Amending the Anti-Agricultural Smuggling Act

Last week, the Senate and the House of Representatives made parallel efforts to discuss and finalize their respective bills amending or repealing the Anti-Agricultural Smuggling Act of 2016, Republic Act (RA) 10845. President Marcos certified the measure as urgent on Sept. 21.

In the House, House Bill (HB) No. 9284 was approved on third reading on Sept. 26. Meanwhile, in the Senate, Senate Bill (SB) 2432 has been sponsored on the floor by its main backer, Agriculture Committee Chair Senator Cynthia Villar. SB 2432 is still under the period of amendments and is pending second reading. Both chambers have adjourned for the recess and sessions will resume on Nov. 6.

To be sure, the smuggling of agricultural commodities needs to be addressed for food security and price stability. The currently filed bills expand RA 10845’s definition of economic sabotage to include hoarding, profiteering, cartelizing, and other forms of market abuse. Smuggling, hoarding, profiteering, and the forming of cartels, after all, partially caused several food crises, which led to the steep prices of onions, rice, garlic, sugar, and other commodities.

Evidently, our law enforcement agencies have failed to implement RA 10845. According to the Department of Justice, from 2016 to February 2023, nine out of 159 large-scale agricultural smuggling cases were filed in court. Seventy-six cases were dismissed after prosecutors found no probable cause, only nine cases reached the Supreme Court, and not a single agricultural smuggler has been arrested nor convicted, despite raids of smuggled goods being publicized.

Several explanations have been given as to why the enforcement of RA 10845 has failed. During a Senate hearing, Senator Villar attributed much of the delay to the Bureau of Customs (BoC). RA 10845, as it is currently worded, requires the BoC to appraise smuggled goods, and its implementing rules and regulations are broad in requiring the Bureau to “file appropriate criminal charges,” making it difficult to prosecute for this crime.

The new version of the bill seeks to correct these weaknesses. The House and Senate versions, despite having numerous similar provisions, are different in that HB 9284 amends the Anti-Agricultural Smuggling Act and SB 2432 repeals it.

Both versions raise penalties on smuggling, hoarding, profiteering, cartelizing, and other forms of market abuse. However, the House version maintains RA 10845’s differentiation of penalties, and the latest Senate version imposes blanket penalties of life imprisonment and a fine for all offenders, regardless of their level of involvement in the crime. In this regard, the House version’s provision on penalties is superior, as penalties for aiders and abettors should be lighter than penalties for the principal actor in the crime. Both House and Senate versions introduce additional penalties for government officers and employees involved in economic sabotage, which is welcome and should ideally deter our public officials from perpetrating this crime.

TROUBLING PROVISIONPerhaps the most concerning provision in the amended Anti-Agricultural Smuggling Act, which civil society has expressed serious concern over, is its inclusion of tobacco products, from raw tobacco to manufactured tobacco and heated tobacco products (HTPs).

While raw tobacco is an agricultural product, tobacco products such as cigarettes and HTPs are, by definition, manufactured commodities based on the Harmonized System of the World Customs Organization, the Standard International Trade Classification of the United Nations Statistics Division, and the Philippine Standard Commodity Classification of the Philippine Statistics Authority.

Further, manufactured tobacco products such as cigarettes and HTPs are vastly different from the essential agricultural commodities in the bill. Cigarettes and HTPs are definitely not essential and have nothing to do with food security, which is the main goal of the bill. Manufactured tobacco products are the only products in the bill upon which excise taxes are levied.

Moreover, tobacco has adverse impacts on health. It is clear that regulation of tobacco should rightfully be under the jurisdiction of the Food and Drug Administration under the Department of Health, and the administration of excise taxes on tobacco should be with the Bureau of Internal Revenue. It is not appropriate for the Department of Agriculture to have a hand in crafting policy or regulating manufactured tobacco.

The inclusion of tobacco opens the bill up to legal infirmities. Illicit tobacco trade, although well worth combating, should be tackled in a separate measure.

The inclusion of tobacco in the bill also means that a representative of the tobacco industry may become a part of the Anti-Agricultural Economic Sabotage Council, or whichever council will be created by the law. This will clearly lead to a conflict of interest between public health and the industry. Notably absent from the council is a representative from the local government units, who are often the first to deal with smugglers and can help in identifying and apprehending them.

Health advocates strongly urged our lawmakers to remove tobacco from the bill. However, given the swift passage of the bill, the inclusion of tobacco should at least be accompanied by a provision on a track and trace system, which will strengthen enforcement. We commend Senator Joel Villanueva for his introduction of a track and trace system in the functions of the Council and urge our legislators to carry his proposed provision to the bicameral conference committee and the final version of the bill: “Establish a comprehensive tracking and tracing system to oversee the value chain of agricultural commodities and collect and report real time data on production, processing, transportation, storage, sale, import and export documentation.”

Much more is needed to combat the illicit tobacco trade as it goes beyond mere smuggling and extends to tax evasion done by local manufacturers. A track and trace system would be more effective if it is implemented alongside a licensing system for legally manufactured and imported tobacco products, record-keeping, and mandatory public disclosures. Further, the online sale of unregulated tobacco and e-cigarette products has been contributing to the tobacco and e-cigarette epidemic which disproportionately harm the Filipino youth and needs to be put to an end.

Numerous provisions need to be clarified to ensure that our new law on agricultural economic sabotage will be fully enforced, economic saboteurs will be held accountable and brought to justice, and our consumers and producers will be spared from smugglers’ and hoarders’ manipulation.

Moreover, the issue of illicit tobacco trade needs to be sufficiently addressed in a separate measure, not only to stop the proliferation of unregulated tobacco products among the vulnerable youth and poor, but to recover billions of pesos in forgone revenues for public health and economic development.

Pia Rodrigo heads the health policy team of Action for Economic Reforms.