In the week commencing 20 June 2015 I was fortunate to join the "Washington Doorknock" delegation organised by the American Chamber of Commerce in Australia (AmCham) and was led by Niels Marquardt, the CEO of AmCham and the former US Consul – General in Sydney (among other roles). Our delegation joined with other American Chambers of Commerce in the Asia – Pacific region including delegations from Mongolia, Singapore, the Phillipines and Thailand.
Aims of the delegation
I was representing both Gadens and the Export Council of Australia (ECA) and joined with a number of other representatives from companies such as Northrop Grumman, eBay, Pfizer, Boston Scientific, Back 9 Capital and PwC. While the agenda for the delegation was broad there were some specific issues of interest to all which included the following .
- the progress of the US Trade Promotion Act (TPA) to allow for expedited negotiation of various US trade deals which would assist the US in completing its negotiations on the Trans Pacific Partnership (TPP) ;
- the future of the US Export – Import Bank (whose mandate is due to expire soon unless extended) ;
- reform of the US FATCA legislation which is creating tax issues for US expatriates working overseas and is acting as a disincentive to their employment; and
- the impending change to the 100% screening regime for US – bound air cargo from Australia as required by the US TSA.
Previous work on TPP and air cargo for the ECA
As readers would be aware I have been working together with the ECA and other interested parties on the future of the TPP and the impending change to 100% screening for US – bound air cargo from Australia. In terms of the air cargo issue, the ECA is a member of the Cargo Working Group convened by the Office of Transport Security (OTS) through which the ECA and its members are undertaking engagement to try and prepare for the potential impact of the new measures which could have commenced as early as 31 July 2015. Some details on the proposed changes can be found in a recent article previously published in Air Cargo magazine - click here. In summary though, the OTS had proposed a scheme to accommodate the TSA requirements in a manner appropriate for Australia including development of a "Known Consignor" scheme as well a more broadly based scanning and examination regime for those not in the Known Consignor scheme.
Schedule of meetings
We had a lengthy schedule of meetings including briefings by the US Chamber of Commerce, US TPP negotiators, representatives of the US Departments of State and Commerce and a number of economic "Think Tanks" dealing with trade issues. The highlight was a visit to the Australian Embassy and meetings with the Ambassador and his officers.
Excellent timing for the visit for TPA and TSA purposes
The timing for the visit for wonderful (putting to one side the early summer heat, humidity and thunderstorms) as the TPA, along with a number of related pieces of trade legislation, such as the Trade Assistance Act (TAA) and the Trade Preferences Extension Act of 2015 (TPEA) were before Congress . There were also a number of other significant legal developments arising at the same time from the release of judgements of the US Supreme Court. Which is not to say that all these issues received unanimous support from the local population. As with the situation in Australia, there is a wide and vocal opposition to the TPP, including posters on bus stops and banners on buildings.
Further, the timing also worked well on the air cargo issue as our OTS organised time for me to meet with senior members of the TSA in DC to press the position of industry that while it endorsed and approved the position of the TSA and would work to accommodate its requirements, industry would appreciate additional time to implement the requirements on a "staged" basis over that time. I was able to work closely with representatives of the Australian Embassy who joined me at the meeting to ensure that both Government and industry delivered consistent messages of support and co- operation while seeking additional time to implement the agreed procedures.
Subsequent good news
As it turned out, there has subsequently been some good news on a number of fronts including that :
- after significant debate, the TPA, the TAA and TPEA were all passed by Congress and have now been signed into law by the US President ; and
- the US Government has indicated a willingness to consider extending recognition of Australia's National Cargo Security Program over the period to July 2017 which would defer the need to adopt the TSA's 100% screening requirements.
Even though the news is good so far on these issues, there are still a number of conditions before either can be implemented.
The future for the TPP
Much of the US commentary on the TPA suggested that once it was signed into law, then the TPP would be completed rapidly. However, it is not such a simple issue.
- The TPP is not just about the US and its needs. There are 11 other contracting countries all of whom have their own agenda to be met.
- There is still significant uncertainty as to what is actually to be provided in any agreement for the TPP (TPPA). Recent press suggests that there remains disagreement on "soft exports" and that, for example, Australia may not be able to secure intended gains on sugar and other agricultural products.
- There is still significant opposition to the TPP within negotiating countries and no guarantee that all countries will secure necessary approvals to enter into the TPP and all the terms of the associated agreement.
- Even if the parties (or enough of them) strike a deal on the form of the TPPA, there is no certainty on when it may actually commence. There are a number of steps between entering into an FTA and it coming into effect on any one country and the TPPA may require all parties or a specified number, to have undertaken all their own steps before the TPPA itself can commence.
The future for adoption of 100 screening for US - bound air cargo
Shortly after my return to Australia, the OTS was able to circulate a notice to industry to the effect that the US Government has indicated a willingness to consider extending recognition of Australia's National Cargo Security Program over the period to July 2017 which would defer the need to fully adopt the TSA's 100% screening requirements.
Some details of the notice from the OTS on the proposed progress of the scheme is as follows;
- From July 2015: Businesses that can demonstrate capability to examine US-bound air cargo, to required piece-level standards, may apply to the Department for an Enhanced Air Cargo Examination (EACE) notice. Once issued with the EACE, the business will be authorised to examine air cargo using approved method. (Australia's approved examination methods are X-ray; explosive trace detection and physical examination;
- From mid-2016: The OTS will aim to complete the legislative and regulatory frameworks to support the Known Consignor scheme, and businesses will need to commit to joining the scheme; and
- by mid-2017: all US-bound air cargo must originate from a Known Consignor or have undergone 100 per cent piece-level examination before it is loaded onto a US-bound passenger aircraft.
More details are on the OTS website click here.
If you would like to view the notice from the OTS in full, please click here.
As readers would expect, there is much to be done in a short period of time and we will continue to provide updates over that time and assist where required.