PCCI favors trade facilitation measures to combat smuggling

The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, recommends that government adopt trade-facilitating mechanisms instead of pre-shipment inspection to combat smuggling, safeguard legitimate regulatory objectives and protect its import revenues.

The PCCI suggested that the country: (a) adopt a risk management system, (b) adopt an authorized economic operator system, (c) modernize customs administration through the use of information communications technology and non-intrusive technology, and (d) use X-ray machines already purchased to ensure the integrity of cargoes.

The recommendations were submitted in a letter by PCCI to Senator Juan Edgardo M. Angara, chairman of the Senate ways and means committee who was congratulated by PCCI for his initiative to enact a Customs Modernization and Tariffs Act before the 16th Congress ends.

Signatories were Ambassador Alfredo M. Yao, PCCI president; Donald G. Dee, chairman of the PCCI legislative committee; and Francis Chua, chairman of the PCCI industry committee.

These recommendations were aimed at modernizing and aligning the country’s customs administration, systems and procedures with the standards prescribed by international trade protocols that the country acceded to such as the Revised Kyoto Convention, the Asean Economic Community and the Philippines-US Trade Facilitation Protocol.

“Customs being a key element of international trade, and international trade being a strategic economic development tool, modernizing customs procedures and standards must be made competitive, consistent with international trade facilitation measures and supportive of business growth and expansion,” the three PCCI officials wrote

According to the PCCI, a risk management system would focus resources on high-risk imports and allows fasttrack or green channel clearance low risk imports including import of accredited companies.

“An added value of the risk management system is that it reduces port congestion by reducing the dwell time of customs clearance and the elimination of the physical inspection and examination of imported cargoes,” the PCCI said.

In an authorized economic operator system, firms engaged in importation and exportation are approved by Customs as compliant with the supply chain security standards and given benefits such as simplified Customs procedures and reduced Customs intervention.

“The AEO concept is being increasingly adopted by various Customs administration with the object of securing the supply chain with resultant benefits for the trading community,” the PCCI said.

A proposal to legislate pre-shipment inspection – inspection of imports by a third party inspector prior to export to the Philippines – would be a step backward from strategic trade facilitation measures under international trade protocols, the PCCI said.

“At a time when we are supposed to be streamlining and reducing processes in line with our international trade commitments, we will only be adding more layers in the importation process with pre-shipment inspection,” the PCCI said.

The PCCI doubted the efficiency of a pre-inspection scheme, asking:

a. What is the value added of PSI? A third-party verifier does not have any access to the value of a transaction agreed between the buyer and seller, and, therefore, does not add value information-wise.

b. In ensuring the identity of the cargo, how will the PSI operate? About 99 percent of ports are governmentowned where third-party inspectors may not have offices. Third-party inspectors would cause delay and additional costs until they could find premises for inspection.

c. Who will conduct the inspection? PCCI said inspectors could rely on technical consultants who, because they are not legally identifiable with the third-party inspectors, could be vulnerable to bribery.

d. Where will the inspection be conducted? Inspectors could inspect on the premises of suppliers. Containers and the sealing system could be manipulated after inspections.

e. Why subject all containerized shipment to PSI? The Bureau of Customs already gives importers with proven track records supergreen lane accreditation.