No Free Lunch

Hurdles to trade

Did you know that according to the law, when you import something less than P10,000 (US$200) in value, you need not pay customs duties or go through rigorous customs processes to determine duties due?

If you like ordering products online from overseas, this means that below that limit, your order should not be slapped a customs duty when you claim it at the post office, or the courier delivers it to you. Like the free import limit, called the de minimis value, many provisions in the new Customs Modernization and Tariff Act (CMTA) passed by Congress last year will make things much easier for our importers and exporters. Customs is now busy translating the CMTA provisions into implementing rules and regulations. This will take a while given the 1,805 sections in the law. That tells us how complex trade and customs rules actually are, which is why colleges offer courses for a bachelor’s degree in customs administration, and a customs broker must study for years to earn a license to practice as one.


As if that were not enough, there are numerous rules that other government agencies impose on imports of various products, for reasons both legitimate and arbitrary. In 2015, the Bureau of Customs, with help from a technical assistance project aimed at making trade processes easier, compiled a comprehensive listing of all permits, clearances and licenses needed to import various goods. It found more than 7,000 traded products subject to such documentary requirements, based either on laws enacted by Congress, or rules and regulations imposed by government agencies.

It was also found that no authoritative listing of all of these trade regulations had been made before. What in fact made then Customs Commissioner Sunny Sevilla request such a listing was the realization that front-line customs personnel exercised so much discretion on what documents to ask of traders and their brokers as they cleared shipments. Often, they made mistakes on what to require or not to require. But often also, they would arbitrarily ask for some clearance document, or even a certificate from an agency concerned that no clearance, permit or license is required. We all know the temptations that come when such additional requirements get in the way of prompt clearance of a shipment. Sevilla thus wanted an authoritative list, to leave no room for guesswork or arbitrariness among his people, and help legitimate traders avoid unnecessary costs of delays.


The result of the stocktaking was the Customs Regulated Imports List or CRIL, the first-ever comprehensive and authoritative listing of all regulations that apply to imported products. CRIL, an online database now accessible on the Bureau of Customs website, not only lists these various documentary requirements but also gives information on the agency requiring them, their legal basis, and even a copy of the form to be filled out. The Food and Drug Administration is dominant among the so-called trade regulatory government agencies (TRGAs), as a great bulk of our exports are food and drugs (including medical instruments), where safety is a concern. Also prominent are agriculture agencies, with farm products subject to sanitary and phytosanitary rules. The Philippine National Police regulates various chemicals that could be used for explosives or other threats to public safety; unfortunately, this includes chemicals that may actually have legitimate industrial use as well. There are dozens of such TRGAs, and each one would do well to make it easy for traders to obtain their requirement, and automate processes whenever possible.

Work on this is underway government-wide. I’ve been hearing, however, that the regulatory bureaus in the Department of Agriculture appear to be moving backward, and going back to manual processing. Establishing a National Single Window (NSW), an online one-stop shop for trade clearances, is a worldwide trend, and is a commitment in the Asean Economic Community, which is establishing an Asean Single Window to interlink the members’ NSWs. Moving backward on this at a time we are chair and host of Asean would be nothing short of a national embarrassment.

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TAGS: Customs, Customs Modernization and Tariff Act (CMTA), law
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