Over the course of the last few weeks, I have been extensively involved in discussions regarding the expectations of the ABF on licensed customs brokers (LCBs) when it comes to the possibility of asbestos being in imported goods, driven, in large part by a revised Community Protection Question (CPQ) in Full Import Declarations (FID) relating to the possibility of asbestos in imported goods.
This has included meetings with officers of the ABF regarding an earlier version of DIBP 2016/30, and delivery of Members Legal Forums in Fremantle, Brisbane, Melbourne, Sydney and Adelaide.. It has also included a lengthy interview with 2SER FM and The Wire on the unique and exposed position of LCB regarding asbestos imports which interview can be found here.
The final version of the relevant notice (Notice) in DIBPN 2016/30 can be found here.
The asbestos issue was also a focus of a lengthy discussion at the Tuesday meeting of the Compliance Advisory Group (CAG) established under the NCTF.
At all times the CBFCA and myself as counsel to the CFCA have been trying to clarify the position and liability of the LCB and the uncomfortable feeling that the LCB may be the "last person standing" at the time of any instance of asbestos being identified in imported goods either now or, more especially, in the future.
At the moment, in our strict liability environment, that LCB could be the target for penalty action – or action against their licence.
So, what can we glean from all this?
• No one wants asbestos coming into Australia – including LCBs who are also involved in reporting as to many other items the subject of CPQs such as guns, drugs or "objectionable material"
• The ABF has been, and continues to be, open to engagement with the CBFCA and has made people and resources available at short notice to discuss an earlier draft of the Notice and to address questions on these issues.
• Asbestos is being identified in items not previously associated with asbestos. It appears in CPQs for certain goods and from certain origins but that does not limit the expectations on importers and LCBs. There remains an expectation of due diligence and assurance on all imported items including those subject to CPQs.
• Asbestos can be in imports from many countries other than China although China seems to be a particular focus.
• In much of the rest of the world, asbestos is still legal and legally included in items – and in many of those countries "zero" asbestos can allow a 1% or 2% tolerance compared to our regime of "absolute" zero where asbestos is a "prohibited import".
• LCBs are not suppliers or manufacturers of asbestos or purchasers or users of asbestos. However, the ABF is under pressure from the many government agencies to guarantee no imports of asbestos at all – which pressure and expectations are then passed onto LCBs over whom the ABF has control through the CPQs, through licence conditions and through penalties and prosecutions.
• At the request of the CBFCA, the ABF is developing a "Fact Sheet" to assist in understanding its approach to the approach and expectations of the parties as set out in the Notice. That was provided during CAG and is being reviewed.
• Through the "NATA" website http://www.nata.com.au/nata/ and the ILAC website http://ilac.org/ there should now be access to a list of laboratories here and overseas which can test and issue certificates that goods are free from asbestos according to Australian standards. That should assist in the obligations of LCBs and their importers
• The terms of the Notice set out expectations of both LCBs and importers (but no other parties in the supply chain such as freight forwarders)
• The CBFCA sought the inclusion of a statement in the Notice that an LCB undertakes the required "due diligence" (DD) and secures an appropriate level of "assurance" as to the presence of asbestos then the liability of the LCB should be extinguished. The ABF had declined to provide that statement in the Notice itself. However, during CAG, the ABF representatives gave clear direction that should the LCB undertake the steps set out in the Notice at a level appropriate for the importer, taking into account the relationship with the LCB, then the LCB should have no further problems.
• There is a very real risk that should asbestos be found, the importer and supplier may be inconvenient to prosecute or no longer exist. Which could leave the LCB as the "last person standing" and the "last insured or licensed person standing" and the focus of enforcement action. In that case, evidence of the DD and assurance in the manner set out in the Notice will be vital to reduce the risk of liability. However, close attention to and observance with the Notice should reduce and perhaps eliminate liability.
• In addition, the ABFs has control over LCBs and can prosecute them or take action against the licence of the LCB – for a very long time. Again, evidence of compliance with the terms of the Notice is vital evidence supporting protection against liability.
• At CAG we sought some comfort from the ABF that an "annual" or "periodic" statement from an importer client may be enough to satisfy the obligations of an LCB as set out in the Notice. However the ABF did not seem keen on that idea and pointed out that such a statement would not relieve an LCB from liability if it believed or suspected the "clear" status of the goods. For example, the nature of production of goods or manufacturer for the supplier of the goods for the supplier may have changed. The ABF expects a close understanding by the LCB of the supply chain from identity and manner of manufacture through the real identity of the supplier and the precise content of the goods. This places serious obligations on knowledge of the clients of the LCB and their supply chain.
What does an LCB take from this?
• The ABF has the view that the LCB is in a "privileged position" best able to know all details of the supply chain for the goods and to check on the possibility for asbestos being imported – which supports a high level of duty of care expected of an LCB. That will lead to the need to change the interaction with the importer and to require more interaction in the relationship with the importer. Of course if everyone acts in the same way then that would be less of a problem.
• It is not just about China – although China may well feel "targeted"
• Check that your insurance covers potential liability if you "tick' the wrong CPQ box or your importers have been facilitating imports of asbestos – knowingly or not. Check whether your insurers will require different practices now for the import of goods where asbestos could be present.
• Pass the Notice to all staff members and importer clients. Make sure that "yes" is the position on any doubt even though it entails the need for retaining specialist handlers for the goods, many further inquiries, specialist treatment of goods, "red line" treatment of the import, delays and detention charges. The goods cannot be re – exported and may need to be destroyed if all concerns cannot be removed.
• Ensure that importer clients pass the Notice onto the suppliers so that the suppliers are aware of the obligations and pass them on in contracts and actions with their manufacturers
• Discuss with importer clients that an LCB now has these revised obligations and that the issue is very crucial right now so that the LCB will need DD and assurance for each shipment unless a comprehensive statement could be negotiated and produced to meet the requirements of the ABF, the LCB and the CPQs (as well as the insurer of the LCB). Such statements and supply chain practices could be expressly "cleared" by the ABF but that will not necessarily relieve of liability if circumstances change, or appear to do so.
• All CPQs should be treated similarly although the type of DD and assurance required will change depending on the goods.
• Ensure that you have Terms and Conditions in place which cover liability in these situations and that there is security to cover the liability against the client.
• Ensure that your clients are well aware that you are relying on them and that in the event of any doubt you have as the LCB you have the obligation to tick "yes" on the CPQs which could cause all manner of delays
• Ensure that ALL members of staff are aware of the obligations
• In the event of ANY doubt on the CPQ, tick "yes" on the CPQ! Regardless of consequences – asbestos is dangerous and appropriate checks should be undertaken.
• The Australian testing and safety authorities and the ABF will be at the CBFCA National Conference – best you are too!
• The CBFCA will keep trying on this but the ABF is limited by other agencies which have a stake in this issue – let alone politicians!
• Public safety ALWAYS wins over trade facilitation so these requirements won't go away.
• Be alert to ongoing statements and alerts from the ABF and the CBFCA especially the next edition of the Goods Compliance Update from the ABF and the release of the Fact Sheets which should be circulated to staff, contractors and importer clients.
• Request that importers continue to advice the suppliers and manufacturers of developments and also the Fact Sheets when available.
• The CBFCA will continue to engage and work co – operatively with the ABF to help manage this and other issues and the Notice reflects that the ABF has allocated resources to assist with "redline" transactions.
Of course – if pain consults make sure you and your clients seel legal advice!