Finance Secretary Carlos Dominguez III has directed Bureau of Customs officials (BOC) led by Commissioner Isidro Lapeña to set up data exchange arrangements with South Korea, Japan and the United States, similar to the one that Lapeña earlier forged with China to ensure the seamless exchange of trade-related information between the Philippines and these major trading partners.

China, South Korea, Japan and the US represent the Philippines’ top four trading partners that Dominguez wants the BOC to closely work with in monitoring shipments and checking discrepancies in trade data.

These include, among others, data on the volume and value of goods exported by these countries to the Philippines and the import volumes from these countries reported by revenue authorities here to check against possible illegal trade practices.

Dominguez said Lapeña and other BOC officials should establish communication lines and coordinate with the heads of the customs agencies of these four countries to accomplish this goal.

“You have to be able to pick up the phone and call them (the heads of other customs agencies) personally,” Dominguez told BOC officials during a recent Executive Committee meeting of the Department of Finance (DOF).

In a press briefing later, Dominguez said that “I asked him (Lapeña) to go to four countries: China, Japan, Korea, and the US. These are our four biggest trading partners.”

In his visit to Beijing last Feb. 8 to 10, Lapeña and his Chinese counterpart agreed to set up a data exchange system to facilitate the timely sharing of trade information and aid them in their respective campaigns against smuggling and tax evasion.

The BOC also requested from its counterpart in China data on 1) Chinese commodity imports and exports to the Philippines between the years 2015 and 2017, 2) monthly or quarterly export and import data of China to the Philippines by commodity for 2018; and 3) export data on all shipments going to the Philippines and manifest of vessels carrying cargoes bound for the Philippines.

The request for information was in compliance with Dominguez’s directive to Lapeña in 2017 for the BOC to check the narrowing but still significant gap between China’s registered export volumes to the Philippines and data on Philippine imports from China as officially reported here.

Following Domingue’s order, Lapeña went to Beijing in February to personally discuss with officials of the General Administration of Customs of China (GACC) the Philippines’ concerns over these trade discrepancies.

During their meeting, the GACC officials expressed China’s support for the Philippines’ anti-smuggling efforts and agreed on the designation of focal persons between the two countries to facilitate the coordination between their respective customs agencies.

According to the BOC, a Cooperative Arrangement between the BOC and the GACC is scheduled to be signed during a proposed visit of Chinese officials to Manila in April this year.

Lapeña also met with Director Yuan Ziwei and Deputy Director Zhao Ru Xiao of GACC’s International Cooperation Division to discuss the progress of the Philippines-China agreement concerning Cooperation and Mutual Assistance in Customs Matters, which was signed by the two countries in April 2010.

In December last year, Dominguez said official trade data show that the estimated discrepancy between registered Chinese exports to the Philippines and registered Philippine imports from China has been declining but still very large, with the gap reported at 60 percent in 2010; 57 percent in 2015, 48.7 percent in 2016 and 48 percent over the January-July 2017 period.

Registered Chinese exports to the Philippines in 2010 was at $11.56 billion, but Philippine imports from China as reported by the Philippine Statistics Authority (PSA) was only at $4.628 billion, resulting in a trade discrepancy of 60 percent or $6.936 billion.

For the first seven months of 2017, Chinese exports to the Philippines was $17.77 billion, while the PSA reported imports from China at $9.24 billion, or a discrepancy of 48 percent or $8.53 billion.

Compared to the previous years and the same period in 2016, the January-July 2017 trade gap between China and the Philippines has been declining. From January to July last year, China’s exports to the Philippines was $17.10 billion, while PSA reported imports from China at $8.79 billion, or a discrepancy of 48.6 percent at $8.31 billion.

“It is going down but it’s still large,” Dominguez said.

Lapeña earlier reported to Dominguez that the wide discrepancy between China’s recorded exports and imports to the Philippines may be attributed to the gross misdeclaration or undervaluation of goods in terms of either volume or weight; and the possible use of “consignees for hire,” which leads to goods released to “hidden” traders and not to the consignees on record.

In 2015, trade data show that Chinese exports to the Philippines was $26.69 billion, against PSA’s records of imports from China of $11.47 billion or a gap of $15.22 billion. In 2016, the gap narrowed, with Chinese exports to the country at $30.35 billion, against PSA records of imports of $15.56 billion or a discrepancy of $14.79 billion.

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