Policy Paper on Smuggling

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Smuggling of Selected Agricultural Commodities in the Philippines

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SUMMARYT his paper was prepared by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) as a milestone deliverable of the project funded by the Department of Agriculture Bureau of Agricultural Research (DA-BAR) titled, An Assessment of Smuggling on Selected Agricultural Commodities in the Philippines.1 Through Focus Group Discussions (FGDs) and Key Informant Interviews (KIIs) done in various institutions (in the Philippines and its neighboring countries), the authors examined WKHG\QDPLFVRIVPXJJOLQJLQWKH3KLOLSSLQHVVSHFLoFDOO\DGGUHVVLQJWKHIROORZLQJ The nature and the extent of smuggling in the country; The effectiveness of existing policies to address smuggling; The channels of smuggling in selected agricultural commodities; and Policy implications to mitigate the problem of smuggling. 0RUHRYHUWKHDXWKRUVKDYHLGHQWLoHGDQGDQDO\]HGoYHPDMRULVVXHVRQVPXJJOLQJ Policies and Procedures on Imports Tariff Rates Extent of Smuggling Value of Smuggling Effectiveness of Anti-Smuggling Policies 6SHFLoF UHFRPPHQGDWLRQV IRU RSHUDWLRQDO SROLFLHV DQG OHJLVODWLYH DFWLRQV PHQWLRQHG LQWKLVSDSHUZHUHEDVHGRQWKHoQGLQJVRIWKHVWXG\RQVPXJJOLQJRQVHOHFWHGDJULFXOWXUDOcommodities in the Philippines. This paper includes an introduction which provides the context of smuggling in the 3KLOLSSLQHVDGHWDLOHGDQDO\VLVRIWKHoYHPDLQLVVXHVLQVPXJJOLQJDQGUHFRPPHQGDWLRQVfor operational policies and legislative actions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ORFDOSRUWVDQGWZRRWKHUFRXQWULHVLQWKHUHJLRQQDPHO\,QGRQHVLDDQG6LQJDSRUH7KH GHWHUPLQDWLRQ RI WKH H[WHQW RI VPXJJOLQJ DQG DQDO\VLV RI WKH HIIHFWLYHQHVVRI H[LVWLQJWUDGHSROLFLHVLQFOXGLQJVDQFWLRQVDQGSHQDOWLHVIRUVPXJJOLQJZHUHGRQHXVLQJHFRQRPHWULF PRGHOV DSSOLHG WR VHFRQGDU\GDWD IURP YDULRXV VRXUFHV 2Q WKH RWKHUKDQG WR GHWHUPLQH WKH QDWXUH DQG PRGHVSMUGGLING IN THE PHILIPPINESBecause smuggling affects government revenues, the competitive advantage of domestic industries, and employ-ment, among many, examining its nature, extent, and implica-tions should be top priority.3PHOTO BY GEM URDANETA7HFKQLFDO VPXJJOLQJ LV FDUULHGRXW LQPDQ\ IRUPVDQG IDFHWVGHSHQGLQJRQWKHDELOLW\DQGZLOOLQJQHVVRI WKHSRUWDXWKRULWLHVWRLPSOHPHQWWKHH[LVWLQJDQWLVPXJJOLQJODZVDQGWKHLQFHQWLYHVDPRQJ WKH VPXJJOHUV $ODQR UHSRUWHG WKDW WHFKQLFDOVPXJJOLQJLQYROYHVWKHXVHRI OHJDOWUDGHFKDQQHOVLQEULQJLQJWKHJRRGVLQWRWKHFRXQWU\EXWVHYHUDOIRUPVRI PDQLSXODWLRQVDUH HPSOR\HG WR HYDGH SD\LQJ FRUUHFW GXWLHV 6RPH IRUPVRI PDQLSXODWLRQ LQFOXGH 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Some forms of manipulation include misdeclaration, undervaluation, PLVFODVVLoFDWLRQ and fake delivery documentation.PHOTO BY VERNA LUCIA SARRAGA 1. 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Extent of technical smuggling by commodities, in the Philippines (1996-2006)Note: All commodities are in metric tons, except for rice which is in thousand metric tons.70LQLVWU\RI 7UDGH LV VSHFLFDOO\ DVVLJQHG IRU WDULII FROOHFWLRQDQGLVGLUHFWHGQRWWRUHOHDVHWKHFDUJRXQOHVVDFOHDUDQFHIURPWKH4XDUDQWLQH2IFHLVSUHVHQWHG2. 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Estimates of the value of technical smuggling of selected Philippine agricultural commodities, 1986-2009, in USD 1,000Source: FAOSTAT and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ecommendations for Operational Policies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oQGLQJVRIWKHVWXG\DEVWUDFWHGFULWLFDOLVVXHVUHOHYDQWWRPLWLJDWLQJVPXJJOHGDJULFXOWXUDOcommodities in the Philippines. 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Manila, Philippines.1DWLRQDO6WDWLVWLFDO&RRUGLQDWLRQ%RDUG16&%KWWSZZZQVFEJRYSK3DODWLQR0k5DPSDQW6PXJJOLQJLQWKH3KLOLSSLQHVy8QLWHG3UHVV,QWHUQDWLRQDO,QFKWWSZZ8SLDVLDFRP(FRQRPLFV7DULII&RPPLVVLRQKWWSZZZWDULIIFRPPLVVLRQJRYSK86'$)RUHLJQ$JULFXOWXUDO6HUYLFHV*DLQ5HSRUW)HEUXDU\15PHOTO BY MASYUDI FIRMANSYAHThe research team was composed of Dr. Prudenciano U. Gordoncillo (Team Leader), Dr. Cesar B. Quicoy (Assistant Team Leader), Prof. Julieta A. Delos Reyes (Field Coordinator), and Dr. Arvin B. Vista (Database Administrator) from the Department of Agricultural Economics, College of Economics and Management, University of the Philippines Los Baos. Department of Agriculture - Bureau of Agricultural Research (DA-BAR)RDMIC Building, Visayas Ave. cor. Elliptical Road, DilimanQuezon City, Philippines 1104Phone: +63 2 928-8624 / +63 2 928-8505Fax: +63 2 927-5691Website: http://www.bar.gov.ph/LAYOUT BY MARK VINCENT P. ARANASCOVER PHOTO BY ADY SURYADI Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA)SEARCA, College, Los Baos Laguna 4031 PhilippinesTel.: (+63 49) 536 2361; 536 2363; 536 2365 to 67; 536 2290 ext 161/406 Fax: (+63 49) 536 7097; 536 2283Email: post@agri.searca.org; kc3@agri.searca.orgWebsite: www.searca.org; www.climatechange.searca.org