Originally published by Lloyd's List - February 2016

2015 was a significant year for those in the Australian supply chain, including exporters, importers and their service providers in licensed customs brokers, freight forwarders, shipping lines, airlines and other providers of transport and logistics services.

A brief historical context to the move towards trade liberalisation

In the early days of our Federation (started in 1901 and still going strong), the collection of Colonies which formed Australia debated on whether a protectionist or free trade approach would best serve its interests.  The protectionist lobby succeeded and for many years, Australia, like many other countries adopted high tariff rates and other measures which it intended to "protect and preserve" its local industries and strategic interests, even though those measures proved to be counter - productive.  At the same time, as a member of the British Empire, Australia tended to follow dictates from England on many political issues.

It was only during the course of the Second World War that Australia began to assert some political independence and began to expand its relationship with the United States as a counter to its European focus.  The change in its trade law and policy took longer to occur but Australia is now perceived as a leader in free trade negotiations, in bilateral, regional and international forums. 

2015 – A focus on FTA and trade remedies actions

In many ways, 2015 represented a high water mark in Australian trade policy on the international stage with the completion and implementation of a number of Free Trade Agreements (FTA) and other initiatives. At the same time as international trade was further liberalised, one of the main agencies involved in the administration of that trade in the Australian Customs and Border Protection Service (Customs) disappeared in a merger with the Department of Immigration to create the Department of Immigration and Border Protection (DIBP).  While the merger was, in large part, handled very well, there have been some not unexpected practical problems created by the merger as new divisions were created which had to be staffed and educated.

However the trend towards trade liberalisation was not unchallenged and Australia's Anti – Dumping Commission (ADC) continued to be extremely busy dealing with many new applications for anti – dumping and countervailing measures as well as variations to existing measures.  At the same time this "Trade Remedies" regime was expanded with our new "anti – circumvention" regime which allow for the application of existing measures to goods involved in transactions deemed to have been created to defeat the application of existing measures.  Many are of the view that the ongoing review of the regime is more aimed at protecting Australian industry for political reasons rather than representing uncompromised economic policy.

The developments on those fronts and related developments will continue in 2016 so it is worthwhile to review what happened in 2015 and what is likely to happen in 2016.

Highlights for 2015

  • Australia's FTA with Korea commenced late in 2014 with a second tranche in tariff cuts on 1 January 2015 and a third tranche of cuts on 1 January 2016
  • Australia's "Economic Partnership Agreement" with Japan commenced in January 2015
  • After significant political debate, Australia's FTA with China (ChAFTA) commenced on 10 December 2015 allowing a second tranche of tariff cuts on 1 January 2016
  • Australia was a founder signatory to the Trans – Pacific Partnership (TPP) in October 2015 along with 11 other nations
  • Australia was to the fore in negotiations at the WTO Ministers meeting in Nairobi in December 2015 which lead to new initiatives such as the Agreement on Information Technology and the agreement to eliminate subsidies on agricultural exports.
  • The merger of Customs and the Department of Immigration on June 2015 to create the DIBP.  From the "customs" perspective, the roles are generally split between the DIBP being responsible for policy and procedure while the Australian Border Force (ABF) takes on responsibility for compliance and enforcement activity as well as other border enforcement activity.
  • The commencement of Australia's Trusted Trader Programme (ATTP) which is our version of the WCO's Authorised Economic Operator concept.  The ATTP started with a selection of exporters and is now being expanded to others in the supply chain.

In very general terms the implementation of our FTA and the move to the DIBP and ABF seems to have been completed well.   However, it is still early in the use of ChAFTA, JAEPA and KAFTA and I remain concerned that the ABF will take a very technical approach to compliance with our FTA and start imposing penalties in a manner inconsistent to the terms of the FTA which indicate that there should only be a "light touch" to compliance and enforcement activity for inadvertent breaches.  There are also a number of senior officers in the ABF who have migrated from other Government agencies and who are still developing necessary technical expertise and who will need continued support from government and industry.

The agenda for 2016

2016 looms as another significant year for those in the Australian part of the international supply chain.  Potentially it would cover:

  • Implementation of the TPP.  We can expect some difficulties with this process.  Not only will it require approval in many of the contracting countries but our recent experience with ChAFTA gives some indication of the sort of debates and political movements which will be required to ensure that the TPP is implemented.  It may well be that the TPP is not implemented until 2017 (if at all)
  • More clarity on the approach by the DIBP to implementation of the ChAFTA given that there have been some recognised "teething problems".
  • Completion of negotiations on an FTA between Australia and India
  • Completion of negotiations on the Regional Economic Co Operation Partnership (RCEP) which is a regional deal between ASEAN countries and those countries who have FTA with ASEAN countries.  RCEP will include Australia along with India and China.  With 23 countries affected the RCEP could be as significant as the TPP
  • Completion of negotiations on the PACER Plus FTA by July
  • Negotiations with Indonesia and potentially the EU on new FTA.
  • Expansion of the ATTP to importers and service providers as well the creation of "Mutual Recognition Agreements" with the AEO programmes of other countries
  • Implementation of new security arrangements for the export of goods to the US by air including the "Known Consignor" scheme.
  • Additional reform to the Trade Remedies regime seeking to further identify practices intended to avoid measures and to allow the imposition of "circumvention measures"
  • A new regime for the licensing of licensed customs brokers and those operating premises subject to DIBP control such as warehouses and depots
  • Implementation of the new Biosecurity act and regulations
  • The impact of the amendments to the SOLAS Convention requiring a shipper of a packed container to verify the container's gross weight to the ocean carrier and port terminal representative before it is loaded onto a ship.

The other trend which I would anticipate at the same time as the trade liberalisation will be a further increase in compliance and enforcement action by the ABF to penalise failures to comply with the strict requirements of the border regime.  This is likely to be matched with a continued approach to TCOs which limits the grant of TCOs and remove or otherwise limit existing TCOs.

Actions to minimise risks and maximise benefits

Ultimately this all points to a premium on "informed compliance".  This entails knowledge and appreciation of likely changes, engagement to represent interests in the context of the changes, understanding the final changes, adopting measures to comply with the changes and maximise benefits, maintaining good relationships with the relevant agencies and taking early and comprehensive legal action to protect interests.