Budget implications for trade

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

Back in October 2020, the federal government released its proposed budget for the 2020/2021 financial year. As usual, most of the details had been formally announced or “leaked” but it is worth paying attention to a few issues.

Main budget themes

Most of the initiatives for new funding were to assist in the support of people and industry affected by COVID-19. However, this will be allocated through different programs. Most of those are focused on workplace relations and employment issues but there are other issues closer to our industry including extensive funding for development of the Simplified Trade System (STS), hopefully leading to the much anticipated single window for trade.

Trade and border services

In general terms, for the STS, the government will provide $28.6m over two years from 2020-21 to support initiatives to modernise Australia’s trade system and streamline border services to reduce administrative complexity and improve the efficiency of international trade.

The measures include $7.8m in 2020- 21 to reduce compliance complexity for Australian businesses. They also include $8m over two years from 2020-21 to reform and strengthen arrangements for aviation and maritime identification card schemes; and $12.8m over two years from 2020-21 to develop a new border intervention model for sea and air cargo.

Extension of the Australian Trusted Trader Program

The budget includes an extension of the Australian Trusted Trader Program (ATTP) to enable accredited trusted traders to pay customs and anti-dumping duty on a deferred basis from 1 July 2021.

This will result in reduced revenue of $7.5m over three years from 2021-22. It is interesting and worth noting that the deferral has now expanded to anti-dumping duty.

Covid-19 support for trade

The government has extended the free rate of customs duty from 1 August 2020 to 31 December 2020 for certain hygiene or medical products imported to treat, diagnose or prevent the spread of COVID-19. Affected product types include face masks, gloves, disinfectant preparations (excluding hand sanitiser), soaps, COVID-19 test kits and reagents, and viral transport media.

This measure is estimated to decrease receipts by $7.2m over the forward estimates period.

Banning of export waste

The government is to provide $6.6m over three years from 2020-21 to implement and administer the government’s commitment to ban the export of certain types of waste from 1 January 2021.

The Department of Agriculture, Water and the Environment (DAWE) will administer a licensing and declaration scheme to enable the export of waste materials where it can be demonstrated that sufficient processing has occurred prior to export to prevent harm to the environment or human health overseas.

Agricultural export assistance

The government is to provide $328.4m over four years from 2020-21 for measures to improve the ease of doing business for agricultural exporters. This includes $222.2m over four years (and $22.3m ongoing) for the first phase of modernising the ICT systems and business processes that support the improved delivery of export regulatory services to agricultural exporters.

This includes simplifying interactions between farmers and exporters and the DAWE in the delivery of agricultural export assessment and certification services. The idea is to reduce the regulatory burden on industry via streamlined and integrated systems that remove unnecessary costs and delays for exporters.

There is also $71.1m over three years from 2020-21 to improve the financial sustainability of export certification services by returning to full cost recovery of these services over time, while minimising the impost on industry as it recovers from the effects of the drought, bushfires and COVID-19.

To round things off, the government has allocated $35.2m over four years for targeted interventions and regulatory reforms in the meat, live animal, seafood, plant and plant product export sectors to get products to overseas markets faster and more reliably.

Further funding for trade

There is $17.9m over three years from 2020- 21 to modernise the Therapeutic Goods Administration business systems to streamline processes for the medicines and medical devices industry. Improvements will be made to electronic systems associated with obtaining regular approvals.

Then there is $7.2m over four years from 2020-21 to streamline the agricultural levy legislative framework to ensure the industry-driven system can meet and adapt to changing industry needs and address emerging priorities and risks.

Subsequent trade developments

The government and its agencies have already moved on several fronts to advance this agenda. These include the establishment of a multi-agency single-window taskforce drawing in relevant members of different government agencies with a role at the border.

The government has also changed the title of the Australian Border Force’s (ABF) Trade Modernisation and Industry Engagement Branch to become Customs and Border Modernisation Branch to reflect the broad scope of the ABF’s border modernisation efforts.

Members of the National Committee on Trade Facilitation have already received a briefing from the ABF on these new developments including an outline of the funding which may become available for industry to develop blockchain-based solutions.

The recent “virtual” industry summit included a panel with representatives from the ABF, Austrade and the Australian Industry Group discussing trade facilitation issues, including the need for the solution to work across agencies and to relieve industry from unnecessary duplication of reporting for approvals and movement of goods to a number of agencies at the border.

The ABF on 25 November announced a trial was launched with Singapore Customs and Singapore Infocomm Media Development Authority to test digital verification systems. According to the media statement, the trial is the first to be developed using blockchain technology by experts from Australia and Singapore at the United Nations Centre for Trade Facilitation and Electronic Business for inter-government document exchange. This being conducted under the auspices of the bilateral Australia – Singapore Digital Economy Agreement.

The process from here

These developments are encouraging. Government (particularly the ABF and its predecessors) has been considering these types of issues for many years and industry has also been eager to work on these moves towards facilitating trade by electronic means.

The move towards a single-window for trade has been an aim of all parties for many years but progress has not been as rapid as all parties would have wanted.

The World Trade Organisation’s Trade Facilitation Agreement and the increased adoption of blockchain technology in trade has provided an impetus for these developments as has the funding provided by government and support from industry here and adoption of the concepts overseas.

The funding from the recent budget will not be enough to finalise the process but hopefully, the government will continue the funding as industry continues to be ready to assist with this concept which cannot be completed by the ABF without broader support.

Our Customs and Trade team are well placed to advise you on all aspects of the Australian and international trade and e-commerce and what the Budget means for you.