A post-election shopping list for Australian trade regulation

A version of this article was first published by The DCN in May 2022.

Andrew Hudson lists the important things the new federal government needs to pay attention to in the international trade space.

As I write this article, it is only five days to the fun-filled day of entertainment and feasting, otherwise known as our federal election. The outcome of the election is still unclear, and there is the very real prospect of a hung parliament with neither of the main parties having a clear majority in either of the Houses of Parliament, which could compromise the passage of measures needed to effect reform of customs and trade regulation.

Hopefully, the outcome of the election will not delay or terminate the reform of trade regulation, which has been gathering momentum in the last few years, especially when funding for new projects has been allocated in successive federal budgets, and various bodies have been established to pursue the reform process.

Whatever is the outcome of the election, many in industry could be called upon to “re-educate” new ministers, new ministerial advisers and officers within various border agencies who move into new positions after the election. Members of the private sector previously involved in the reform of trade regulation for some time will need to provide vital historical information and context. To assist the process, I thought I would set out a shopping list of items that deserve priority attention once the election has been completed and the relevant government parties have been identified. These are not set out in any order of priority; I believe they all have significance.

Convene a new Joint Standing Committee on Treaties. Quickly.

Readers would be aware that once a Free Trade Agreement (FTA) has been completed, the FTA needs to proceed through domestic ratification and implementation in all the countries who are party to the FTA. In Australia, that includes review by the Joint Standing Committee on Treaties (JSCOT) where interested parties outside of federal parliament can make submissions regarding the FTA. Those supporting the FTA seek approval for implementation of the FTA, either without reservation or only subject to minor conditions. Consequently, the establishment of a “new” JSCOT is a priority to consider the terms of the Australia-United Kingdom FTA and the Australia-India Economic Cooperation and Trade Agreement.

Issue a comprehensive statement on the trade reform agenda

Readers would also be aware that the trade reform agenda has been moving forward in recent times. However, that reform agenda is not working through one set of terms and conditions or through one government agency. By way of example, the agenda includes work by the Simplified Trade Implementation Taskforce (established under Austrade); the Department of Prime Minister and Cabinet; the Australian Border Force; the Department of Agriculture, Water and Environment; the Department of Infrastructure, Regional Development and Communications and the Department of Industry, Science, Energy and Resources. While the spread of work is admirable, there remains the very real concern that interested parties may not be clear on the scope of all of the work, the status of that work, the proposed future work programs and how that work all interacts towards a clear set of combined outcomes. It would be enormously helpful if a comprehensive statement could be created and issued setting out details of all the work being conducted across government and its agencies, its connection and proposed outcomes.

Maintain and expand the current trade reform agenda

As stated in the preceding paragraph there is a wide scope of work being undertaken in the border reform space across several agencies with financial support through the budgetary process. There are signs that the work is starting to deliver outcomes. However, we have all seen previous promising developments which did not deliver the anticipated outcomes. On that basis, once the relevant work and outcomes are mapped and communicated then government and its agencies should confirm their commitment to those outcomes and provide all necessary financial and other support as well as updates on developments. That should extend to commitments to expedite and pass relevant legislation including the Controlled Trials bill to establish the “regulatory sandbox” and the legislation required to implement the reforms to dumping and countervailing practices which were endorsed by all of industry several years ago but have still to be developed and completed.

Ensure that there is one body with oversight for the trade reform agenda

The spread of work and the involvement of different agencies places a premium on there being one body with oversight of all the work, which regularly receives reports on the work, guides future work and ensures that it is completed and implemented. That body should have an all-of-government membership and an active engagement with broad representation of those in the private supply chain. Fortunately, we already have such a body being the National Committee on Trade Facilitation (NCTF) and its various subsidiary sub-committees and advisory groups. Our NCTF was established to meet Australia’s obligations pursuant to the Trade Facilitation Agreement created by the World Trade Organization and certainly has the scope of work which would allow it to conduct such an oversight and guidance role. However, the work of the NCTF has suffered from a variety of factors, including infrequent meetings of the NCTF and its subsidiary sub-committees and advisory groups, changes in representation of the government agencies and the continued inability to establish work plans and influence the wider agenda. I have been involved in a series of recent discussions with officials at relevant government agencies and there is a sense of optimism around the future direction and work for the NCTF. The completion of the election and any governmental changes affords a valuable opportunity to reset the central importance of the NCTF.

Moving onto regulation of the maritime supply chain

In general terms, Australia has been unwilling to further regulate or control the maritime supply chain beyond the current framework even as costs increase and services decrease. Being so far from overseas-based shipping lines, regulators may have feared that additional regulation and oversight could lead to services not being provided by those overseas-based shipping lines and that allowing coordination would be in the wider public benefit. This approach can be seen in the wide set of exemptions from competition laws provided in Part X of the Competition and Consumer Act 2010 to enable shipping lines to coordinate on the provision of liner services. Further, governments at the state and federal level have also been disinclined to impose more regulation on those providing land-side services in the supply chain such as stevedores and empty container parks. The Australian Competition and Consumer Commission (ACCC) has only had a monitoring role on the services and their charges.

However, in more recent times, we have seen some movement suggesting that the maritime supply chain may be open to more direct investigation and regulation. In the US, the Federal Maritime Commission (FMC) has been engaged in the review of detention and demurrage charges of shipping lines (holding some to be unfair and unenforceable), as well as considering the provision of services by the shipping lines. Australia has increased review through the work of the ACCC both in Australia and in conjunction with other international competition authorities in five-eyes jurisdictions in a new working group focussing on collusion in international trade. The Productivity Commission is also undertaking a review of Australia’s maritime logistics system, which is due to issue a draft report in late May 2022. Some state governments have established voluntary codes intended to bring more transparency to increases in charges by stevedores although increases have recently taken place without compliance to the code.

While I appreciate that many do not support the idea of an Australian version of the FMC, given that the maritime supply chain is so vital to Australian interests and given that there is a current lack of direct regulation, I think it is time for the establishment of a well-resourced Australian FMC (possibly even including New Zealand) with specific powers and focus over behaviours in the private supply chain. Whatever the outcome, the maritime supply chain does warrant more transparency on the way services are provided and the costs for those services. Considering that many global supply chain issues are beyond our control, it would seem logical and appropriate for Australia to adopt measures in our own supply chain to secure equitable outcomes.

Watch this space for comments on progress post the election – including whether we will see a resurgence in the Australian maritime fleet as both parties seem to have promised.

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