This article was first published in August 2020 by AMT Magazine.
During the current pandemic, the focus of many has been on the manufacture of medical equipment required for the treatment of COVID-19 and their urgent movement through the international supply chain.
That movement has required the management of existing and new export and import controls as well as steps to facilitate the movement of those items by air freight.
Australian controls on the export of medical equipment for the treatment of COVID–19
Support for Australian exporters has included the following initiatives from the Federal government:
- Additional funding for the Export Market Development Grant program (EMDG)1. The EMDG is an Australian program providing limited reimbursement for approved exporters for their export development activities;
- Air cargo funding assistance through the International Freight Assistance Mechanism2 to assist exporters of seafood and other primary produce with the return flights bringing Personal Protective Equipment (PPE) and other medical equipment. This has provided funding for limited replacements for air cargo space lost with the cessation of international passenger aviation;
- The establishment of the new Export Capital Facility3 administered by Export Finance Australia;
- The provision of grants to Export Hubs assisting Small to Medium Enterprises (SMEs)4. Again, this is intended to provide financial assistance to SME export hubs developing local, regional and Indigenous brands. The hubs will work with Growth Centres in each sector to take advantage of export opportunities; and
- The adoption of new export controls on PPE and related medical equipment5. Many countries have adopted export controls but in the Australian context, the controls have been aimed at stopping opportunistic exporters by allowing exports by “legitimate” and existing exporters already involved in the manufacture and export of the items. The regime has been different to the regime in other countries such as China where the items have needed quality certification of items before export.
Chinese controls on the export of medical equipment for the treatment of COVID-19
There have been significant controls on the export of medical equipment required for the treatment of COVID–19 conditions. We have been involved in the review of those controls within Australia and overseas. Among those actions is a new Chinese regime for the quality certification of equipment intended to be exported by the National Medical Products Association as a response to complaints on the quality of Chinese equipment. Other nations (including Australia) have introduced other controls on the export of such equipment made in their jurisdiction.
Exemptions from customs duty on the imports of medical equipment for the treatment of COVID-19
Another important development has been the agreement to defer customs duty and GST (or VAT) on the import of such equipment in certain countries. In related developments, several nations have further established temporary exemptions from customs duty otherwise payable on the imports of medical equipment. Those exemptions are only intended to operate on a temporary basis during the period of the pandemic and, importantly, do not create exemptions from any dumping and countervailing duty.
In our region, New Zealand moved some time ago on the exemption from duty issue by creating specific exemptions from duty and confirming that certain equipment would otherwise be included under existing tariff concession items. There had been industry requests for similar action in Australia and at a meeting of the National Committee on Trade Facilitation (NCTF) held on Wednesday, 29 April 2020, the industry was given notice that the Australian Border Force (ABF) was proposing to take action to create temporary exemptions from customs duty on a number of categories of medical equipment required in the treatment of COVID–19. As promised in the NCTF meeting, the ABF has subsequently provided details of the arrangements in ACN 2020/20 discussed in more detail below.
It is in the best interest of all producers, importers and their licensed customs brokers to be aware of the details of these changes so that the exemptions can be implemented for future imports and for customs duty refunds to be secured from the effective date of 1 February 2020. The exemption is only temporary for so long as the relevant Biosecurity Determination regarding the pandemic is in place. It is being effected by way of a new Item 57 to Schedule 4 of the Customs Tariff Act (1995) to give effect to new By–law number 2019608, to be in effect from 1 February 2020 until 30 June 2020 but which will presumably be extended if the Determination is also extended. That By–law identifies the types of goods to be covered by the new arrangements. Importantly, it only provides for use if no other concessional arrangements apply whether in Schedule 4 or a TCO. Further, the By–law does NOT apply to hand sanitiser taking into account significant local production of that item. More details on the arrangements for claiming the By–law for imports and refunds are found in ACN 2020/20 found here. The Notice includes some indicative classifications of goods affected but they are only indicative and those seeking to use them need to properly classify the goods, determine whether they meet the By–law and then use that By–law correctly. No doubt, many within the industry will be busy with these issues now and into the future.
Addendum to the article
Readers should note that that this article was submitted in early June 2020 and referred to the introduction of a new Policy By–Law created to allow certain COVID-19 medical items to be imported free from duty. That concession has now been extended until 31 December 2020 by the creation of a new Item 57A to the fourth schedule to the Customs Tariff Act 1995 which refers to By–law no 2041552 with effect from 1 August 2020. Details of the new arrangements are summarised in ACN 2020/30 to be found here.
Please contact our Customs and Trade team for further advice.
1. “Funding boost to support Australian exporters and tourism businesses“.
2. “International Freight Assistance Mechanism”
3. Export Finance Australia COVID-19 Export Capital Facility factsheet
4. “Grants to support export hubs in growth industry sectors”
5. “Australian Customs Notice No. 2020/15 – “Export control on goods essential to controlling and preventing the spread of COVID-19”
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