A look at last year and a look ahead

A version of this article was first published by The DCN in February 2024.

Twenty twenty-three was the first full year after the restraints on trade imposed by the covid-19 pandemic and the first full year in power for our new federal government. Many things moved, yet many issues remain unresolved. Trade law expert Andrew Hudson outlines some of the highlights for 2023 and predictions for 2024.

Australia has actively pursued several bilateral, plurilateral and regional free trade agreements with its major trading partners. A free trade agreement (FTA) with India (the Australia-India Economic and Trade Agreement known as ECTA) commenced on 13 December 2022. An FTA with the United Kingdom, known as the A-UKFTA, commenced on 31 May 2023. Negotiations continue with India for a wider Australia-India Comprehensive Economic Cooperation Agreement (to be known as CECA). The trade initiatives in ECTA would then be folded into the broader CECA.

Negotiations have also been concluded by Australia and the other parties to the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) for a ‘Second Protocol’ to the agreement establishing AANZFTA. The ‘Second Protocol’ operates as a significant upgrade to the terms of AANZFA and was signed on 23 August 2023. The provisions of the ‘Second Protocol’ will enter into force when Australia, New Zealand and at least four ASEAN member states conclude their ratification and implementation steps.

Australia joined 13 other countries negotiating the Indo-Pacific Economic Framework Agreement (IPEF) comprised by ‘four pillars’. Subsequent negotiations have led to the conclusion and signing of the ‘Supply Chain Agreement’ (Pillar II of IPEF), but that agreement has yet to be implemented by the contracting parties. There are reports that the principles for two of the other pillars have been settled with the final form of the related agreements yet to be released. However, IPEF does not address tariffs or market access as found in traditional FTAs and can better be seen as seeking to establish rules to enhance trade and social outcomes.

The FTA process has not all been positive. Australia had been negotiating an FTA with the European Union (Australia-EU FTA) since 18 June 2018, with a break following Australia cancelling its order of submarines from France. While much of the Australia-EU FTA seemed to have been settled, the parties could not reach consensus on some fundamental issues, including Australia’s proposed access to the EU’s agricultural markets and on the EU’s demands for protection on a significant number of ‘geographical indicators’, which would have jeopardised current Australian use of those indicators. While public statements indicate that discussions will continue, the inability to reach agreement on fundamental issues after five years of negotiations does not suggest that a positive outcome will take place soon.

The trade relationship with China

One of the most significant trade issues for Australia has been its relationship with China. Even though Australia has an FTA with China (ChAFTA), as the political relationship between Australia and China deteriorated, the trade relationship also fractured. This included restrictions and/or significant additional duties on Australian exports of seafood, coal, barley, and wine. Australia had resorted to proceedings against China at the World Trade Organisation (WTO) regarding the measures on barley and wine. Simultaneously, China has also acted against Australian trade measures imposed on Chinese steel products.

Following a change in the Australian federal government in 2022, the political relationship seems to have improved. Bans on imports of Australian coal and timber were lifted during 2023. Dumping and countervailing measures imposed on Australian barley were removed in August 2023 after China reviewed the need for the measures. Australian action at the WTO regarding those measures has been withdrawn. The countries have recently announced that China will undertake a review into the dumping duties imposed on Australian wine exports and it can only be hoped that China resolves that ongoing measures will not be required. Australia could then withdraw its action against China at the WTO.

Dumping and countervailing measures

Australia continues to maintain an active trade remedies regime with 27 measures in place and 20 investigations in progress. There are also several applications which have yet to lead to investigations being commenced. Rigby Cooke Lawyers has had some success in litigation against measures, including determinations that measures do not apply to aluminium extrusions forming part of certain residential solar panel kits and do not apply to certain steel items forming part of a large solar farm.

Sanctions and trade restrictions

Australia has three categories of sanctions regimes including one based on sanctions imposed by the UN, one allowing for autonomous sanctions outside of those imposed by the UN and one allowing for the imposition of ‘thematic’ sanctions. Australia imposed significant autonomous sanctions in 2022 and 2023 on Russia and Belarus following the initiation of conflict with Ukraine. Those sanctions extended and expanded previous autonomous sanctions imposed on Russia in 2014 and 2015.

Those autonomous sanctions include restrictions on the export or supply of certain goods, restrictions on the import, purchase or transport of certain goods, restrictions on certain commercial activities, restrictions on the provision of certain services, restrictions on providing assets to designated persons or entities, restrictions on dealing with the assets of designated persons or entities and travel bans on designated persons. We are now seeing the first signs of litigation against these sanctions with a Federal Court action brought by a person seeking to remove themselves from the ‘designated list’ being unsuccessful at first instance.

In addition to sanctions, Australia has also taken other measures including removing ‘Most Favoured Nation’ status for Belarus and Russia and recently extending the additional 35% customs duty payable on goods imported into Australia from those countries until 24 October 2025.

Trade facilitation and modernisation

Many countries and international agencies are pursuing versions of the ‘trade facilitation and modernisation’ agenda.

Australia’s journey has been somewhat fragmented. Recent research determined that there are 29 agencies that have an interest in goods at the border and 200 pieces of legislation in operation. This makes a ‘trade single window’ quite an ambitious outcome. Many of the agencies are also undertaking their own work. By way of example, legislation has recently been passed which will allow the Australian Border Force (ABF) to conduct a ‘regulatory sandbox’ for ‘controlled trials’ of new processes to facilitate trade which are not allowed by the provisions of the Customs Act 1901.

Importantly, the federal government established the Simplified Trade Implementation Taskforce in 2021 as a temporary ‘whole of government’ body to review the trade reform work of the border agencies and recommend trade simplification initiatives to the federal government. There have also been significant contributions by the private sector to the work of the border agencies and the Taskforce. Late in 2023, the government released its Mid-Year Economic and Fiscal Outlook (MYEFO) which outlined spending commitments for the remainder of the fiscal year including spending on trade facilitation and modernisation.

What follows for 2024?

We are already looking forward to what is coming in 2024. At the time of writing this update, important issues include the following:

• Whether there will be continued interruptions or additional charges for sea cargo movements in the Red Sea associated with conflict in the region.
• The impact on our trade agenda of the US elections late in 2024. The Biden administration has not moved towards trade liberalisation and recent movements in the US have focused on supporting local US industry and interests.
• Completion of the ABF review of conditions governing the operation of licensed customs brokers which look like imposing significant obligations.
• Playing in the ABF’s ‘regulatory sandbox’ and working with agencies and the Taskforce to accelerate trade modernisation and facilitation following the MYEFO and the subsequent Federal budget in May 2024.
• Discovering whether the proposed Australia-EU FTA is dead or only resting.
  Whether relationships with China continue to improve.
• The development of the measures to facilitate the AUKUS defence relationship, including reform of export controls on goods and information passing between Australia, the UK, and the US.
• Whether the federal government will respond to the 2022 recommendations of the Productivity Commission on reforms to the maritime supply chain, especially given the ‘Container Stevedoring Monitoring Report’ issued by the Australian Competition and Consumer Commission in December 2023 which raised similar concerns on increasing profit levels of stevedores and practices around demurrage and detention changes by the shipping lines.

Whatever happens, we will keep you informed.

Contact us

If you are an individual or Australian business and would like to discuss any current trade or supply chain issues your business is facing, please contact a member of our Customs & Trade team.