Beyond the pandemic – trade facilitation and supply chain questions

This article was first published in April 2021 by Daily Cargo News.

The world continues to struggle with the practical consequences of congestion in the supply chain and governments are initiating reviews into supply chain vulnerabilities and how they may be addressed. However, it remains important that we do not overlook other initiatives to facilitate trade which may have been stalled by the focus on the more immediate problems of the global pandemic.

Whether described as “facilitating trade” or “enhancing trade”, there are a series of agreements already in place that could form the framework for developing these initiatives.

Globally, these include the Trade Facilitation Agreement (TFA) established through the World Trade Organisation (WTO), the International Convention on the Simplification and Harmonization of Customs procedures (as amended), known as the Revised Kyoto Convention established through the World Customs Organisation (WCO) and the associated SAFE Framework of Standards to Secure and Facilitate Global Trade (as also amended) established through the WCO. Further, most free-trade agreements contain chapters on trade facilitation, customs practices and electronic commerce. But, in many cases, those chapters only include a framework for work on trade facilitation discussions over time as opposed to delivering immediate outcomes.

The view from Australia

Australia has already laid some groundwork for this agenda beyond its WTO, WCO and Free Trade Agreements commitments both here and in the region. The Australian Trusted Trader Programme (ATTP) which has its source in the Authorised Economic Operator (AEO) concept from the WCO Safe Framework, is rapidly gaining acceptance and momentum. Its popularity comes in no small part from the benefits to be found in the ATTP.

There are related programs from other government agencies with responsibilities for clearing goods at the border, aimed at bringing industry and government closer together and working collaboratively to ensure that the movement of goods (including border clearances) operate effectively while preserving revenue payments and preserving safety and security in the supply chain. Further, the engagement with industry and its service providers as required under the TFA is conducted through the National Committee on Trade Facilitation (NCTF) chaired by the Department of Home Affairs and its related advisory committees such as the Trade Facilitation Initiatives Working Group and the Trade and Goods Compliance Advisory Working Group.

Agreements in the region

In the region, Australia has entered into a digital economy agreement with Singapore and a series of related memoranda of understanding, including a Memorandum of understanding (MOU) on data innovation, an MOU on co-operation in the use of artificial intelligence, an MOU on trade facilitation, an MOU on electronic certification co-operation and an MOU on co-operation in the field of digital identity. The choice of Singapore to collaborate on these developments was assisted by the fact that the country already has widely adopted digital and electronic measures, including a single window for trade.

Further recognition of the importance of these measures to government can be found in the last budget released in October 2020. Among a wide range of economic measures intended to address the effects of the global pandemic in Australia, the government still included expenditure on digital trade facilitation measures such as funding to support the export process for agricultural producers, funding for a “simplified trade system” to be developed by the Australian Border Force (ABF) as the base for a single window for trade as well as funding for an “industry-led” blockchain system for enhancing trade. That system could potentially draw upon the work of the Custom Brokers & Forwarders Council of Australia’s (CBFCA) white paper on the use of blockchain and other reforms to enhance trade outcomes. The International Forwarders and Customs Brokers Association of Australia, as the entity combining the CBFCA and the Australian Federation of International Forwarders, continues to support associated developments including working through the National Committee on Trade Facilitation, its working groups and other industry groups both here and overseas.

However, the adoption of digital trade reform is only one of the many changes needed to deliver enhancements to the movement of goods through the supply chain.

Equally important is regulatory reform. Ultimately, any steps to enhance trade through new systems or platforms are of limited value without a regulatory framework that allows those practices and does not unnecessarily punish those who do not comprehensively comply with the regulations. Encouragingly, the ABF has also commenced a simultaneous comprehensive regulatory review and is engaging with industry through a “regulatory sandbox” for the development of enhancements both to regulatory practice and the legislative framework.

What reforms to include?

Ideally, there would be a brand-new Customs Act to replace the Customs Act 1901. I know the response received from the government is that the act is up to date as a result of the various amendments. However, my concern is that the ongoing amendments seek to squeeze more into the existing structure of the act, which leads to more complexity from the titles to the sections and sub-sections in the act. Even the hardiest soul needs a map (and a clever lawyer) to navigate some of the provisions in the anti-dumping and countervailing regime. The complexity of the act sometimes defies the best efforts of the parties to comply. We survived the creation of a new Biosecurity Act from the venerable Quarantine Act and even New Zealand coped with an entirely new Customs Act.

Clarity on the future of the ABF’s Integrated Cargo System. There was a rocky time when it was first introduced in 2005 and, apart from some infrequent brief outages, it has operated well since then. However, the common view appears to be that it either needs significant expansion or the adoption of an entirely new system. The ABF recently revised the requirements to engage with the Integrated Cargo System and issued a new notice identifying those requirements leaving the question of how they may change with a new system.

The passage of reforms to the anti-dumping and countervailing legislation and practice, which industry approved several years ago. These included the creation of a process to issue “dumping advices” to confirm whether dumping or countervailing duty is payable on imported goods. It is a significant gap in the compliance tool kit available to importers and their service providers. We are told it did not make it into cabinet before the last election and there is real concern that it may not make it into cabinet before the next election – or at all. It was a package approved by all parties yet its future is still uncertain.

Reform of the customs reporting regime so that more information normally required to be included in an import declaration is included in the export documentation at the point of the movement of the goods to Australia and which must be the subject of preliminary customs clearance before they are released to be conveyed to Australia. The US adopted such a regime in the various versions of the “10+2 Rule” and Canada has recently adopted a similar regime. “eManifest” is a term used to describe the advanced electronic information to customs officials prior to the shipment arriving at Canada’s border. The earlier provision of vital information would surely assist the ABF and other agencies to undertake their screening before the goods leave the country of export.

An extension of the ATTP so that it delivers additional benefits to service providers such as licensed customs brokers (LCB) who hold a key position on the “industry” side of the supply chain. LCBs are exposed to a wide variety of risks and liabilities which far exceed the amount they are paid by their clients for the provision of clearance services. There are more than 40 government agencies with an interest in goods passing across the border which creates significant risks for LCB, yet the ATTP only offers limited benefits to LCBs. At the very least, the “voluntary disclosure” protections under the Act should be extended to provide protection for LCBs from all liabilities across the Act – and across any “Customs – related Law”, especially as LCBs are required to report errors or omissions.

Adoption of a new blockchain system that includes government agencies, LCBs and other related service providers so that those service providers can access originals of all documents relating to an import to enable them to properly review those documents and undertake the intellectual and informed task for which they are licensed by government.

We appear to be at a crucial moment to review and comprehensively reform the supply chain in Australia. That would include enhancing the position of LCBs who need to balance obligations to their clients and to customers and enhance the quality of information provided to government. I look forward to wading into the regulatory sandbox and supporting government on initiatives to reform the supply chain and the responsibilities of those in that supply chain.

For advice on all aspects of Australian and international trade and e-commerce, please contact our Customs & Trade team.