Modernising the trade system

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

As readers would be aware, ‘compliance’ is a term embedded in the international supply chain. However, it is not exclusively reserved to the international supply chain; it is a term used in every aspect of the commercial world and the laws and other regulations governing the commercial world.

For these purposes, it is instructive to refer to commentary from the Australian Financial Review regarding a recent review of the Australia’s corporations laws undertaken by the Australian Law Reform Commission (ALRC):

“Australia’s corporations laws are a tangled mess, difficult to navigate, costly to comply with, difficult to enforce and need an overhaul that could take up to a decade, a report tabled in parliament showed on Thursday.

“The Australian Law Reform Commission’s final report into corporations and financial services laws was scathing, reflecting judicial commentary that the current laws are like ‘porridge’, ‘tortuous’, ‘treacherous’, and ‘labyrinthine’.”

While the comments were in respect of the corporations laws, they could have equal application to many other forms of regulation governing other areas of practice. In particular, the comments would resonate with those in the private supply chain who need to deal with the provisions of the Customs Act 1901 (the Act) and related legislation, regulation, directions and operational policies of the Australian Border Force (ABF).

Further, according to the Simplified Trade System Implementation Taskforce there are also 28 other agencies in addition to the ABF who have a role in relation to goods passing across the border, with such roles being administered through approximately 200 pieces of primary legislation.

The ALRC has already conducted several previous reviews of the Act itself and parts of the Act. In each case, the ALRC made several recommendations regarding reform of the Act, including, famously, providing a revised draft of the Act some years ago.

To date, successive federal governments and their agencies have declined the recommendations of the ALRC regarding full-scale review of the Act on the basis that it is ‘up to date’ by way of passage of amending legislation or regulation. However, such an approach overlooks the facts that it is notoriously time-consuming and difficult to create and pass such amendments and that the amendments are then ‘squeezed in’ to the existing framework of the Act, leading to new sections which look like other sections but are very different.

A complex task

Navigating the Act and other regulations, directions and ABF practice directions remains a difficult task. It requires a very good compass and experienced practitioner, which is something of an arcane skill, confined to a limited numbers of practitioners who, in many cases, confine their expertise and practice to only certain parts of the Act. That creates all manner of complexity for those moving goods through the border, whether large corporations or micro to small and medium enterprises.

Those complexities in the Act and other border legislation and regulation often constitute barriers to entry to the market for the enterprises and other parties in the supply chain, whether importers or exporters, movers of cargo or other service providers such as licensed customs brokers. The ABF does publish the invaluable Goods Compliance Update but it is not published as often as originally intended and its form may need reform to ensure that it fully serves the purposes of both the ABF and industry.

The complexities in the Act on their own are difficult to approach, let alone the other border legislation and regulation and practices of other border agencies.

The needs of modern regulation

Increasingly, the Act should be entirely replaced with new legislation and regulation considering the needs of modern regulation and trade facilitation. The ABF and the federal government may be disinclined to such an action, especially in case items could be ‘missed’. However, in the recent past, New Zealand adopted a new Customs and Excise Act (occasionally misquoted as the Customs and Exercise Act) and Australia adopted a new Biosecurity Act to replace the venerable Quarantine Act 1908 which came into effect after the Act. In both cases, the adoption of new legislation was the subject of extensive and efficient collaboration with industry and in both cases the new legislation appears to be working without substantive issues.

Returning to the issue of legal principles regulating the supply chain, it is widely accepted that any legal framework should provide a clear and transparent regulatory framework readily accessed and understood by all in the supply chain with mechanisms to allow parties to secure assistance, guidance, and rulings as well as providing access to comprehensive websites of relevant agencies.

For those purposes, at present those in the supply chain potentially need to access the websites and administration of up to 29 border agencies, all of whom have limited resources, especially in relation to provision of help desks or equivalent customer service officers. The agencies do endeavour to provide assistance, but they are limited by financial restraints and the availability of skilled and experienced officers with expertise across border agencies and the ability to action resolutions to issues which arise.

To that effect, while we are encouraged by many of the current actions of the Simplified Trade System Implementation Taskforce, the ABF and other agencies to modernise and facilitate trade, that work has yet to substantively address the form and content of the regulation operating at the border as well as the availability of comprehensive guidance.

Certainly, industry looks forward to working with the ABF in the so-called regulatory sandbox to be established when the controlled trials legislation comes into effect. There has already been active engagement on what revised procedures may be facilitated inside or outside of the regulatory sandbox. However, that only applies to limited possible trials to facilitate trade as opposed to facilitating actual legislative or practical amendment.

Recommended priorities

The current reform progress would benefit from prioritising several regulatory and practical initiatives, such as a formal additional review of whether existing border legislation (in its entirety) is totally fit for current and future practices, and to keep pace with other border reforms, such as the Single Window for Trade.

A review of what changes to all existing border legislation could now readily be made to facilitate and modernise trade in the current environment.

Examination of whether there could be fewer pieces of legislation and regulation to cover the matters currently operating at the border and whether a form of omnibus legislation could be considered incorporating many of the current controls.

Further, a review of whether, separately to the Single Window for Trade, there could also be a single window for regulation where persons could enter a question on regulation of transactions and be provided to links to relevant parts of all corresponding regulation, both legislation and practice.

Finally, the creation of a new border help desk, properly financed and staffed by multi-skilled officers of all agencies who can respond promptly to inquiries and directly with their name and details. Those officers would be authorised to make inquiry regarding any actions of border agencies and assist in facilitating outcomes. While this may require some changes to the terms of employment of officers or even to the provisions of the Public Service Act 1995 and would no doubt require procedures to ensure the service is not provided to ‘bad actors’, this could be of real benefit. The service could be a ‘one-stop shop’ for information and assistance with trade rather than the Single Window for Trade to have one place to report on trade as required by all agencies.

In conclusion

While some of the above recommended priorities are ambitious, we believe they are important parts of the reform process to be undertaken on a whole-of-government basis by the Simplified Trade System Implementation Taskforce working with the border agencies with visibility through the National Committee on Trade Facilitation and its advisory bodies and sub-committees.

A comprehensive national process would seem to be the best way to undertake these tasks, which we are confident would be welcomed and supported by industry having invested significant resources in the process already.

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.