Dear Subscribers to the Gadens International Trade and Customs Updates

Well, Budget night for 2015 has passed and I have had the extreme honour of watching details of the Budget being revealed to all.  As you are all keen students of the political process and directly interested in many of the outcomes I thought that I would provide the following summary of the highlights as they affect those in the International Trade and Customs industry.  

  • The Government has allocated $400M to the cost of establishing the Australian Border Force (ABF) and integrating both the Australian Customs and Border Protection Service and the Immigration Department into the ABF.  
  • A total of $5.6 million has been allocated to start a pilot phase of the Trusted Trader Programme.  The pilot will start with four industry partners focusing on seaborne container exports and expand over the year to imports and air cargo involving around 40 Australian exporters and importers and their supply chains. According to the Ministerial statement, "faster clearance of low risk cargo for traders with a history of high trade compliance and commitment to supply chain security will again enable border officers to focus on high risk consignments".  However, disappointingly, no details have been provided as to the precise nature of benefits for those in the Programme such as deferred customs duty or streamlined cargo reporting.  Presumably confirmation on these important outcomes is still "in development".  
  • The Government will provide $24.6 million over two years from 2015 16 to promote business understanding of the recently concluded Free Trade Agreements in North Asia and to assist businesses to access and maximise their benefits under these Agreements. Advocacy and outreach activities will take place in both Australia and in target offshore markets.  This will include a new online "dashboard" to help Australian exporters get the best out of the three North Asia FTAs and funding for a "Free Trade Roadshow". While the Government has concluded Agreements in the past, evidence suggests that the Government has not been as good at promoting their benefits and getting business to take advantage of the Agreements.  I am speaking on this topic at the AFIF Conference this week.  The trade dashboard will be designed to condense the documentation that make up FTAs into a digital interface so that an exporter can type in their product and the export destination and the system returns the best possible tariff rate. The dashboard will also contain information on quotas and any other restrictions that apply to the export product.  This initiative is consistent to the ECA's Trade Policy Recommendations for 2013 – 2014 and 2014 – 2015 and the ECA's new "FTA tool" being developed as an online resource will be complementary to the new Government initiatives.  
  • The Government will restructure the Import Processing Charge (IPC) and import related licence charges, resulting in additional revenue of $107.6 million over four years from 2015 16.The IPC will be restructured to recover "the cost of cargo and trade related reform activities, remove the differential charges for post, air and sea cargo declarations, and introduce higher charges for manual documentary declarations". Licence charges will be restructured for licensed customs brokers, depots and warehouses, including introducing warehouse and broker licence application charges, increasing the broker licence renewal charge and introducing a warehouse licence variation charge.  The new charges will come into effect on 1 January 2016 although details of how it will be implemented have yet to be provided.  However it does mean that the cost of processing import transactions will increase for business.
  • Fines for most customs offences are measured in penalty units which will increase arising from last night’s announcement.  The amount of penalty units will increase from $170 per unit to $180 per unit.  Given that the majority of  infringement notices for companies are set at 45 penalty units,  that will lead to an increase of $450 increase in penalties for most strict liability offences.  However the amount will increase even more for more serious offences.
  • The Government has confirmed its proposals regarding review of foreign investment in rural land and agribusiness.  The threshold on review of investment in rural land has already been reduced to $15M from $252M and the threshold for review on investment in agribusiness will be reduced to $51M from December 2015.  There will also be a new "Foreign Land Ownership Register", new fees on review of investment proposals and new penalties including financial penalties and imprisonment for breach of the rules.  At the same time Government has promised to continue consultation on streamlining the system to review and approve investments.