-
The Association of International Shipping Lines, Inc. and Alliance of Container Yard Operators of the Philippines, Inc. offered counter-arguments to a proposed Bureau of Customs order on shipping line charges
-
The AISL reiterated the Bureau of Customs has no regulatory authority to formulate policies on charges that may be imposed by international shipping lines
-
AISL said the section on regulation of third parties–which include shipping lines–under the Customs Modernization and Tariff Act does not grant BOC the legal authority to regulate charges imposed by international carriers
-
AISL instead supports bills filed in Congress that aim to strengthen the oversight function of relevant government agencies over the imposition of local charges by international shipping lines
The Association of International Shipping Lines, Inc. (AISL) reiterated that the Bureau of Customs (BOC) has no regulatory authority in the formulation of policies regarding charges that may be imposed by international shipping lines.
In a position paper dated November 12, AISL—a group of international carriers calling Philippine ports—said Section 1226 (Supervision and Regulation of Third Parties) of Republic Act (RA) No. 10863, or the Customs Modernization and Tariff Act (CMTA), does not grant BOC the legal authority to regulate charges imposed by international carriers.
AISL noted that BOC’s supervision and regulation of international shipping lines, if at all, are actually provided for under Sections 1201-1218 of Chapter 2 (Carriers, Vessels, and Aircrafts) of the CMTA, which the group noted “are all operational issues.”
AISL had earlier pointed out that while BOC may register and regulate foreign shipping lines, the agency cannot involve itself in commercial matters such as carriers’ rates and charges.
READ: AISL: BOC’s authority over lines excludes issues on freight rates, other charges
AISL’s position paper was submitted in response to the proposed customs administrative order (CAO) on rules to determine cost of transport, loading, unloading, and handling charges levied by carriers.
READ: BOC drafts rules on foreign shipping line charges
The proposed CAO intends to implement Section 1226 of the CMTA, which states that upon the recommendation of the commissioner, the secretary of finance shall issue rules and regulations to govern and regulate the conduct of all third parties dealing directly with BOC in relation to the importation, exportation, movement, storage and clearance of goods for and on behalf of another person.
Third parties include, among others, shipping lines, shipping agents, and warehouse operators.
AISL noted that the absence of legal authority is the primary reason behind the introduction of House Bill (HB) No. 4933 and Senate Bill (SB) No. 2147, or the International Maritime Trade Competitiveness Act, which aim to, among others, strengthen the oversight function of relevant government agencies over the imposition of local charges by international shipping lines.
The bills seek to address the longstanding issue of “excessive and unreasonable” shipping charges imposed by international shipping lines.
AISL said the introduction of HB 4933 and SB 2147 “recognize the lack of authority of BOC over shipping lines charges and both bills intend to fill the gap by designating the Maritime Industry Authority (MARINA) as the proper maritime authority to assume the role.”
The association said, “It is important to stress that any government issuance which tries to fast track the implementation of a policy without the necessary legal support should be avoided.”
AISL president Patrick Ronas, in a text message to PortCalls, said they have been pushing for the passage of the International Maritime Trade Competitiveness Act as it is “equitable for all.” Other business groups and foreign chambers also support the passage of the act.
AISL noted that the provisions on return of container deposits, demurrage and detention charges, and holding the release of containers under the proposed CAO will be addressed in HB 4933 and SB 2147.
The group claimed administrative orders issued by government agencies “should not preempt, but should give way to the legislative functions of Congress especially on matters that aim to address jurisdictional issues.
“It should be understood that legislative processes usually take time not only in this part of the world but it is the experience everywhere.”
Container yard operators
Alliance of Container Yard Operators of the Philippines, Inc. (ACYOP), in a separate position paper, recommends that the provision to penalize empty container depot for failure to accredit as a customs facility and warehouse (CFW) should not apply to depots/yards whose applications for accreditation with BOC as a CFW has already been filed and remain pending prior to the effectivity of the proposed CAO.
Under the proposed CAO, empty container depots will be required to be accredited by BOC as third parties.
But even prior to the proposed CAO, ACYOP said that since the issuance of Customs Memorandum Order No. 18-2022 (Rules and Regulations on the Establishment, Supervision, Operation and Control of CFWs), the group has already expressed its desire to comply by formally filing the application for accreditation on behalf of its members in 2023.
“Unfortunately, the frequent reshuffle of key personnel in Customs Districts and the different management style of District Collectors has delayed action on the application which is still pending to date,” ACYOP said.
“Fault cannot therefore be attributed to members of our Association if no Certificate of Accreditation has been issued by BOC even after effectivity of this Order,” it added.
ACYOP also recommends the deletion of a provision in the proposed CAO that will penalize the charging of higher rates prior to the issuance of a BOC customs memorandum circular.
ACYOP explained that with the passage of RA 10667, or the Philippine Competition Law, which it said was heavily influenced by competition and antitrust laws in other countries, circularization/publication/posting of service rates have received negative reception by many countries because of its vulnerability to anti-competitive practices.
The group said circularization/publication/posting of rates is seen by many countries as a form of “signaling” where it “practically shuts the door to any room for negotiation by the client and service provider.”
ACYOP added: “This scheme stifles freedom to freely negotiate for the best agreed rate. It also gives the chance to competitors to undercut each other where competition becomes cutthroat that ultimately impacts on the quality of service rendered.”
At the public consultation on the proposed CAO on November 12, BOC Customs Operations Center chief Atty. Julito Doria said that for the drafting of the order, they have taken some provisions from pending bills in Congress as well as some wordings from the earlier proposed joint administrative order (JAO) to regulate origin and destination charges of foreign carriers.
In February 2019, the Department of Trade and Industry (DTI), together with the Department of Transportation and Department of Finance, released a draft JAO intended to regulate origin and destination charges imposed by foreign carriers, and to lessen or eliminate port congestion. The JAO aimed to address the high cost of international shipping, a frequent complaint among stakeholders.
But by July 2019, DTI announced that instead of a JAO, it would push for an executive order (EO) to give “more teeth” to the proposed policy to regulate the local charges of foreign shipping lines. The planned EO was, however, eventually shelved and instead legislation was sought through a bill submitted to Congress.
READ: DTI bill regulating foreign carriers’ charges may be ready by end Jan—trade exec
BOC Administration Office director John Simon, during the public consultation, said the BOC commissioner “is very determined” to address issues raised by stakeholders about shipping lines, which he noted have been the “main topic” in all meetings of BOC’s Customs Industry Consultative and Advisory Council, a body comprising industry groups to enlist their support and active participation in advancing the bureau’s reform agenda.
Stakeholders were given until November 17 to submit their position papers on the proposed CAO. – Roumina Pablo
