It's been a busy couple of weeks in the trade policy "space" (to use the cliché) and it is very clear that Governments here and overseas are placing an increased focus on customs reform as part of a global push on trade facilitation and de – regulation, even though the Protocol on adoption of the WTO Trade Facilitation Agreement was not adopted by the deadline of 31 July 2014. In a related topic, a number of studies have recently been released which emphasise the need to improve the use of FTA and for Governments to adopt measures to assist in that process.
The Customs reform agenda in Australia
I have recently returned from 2 exciting days of direct engagement with the Australian Customs and Border Protection Service ("Customs") which included the Industry Summit on 18 August 2014, the National Consultative Committee meeting on the morning of 19 August 2014 and the first meeting of the Trusted Trader Advisory Group that afternoon.
Some of the highlights of the Summit included:
- Attendance by Minister Morrison at a breakfast to start the Summit
- An opening address by Assistant Minister, Senator Cash
- Addresses and engagement by the CEO of Customs and the Secretary of the Department of Immigration and Border Protection
- A full day of panel discussions around the 4 main themes of Travel, Border, Trade & Goods and Strategy
- Presentations on the implementation and impact of the merger of Customs and the Department of Immigration
- Discussions on the proposed reinvigoration of industry engagement and the development of the new Trusted Trader Programme
On the next day, following the traditional meeting of the Consultative Committee, a smaller group attended the inaugural meeting of the Trusted Trader Advisory Group. Members of the Group included representatives of industry associations, Customs, other Government agencies and some of the large multinationals such as Boeing, IBM and GM Holden who are all members of similar programmes overseas. The meeting set the scene for the proposed development and introduction of the Programme, addressed some preliminary issues on the parameters of the Programme as well as setting out an ambitious timetable for further meetings and the development of the Programme and associated legislation so its first iteration would be in place by 1 July 2015 as promised.
Details on the Summit and the Trusted Trader Program can be found on the new and improved Customs website at http://www.customs.gov.au/businesses/industry-summit.asp and http://www.customs.gov.au/site/trusted-trader-programme.asp. I would recommend that those in industry pay close attention to the material on these pages as it will assist in understanding and use of the new developments – for them, for their clients and for their supply chain. Engage early and often!
The Customs reform agenda in the EU
Ironically, shortly after the events in Australia, on 21 August 2014 the European Commission (which governs the EU) gave notice that it had adopted a new strategy ("Strategy") and action plan for better customs risk management. The communication refers to it as the "EU Strategy and Action Plan for customs risk management : Tackling risks, strengthening supply chain security and facilitating trade" and it includes the strategy and a specific action plan with timetable.
In a manner consistent with other initiatives, the EU Press Release associated with the Strategy refers to the main priorities in the strategy to improve customs risk management to be:
- efficient controls and risk – mitigation
- data quality
- information sharing
- interagency cooperation
- capacity – building
- international customs cooperation
While there is some detail in each of these aspects, the general thrust of the Strategy is consistent to that found in other places such as the Trusted Trader Programme and the WCO SAFE Framework (from which all these programmes derive). Hopefully, Customs and other border agencies both here and in the EU are aware of one another's work and will spend time to ensure that they all advance the agenda in a similar and complementary manner.
(Non) use of FTAs – release of the HSBC Survey and the B20 recommendations
As many of you would be aware, through my practice and involvement with Industry Associations I have been engaged in the development of the Australian Free Trade Agreement (FTA) agenda which has included advice on the usage of the FTA as well as compliance issues.
However, an ongoing issue has been the apparent under – utilisation of FTAs and how that can be remedied given the work undertaken to put them into place and the very real benefits which can accrue from use of the FTAs. This is a very live issue given the recent completion of FTAs with Korea and Japan and the potential FTA with the PRC along with the work on the TPP and RCEP.
The issue of use of FTAs was a focus of the Productivity Commission Research Report entitled "Bilateral and Regional Trade Agreements" issued in November 2010 and in the recent B20 Trade Recommendations of the B20 Trade Taskforce The issue was also investigated and addressed in the Survey entitled "FTAs ; fantastic, fine or futile? Business views on Trade Agreements in Asia" from The Economist Intelligence Unit, which was sponsored by HSBC and released in August 2014. In my capacity as a director of the Export Council of Australia and Chair of the Trade Policy Committee of the ECA I was fortunate to be invited to a media launch of the Survey on 19 August 2014. One of the most striking findings of the Survey was the low usage of FTAs in the region including a mere usage of 19% in Australia. Ironically, the Survey also recorded that those respondents which did use FTAs reported an 85% increase in trade.
In a manner consistent to other studies the Survey identified some reasons for low usage to include:
- lack of awareness
- the need for Government to supply better information.
The need to address these issues also took up time in discussions at the Summit with Industry providing reasons for lack of use of FTAs and how that use may be increased.
Need for work by Government and Industry in both areas
Given the massive amount of work being undertaken in both areas and the potential significant benefits through these areas, there is a clear message in all of this. Both Government and Industry need to improve their engagement with each other to make sure that this work is properly developed and implemented and that all parties secure the maximum results from their investment.
However, there are two cautions. First, the financial and administrative costs must not be disproportionate compared to the benefits being offered. Second, Governments here and overseas together with their agencies have the ultimate responsibility and power to set the agenda and the policy framework which control the ability of parties to trade. Further, they usually have the superior financial means to action the plans and ensure that they work here and overseas with other Governments. Accordingly, the final responsibility rests with Government and its agencies to make the agenda work and to ensure that parties engage successfully with that agenda. Let's hope that these basic realities are not forgotten by Government and its agencies as they seek to advance their agendas.
As always pleased to assist but get in now – the doors are closing!