Aduana News: What is your assessment of the customs situation?
Answer: First of all, I would go back to June 30, 2000 to recall the words of Eduardo Casullo himself, the resigning administrator of Customs, who in a report for the newspaper Clarín admitted that Argentina loses 10.000 billion dollars a year in customs evasion.
Casullo recreated the same conditions and modalities of smuggling that we detected in the parallel customs investigation: systemic over-exportation (over-invoicing in privileged exports with refund), systemic under-invoicing in imports for consumption, escape from the smuggling circuit in goods processed in transit destinations thanks to the intrinsic vulnerability of the implemented computer system, which also made possible the operations of twin and triplet containers. Casullo took a series of important initiatives, such as the insertion of the so-called electronic lathe, whose implementation could contribute something in terms of control, but only as long as it is systematized, incorporated into the computer system, because if it is not, the same margin of vulnerability could be generated because it would cost nothing to remove one chip and put in another.
Since the first years of the convertibility plan, what was designed was a customs office for services to the detriment of a customs office for control. The equation is unbalanced because speed has been privileged, favouring the interests of foreign trade operators who need speed. To the extent that there have been policies of outsourcing and privatisation in aspects linked to port activity, the implementation of intense control systems has become difficult.
At this point, another fact must be added: the deregulation of customs operations and the gradual privatization of all the properties adjacent to the coastal areas.
Aduana News: Is this situation the result of inefficiency or the implementation of a planned policy?
Answer: In this case, I believe that everything known as customs evasion has been a formidable tool as a state policy, developed at the beginning of the economic opening. To understand what I mean by this, it is good to remember a column from November 1996 written in Clarín by Daniel Muchnik, which takes a macroeconomic approach to customs evasion and explains how this evasion was used as a state policy. Minister Domingo Cavallo, in the first years of the convertibility plan, needed to clear away any possibility of a resurgence of inflation. To do so, he needed to flatten prices downwards. The only way to generate an abrupt drop in the price level was to generate a huge oversupply in the internal market of goods for consumption, thereby opening the floodgates to the Asian markets and Argentina was virtually converted into an under-invoicing paradise. I say this because, based on the systemic under-invoicing of imports for consumption, this objective was achieved. The consequence was the immediate generation of dumping and unfair competition and the immediate commercial failure of no less than 100.000 SMEs.
But Cavallo used another, even more perverse methodology: the use of over-exportation to generate a distorted reading of the trade balance. Starting from a non-existent export growth disguised with the pure formality that the numbers indicated, Cavallo intended to induce people to believe that in 1995 Argentina had registered a surplus in the trade balance. Over time, it was discovered through judicial investigations that the large percentage of this export growth was due to intrinsically false exports, intellectually misdeclared, so that, if we genuinely analyze the content of this export growth, we see that in truth what was generated was an increase in the deficit. That is to say that the export growth in its primary reading within the context of the trade balance generated a surplus. But, as soon as the judicial investigations advanced, it was shown that the high percentage of exports was, in principle, criminal. The customs service was simply given a simulation, either of the quantity of the goods, their quality or type, or of the value. In this way, export growth became relative and what was presented to the public as a surplus in the trade balance was nothing more than a cover-up for the growing deficit.
I would invite you to review all the conclusions at the close of the parliamentary work of the Special Investigative Commission that studied the entire Parino administration, where they speak of the "deliberate decision of Dr. Cavallo's economic team, which preferred to lose revenue by increasing the supply of goods at low prices while decreasing statistical imports, disguising the trade balance deficit."
Therefore, if you ask me if all this was deliberate, the Chamber of Deputies affirms that it was, that there was a deliberate decision by Cavallo's economic team in order to generate this enormous sieve, this great black hole, to be used as state policy.
Aduana News: Was the merger of the DGI and Customs under the umbrella of AFIP positive?
Answer: I think that it is a simple juxtaposition of the two control bodies, and it is not useful because the nature of the control is essentially different. It is not the same to exercise a genuine control task over foreign trade as to exercise a task of supervision over taxable matters, especially when it is linked to internal trade.
The creation of the AFIP produced a genuine colonization of the customs office, characterized by the displacement and removal of highly specialized and trained officials, which accentuated a progressive weakening and subordination of the institution.
In my opinion, there were also some reforms of dubious rationality in relation to administrative and operational structures that, far from correcting, accentuated the shortcomings of control activities.
There was also another policy that, in my opinion, is not compatible with functions that cannot be delegated to the state, such as the hiring of private pre-shipment companies that promised to control and resolve the issues of valuation and under-invoicing, which failed completely, so much so that Silvani himself had to do without this mechanism. This privatization of the pre-shipment inspection cost the state nearly 200 million pesos that were taken from the agency's budget, preventing strengthening, equipping and modernization.
There was also an attempt to combine human resources, and this is not good because it seems to me that assigning officials who had high training and specialization in tax inspection to customs administration is useless, because it wastes the official who is not qualified to perform in that aspect.
Aduana News: What is your impression of the private pre-shipment control system?
Answer:The pre-shipment inspection generated an expenditure of approximately 200.000.000 dollars for the State and encouraged fantastic negotiations and outsourcing through the intended insertion of the purple channel, but the former head of the AFIP, Carlos Silvani, had to do without that channel, assuming responsibility for its resounding failure.
Customs News: Is there any loss of control with the cancellation of pre-boarding?
Answer: It is relative. How can we rule out that in the market where the merchandise comes from, there is no maneuver to violate a local promotion regime? What guarantee does the Argentine state have to the extent that it gives up its power to control to ensure that the valuation made at origin is absolutely true? Even if the entity that makes the valuation deserves all the prestige, a market is never exempt from the fact that the same entity that determines the value of a merchandise may in some way generate an undervaluation with the purpose of violating a local promotion regime. In this way, merchandise that has been undervalued or overpriced in the market of origin would be entering the Argentine market. There is never absolute certainty that the merchandise will be better valued at origin than when it arrives in Argentina.
On the other hand, I agree with many specialized authors that the issue of value is a central aspect of customs control, and that control, conceptualized as a legal asset of a macrosocial nature, represents a non-delegable function of the state. Resigning it would be equivalent to Argentina giving up its sovereignty over foreign exchange, finance, taxation or customs. If we enter the realm of quasi-privatizations, we run the risk of the state giving up its control powers, and this does not seem good to me.
On the contrary, what needs to be done is to optimize state resources, ending the rationalization policy at customs. The Argentine Customs Office has 5000 personnel and has a huge area to cover in terms of control. If you compare it, for example, with France, you will see that it has 15000 agents to cover a much smaller area. What needs to be reformulated here, in a process of reconversion of the customs administration, is, above all, to triple the staff. On the other hand, to the extent that this policy of dismissals and voluntary retirements has contributed to the dismissal of highly qualified officials, it generates greater problems, because it takes Argentina almost 30 years to train a career official. The fact of having dismissed young officials who were on average 40 to 55 years old based on a voluntary retirement regime, means that customs is now lacking highly qualified human resources.
The lack of human resources is directly related to the difficulty of carrying out effective control of smuggling.
A conceptual distinction must be made in the field of smuggling. There is a conventional form of smuggling called "ant smuggling" which consists of the physical transfer of goods from one customs sector to another. And there is another, more modern form of smuggling, which is expressed through documentary means, based on false statements made in customs procedures, whether in over- or under-invoicing, which lead customs to make mistakes by not truthfully declaring all the information that customs needs to exercise its control. Today, customs would need at least 15000 agents, especially in the interior customs and specifically in the so-called "hot" customs such as Clorinda, Paso de los Libres or Pocitos and the crossings with Chile where smuggling from the free trade zone of Iquique occurs.
Aduana News: The new administrator, César Albrisi, comes from the ranks of the Cavallismo. Do you think there could be a change in Customs?
Answer: I think that a strong process of reconversion of the customs administration would be necessary, which I do not believe Albrisi is in a position to do for ideological reasons. To the extent that he agrees with Cavallo's principles in this matter, I think it will be very difficult to generate a process of reconversion in Customs. It is also important to bear in mind that Albrisi has been in office for a very short time and it is very difficult to generate a diagnosis because he at least deserves time to be able to evaluate his management. In any case, considering that it is very difficult for Cavallo to generate a change or a rethinking in what has to do with the need to reformulate the customs administration, it seems to me that the forecast is relative.
Albrisi, in agreement with Casullo, admitted that the Customs Office loses 7000 billion dollars annually due to tax evasion. In his opinion, how can this trend be reversed?
The first thing to achieve is an adequate interconnection of the computer system at all points of departure from the country.
Second, reformulate the computer system by introducing a counter-verification module that changes the random criterion a little. This means ending the rigidity of the percentages assigned to the channels. The system was designed so that 75 or 80% of the assignment was to the green channel. I believe that by introducing a counter-verification module that changes the frequency of the percentages on a daily basis, the document holder will be exposed to not knowing if on a given day there will be a 75% chance of the green, orange or red channel.
Thirdly, I find Casullo's initiative to introduce the electronic locking system to containers, especially in transit destinations, very praiseworthy.
This must also be accompanied by another state policy that goes beyond the framework of customs administration, such as, for example, in the area of imports for consumption, carefully examining the country of origin of the goods and being very careful with imports that come from exporting places that subsidize their production. Argentina has been characterized by the lack of implementation of economic retaliation measures and the absence of antidumping duties. For example, in Uruguay the economic policy consists of applying discretionary, severe antidumping duties against certain exports that arrive from Argentina. Our country has to apply economic retaliation policies in a timely manner. This must be done in a timely and discriminating manner because it evidently produces a gap in the internal market to the extent that accessing an import from a place that does not subsidize its production is not the same as accessing an import from a place that does.
Aduana News: The new administrator assured that he will complete and maintain the Maria system, what do you think?
Answer: We should recount a decade, starting with the implementation of the María computer system, which in my opinion may have some suitability as a registration system, but I have my doubts about whether it can function as a control system.
As soon as it was implemented in 93, a great deal of criticism began to pour in, from the Argentine Chamber of Importers, the Customs Brokers Centre and the Single Union for Customs Personnel, among others. Basically, the objections were, first of all, the obvious absence of a value range that prevented genuine control over the matter of valuation.
Here we must not lose sight of some fundamental aspects. The customs code designs a concept of comprehensive control over some fundamental aspects: control over the description of the quality, type and quantity of the merchandise; inspection of the correctness of the classification or tariff opposition invoked by the document holder; the exercise of a genuine control task over the declared value, both for what is imported and for what is exported. This has its reason for being because customs law rests on the principle of the presumption of credibility or good faith in the document holder. The problem is that the enforcement authority, the customs, does not have the operational capacity to carry out an inspection of the entire universe of taxpayers since doing so would imply a paralysis of foreign trade. Thus, it is logical that there is a criterion of selectivity on which the customs controls of the most modern customs in the world are based. Likewise, the principle of intelligent selectivity must operate on the basis of control modules that obey intelligent memories that give balance to the computer system, seeking to avoid, for example, the abusive assignment of the green channel or the advance knowledge of the channel assignment. This is countered with an adequate counter-verification module.
The MARIA system is very good as a registration system. If we want to implement it as a control system, we must take many precautions. Among them, all the measures that were being implemented by the administrator Casullo, who had the great advantage of coming from the other side of the counter, with extensive experience in business matters, which allowed him to appreciate the devastating effect that the customs administration generated for decades on the productive factors of Argentina. The problem of the customs service dates back to at least 1984. We must remember the disaster that the actions of Juan Carlos Delconte produced for the national treasury for four and a half years, which exceeded 5000 billion dollars in fiscal losses. A parallel could be established between the two administrations: Delconte's was more associated with the concept of a more depleting and fraudulent customs and Gustavo Parino's was more in line with an idea of inefficient management.
New technologies, the Internet in particular, pose new challenges to customs law.
What remains to be clarified is what happens to goods and materials under customs control, which has sparked a heated debate.
The customs authority has been arguing that there is no regulation that contemplates the intervention of control mechanisms in relation to the entry and exit of computer signals emitted by satellite. In support of this position, it has been argued that these satellite signals are not included in the harmonized system of designation and coding of goods. This nomenclature, as its name indicates, is applicable to goods and not to services. For this reason, it has been proclaimed that the customs service would lack genuine powers to control such activities. For this reason, with the alleged basis of article 10 of law 22.415 of international character, there are authors who believe that everything that has to do with satellite emissions would be outside the scope of customs control. This same nomenclature has been approved by the Argentine Republic by the enactment of law 24.206.
This brings us face to face with an intangible asset, such as software, films, videos, computer signals and video signals, which are transported by an intangible medium such as electromagnetic waves. The need to reformulate this issue within the framework of the international body that is empowered to make amendments has been raised. In short, Argentina is far behind on this issue.
In pursuit of an eventual reform through the international enforcement authority, what is suggested is the immediate insertion within the context of customs control of the denomination of merchandise that enters by solid physical means, that is to say through the support, which would be mail, films, videos, disks, books, magazines, newspapers, catalogues, computer programs or software, as well as merchandise that enters by intangible means such as the Internet, which would be the same as those I just mentioned. In both categories of goods, with or without solid supports, the control by the customs service would be the same, and the recipient would also be identified in both cases. So we come to the million-dollar question: why is the World Customs Organization reluctant to include intangible goods in the respective nomenclature catalogue? I think we should go and ask the question there. As you will see, you have asked the question that is driving specialists crazy.
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