The customs agencies of the Philippines and China have 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.

Bureau of Customs (BOC) Deputy Commissioner Edward James Dy Buco reported during a recent Executive Committee (Execom) meeting of the Department of Finance (DOF) that the agency also requested from its counterpart in China several 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 the directive of Finance Secretary Carlos Dominguez III to Commissioner Isidro Lapeña 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 officially reported here.

Following Dominguez’s directive, Lapeña visited Beijing on Feb. 8-10 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 led by Deputy Director General Zou Zhiwu, of the General Administration of China Customs, 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, the BOC said in its report to Dominguez.

According to the BOC report during the Execom meeting, 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.

During the visit to China, the BOC delegation led by Lapeña also took part in the First Global Cross Border E-Commerce Conference, which was held at the Beijing International Convention Center and attended by 500 representatives from various customs administration agencies, other partner-government agencies and private entities across the globe.

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.

In 2010, registered Chinese exports to the Philippines 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.

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.

The BOC is now focusing on China, one of the Philippines’ largest trading partners, to check the gap in export volumes to the Philippines and the shipment figures officially reported here by importers, as part of its ongoing efforts to institute reforms in the agency, run after smugglers, and improve revenue collections.

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.

The latter practice allows importers to evade the scrutiny of the Bureau of Internal Revenue (BIR), Lapeña said.

In both instances—misdeclaration or undervaluation and the use of consignees for hire—benchmarking and the submission of fake documents enable traders to get away with these underhanded schemes, he said.

-oOo-