THE Federation of Free Farmers (FFF) has urged the Bureau of Customs to review its rice import assessment system to prevent importers from misclassifying the tariff lines of their shipments to avoid higher reference prices.
According to the FFF, the BOC uses over 10 different classification codes for the same type of rice imports, which, it pointed out, could be utilized by unscrupulous importers to evade higher customs’ reference prices.
“Eighty percent of rice imports in 2020 were placed under a tariff heading for ‘broken rice’ which includes a subheading for rice ‘of a kind used for animal feed’. Others were classified as ‘brown rice’, even if they were actually white and well-milled,” FFF National Manager Raul Q. Montemayor said in a statement on Monday.
“It is possible that some imports were being misclassified under tariff lines that had lower reference prices so as to conceal attempts to undervalue FOB prices,” Montemayor added.
The FFF also explained that a “significant” volume of imports did not indicate any rice grade, thus, making it impossible to determine their proper tariff classification and corresponding customs’ reference price.
The customs’ reference price serves as a basis for the prevailing price of an imported good so it could determine if there are undervaluation or other trade-related issues.
“This makes it easier for a Customs examiner to accept whatever price the importer declares and/or to arbitrarily place the imports under any classification code,” Montemayor said.
The FFF recommended that the BOC sit down with the Department of Agriculture (DA), the National Food Authority (NFA) and private-sector representatives to come up with an “accurate and realistic” classification and valuation system for rice imports.
The farmers’ group also urged the DA to tighten further its screening of rice imports and blacklist unscrupulous players that have undervalued their shipments since the rice industry was deregulated in March 2019.
The FFF has repeatedly raised the issue of undervaluation before the BOC and the DA following the enactment of the rice trade liberalization law in 2019, paving the way for the easier importation of rice.
It recently claimed that undervaluation of rice imports continues with at least P890 million in lost tariff revenues from over 766,000 metric tons of staple imported from January to April.
The undervaluation, the FFF explained, could be seen in the free on board (FOB) price of rice and the freight and insurance costs of the shipments.
The FFF noted that the extent of undervaluation of imports can be gauged by the results of the recent bidding conducted by the Philippine International Trading Corporation for 300,000 metric tons of rice.
“Myanmar quoted an FOB price of $405 per metric ton, which is 41 percent or $118 higher per ton than the declared price of imports from Myanmar from January to April 2020 for the same type of rice. Vietnam’s bid to PITC was $455 per ton, while the average declared FOB price of its exports to the Philippines was only $302 per ton,” Montemayor said.
Image credits: Nonie Reyes
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