Congress finds proof of onion smuggling

Renegotiation is what Malacañang has in mind, Justice Secretary Hernando Perez says of the one-sided Piatco contract to build and run a third NAIA terminal. And renegotiation was what Presidential Chief Legal Counsel Avelino Cruz had advised to begin with, before spin doctors came in claiming he was plotting to grab the company from its present owners.

Presidential adviser Gloria Tan Climaco, too, had wanted Piatco as early as March to talk about erasing clauses that tie government’s hands. For instance, the 1998 insert that compels government to herd all airlines into Piatco’s Terminal-3 from Terminals-1 and -2. That puts government in a bind. If it forces all airlines to move, it would be sued by food caterers, lease holders and cargo handlers for depriving them of clients. If it doesn’t, Piatco would declare it in default and make it repay construction costs Such a transfer hinges on safety and security clearances from international aviation authorities. Yet another proviso deletes government’s authority to put a quality inspector at Terminal-3. Still another odious clause compels government to guarantee Piatco’s loans, a violation of the Build-Operate-Transfer Law under which the company won the project in 1996.

On Cruz’s advice, Climaco had asked Piatco to submit its book of disbursements for the project that was bidded at $350 million in 1996 but was hitting $600 million yet still uncompleted in 2002. Government needs such papers to determine what rates Piatco reasonably can charge as terminal, airline parking and other fees. Piatco ignored Climaco’s requests. The break only came when Fraport AG, Piatco’s German part-owner, disclosed in July its real share holdings and cash advances. Piatco turned frantic. Its spin doctors began to insinuate that the president’s spouse Mike Arroyo, who holds office in the same building as the law firm from which Cruz came, was angling to take control of Piatco. Poor Arroyo became their punching bag. Ironically, some of the service providers at Terminals-1 and -2 had also suspected him last year of protecting Piatco from Malacañang investigation. The rumors were unfounded back then, as they are now, but they did make for juicy tidbits to get some congressmen and commentators to take Piatco’s side.

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The pungent odor of onions has become unbearable for legislators. The House committee on agriculture last week prescribed smuggling raps against shippers who dumped onions from China during the Philippines’ own peak harvest last summer. It also ordered the agriculture department to stop the sale of imported onions sprayed with harmful chemicals.

The twin moves arose from documents presented by Rep. Aurelio Umali, whose Nueva Ecija province grows 60 percent of the local onion supply. The committee noted that the Bureau of Plant Industry had last given an onion-import permit on Jan. 27, valid for three months, and resumed issuance only in August. Yet the Bureau of Customs received permits dated March to July, thus confirming long suspicions that certain importers illegally are recycling the permits with altered dates. This is a form of technical smuggling.

By policy, the BPI does not issue permits during the local harvest season from February to April, and peak trading up to July. The delivery for the Jan. 27 permit came in February. But local growers noticed that tons of onions from China continued to come in from Hong Kong at the peak of their harvest, prompting Umali to call for an investigation. His documents proved the smuggling that growers had been complaining about for years.

The inquiry turned up other anomalies. Even the legal imports went over the volume allowed in the permits. BPI documents covered only 1,053 tons for January-February 2002. Customs records showed 1,626 tons dumped onto the piers in the same months. This not only violates the law against dumping, but also points that BPI should not allow imports to begin with. The local yield has been increasing each year. The 2002 consumption was estimated at 160,000 tons; the harvest, at 168,160 tons. Imports and dumping pull down the expected farm-gate prices, already low because of oversupply. More than half-a-million farmers, mostly poor, grow onions for the P2.6-billion local industry. The BPI had allowed 39,661 tons of imports in 2001 alone.

Agriculture officials told the House investigators that imports are necessary to shore up stocks when local onions begin to wither or rot. The committee replied that the answer is in what first-termer Umali has been asking for: set up cold-storage plants in Nueva Ecija and the other onion-growing provinces of Pangasinan, Nueva Vizcaya, Ilocos, Isabela, Tarlac, Bulacan, Mindoro, Iloilo, Negros, Sultan Kudarat, Bukidnon, Misamis and Zamboanga.

Customs tacks on a 60-percent import tariff for fresh or ready-for-market onions. Stocks sprayed with the SO2 preservative, adjudged very harmful to humans, enjoy a much lower seven-percent duty. But these are supposed to be kept in bonded warehouses until the effects of SO2 wear off. Sleuthing by Umali’s staff revealed that the BPI and Customs have no rules to clear such contaminated stocks for release to public markets. Committee members must have suffered upset stomachs from the discovery. They recommended that the two bureaus, with health and trade officials, draw up measures for chemical testing and release monitoring.

Asian countries are set to strike off all import duties on foodstuffs by 2004. But agriculture officials are contemplating a P60-per-kilo tax on onion imports up to 2010, which is allowed by rules of the World Trade Organization. By that year, the cold-storage plants would have been set up, along with an Onion Research Institute that would help growers improve their yield.

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Catch Linawin Natin, Mondays at 11:30 p.m., on IBC-13.

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