Customs fleshes out trusted trader plan
Traditional notions of control and transaction based verification are set to be challenged by the Australian Customs and Border Protection Service (ACBPS) as it prepares to roll out its new regulatory program.
The Trusted Traded Program is a move from control to trust-based regulation and shared responsibility. It was established by the Blueprint for Reform 2013-2018 as the centrepiece of the trade and goods reform to be developed over the next five years. In a just released discussion paper, the ACBPS present the Trusted Trader Program as consisting of two schemes, the ITTS and the ETTS.
The objective of the ITTS is to promote trade compliance and provide an avenue for select, trusted overseas exporters, supply chain participants and importers to access a range of trade facilitation benefits.
Meanwhile, the ETTS will be supply chain security focused and account for the World Customs Organization’s (WCO) Authorised Economic Operator (AEO) model with an emphasis on mutual recognition of the scheme. The ETTS will also be consistent with the World Trade Organization’s Trade Facilitation Agreement.
Other major jurisdictions have already recognised the need to diversify from the classic customs-control risk management model to foster growth in trade and work with evolving international supply chains, says the ACBPS.
“We must strive to alleviate unnecessary administrative and regulatory burden while also meeting the demands placed on the service by increased trade flows and a growing array of border risks,” says the ACBPS.
“This will not occur by simply scaling up our cargo clearance functions. The service needs to introduce innovative ways in which to become more efficient and effective as well as further refine its approach to risk.”
Forecasts of future growth indicate an 85% increase in air freight and a 20% increase in containerised sea cargo to 2016/17. Meanwhile, the ACBPS has also witnessed marked increases in sea and air cargo consignments over the past ten years and the amount of duty collected by it has almost doubled. The Trusted Trader Program presents as a “prime opportunity” to drive regulatory alignment with the service’s key partner agencies at the border, says the ACBPS.
“The Department of Agriculture is concurrently developing a Trusted Arrangements Scheme which complements the fundamental principles of the service’s Trusted Trader Program and will provide benefits to industry where there are appropriate levels of confidence in management of biosecurity risk.”
The ITTS aims to provide enhanced border clearance privileges for a range of entities engaged in the importation of goods into Australia. This scheme, according to the ACBPS “will increase the certainty and reliability of import clearance processes for its members and will alleviate administrative burden for both industry and government”.
“It will also further enable just-in-time supply chain models which improve return on investment by reducing the level and the cost of inventory and associated carrying costs.”
The ITTS will adopt a differentiated approach when assessing a trader’s eligibility for membership. Since the ACBPS deals with a variety of entities involved in the import supply chain, the ITTS will consider three broad entity types.
They are:
1. Overseas exporter entities – such as those entities operating a ‘one-to-many’ business model exporting goods to Australia;
2. Supply chain participant entities – such as freight forwarders, carriers, brokers or any other entity involved in the movement of goods along the supply chain; and
Importer entities – being any Australian-based entity engaged in the import of goods to Australia.
The accreditation of trusted traders could occur using a two-step process.
- Step one could incorporate industry self-assessment which will ensure potential trusted traders meet a predetermined set of internationally recognised minimum standards in line with the WCO SAFE Framework, or have an opportunity to rectify areas which require improvement.
- Step two could consider a number of key characteristics which may include an assessment of the entity, the goods, the risk and responsibility framework and any trusted technologies or connected systems.
The ETTS will be based on the WCO’s Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework) and most commonly implemented as the AEO model.
While the ACBPS already offers some of the key benefits existing under the SAFE Framework, there are a number of opportunities currently being missed by industry and government, it says.
“Specifically, the ability to seek mutual recognition of exporters with our top trading partners would have a number of benefits, including:
• increased market access for Australia’s exporters;
• increased assurance over supply chain security;
• increased trade compliance;
• improved economic competitiveness.”
A key feature of the ETTS will be mutual recognition agreements (MRA), which the ACBPS will pursue with customs administrations in Australia’s major trading partners.
Mutual recognition is viewed as one of the key enablers in increasing uniformity in the application of AEO standards.It will benefit Australia’s traders by offering them supply chain certainty and reciprocated border clearances processes through mutual recognition of Australia’s ETTS by our major trading partners.
Similarly, the ETTS would utilise the same tiered structure as the ITTS with a number of benefits existing at each tier.
Compliant behaviour would see entities move up tiers while non-compliant behaviour would see entities move down tiers and would result in some benefits being taken away.
In addition, an entity’s willingness to allow the ACBPS to access their systems will also be taken into account when assessing the G2B relationship and corresponding ETTS status ranking.
The service is now calling on businesses to engage in the implementation of the Trusted Traded Program by sharing their thoughts on it in a questionnaire.
Find out more at: http://www.customs.gov.au/webdata/resources/files/TTP-IndustryDiscussionPaper.pdf
Two sides to the program
The Trusted Trader Program will focus on imports and exports in the air and sea environments, and consist of two schemes:
- Import Trusted Trader Scheme (ITTS); and
- Export Trusted Trader Scheme (ETTS) (commonly known as authorised economic operator).
Its core principles include:
- founded on cross-border agency collaboration;
- government-to-business partnership approach and shared responsibility;
- trade compliance focused on import and supply chain security focused on export;
- based on voluntary industry participation;
- open to participants in the international trade supply chain;
- requires a proven border compliance and security history;
- ongoing industry self-assessment against predetermined criteria;
- provides incentives through the delivery of benefits;
- offers added benefits through customs-to-customs mutual recognition; and
- uses trusted technologies where appropriate.
The future-state may deliver:
- a more refined approach to risk management at the border;
- an economic dividend for industry, community and government;
- reduced regulatory and administrative burden on trusted entities; and
- reduced impact on low risk entities and goods and may foster the expedited movement of legitimate trade.
Source: Trusted Trader Program Australian Customs and Border Protection Service Industry Discussion Paper, 2014.
Next steps
Over the coming months, the ACBPS will be engaging with its partner agencies and industry as it looks to co-design the benefits offered by the Trusted Trader Program.
Timeframes for implementation of the program are still being finalised. The ETTS will be developed as a priority in 2014 while the ITTS will be implemented through a phased approach. The service may look to implement a number of limited scope import trusted trader arrangements over the next 12 months. Legislative and systems changes present as key dependencies which may impact the speed of implementation of some aspects of a Trusted Trader Program.
However, the ACBPS will prioritise the benefits which can be achieved without legislative and systems changes.
Source: Trusted Trader Program Australian Customs and Border Protection Service Industry Discussion Paper, 2014.
Australian, NZ and ASEAN trade rules to be eased
Trade and customs rules will be eased to the benefit of importers, exporters and forwarders who do business in New Zealand and South-east Asia after a new high-level political deal.
ASEAN, Australian and New Zealand trade ministers have closed the deal to amend the ASEAN-Australia-New Zealand Free Trade Area agreement (AANZFTA).
A new protocol will make it easier to do business by amending a variety of customs, trade-in-goods, origin and certification rules.
“Australian industry came to the government with concerns that a number of administrative requirements in AANZFTA discouraged its use because they required some businesses to provide commercially-sensitive information.
“The protocol addresses these concerns and modernises the presentation of the agreement’s rules of origin.
“This should reduce costs and make doing business under AANZFTA easier,” said Australian minister for trade and investment Andrew Robb.
The first protocol will:
• reduce the information requirements on a business when completing origin documentations;
• consolidate the rules of origin into one annex;
• simplify presentation of the rules of origin by removing a set of product specific rules;
• streamline the administration process for amending the AANZFTA in the future; and
• remove the free-on-board value requirement from certificates of origin.
The proposed agreement will enter into force 30 days after Australia, New Zealand and at least four ASEAN member countries have notified the others that they have ratified the protocol.
AANZFTA is Australia’s largest free trade agreement and provides for reduction and elimination of tariffs for goods exported by the parties that meet the agreement’s rules of origin.
The parties to AANZFTA accounted for 17.6% of Australian two-way goods and services trade in 2013.
Total trade with Australia last year amounted to $113.9bn.
AANZFTA countries have a GDP in total US$4.1 trillion but, with a population of 653.6m, have a GDP per capita of US$2263.
However that disguises quite a variation.
Singapore, for instance, is ranked 4th in the world with a GDP (parity of purchasing power basis) of US$78,744 while Myanmar is estimated to be one of the poorest countries in the world with a GDP PPP per capita of US$1700. AANZFTA countries are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, Australia and New Zealand.
Source: Lloyds List
Australia could relax secondhand car import duty by 2018
Australia should “progressively relax” import restrictions on secondhand passenger and light commercial vehicles, according to a recommendation by the Productivity Commission in its report on the automotive manufacturing industry.
Current restrictions include the requirement to obtain a Vehicle Import Approval, without which no road vehicle may be imported into Australia.
“Any relaxation of import restrictions on secondhand vehicles should commence no earlier than 2018,” the Productivity Commission said.
“As importers can claim exemption from the $12,000 secondhand import duty once a Vehicle Import Approval is granted, this duty is essentially redundant and should be removed from the Customs Tariff as soon as practicable.”
But the commission adds that secondhand vehicle imports should be limited to source countries where vehicle design standards are consistent with those recognised by Australia.
Furthermore, the commission expects the outcomes of the current review of the Motor Vehicle Standards Act will provide insights into the appropriate regulatory framework for a future secondhand vehicle import scheme.
“There are several pathways for secondhand vehicles to be imported into Australia, but under the Motor Vehicle Standards Act, applications for approval to place a used import plate (or to sell a used imported vehicle without such a plate) can only be made in respect of a single vehicle,” the Productivity Commission said.
“The Motor Vehicle Standards Regulations 1989 (as amended up to 2012) also prohibit automotive workshops from importing more than 100 used vehicles in each vehicle category in a 12-month period.”
Customs reports faster clearances of sea cargo
Sea cargo is now being cleared approximately two and half hours prior to arrival, a new study by the Australian Customs and Border Protection Service has revealed.
Air cargo is now being cleared for entry approximately three and a half hours after arrival.
Improved clearance times were “largely made possible” by early reporting by the industry, the Service said in a release, with 71% of cargo now released by the time it is physically available.
“This report demonstrates that we are continually evolving and improving processes to meet the demands of a growing cargo industry, while performing our role of protecting the community from the import of dangerous and illegal goods,” CEO Michael Pezzullo said.
“With additional funding announced in January this year Customs and Border Protection has been able to increase inspections of high risk cargo and mail and also increase the intensity of examinations which has maximised the potential for stopping illegal firearms and drugs before they hit our streets,” Mr Pezzullo said.
“The results show sustained improvement primarily generated by data exchange enhancements between supply chain entities. The most significant outstanding issue is the limitation of the ICS integrated cargo system cargo reporting functionality, which does not allow amendment of key data fields. That results in forwarders waiting until late in the statutory reporting timeframes to complete their reports with accuracy,” said Paul Zalai, director of the Freight & Trade Alliance.
Data for the Time Release Study was sourced from air and sea cargo import consignments from the Import Cargo System which arrived during the one week period of 24 to 30 September 2013.
KEY RESULTS
Volume – sea cargo consignments increased by one per cent in 2013;
Cargo released – 59 per cent of all consignments are reported, paid and released either before or at the time of vessel arrival;
Clearance performance – on average goods were cleared for entry into home consumption prior to their arrival at an Australian port;
Availability performance – after experiencing a decline in 2012, the average availability time in 2013 for sea cargo improved, recording the best result since 2009;
Port performance – the proportion of cargo entering the top five ports remained relatively consistent with the previous year;
Loading countries – goods arriving into Australia during the TRS week were loaded onto ships in 90 countries; nearly 40 per cent of these goods were loaded onto vessels at ports in China;
Gate-out performance – LCL cargo continued to move more quickly from the port precinct compared to FCL and FCX cargo;
Performance by cargo type – there was improvement against all six performance measures for LCL, FCX and bulk cargo;
Importer size – small and medium importers account for 85 per cent of all importers, but are only responsible for 41 per cent of the total consignments imported during the TRS week.
Country of origin – goods originating in China, the US and New Zealand make up the top three trading partners.
Source: “Time Release Study 2013” Australian Customs & Border Protection Service; released 18 August 2014.
