Changes announced for Asian free trade deal
Analysts have welcomed agreement on a protocol change in the ASEAN – Australia – New Zealand Free Trade Agreement (AANZFTA) with a view to making it more “business-friendly”.
The first protocol removes some information requirements deemed unnecessary while avoiding changes to preferential access arrangements.
Most specifically, the certificate no longer requires the free on board (FOB) value of the consignment to appear unless origin qualification is based on the regional value content of the good.
The first protocol comes into force for New Zealand and nine of the 12 AANZFTA parties on October 1st and the remaining two parties (Cambodia and Indonesia) are expected to implement it by January 1st.
The ten parties implementing the protocol on October 1st have said they will accept either the original certificate of origin or the changed version by March 31st next year.
Melbourne-based lawyer Andrew Hudson, a partner with Gadens Law firm, said he was quite “excited” on the issue as industry has been encouraging Department of Foreign Affairs and Trade for change in this area.
“The changes to the form of the CoO will be a welcome relief to many of those trading in goods affected by the AANZFTA who did not want to disclose the price they paid for the goods to those to whom they were selling the goods.
“That information plus the detail of the exporter or producer on the CoO would allow a purchaser to sideline the trader and buy the goods direct.
“After all the ‘free on board price is not relevant to the issue of the origin of the goods but it was included in the form of CoO at the insistence of the ASEAN parties and it has taken years of negotiation to make the change,” Mr Hudson said.
“While this shows that there is generally a process to amend items set out in an FTA, it is far better for industry and Government to work to get a form of CoO which does not need to be amended.”
Mr Hudson said later FTAs such as KAFTA, JAEPA and ChAFTA didn’t require FOB value to be disclosed.
“The real issues are the identity of the exporter/producer (the certifier) and the basis on which origin is claimed.
“Keeping to those criteria is part of the process to facilitate the issue and use of CoOs.
“Still other issues are whether a CoO is really needed at all and, if so, who needs to provide it – the parties involved or a third party verifier?”
Steve Morris of the Customs Brokers & Forwarders Council of Australia also has welcomed the changes.
“Any change to certificates of origin to make them more business friendly is always welcome,” Mr Morris told Lloyd’s List Australia.
“In relation to many bilateral and multilateral trade agreements there are differences in requirements relating to certificates of origin particularly as to manner and form as well as what will be deemed as goods the produce or manufacture of the respective country in terms of the origin”.
Industry, particularly in relation to international trade, seeks uniformity and consistency.
For traders and their service providers, when clearing goods across borders under trade agreements at respectively lower rates, need certainty as regulators, particularly in the Australian context, require a high level of compliance to achieve those usually lower rates of duty. So as to the Protocol one can only think it will be beneficial,” Mr Morris said.
According to New Zealand Customs, AANZFTA is a regional trade deal including the Association of South East Asian Nations (ASEAN), Australia and New Zealand.
AANZFTA came into force in 2010 for Australia, New Zealand, Brunei, Myanmar, Malaysia, the Philippines, Singapore, Thailand and Vietnam, and subsequently included Laos and Cambodia in 2011 and Indonesia in 2012.
According to the Australian Department of Foreign Affairs and Trade, AANZFTA is the first time Australia and New Zealand have been involved jointly in negotiating an FTA with third countries.
“It is the first time ASEAN has embarked on FTA negotiations covering all sectors including goods, services, investment and intellectual property simultaneously,” DFAT has said. “This makes it the most comprehensive trade agreement that ASEAN has ever negotiated.”
Source: Lloyds List
Opportunities facilitated by WA reform initiatives
Whilst much of the media attention has focussed on East coast activities with the much hype surrounding the development of rail intermodal operations, the Hutchison industrial dispute and Melbourne port privatisation, our friends in the West have been kicking goals!
The WA Port Operations Task Force has long been looking at ways that they can get the supply chain to be more responsive to the need to move to extended hours operations.
Clearly the lack of large distribution centres is a hindrance, however even in peak times, there is still somewhat of an expectation on the part of importers and transport operators that they should not have to work beyond 18:00.
Fremantle Ports have worked closely with empty container park operators to see what could be done about this. The thought was that extended hours at the parks, to match the terminal hours, would take away one of the disincentives not to work longer hours.
Now that the new, purpose-built Qube Empty Container Park (QCP) is in full operation, a significant step has been taken towards achieving this outcome. The move will mean that nearly 90% of this trade can be handled in and out of the port between 6:00 and 22:00 hours each working day.
This appears to be a major opportunity for logistics service providers with the change in operating hours facilitating an opportunity for efficient two-way running of vehicles by utilising staging practices. By avoiding queues at peak times, logistics operators can dehire empties, take receipt of containers before the terminals close and be in a position to deliver to the importer first thing in the morning with a guaranteed service.
Graeme Wilson, Chairman of the WA Port Operations Task Force is of the view that industry should be working their expensive assets smarter and longer to take advantage of the new extended hours at Qube parks with the Christmas peak rapidly approaching “When you think about it, why wouldn’t you continue to operate your despatch operations into the evening where turnarounds at the port are much faster and your productivity increases. When you can move the majority of container trade during the quiet evening hours, where there’s virtually no traffic on the roads, it is smart business,” he said.
Perth Freight Link – a local’s viewpoint
Controversy around the Perth Freight Link (“A highway to success or a road to nowhere?”- Lloyd’s List Australia, 10/9/15) has become highly emotive for local citizens and a huge political football for the government.
This article states that community surveys indicate a whopping 95% support a rail link. Surely this indicates that 95% are opposed to a road link?
The map of the Perth Freight Link in the article conveniently finishes on the south side of the Stirling Bridge and ignores the massive congestion in the tiny strip of Tydeman Road between Beach Road and Stirling Highway on the north side of the bridge. This strip is the feeder for all cargo coming out of North Quay.
This strip is less than a kilometre long and has up to 1000 trucks a day feeding into it from Northport Terminal and Berth 11 and 12 gates as well as carrying commuter traffic.
Add to this a rail level crossing on Tydeman Road and four sets of traffic lights and you have traffic chaos. Most days it is chaotic with trucks trying to change lanes to get to the Stirling Bridge but when the road is closed for a train crossing it is even worse.
To solve this almost insurmountable problem given the current amount of the road traffic is a daunting task. To consider an increase in cargo movements through this route is even more implausible.
Equally the rail link from North Fremantle has its problems in as much as it has to share the passenger rail line over the rail bridge and pass through new residential areas in South Fremantle. Containers can only be single stacked on these trains because of the height limitation of the electrification wires for the passenger service.
The Inner Harbour as an ongoing container terminal is doomed. Even at its current capacity it is choking the roads. Any attempt to increase capacity would be a disaster.
Fifteen years ago we had the opportunity for a privately funded shipping terminal at James Point in the Outer Harbour - at absolutely no cost to the taxpayer.
The government of the day rejected this proposal for whatever political reasons. This proposal had excellent container freight corridors to the big depots in Kewdale and Welshpool and at the same time would remove the livestock trade from the Inner Harbour.
Not only that, the government walked away from a massive, multi-million dollar real estate windfall with the opportunity to sell off all the North Quay harbour frontage and beachside land as highly valuable real estate.
The only sensible option to allow realistic growth of trade through the Port of Fremantle is to develop the Outer Harbour option.
Victoria Quay and the Inner Harbour could remain as an excellent terminal for cruise ships, ferries and visiting warships and a much more attractive harbour for the residents of Fremantle.
Surely some sense could be shown by investing taxpayers’ dollars more responsibly on a true vision for the future for the Port of Fremantle?
Source: Kent Stewart - Executive Director at Maritime Engineers.
Another carrier pulls the pin
Hanjin Shipping will withdraw from the Southeast Asia-Australia-New Zealand KIX service before year’s end and terminate its two-year participation in the NZ market.
The line yesterday advised Australian customers bookings for trans-Tasman links via KIX (which Hanjin labels AAZ) will cease from October 6.
Simultaneously, Hanjin’s NZ agents ISS-McKay notified shippers that due to “the demise of the AAZ service and subsequent withdrawal of Hanjin Shipping from NZ” they were unable to accept any import bookings, effective immediately.
The last AAZ voyage will be ANL Euroa V020 E/W, departing Singapore on November 9 and concluding in the same port on December 21. ISS-McKay said it would continue to accept exports ex-Auckland for the remainder of sailings.
While Hanjin did not give a reason for its decision the move has been widely anticipated in the marketplace given the severe overcapacity in the SEA-NZ trade.
KIX was launched by ANL, APL and Hanjin in August 2013, initially with each partner supplying two ships of the six-ship fleet. NYK was a slot-charterer on certain legs as have been/are others, including Coscon, PDL and Swire Shipping.
The service format, with a port roster of Singapore, Port Klang, Brisbane, Sydney, Auckland, Tauranga, Brisbane, Singapore, was designed to perform a number of roles for member carriers.
These including freeing the AAX consortium (ANL, APL, NYK) to standardise its previously alternating rotations on the SEA-Australia route; compensating Hanjin for a loss of space following the rationalisation of the ASA and SAL services on the same route; boosting ANL’s trans-Tasman coverage (especially of the Queensland market) and introducing APL and Hanjin to New Zealand.
In mid-2014 Hanjin reduced its participation to one ship – with ANL/CMA CGM stepping in to provide a replacement – and then, at the end of the year APL was lured away to rival consortium NZS. Again ANL supplied an additional vessel, with previous slotter Coscon upgrading to full membership and contributing one ship.
While there is widespread speculation of an imminent merger of the KIX and NZS services at the time of writing there had been no announcement from any of the affected parties.
An ANL spokesman said discussions over the future of KIX were continuing and the market would be informed “as soon as possible”.
Swire introduces Hobart service
Tasmanian demand for better access to international markets is behind Swire Shipping’s decision to introduce a new multipurpose service to Hobart.
Swire Shipping has opted to extend its Australian east coast / Papua New Guinea service to the Tasmanian capital to move containers, reefer containers and breakbulk cargo.
Features include:
- Direct calls to Hobart in Tasmania with a nine-day service frequency
- Connects Hobart to Sydney and Brisbane; Melbourne to Hobart
- Connects Hobart to global destinations through transhipment services
The network is to connect Melbourne to Hobart with a transit time of one day and then link Hobart to Sydney and Brisbane with transit times of two and five days, respectively.
As well as improving connections with the mainland, Swire has talked of developing Tasmania’s global connections via transhipment services to Asia, Europe, the Pacific Islands and the United States.
Country manager for Swire Shipping in Australia, Brodie Stevens, told Lloyd’s List Australia the new service would begin around mid-November.
“We have been working closely with our partners to develop this service and are confident that the Tasmanian industry will benefit from the shipping options for international and domestic cargo,” Mr Stevens said.
He indicated there had been interest from among the Tasmanian seafood industry.
Some four ships are involved in the service, two described as ‘Chief-class’ and two as ‘Miho class’ and all are geared vessels which allow them to load and unload containers at Hobart which has no shore-based cranes.
Qube has been hired to provide stevedoring services.
Mr Stevens said Swire had spoken with business about shipping demands, but ultimately “the proof would be in the pudding” on whether it proves viable.
The Swire announcement has been welcomed by the state government with infrastructure minister Rene Hidding saying new shipping calls could “only improve logistics and supply chain efficiency”.
“This service will bring new opportunities and optionality for southern Tasmanian exporters,” Mr Hidding said.
“The Tasmanian Government has not provided any subsidy to the shipping company for this new call at the Port of Hobart.”
It makes for an interesting development in Tasmanian logistics, which in recent times has been focused upon the northern Bass Strait ports.
Indeed Swire Shipping has operated a monthly call to Bell Bay (at the mouth of the Tamar) through its Australia Pacific Asia service, focused on breakbulk but with some container capacity.
That service remains unchanged.
Tasmanian Logistics Committee chairman Steve Henty said the decision was “a vote of confidence” in Tasmania and brought some added market competition.
Aussie trade stats looking good
Australia performed well in international goods and services trade in August, with imports and exports values both up compared to July, according to the latest data from the Australian Bureau of Statistics.
Goods and services imports for August 2015 were up $173m, or 1%, compared with July, at $29.6bn, and up by $2.27bn, or 8%, compared with July last year.
In seasonally adjusted terms, the value of goods imports alone in July was up by $202m, or less than 1%, at $23.56bn. Year-on-year, goods imports were up almost 10%, from $21.45bn.
General merchandise accounted, by far, for the highest value of goods in July, worth $23.22bn, while consumption goods came in next at $8.08bn, both records for Australia.
Imports from China were worth $5.09bn, making the country Australia’s biggest import trade partner in monetary terms. The United States followed, with imports from the country worth $2.33bn, slightly down compared with the last six months. Japan was Australia’s third strongest import trade partner for August 2015 in terms of value, with imports from Japan worth $1.73bn.
New South Wales imported almost 40% of Australia’s total imports in August, with goods to the state worth $8.55bn.
Victoria imported $6.04bn, Queensland $2.95bn, Western Australia $2.43bn, South Australia $670m, Northern Territory $381m, and Tasmania $65m.
Australia’s goods exports were worth $21.9bn in August, up $262m, or just over 1% compared with July. However, compared with August last year, goods exports were down by $34m, less than 1%.
General merchandise and non-rural goods were the top two export categories, worth $20.49bn and $16.75 respectively.
Exports to China were worth $7bn in August, which is 32% of Australia’s total exports. While those to Japan were worth $3.52bn, up by $269m, or 8% compared with the month before. Exports to Japan were worth the most since March 2015. Goods shipped to the US were worth $1.18bn, slightly down on last months’ figure of $1.3bn.
VIC & NSW W/Cover Authorities’ Blitz on Container Packing / Unpacking
Advice has been received from Victorian WorkSafe that it intends to undertake a blitz on manual handling involved in packing / unpacking shipping containers commencing in December. The following information has been forwarded by WorkSafe:
WorkSafe Victoria inspection program targeting hazardous manual handling across the Supply Chain - Phase one packing/unpacking shipping containers
Many of Victoria’s most at risk workers for manual handling injuries are store-persons and drivers employed within the transport, postal and warehousing, wholesale trade, retail and manufacturing sectors and undertake the following key tasks:
· Packing / unpacking shipping containers (phase 1)
· Order picking (phase 2)
· Loading / unloading vehicles (phase 3)
WorkSafe Victoria is once again focussing on the safety of workers who undertake these tasks and will continue this focus over a number of years.
Why
· Workers are getting injured
· The Port of Melbourne Authority (sic) is predicting the number of containers traded per day increasing from 7,000 to 12,000 by 2025.
· There is automation and mechanisation in most areas of the supply chain (e.g. palletised loads being handled by forklift, the use of slip sheets and forklift with a push pull attachment and other powered mechanical aids). This has been shown to be more efficient, productive and improved safety for workers.
· Further, WorkSafe Victoria believes that duty holders, particularly some small and medium sized employers, may not be considering how the goods will be unpacked when ordering them resulting in a reliance on manually unpacking shipping containers often using workers provided by labour hire companies.
When
For phase 1 our inspectors will be conducting workplace visits commencing in December 2015 and continuing into 2016.
What
The Inspectors will be focusing on hazardous manual handling however they may also identify other health and safety issues associated with container handling including placement of containers, falling loads, separation of traffic from forklift operations and other issues. Inspectors will continue to utilise the tools developed by this project during future visits. They are also likely to be collecting information for phases 2 & 3.
In discussions with WorkSafe, it was revealed that the Victorian and NSW Workcover Authorities are liaising with a likely similar shipping container unpack / packing manual handling inspection focus in NSW in 2016.
New biosecurity and export certification fees begin in December
Revised biosecurity and export certification fees and charges are to take effect on December 1, following a decision to postpone implementation.
A key objective of redesigning the cost recovery arrangements is to remove areas of under-recovery and inequity, according to the Department of Agriculture and Water Resources.
Money for approved arrangements (including compliance agreements, quarantine approved premises and imported food compliance agreements) are sourced partly from cost recovery imposed on importers, including those who do not use approved arrangements.
“This is not equitable, and is not appropriate under the government’s cost recovery guidelines,” a Department statement read.
As a result, charges for approved arrangements are to rise. However, each entity is to pay just one charge regardless of how many arrangements it has.
Meanwhile, a new $180 application lodgement fee has been introduced for new approved arrangements.
Stakeholders recently asked the department for more time to prepare for the charges and change to their own systems and processes, according to the Department’s deputy secretary Jo Evans.
Ms Evans said the department received comments on the draft fees and charges during the public consultation process, which began on 28 July, 2015, and has worked through those to finalise the arrangements.
The Department aims to release the final cost recovery implementation statements for biosecurity and export certification fees and charges soon as they are now progressing through the approval processes.
Australian exports to China tipped to surge
Australian exports to China could nearly-double from $130bn to around $250bn by 2030, according to a recent ANZ Research paper, ‘Sleeping Giant: China’s Consumer’.
This expected increase would be driven by agriculture and services exports and supported by the recently signed China-Australia Free Trade Agreement, according to ANZ chief executive International and Institutional Banking Andrew Geczy.
Agriculture exports are expected to grow because of increasing Chinese urbanisation and Australia’s reputation for producing high-quality, safe food.
ANZ’s report identifies China’s shift from investment-led to consumption-driven growth and forecasts a further 300m new middle class consumers will more than double the country’s spending, lifting China’s consumption as a portion of GDP to almost 50%, from 38%.
However, the shift toward domestic consumption and away from investment is expected to mean lower average growth for some sectors.
ANZ chief economist Warren Hogan said that China’s reduced investment, especially in heavy industries such as steel making, is likely to see lower overall demand for hard commodities such as iron ore.
While Australia’s commodities still will be needed for China’s growing housing, infrastructure, car and energy markets, Australia should adapt to the new Chinese growth model by moving towards service exports and opportunities in agriculture and manufacturing.
According to last year’s Australia China Business Council’s 2014 Australia-China Trade Report, Australia’s trade with China as a share of total trade rose from 8% in 2003 to 23% in 2013; one in 58 Australian workplaces is involved in direct exports to China.
Meanwhile, according to Australia’s Department of Foreign Affairs and trade, China was Australia’s leading export market in the 2013-14 financial year, with exports jumping by about 27% in value terms compared with the previous year. Five-year trend growth stood at 19%, and in dollar terms, exports to China were up by $22.9bn year-on-year.
Austrade stated China accounted for about 80% of the overall increase in Australia’s exports of goods and services for the year. Of the 9.5% growth in total exports, China was responsible for 7.6%.
EOIs open for $985m Northern Connector road
South Australia is seeking industry proposals to design and construct the $985m Northern Connector road which is expected to improve freight access to the Port of Adelaide.
South Australian transport and infrastructure minister Stephen Mullighan said the project will be subject to a 20% weighting under the government’s Industry Participation Policy, giving companies which support South Australian workers an advantage when bidding for government work.
He said over 200 people participated in a recent industry briefing on the Northern Connector project, indicating a strong level of interest.
Federal minister for major projects Paul Fletcher said the Northern Connector will stimulate a greater economic contribution from South Australia’s transport network.
The new six-lane, 15.5 kilometre link between South Australia’s Northern Expressway, South Road Superway and Port River Expressway will, on completion, create a non-stop motorway from Gawler to Regency Park, at a total of 43km.
The project scope will include four road interchanges, three lanes in each direction with a posted speed of 110kmph and a 16km path for cyclists and pedestrians.
The motorway is expected to improve freight access to the Port of Adelaide and the industrial areas of Adelaide’s north and northwest, and better serve the industrial and commercial sectors along Port Wakefield Road.
Early works are expected to begin in the first months of 2016 with major construction to start in May 2016.
A rail component of the project has been deferred for future implementation.
South Australia is providing $197m towards the project with the Federal Government committing the bulk of the Northern Connector at $788m.
The two governments are collaborating with industry to develop a heavy vehicle network based charging trial in South Australia and potentially involving the Northern Connector.
The Northern Connector road project is part of the upgrade to the 78 kilometre North-South Corridor.
Aussie importers unaware that they could be toxic offenders
Asbestos-free certificates from overseas suppliers may be worse than useless in helping to protect importers from unwittingly breaking the Australian prohibition on importing asbestos into Australia.
Even though importation of asbestos into Australia is a strict liability offence – i.e. it is no defence to say to a prosecutor ‘I didn’t mean to do it’ – many importers rely on overseas suppliers or laboratories to certify that the product is asbestos-free.
However, that overseas certification simply cannot be trusted.
“You can’t rely on overseas certification – there is widespread non-compliance,” Peter Tighe, CEO of the Asbestos Safety & Eradication Agency told delegates at the National Conference of the Customs Brokers & Forwarders Council of Australia, which was held in mid-October.
He added that overseas suppliers have been found to supply certificates that wrongly stated that the product or goods were asbestos-free when, in fact, they did contain asbestos.
A marine example of this took place earlier this year when harbour towage provider Svitzer Australia had to pause, then cancel major remediation work on its Chinese-built tugs, Warunda (IMO 8668250) and Warrego (IMO 8668262) after an electrician found asbestos onboard.
Svitzer Australia managing director Mark Malone said at the time that the tugs were given an “asbestos-free” certificate at purchase and that Svitzer checked the tugs three times prior to buying them, to make sure the vessels were asbestos-free.The tugs were later exported having never been put into service.
Mr Tighe said that another way that asbestos-containing-products may enter the Australian supply chain happens when procurement agents bundle together products from a variety of places.
Another issue is that “lots” of overseas laboratories follow testing procedures that “leave much to be desired” and he displayed to the audience a copy of a certificate stating that a given product was asbestos free when, in fact, it was not.
Mr Tighe also informed the National Conference of Customs Brokers that many countries have little to no prohibition on asbestos while some other countries even allow trace amounts to be present.
“If it is less than 1% of the total weight in the US then it is considered to be asbestos free,” Mr Tighe said, whereas, in Australia, it is near-absolutely forbidden to import any amount of asbestos at all.
Mr Tighe also added that if importers have been warned that certification is not an effective way to prevent the import of asbestos then any legal defences may also be in jeopardy too.
Meanwhile, the Department of Immigration and Border Protection has signalled that the authorities will take a hard-line stance on asbestos importers.
“At the more serious end of the compliance scale where wilful neglect of import regulations is apparent, the ABF [Australian Border Force may issue infringement notices and undertake prosecutions,” the Department has stated.
Importers may be subject to fines of up to $170,000 for individuals, $850,000 for companies or up to three times the value of the goods (whichever is the greater).
Other consequences of importing asbestos-containing materials are that if the goods are under bond then those goods can be seized; and any such products can’t be sold-on.
There are some, very limited, exceptions to the prohibition on importation. One exception is for large (over 150 gross ton) ships where the presence of asbestos is unlikely to be harmful if it is not disturbed.
Another important exception is that, under section 4(c)(b) of the Customs (Prohibited Imports) Regulations 1956, the Minister (or his/her delegate) responsible for administering the Occupational Health and Safety Act 1991 may grant permission to import asbestos or asbestos containing materials.
This may be granted, for instance, so that laboratories can test goods to confirm the absence or presence of asbestos.
Accordingly, given that overseas certification cannot be trusted, Mr Tighe recommends either that samples are tested in Australia, or, for major products (such as large machinery) then an Australian-qualified auditor is sent out to inspect the goods.
Mr Tighe recommends contacting the National Association of Testing Authorities which will have a list of testing authorities that have the ability to import potentially asbestos-containing materials for testing.
It was also heavily emphasised by Mr Tighe that all of the current responsibilities for preventing the import of asbestos into Australia fall upon the importer – even if all assurances have already been given overseas.
“You might stipulate ‘no asbestos’ in your order – but you’re responsible as the importer. Where there is a reasonable suspicion, test and test again,” Mr Tighe told the CBFCA’s National Conference.
However, some customs brokers were aghast at the implications.
“I’m seriously concerned that, as a customs broker to importers of machinery, that if I have to tell the importers that they have to get everything tested for asbestos, then I’ll have no clients left!” exclaimed one broker.
That broker wasn’t the only executive to feel the same way. “Correct,” affirmed another broker upon hearing the warning that clients and business would be at risk.
However, another customs executive treated those views with disdain. “Aren’t customs brokers supposed to take pride in compliance as being part of a regulated profession?”
