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Customs Starts Compliance
Audit of Importers, Customs Brokers
In the last three weeks, the Post Entry Audit (PEA)
Group of the Bureau of Customs (BoC) has reportedly
issued numerous Audit Notification Letters (ANLs) addressed
to major importers in various industries (e.g. garments
and textile, automotive, pharmaceutical, food, steel,
consumer goods and other major importing industries).It
will be remembered that the law on Post Entry Audit
or Republic Act No. 9135 was enacted as early as June
2001.
Prior to the issuance of ANLs, customs has not conducted
a customs compliance audit on any company. The main
reason for this is that the necessary infrastructure
to implement the law was only completed late last year.
Specifically, the members of the PEA group, appointed
during the last quarter of 2003, had to undergo various
technical training here and abroad.
During the first quarter of 2004, PEAG members started
profiling of prospective auditees. Obviously, the group
has finalized its short list of auditees and has now
issued the corresponding ANLs for the unlucky importers
and customs brokers. Post Entry Audit - A Review. Republic
Act No. 9135 (RA 9135) took effect on June 2, 2001.
Thereafter, the Department of Finance (DoF) issued the
rules and regulations (Customs Administrative Order
No. 5-2001) to effectively implement RA 9135. CAO 5-2001
took effect on December 14, 2001. The Post Entry Audit
(PEA) system is an international best practice aimed
at increasing trade facilitation, encouraging voluntary
disclosures, reducing incidence of fraud and protecting
government revenues. Also known as the Customs Compliance
Audit, it provides a control mechanism for customs to
verify the correct payment of taxes and duties after
the goods are cleared from customs.
Under the law, customs may visit the company and conduct
an audit of the import and business records kept. A
finding of underpayment of taxes and duties arising
from negligence or fraud will likely result in very
stiff administrative fines and/or criminal prosecution.
In addition, the law and implementing rules require
that specific information and business process documents
relating to the import activities be kept at the companies'
premises within a period of 3 years from the date of
the filing of the import entry. Failure to keep records
or to give customs access to said records would result
in separate administrative fines and/or criminal prosecution.
What Happens in a Customs Audit? The implementing guidelines
issued by the BoC, specifically Customs Memorandum Order
No. 2002, provide the following operational process
in the conduct of a customs compliance audit:
a) Audit Selection using a Risk Management Approach
b) Profiling and Information Analysis
c) Audit Notification
d) Audit Preparation / Audit Plan
e) Pre-Audit Conference with Auditee
f) Conduct of Audit Proper - Field Audit
g) Exit Conference
h) Audit Reporting
i) Audit Monitoring and Implementation
The issuance of an ANL will generally involve the receipt
of the following documents:
a) A Letter from the Customs Commissioner informing
the importer of the conduct of a customs compliance
audit and the date of the pre-audit conference;
b) Demand Letter for Submission of Records together
with an attached List of Records and Documents to be
presented to customs (Note: Failure to present the documents
upon second demand will make the import subject to penalties
under Section 3610, TCCP, as amended by RA 9135); and
c) General Customs Questionnaire
Possible Audit Issues - What to Expect. The general
issues that may be looked at during the audit will initially
involve the following:
a) Audit readiness of company records;
b) Consistency of import VAT payments with BIR VAT declarations;
and
c) Beneficial ownership of locally purchased imported
goods.
Once a general sampling is made on the company's records,
the customs auditors will likely review the following
specific concerns:
a) Customs Declaration Process / Customs Broker Practices;
b) Customs Value Information
c) Customs Classification and Product Description
d) Quantity and Inventory Flow
e) Licensing, Marking and Country of Origin
This is the first time that customs will be conducting
customs compliance audits and many companies are nervously
awaiting the conduct of the audits. Based on the practices
of many companies and considering that customs management
has normally been outsourced to customs brokers, most
importers have no idea as to their level of compliance.
For those companies that have not conducted a due diligence
review of trading activities prior to the audit, they
will be facing in the next months the uncertainty of
customs possibly finding non-compliant issues in their
business operations.
An international trade and customs consultant and licensed
customs broker, the author is a Fellow at WTI.PH
and a Partner of DLUGMS Law Office. Please contact
aouvero@dlugms.com or (632) 4050021 / 29 for your
comments.
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Are existing customs brokerage firms
allowed under RA 9280? (June 7, 2004)
As a result of our recent article on RA 9280 entitled
"New Law Prohibits Companies from Custom Brokerage"
(PortCalls, May 10, 2004 issue), we have been
receiving many queries in regards to the application
of the law on existing customs brokerage firms.
In all those inquiries, the main issue has been - can
an existing customs brokerage company continue to engage
in the business of customs brokerage? Stated otherwise,
does the law prohibit existing firms from the customs
brokerage business?
There are two main contending positions to the question.
One position is that the prohibition is prospective
and as such, existing customs brokerage firms have the
vested right to continue its business.
The opposite position is that RA 9280 now expressly
prohibits the corporate practice of customs brokerage.
Vested Right of an Existing Customs Brokerage.
The first position to the controversial law is that
the RA 9280 itself allows existing customs brokerage
companies to continue their business.
The basis for this position is Section 33 of RA 9280
as follows: "Sec. 33. Vested Right: Automatic Registration
of Customs Brokers. - All customs brokers who are registered
and licensed at the time of this Act takes effect shall
automatically be registered."
Accordingly, the present law clearly recognizes the
vested rights of customs brokerage corporations, associations
and partnerships established under the old provisions
of Tariff and Customs Code of the Philippines (TCCP).
This "vested right" concept is based mainly on the constitution
right to property, which provides that no person shall
be deprived of property without due process of law.
In a number of Supreme Court decisions, it has been
decided that "protected property" includes the right
to one's employment, profession, trade, or calling,
and the right to earn a living.
Thus, this right is considered to be property within
the protection of a constitutional guaranty of due process
of law.
Against Existing Corporate Practice. The other
position is that RA 9280 only allows individuals to
engage in the customs broker profession, to the exclusion
of corporations.
The main argument in support of this position is section
29 of RA 9280, which specifically provides that the
practice of customs broker is a professional service
and as such, "no firm, company, or association may
be registered or licensed as such for the practice of
customs broker profession".
In addition, Section 28 also provides that no person
shall practice or offer to practice the profession,
or use the title unless one is a registered licensed
customs broker.
Under the old provisions of the TCCP, customs brokerage
companies, associations or partnerships are allowed
only by virtue of having at least two officers or partners
who are licensed customs brokers. Accordingly, the present
law merely prevents licensed customs brokers from extending
their licenses to non-licensed individuals (in case
of partnership) or to legal entities.
In other words, these licensed customs brokers can
still continue to practice their profession in their
individual capacity. In fact, the law clearly recognizes
their vested right to the profession by providing that
they be automatically registered.
Accordingly, it is the intention of the law to expressly
prohibit the corporate practice of customs brokerage,
which is not exactly a vested right but merely a privilege.
The vested right refers only to the individual.
Corporate Practice as a Property Right. Under
the old provisions of TCCP, the right or privilege of
corporations and associations to engage in customs brokerage
was expressly provided.
Thus, corporations have property rights or privilege
to engage in the customs brokerage business or profession.
However, property rights are not absolute and these
rights can in fact be interfered with so long as there
is due process of law.
In many instances and with justifiable reasons, laws
have previously been passed effectively curtailing such
property rights. To properly address the issue of whether
corporations are still allowed under RA 9280, two questions
must be separately addressed:
(a) Does the vested right mentioned in Section 33 of
RA 9280 include corporations? Is the right to be automatically
registered available to corporations?
(b) Is it the express intention of Congress to prohibit
corporate practice of customs brokerage given the fact
that customs brokerage has been defined as a profession
and not a business?
A Painful Transition. The title of customs broker
refers to a licensed individual. Under the present law,
we would expect that the registration requirement be
limited to licensed individuals, which would of course
include the principal and alternate brokers of corporations.
However, even if the principal and alternate brokers
are registered, the question persists as to whether
corporations can still engage in a "business". Under
the old provisions of the TCCP, it was not very clear
whether customs brokerage was a business or a profession.
While the old rules required certification for individuals,
corporations and associations were, however, allowed
to engage in the "customs brokerage business". Obviously,
the source of the present controversy lies in the redefinition
of customs brokerage as a practice of profession under
RA 9280.
Ordinarily, a transitory provision would have been
provided in the law to ease the transition from the
old system to a new system. Considering that there is
no such provision under RA 9280, we would hope that
the implementing rules and regulations to be issued
will "fill in the blanks" left out by the legislation.
An international trade and customs consultant and
licensed customs broker, the author is a Fellow at WTI.PH
and a Partner of DLUGMS Law Office.
Please contact him at aouvero@dlugms.com
or (632) 4050021 / 29 for your comments.
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Promoting Cost Efficiency and Customs
Compliance thru SGL (May 24, 2004)
Designed to facilitate trade and promote compliance
among the major importers, the Bureau of Customs (BoC)
first introduced the Super Green Lane (SGL) import processing
facility to the top 100 importers in year 2000.
Under the program, an importer is allowed the paperless
processing of the imported cargo, resulting in the release
of the goods at the earliest possible time after the
electronic filing of the import entry. Submission of
the manual copies of the import documents are made after
the goods have been released from customs custody.
Under the rules, an importer may avail of the privilege
under the program only after proper accreditation of
the company and prior approval of a list of importables.
New SGL Rates - The BoC
has recently issued new rules on the SGL, which effectively
allows any importer to apply for accreditation and which
further reduces the cost of releasing goods from customs.
The revised rules are now embodied in CMO 6-2003 and
CAO 28-2003, with the new rates as follows:
| FOB Value
Fees Below US$5,000 - |
PhP 500.00 |
| US$5,001 to $100,000 - |
PhP 1,000.00 |
| US$100,001 to $200,000 - |
PhP 1,500.00 |
| US$200,001 to $500,000 - |
PhP 2,000.00 |
| Above US$500,000 - |
PhP 2,500.00 |
Benefits to the Trading Community
- Among the benefits provided under the program are
as follows:
a. Exemption from selectivity system at the customs
border;
b. No face-to-face interaction with BOC from filing
of import entry to release of cargo;
c. Early manifest filing by shipping lines;
d. When necessary, physical inspection conducted only
at importer's premises; and
e. Mission Orders or "Alerts" can only be issued only
by Commissioner.
Exemption from the customs selectivity system simply
means that upon electronic filing of the import entry,
customs will automatically process the shipment and
immediately allow release of the imported goods after
payment of taxes and duties. The goods are exempted
from regular document check and physical inspection.
So long as the import entry declaration is proper
and in the absence of any error, the shipment is also
exempted from valuation and classification issues being
raised against it. Thus, under the system, traders are
assured of hassle-free and timely release of the imported
goods.
In addition and based on the experience of current
SGL members, substantial savings are generated as a
result of lower customs processing expenses.
Requirements and Procedures for Accreditation
- In contrast to the old rules, the requirements
for accreditation under the program have become less
stringent, allowing any bona fide importer to apply
for accreditation. In particular, the new requirements
for an applicant under the program are as follows:
a. Any BOC-registered importer (even those outside
top 1000);
b. At least 1 year of operation at time of filing of
the application;
c. Regular importation of same articles;
d. Importer accredited to use remote lodgment facilities
(EDI user through VAN service providers); and
e. Willingness to undergo Voluntary Compliance Audit
Part of the accreditation process is the submission
of the list of regular importables.
These list of articles must be freely importable (or
if regulated, covered by continuing Import Authority)
and bound for domestic consumption (not for warehousing).
The filing of the import entry must be done through
the use of an EDI lodgment facility (ref. CMO 22-99).
To apply for accreditation, an importer must submit
a duly-accomplished application form to the SGL Secretariat
together with supporting documents. The SGL secretariat
will then review the application and request for a meeting
with the applicant.
Assuming that the application is in order, the secretariat
will make a recommendation to the SGL Committee. Once
the application is approved, BoC will now issue a Certificate
of Accreditation.
Promoting Compliance through SGL
- Prior to accreditation as an SGL member,
an importer must express its willingness to undergo
voluntary compliance audit. In addition, an SGL member
may be randomly selected for enforced compliance audit.
Notwithstanding the above situation, accreditation
under the SGL program should enhance the compliance
of an importer for the following reasons. First, the
use of the EDI lodgment facility will help the company
comply with the record keeping requirements under the
customs audit system and will ensure that taxes and
duties are properly paid and actually received by customs.
Second, BoC will have difficulty raising issues against
the valuation and tariff classification (pre-approved
by the SGL Committee during the accreditation process)
of the imported goods in case of a customs audit unless
there are clear and valid grounds. Finally, the use
of the electronic system allows the importer to have
better control of customs operations through electronic
monitoring and supervision of the customs processes.
An international trade and customs consultant, and
licensed customs broker, the author is a Fellow of WTI.PH
and Partner of DLUGMS Law Office.
Please contact him at aouvero@dlugms.com
or (632) 4050021 / 29 for your comments.
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RA 9280: New Law Prohibits
Companies from Customs Brokerage (May 10, 2004)
A new law has recently been enacted,
which effectively regulates the practice of the customs
brokers profession and prohibits corporate practice
of customs brokerage.
Republic Act No. 9280, entitled "An
Act Regulating the Practice of Customs Brokers Profession
in the Philippines, Creating for the Purpose a Professional
Regulatory Board for Customs Brokers, and Appropriating
Funds Therefor", was officially enacted last March
30, 2004 and will take effect fifteen days from its
publication in major newspapers. A Profession, Not a
Business.
For many years, the practice of customs
brokerage has been the subject of debates and discussions
- whether it is a business or a profession.
Many in the trading community simply
consider customs brokerage as an ancillary or support
service necessary for customs facilitation and release
of imported and exported goods. Thus, not a few are
surprised when informed that customs brokers take licensure
examinations, which are administered by the Professional
Regulation Commission (PRC).
RA 9280 now puts an end to this issue
by defining the practice of the custom broker as a professional
service. Section 6 of RA 9280 provides that the practice
of customs broker profession involves:
a) consultation, preparation of customs
requisite documents for imports and exports;
b) declaration of customs duties and taxes;
c) preparation signing, filing, lodging
and processing of import and export entries;
d) representing importers and exporters
before any government agency and private entities in
cases related to valuation and classification of imported
articles; and
e) rendering other professional services
in matters relating to customs and tariff laws, its
procedures and practices.
Prohibition Against Corporate
Practice - Section 29 of RA 9280 specifically
provides that the customs broker practice is a professional
service and as such, "no firm, company, or association
may be registered or licensed as such for the practice
of customs broker profession". In addition, Section
28 provides that no person shall practice or offer to
practice the profession, or use the title unless one
is a registered licensed customs broker.
Thus, can an existing customs brokerage
company continue to engage in the business of customs
brokerage? Can such company continue to advertise itself
as a customs brokerage?
Section 33 of RA 9280 provides the answer:
"customs brokers who are registered and licensed
at the time of this Act takes effect shall automatically
be registered" with the Professional Regulatory
Board for Customs Brokers (Board), which is attached
to PRC. A close reading of the above section seems to
provide more questions rather than answers.
First, are existing customs brokerage
companies obliged to register with the Board - an office
which regulates individuals and not companies? If yes,
can the Board or PRC regulate and supervise these customs
brokerage companies?
Second, are individual customs brokers
allowed to replace the principal or alternate brokers
of companies once the latter are no longer available
(e.g. physical or mental incapacity)? Third, will the
Code of Ethics and other standards for customs brokers
apply for these companies?
Prohibition Against Financing
Activities - One benefit for customs brokers
under the law is that customs brokers are now prohibited
from advancing and financing in behalf of their client-importers
the payment of duties and taxes, arrastre charges, wharfage
dues, storage fees and other port charges. In other
words, importers can no longer ask their customs brokers
to advance their duties, taxes and related costs.
Many importers normally require a minimum
credit line prior to accrediting customs brokers. With
this practice now prohibited, the financial standing
of a customs broker will become less of a consideration
when companies bid out their customs brokerage requirements.
New Qualifications for Licensure
- Under the law, existing licensed and registered customs
broker are automatically registered under the law. For
those who intend to take the licensure examination,
a more stringent set of qualification standards has
been provided.
Specifically, only graduates with a bachelor
degree or master's degree in customs administration
shall be qualified to take the exam. In the case of
those with a master's degree, they will only be allowed
to take the licensure exam within the next 5 years from
effectivity of the law.
In other words, by year 2009, only those
with a bachelor degree in customs administration can
be allowed to take the licensure examination. Implications
on Current Corporate Practice.
To date, the President has yet to appoint
the members of the Professional Regulatory Board, which
is tasked to issue the implementing rules and regulations
including the Code of Ethics for customs broker profession.
As mentioned above, there are certainly many outstanding
issues that must be clarified in the implementing rules.
One main concern is how the rules will
apply on the corporate practice of customs brokerage.
We certainly do not expect different rules for individuals
and for corporations, although the latter may be exempt
from certain requirements applicable to professionals.
On the other hand, the application of
the same set of rules can pose some problems for corporate
customs brokers. By and large, we foresee future administrative
roadblocks for the continuing registration and operations
of corporations engaged in customs brokerage.
The reason for this is that the real intention
of the law is to regulate the practice of the profession,
to the exclusion of corporations. Considering that many
logistics providers consider customs brokerage as part
of their integrated service, these companies will now
have to rethink their strategic plans to ensure that
existing operations do not constitute as a practice
of the profession.
The author is an international trade
and customs consultant, and a licensed customs broker.
He is also a Partner of the Law Firm of David Leabres
Uvero Gaticales Mosquera Samson.
Please contact aouvero@dlugms.com
or (632) 4050021 / 29 for your comments.
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Customs Audit to Focus on Royalty
and License Fee (April 26, 2004)
In a previous article entitled "Are Royalty Payments
Dutiable?" (February 10, 2003), we wrote on the general
customs treatment of royalties and license fees.
The discussion below is very important because based
on experience in other ASEAN countries when they first
implemented the Post Entry Audit (PEA) system, royalties
and license fees will certainly be one of the focus
areas once customs starts auditing companies.
Elements of Dutiability. Under Section 201 of the
TCCP, the dutiable value of an imported article is the
"transaction value, which shall be the price actually
paid or payable for the goods when sold for export to
the Philippines", adjusted by adding the following costs:
freight and transport costs, insurance, royalty payments,
assists, subsequent payments and commissions.
In other words, the dutiable value is computed by
getting the price paid or payable plus the adjustments
mentioned above. Effectively, these permissible additions
will increase the amount of taxes and duties payable
and consequently, the landed cost of the imported goods.
Paragraph (1)(e) of Section 201 particularly states
that "the amount of royalties and license fees related
to the goods being valued that the buyer must pay, either
directly or indirectly, as a condition of sale of the
goods to the buyer" must be added to the dutiable value.
Stated otherwise, royalty and license fees are considered
dutiable when such:
a) Payment accrues, directly or indirectly, to the
seller;
b) Payment is related to the imported goods; and
c) Payment is a condition of the sale for export.
Although there is a presumption that the payment is
related to the goods when its calculation is based on
the value or on the proceeds from resale of the imported
goods, careful examination must be made on the basis
of the payment to determine dutiablity.
In general, payment is considered a condition of the
sale when without such payment, the goods would not
have been sold at all or not at the agreed price, payment
and delivery terms. In addition, payment to a third
party related to the supplier, even if considered as
indirect payment, will only be considered as a condition
of sale when the seller, through the buyer, is obligated
to pay such fees. Vague Definition of Royalties and
License Fees.
The term "royalty or license fee" normally refers to
payments in respect of patents or design rights, processes,
trademarks, copyrights or for "know how" and may be
paid directly or indirectly (e.g. to third parties or
parties other than the direct suppliers). It may also
include payments for distribution rights and rights
of reproduction within the country of importation.
The WTO Agreement on Customs Valuation (ACV) and the
enabling legislation in the Philippines (Section 201,
TCCP as amended by RA 8181 and RA 9135) does not provide
any clear definition of the term "royalty or license
fee".
An implementing regulation of the European Union (EU)
defines royalties and license fees as payments for the
use of rights relating to:
a) manufacture of imported goods (e.g. patents, designs,
models and manufacturing know how);
b) sale for exportation of imported goods (e.g. trademarks
and registered designs); or
c) use or resale of imported goods (e.g. copyright,
manufacturing processes inseparably embodied in the
imported goods).
While the above arguably provides an exhaustive definition,
we have to make it clear that many of such payments
should not be included in the customs value. One reason
for this is the absence of relationship of the payment
to the imported goods (e.g. payment for the right to
distribute).
Again, for these payments to be dutiable, the same
must satisfy the conditions for dutiability. Presumption
of Dutiability.
In general and based on practices in other customs
jurisdictions, all payments made by a buyer to the seller
(e.g. royalty, assists, subsequent proceeds, etc.) are
presumed to be part of the price paid or payable, unless
rebutted by evidence which clearly establishes that
the payments are completely unrelated to the imported
merchandise. This presumption extends to payments made
to a third party which is related to the seller.
Some clear examples of non-dutiable payments are those
paid for the right to reproduce or for the right to
distribute or resell the imported goods. Some discussion
on this subject is made in the Interpretative Notes
to Article 8 of the ACV. Major Concern for Importers.
As mentioned in recent seminars, and based on our own
discussions with many multinational companies, we have
identified several concerns which must be addressed
immediately by importers before their royalty and license
fee payments become the subject of customs audit:
a) Most importers do not know what royalties and license
fees are, and even if they do, have the wrong impression
that the same are not dutiable.
b) Customs will presume all royalties and license
fees and other payments to the suppliers (subsequent
proceeds) as dutiable in case of an audit.
When such happens, most importers will not be able
to rebut such presumption and thus, will be assessed
additional taxes and duties covering the three-year
maximum audit period.
The author is an international trade and customs consultant,
and a licensed customs broker. He is also a partner
of The Law Firm of David Leabres Uvero Gaticales Mosquera
Samson.
For your comments, he may be contacted at aouvero@dlugms.com
or at (632) 4002145 / 4050021.
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A Borderless ASEAN before 2020
(April 12, 2004)
IN a previous article, we mentioned that ASEAN has
formally agreed to establish an ASEAN Economic Community
(AEC) by 2020.
The agreement was forged during the Ninth ASEAN Summit
held last year in Bali, Indonesia. In general, the establishment
of an AEC is envisioned to result in a single market
and production base of 520 million people with annual
GDP of US$700 billion and will allow the free flow of
goods, services, investments, capital and skilled labor
among the member countries.
The ASEAN Economic Community (AEC). The AEC is one
of the three pillars under the ASEAN Community concept,
which includes the ASEAN Security Community (ASC) and
the ASEAN Socio-Cultural Community (ASCC).
With the prior establishment of the building blocks
towards ASEAN economic integration [i.e., ASEAN Free
Trade Area (AFTA), ASEAN Investment Area (AIA) and the
ASEAN Framework Agreement on Services (AFAS)], the movement
towards an AEC seem the most logical step in the economic
ladder. With AEC therefore, ASEAN will have greater
focus in expediting the movement towards an integrated
free trade area.
Already, a high-level task force on economic integration
has been created with clear deadlines to expedite the
integration process towards an AEC. With many of the
initiatives drawn towards benefiting the trading community,
most of the deadlines established for the task force
are supposed to happen before the end of 2005.
While the AEC is still in the planning stage, many
foresee an AEC established towards the direction of
an "FTA plus" arrangement. An FTA plus arrangement is
basically a zero-tariff free trade agreement with additional
benefits akin to a common market.
Thus, while the AEC is envisioned to be more than a
free trade area, it will however not be identical to
that of the European Union where there is a common external
customs and tariff policy. Under the AEC, member-countries
are expected to have harmonized tariffs while maintaining
different tariffs when trading with non-ASEAN countries.
An FTA plus Arrangement. A recent study by the Institute
of South East Asian Studies (ISEAS) envisions an AEC
with the following characteristics:
* Zero-tariff free trade area; elimination of non-tariff
barriers;
* Free movement of goods, services, investments and
capital;
* Free movement of tourists and skilled labor;
* Harmonization of customs procedures and minimization
of customs requirements (e.g. ASEAN Single Window for
Imports);
* Harmonization of standards; and
* Institutional and legal infra-structure to facilitate
economic integration.
Considering the varying level of economic develop among
the member countries, experts are expecting a "two-speed"
AEC, with Singapore and Thailand already pushing for
early integration of priority sectors before the 2020
deadline. Under the "two-speed" scheme, member countries
that are ready to integrate certain priority sectors
can go ahead first, giving other countries the option
to maintain its regular course.
Accordingly, the key to accelerating economic integration
is to ensure that the less developed ASEAN members (i.e.,
Cambodia, Laos, Myanmar and Vietnam) are able to catch
up fast enough within the AEC framework.
In a recent ASEAN roundtable discussion among academics
and policy makers on the topic of AEC, some of the conclusions
arrived at to promote an AEC were as follows:
* Promoting the utilization of AFTA-CEPT;
* Promoting "institutionalization" (meaning, creating
more regional units to manage the economic integration);
* Creation of supranational bodies such as: (1) ASEAN
Court of Justice; and (2) ASEAN Economic Secretariat;
and
* Providing support for institutional building and
human resource development for the less-developed ASEAN
members.
The Need for an AEC. It is important to note that
in an increasingly competitive environment, there are
deep concerns that ASEAN is being overtaken by emerging
market economic economies such as India and China.
An integrated economy through AEC should therefore
promote the competitiveness and advantages of the region
against the emerging markets.
In a related development, the association is now giving
more focus in developing the area known as Brunei Darussalam,
Indonesia, Malaysia and the Philippines-East ASEAN Growth
Area (BIMP-EAGA). Against the backdrop of the planned
greater economic cooperation, ASEAN recently entered
into various cooperative measures with its dialogue
partners in Asia, particularly, China, Japan, ROK and
India.
In relation to China, Korea and Japan, ASEAN is now
moving towards the implementation of the "ASEAN plus
Three" processes, which involve short-term measures
adopted by ASEAN leaders to deepen cooperation between
ASEAN and the other three countries.
In reality, the move towards Asian economic cooperation
hinges on how fast ASEAN gets integrated or specifically,
how fast the less developed ASEAN members are able to
integrate with the other members. Only when ASEAN becomes
more economically integrated will we see acceleration
in promoting cooperation with other Asian countries.
In other words, the key to Asian integration is ASEAN
integration.
The author is an international trade and customs consultant,
and a licensed customs broker. He is also a partner
of The Law Firm of David Leabres Uvero Gaticales Mosquera
Samson.
For your comments, he may be contacted at aouvero@dlugms.com
or at (632) 4002145 / 4050021.
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