Arturo Reyes
Confederation of Associations of Customs Agents of the Mexican Republic
Expert Contributor

The Monster with 100 Heads: The Armed Forces and Customs

By Arturo Reyes | Fri, 12/04/2020 - 14:00

In April, President Andrés Manuel López Obrador pointed out that corruption was a pending issue at the country's customs offices. 

In response to an Army report that pointed out high flows of drug trafficking from south to north (fentanyl, methamphetamines and marijuana), high flows of arms trafficking from north to south, collection of fees for not reviewing shipments, collection of taxes with hand-written receipts and high fines for crossing with merchandise. The president made the decision on July 17 to have the Army and Navy assume control and surveillance of ports and maritime and land customs to combat corruption, smuggling and drug trafficking. "We are going to clean up the ports and customs in the country," he said. 

This is one of the most controversial issues in recent times. What is the reason for our president to make such an important decision as calling on the Navy and the Army to coordinate with the General Customs Administration (AGA) in the customs of the country? We can imagine many things but the truth is that President López Obrador has better and more information about what's going on. As such, CAAAREM gave him a vote of confidence so that we could soon have a world-class customs system.

A few years ago, the World Customs Organization (WCO) provided a definition so that everyone would understand the importance of a healthy customs service that fights illegality with all its resources. The text reads: "Customs is considered a reliable thermometer of measurement, of how society perceives the integrity and quality of government as a whole."

In this sense, three weeks ago, CAAAREM's customs agents signed a collaboration agreement with the Financial Intelligence Unit, through Dr. Santiago Nieto, in order to fight acts of corruption, money laundering and the financing of terrorism through customs. 

The agreement included the implementation of best practices for the prevention of these crimes and to carry out roundtables and working groups, forums, workshops and seminars to promote "the culture of legality" among the entire foreign trade community. 

On that occasion, I referred to a number of points in the Arusha Declaration of the WCO concerning good governance and customs ethics, which are worth listing again because they describe very well the impact that corruption has on significantly limiting customs' ability to carry out its mission effectively. The adverse effects of corruption highlighted by the WCO are as follows:

1) Reduced national security and community protection; 
2) Tax fraud and loss of revenue; 
3) Reduction in foreign investment; 
4) Increased costs that are ultimately borne by the community; 
5) The maintenance of barriers to international trade and economic growth; 
6) A reduction in public confidence in government institutions; 
7) A decrease in the level of trust and cooperation between customs administrations and other government agencies; 
8) A reduction in the level of voluntary compliance with customs laws and regulations; 
9) The weakening of the morale and working spirit of all of us who are connected to customs.

As we can see, these are all key points of the Mexican customs system. Never before has any president of the republic been interested in doing anything about it, something that we have widely acknowledged to President López Obrador, who is driving the transformation from above, sweeping the stairs, as he says.

We, the customs agents, are convinced that we are stronger together. The authority and the customs agents may make a difference. Therefore, from our side, you will always get proposals for improvement to make the Mexican customs system an example of leadership, honesty and social welfare through proper tax collection, the fight against smuggling, customs fraud and corruption. CAAAREM has zero tolerance for bad customs practices.

We, the customs agents, are here to help the state and to be guarantors of the normative compliance in the matter of foreign trade and customs. Historically, we have participated in the fight against corruption, customs fraud and smuggling. Examples such as the centralized electronic payment, the joint development of technological systems such as CADEPA and SAAI, and tools such as the prevalent or SAORS support these efforts that undoubtedly put an end to systemic corruption in customs offices.

In other words, today's corruption is not the corruption of the Mexican customs system, but the action of a few that can be fought with the correct use of information technology and the full weight of the law.

Before the major customs reform of the early 1990s, the boxes for the collection of taxes and other customs duties were inside the customs houses, which were, by the way, true fortresses, with a complex system for the entry and exit of goods, making them a paradise of tipping. There was a great deal of discretion and the law was opaque.

The central element of the dispatching process seemed to be designed for extortion. It consisted of 14 tables through which the pedimento and other documents were passed. Imagine that customs officials had absolute powers.

As for sanctions, in the event of discovering a shipment different from the one declared, either in quantity or nature, only the missing taxes were collected, so the worst thing that could happen to the person who would falsify the information was to pay what would be his obligation from the beginning.

To eliminate all this, we, the customs agents, collaborated with the tax authorities and put an end to discretionary practices. Random selection was then introduced to review merchandise. The boxes are removed from customs and the collection of taxes and duties is left to the banks and the use of technology to review information at the central level begins, taking away the powers of customs officials.

Times have changed and the modernization of customs has made it possible to curb illegality to a great extent. 

In the third pillar of its SAFE framework, the WCO underlines the importance and need for cooperation between the authorities and the private sector in order to strengthen security in the supply chain. This collaboration is bearing real fruit, as we have seen in Mexico with the SAORS program that we developed in CAAAREM, which has helped to stop undervaluing goods in textiles, footwear, toys and other industries vulnerable to trade openings.

The issue that concerned us as customs agents about having the Navy or the Army involved with customs, was that due to their lack of experience or technical knowledge, the flow of trade is hindered, disrupting the balance of control and facilitation that we were talking about before. But, the General Administrator of Customs, Master Horacio Duarte, let us know from the beginning that the AGA would maintain the operation and that the armed forces would also receive constant training on foreign trade. 

So, again, I say: We are confident that this scheme will work in favor of Mexico. 

Photo by:   Arturo Reyes