How Customs heps business _____________________________ By Raphael Edward B. Madarang
It is anticipated that the domestic economy will fare relatively well in the foreseeable future in spite of a predicted slowdown in the US economy. With demand in the US expected to taper off, alternative markets in Asia such as the Philippines may be on the receiving end for importations. This would mean bigger import volumes — although import values would be affected by the devaluation of the US dollar — which, by extension, would result in more work and appraisals on the part of our colleagues at the Bureau of Customs (BoC). Customs: from regulator to team player Emphasis should be made in considering the BoC as a team player in business, as opposed to the more traditional perception of the same as a bureaucratic barrier that importers would rather take every opportunity to avoid. It is an undeniable fact that the BoC does have a collection target to meet and does exercise a broad degree of authority over the valuable merchandise that fuels business and the economy. Company officials engaged in importations may have had more than a few difficult encounters with customs officers scrutinizing their cargo. The situation oftentimes leads to heated debates as revenue and deadline pressures aggravate tensions between both parties. However, it is also the BoC that safeguards public health, morals, and national security on the ground – where it ultimately matters. Notably, the actions of the BoC are the final clinchers that give teeth to our trade, agriculture, and environmental policies. In the absence of effective enforcement, the long hours of consultation, discussion, and deliberation by policy makers and trade negotiators would have been all but in vain. Foreign observers, multinational businesses, and prospective investors therefore would consider the effectiveness of a country’s customs administration as a critical indicator of how conducive the place is for investments. It would only be fair to state that economic growth and development, which depend on a stable business environment as envisioned in national trade policies, are in large part the function of having an effective BoC. Constructive partnership — and not conflicting interests — should be the operative phrase to describe what a productive relationship between business and the BoC should be. The changing face of customs administrations Customs administrations around the world are redefining themselves more and more as agents of trade facilitation, slowly receding from the general impression that they are mere necessary impediments to international trade. This trend was shepherded by multilateral institutions such as the World Customs Organization (WCO), which developed standards and best practices aimed at easing the flow of goods through Customs territory. The World Trade Organization (WTO) has likewise undertaken bold measures to broker an international Agreement on Trade Facilitation meant to reduce transaction and documentary costs at the border with the help of modern technology. Just recently, the Philippine Article of Accession to the Revised Kyoto Convention (RKC) has been forwarded to the President. The RKC is an international agreement on the simplification and harmonization of customs procedures to promote trade and improve transparency in the process. This is welcome news since it would strive to bring the country’s customs administration at par with those of other countries who have already adopted the uniform guidelines and principles. Philippine customs in positive transition While awaiting RKC accession, it should be noted that the Philippines is already a member of both the WCO and the WTO and has, recently, adopted such measures meant to speed up cargo clearance time without compromising revenue generation and security. One such mechanism which has been installed in BoC practice is the conduct of Post-Entry Audits (PEA). In keeping with the demands of a growing economy, a greater need has arisen to minimize delay-causing physical and documentary checks at the border. With containers coming in faster, deadlines getting tighter, and resources at the BoC being stretched beyond human limits, the PEA system has come in handy. The idea of PEA is to move the more intensive BoC scrutiny from the immediacy of the border and into records of each transaction for as long as three years after the importation. Through this, actual container stripping and physical examinations can be made more focused and limited to high risk cargo. Most low-risk shipments can be treated with more leniency and thus allowed speedy clearance out of BoC premises. The crucial caveat here, however, is that companies would have to ensure that they maintain complete records of their import transactions and are made better adept in understanding and complying with Customs rules and regulations. Admittedly, these systems are not perfect and may take time and experience before being optimally utilized. It is only normal for confusion among the transacting public and customs officers to jolt the system on certain instances during the early phases of introducing these reforms. To cope with this and to assuage the concerns of the business sector, the BoC instituted a voluntary disclosure program. This program is meant to give an opportunity for companies wary of possible compliance issues to come forward with a clean slate, subject to certain requirements. This program underscores the BoC’s thrust to partner more constructively with the business sector and seek mutual grounds of cooperation. Consultations encouraged A strong and constructive partnership with the BoC is developed by a proactive effort on the part of companies to understand both local and international customs rules and practices. Importantly, it is not advisable to take upon this function alone, in view of the growing complexity of these rules and diversity of practice. Misunderstanding the relevant concepts and contextual background of these rules is a costly hindrance which companies should take every extra precaution to avoid. It is essential, therefore, for companies to seek the guidance of experienced professionals specializing in the field of international trade and customs. External advice will provide an objective and technical understanding of the trade and customs needs of your company that will, in turn, allow more effective communication and interaction with the BoC. Once business is on the same page and in the same frame of mind as the BoC, then that constructive partnership can begin. |