CHAFTA's impact on tariffs
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"China, with its population of 1.4bn people and rapidly rising middle class, presents enormous opportunities for Australian businesses well into the future,” Australia's Minister for Trade and Investment, Andrew Robb, said in a statement. Another round of tariff cuts on January 1 will "significantly enhance our competitive position in the Chinese market”.
The following is a summary of sectors that will be impacted by the trade pact:
Agriculture: tariffs of 3% on barley and 2% on sorghum eliminated
Beef: tariffs of 12-25% eliminated within nine years
Coking coal: 3% tariff removed
Thermal coal: 6% tariff within two years
Dairy: tariffs up to 20% eliminated in 4-11 years
Fruit and vegetables: tariffs of up to 30% removed within four years
Iron ore, gold, crude oils and LNG: locks in existing zero tariffs
Alumina, nickel, unwrought zinc: tariffs removed
Aluminium unwrought: tariff elimination of 5-7% within four years
Pharmaceuticals: elimination of tariffs of up to 10% within four years
Wine: tariffs of 14-20% eliminated within four years
Wool: duty free quota on 30,000 tonnes, rising through the years
Others (including car parts, engines, plastic products, pearls and precious stones): tariff elimination within 4 years
Freight scheme boon for Tassie exporters
Tasmanian infrastructure minister Rene Hidding has urged his state’s exporters to take advantage of the expanded Tasmanian Freight Equalisation Scheme (TFES) which has just come into effect.
The expanded scope of the TFES is expected to help the apple isle’s exporters by expanding the current scheme’s coverage by $50m a year, based on Commonwealth figures.
Mr Hidding described the expanded scheme as “a real game-changer” for exporters.
“For the first time, eligible Tasmanian goods exported to an international destination via an Australian port will receive assistance of $700 for each twenty foot-equivalent unit (TEU, or standard size shipping container),” Mr Hidding said.
“Goods shipped from King Island or the Furneaux Group of islands will be eligible for a further 15% loading, taking their assistance to $805 per TEU.”
Up until this year Tasmanian businesses could only receive assistance under the TFES if the goods were for consumption on the Australian mainland or if they underwent some value-adding on the mainland before being exported overseas.
“This is a game-changer for Tasmania’s economy and I encourage all Tasmanian exporters to seek advice on their eligibility to claim assistance under the expanded scheme,” Mr Hidding said.
“The Hodgman Government lobbied hard for this expansion and the Federal Government acknowledged the merit of our argument with this historic extension of the Scheme.
“I expect that Tasmanian businesses will have investigated the benefits of the new Scheme, and our export sector growth will accelerate as new international markets are identified and volumes grow.”
India overtakes China to become emerging market with the most logistics potential
India has replaced China as the emerging market with the most potential to grow, according to Agility Logistics and supply chain consultancy Transport intelligence, which today jointly published the annual Agility Emerging Markets Logistics Index.
This represents the first time in the index’s seven-year history that a country other than China has seen as having the most potential, and not only reflects the strong economic growth on the subcontinent, but also the continuing concerns that surround the Chinese economy this year.
China continues to lead the emerging market index by virtue of the sheer size of its economy, but there are a considerable number of countries moving up and down the index – every other country in the top 10 has changed position in the last year, bar Turkey, at number 10.
“For several years, countries ranked at the upper end of the index looked to be slowly edging away from the pack. They were, within the index at least, stable in their position as a group of emerging markets that appeared to offer the very best mix of economic robustness, commercial opportunity and access to both domestic and global markets.
Results now, however, appear to show a split between these markets, highlighting those “best positioned to manage macroeconomic turbulence and those more vulnerable to global market forces and economic headwinds,” the report says. It adds that the elevation of India to number three (in 2015 it sat fifth) shows just how “uneven” its economic development has been in recent years.
“At the heart of the undulation in its fortunes sits stifling inefficiency, the best example of which can be found in the dire need for the still-pending Goods and Services Tax (GST). India’s current tax regime effectively creates 29 sub-national markets within the continent-sized nation and requires checkpoints on major transportation lanes that create queues of trucks and delays in transit, while eroding value and efficiency, and adding significant complexity.
“Estimates suggest implementation of the GST alone would instantly add up to 2% to India’s GDP and free up value within supply chains across the market. The need for such reforms is made all the more pressing by India’s potential as a logistics market primarily bring driven by its size and strength as a consumption-driven economy.”
Meanwhile, the biggest gainer in the overall index was Egypt, which jumped 10 places on the back of rising foreign investment and a recovering economy, underscored by the recently completed Suez Canal expansion. “The improvement has been driven by significant upward revisions to its economic growth forecasts and the overall size of its economy being more impressive compared to the rest of the pack, than last year. Post-Arab Spring, Egypt has quietly made an impressive recovery.”
Argentina was the biggest loser, dropping five places.
Meanwhile, the possibility of a hard landing for the transforming Chinese economy was seen by respondents seen as the biggest threat to emerging markets this year, overtaking previous concerns about natural disasters in the Asia-Pacific region.
“For the first time, logistics professionals see economic shock as the leading supply chain risk in Asia Pacific, reflecting concern about the effect of a slowing Chinese economy and the potential for a ripple effect in the region. In the past, industry professionals viewed natural disasters and corruption and the top threats to Asia’s supply chains.
“More than half (54.8%) of logistics professionals now believe the Chinese economy faces major challenges over the next two to three years. A significant percentage (38%) is reassessing its China strategy, as a result. Sluggishness in China has prompted 22% to re-examine their broader emerging markets strategy,” it says.
However, Transport Intelligence chief executive John Manners-Bell commented: “It is not all bad news. China is much more resilient than many would believe. It has the economic resources to be able to ride out the transient problems which it currently faces.
“Although there will be a slowdown in growth, the chances of a full-scale recession seem overblown.”
Verified Container Weights - Terminal operators call for clarification on box weighing
With less than six months to go until the implementation of amendments to the Safety of Life at Sea Convention (SOLAS) requiring the verification of gross mass of all containers loaded on vessels, terminal operators are calling for weighing rules to be clarified at national levels.
The Federation of European Private Port Operators says national authorities need to develop guidelines that protect the efficiency of the logistics chain and do not create competitive distortions between member states.
“From July 1, 2016, all containers to be loaded on a vessel will need to be accompanied by a verified gross mass,” said Jasper Nagtegaal, chairman of Feport’s customs and logistics committee. “As of now, industry actors have released guidelines on the implementation of Solas requirement, but guidance from national authorities is still absent in many cases.”
A lack of national guidelines would ultimately lead to confusion in implementation and would have an adverse impact on operations and lead to possible competition distortion, Mr Nagtegaal added.
Feport is asking member states to draft guidelines which adopt a pragmatic approach and do not lead to competition distortion.
Verification of gross mass remains a contentious issue and time is running out for national authorities to implement structures.
Moreover, a recent study by Inttra found that only 30% of cargo owners globally say they are ready to meet full compliance with new container weight rules.
The International Maritime Organization has adopted amendments to Solas requiring every packed export container to have its weight verified before being loaded onto a ship. The rules come into force on July 1, 2016
The IMO has specified that two methods of verifying weight are acceptable: either weighing the packed container using certified and calibrated equipment or using a calculated weight method, which involves summing the individual items separately, and adding the tare weight of the container and packing materials using an approved process.
The Solas revision requires that any apparatus utilised must be "calibrated and certified" in the particular jurisdiction in which it is used.
TT Club risk management director Peregrine Storrs-Fox said: “The issue here is that, while weights and measures regulations will generally already exist, there is currently insufficient clarity as to whether, or to what extent, the Solas regulations fall under legal metrology control in individual states.
“This may discourage innovators faced by the potential of having to meet differing standards around the globe or even by protectionist barriers.”
The capability of weighing equipment, whether in respect of Method 1 (the packed container) or Method 2 (the sum of all the constituent parts), has traditionally been more aligned towards safe working load requirements, that are far less exacting than what might be expected for "‘calibrated and certified" purposes.
In this regard, Method 2 shippers may be better placed to implement a certified methodology that can be approved in the relevant state.
