The evolution of our trade agenda – The past 130 years

18 February 2022

A version of this article was first published by The DCN in February 2022 as part of the 130th Anniversary of its first edition.

Customs & Trade lawyer Andrew Hudson takes a look at how the laws governing trade in Australia have grown and changed over the years.

On the auspicious occasion of the 130th anniversary of the first edition of the DCN, it is a good time to review selected developments in Australian trade and regulation.

To start with, there was no Australia 130 years ago. That’s right – we were known as a collection of colonies, which are now our states. The colonies established their own parliaments and pursued their own agenda and legislation to satisfy their own interests. There was little co-operation between them. The colonial arrangements included borders, which were often strictly enforced. The movement of goods across these borders attracted customs and excise duties imposed through colonial customs and excise acts.

Towards the end of the 19th Century, various politicians and public servants moved the colonies towards a national federation, often through “constitutional conventions”. The shape of that federation changed over time. At the commencement of negotiations, New Zealand was involved, Western Australia originally appeared reluctant to confirm its membership.

Ultimately, an agreement was reached, and after approval by the British Parliament and Crown, we became “the Commonwealth of Australia” under the auspices of the Constitution Act of 1901 (Constitution). The Constitution reserved specific powers to the Commonwealth, powers to the states, and powers to be shared between both. The Constitution included a provision stating that the Commonwealth’s powers would take precedence in the event of a conflict. Among powers reserved to the Commonwealth were those governing quarantine (of people or goods), “external affairs”, defence and the imposition and collection of customs and excise duties. Powers relating to the imposition and collection of income tax were reserved to the states, who only relinquished those powers with arrangements for sharing revenues during WWII.

The Customs Act

At about the time the federation came into effect, Commonwealth acts were implemented relating to the new Commonwealth powers, including one of our favourites, the Customs Act 1901 (Customs Act), which is act number five of 1901. It has been regularly and comprehensively amended since then, along with associated legislation and regulation.

Interestingly, the Customs Act still contains provisions from its origins alongside recent amendments, all of which are squeezed together into the original framework of the Customs Act.

Unsurprisingly, the early years of Australian trade tended to focus on exports of raw materials and imports of finished products from the Northern Hemisphere. Australia initially maintained a relatively high level of tariffs intended to protect local industries, supported by the main political parties. That situation became more pronounced in Australia with the advent of the Great Depression.

The United States (US) enacted the Smoot-Hawley Tariff Act in June 1930, which raised import duties to protect American businesses and farmers but added considerable strain to the international economic climate of the Great Depression. Similarly, during the Great Depression, the Commonwealth government raised many duty rates and established high barriers for imports of manufactured goods overall.

War years

WWII led to the recognition that more liberal trade was an admirable outcome. The US and the United Kingdom (UK) aimed for more liberal global trade as part of its Atlantic Charter, a joint statement issued on 14 August 1941 even before the US joined the conflict. The charter and other agreements with the allied nations set the agenda for a more integrated international community, even with the advent of the Cold War.

Those international movements included the establishment of the United Nations (UN) in 1945 and the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947, which was subsequently folded into the World Trade Organization (WTO), which commenced on 1 January 1995.

Australia was a foundation subscriber to the GATT and a foundation member of the UN and WTO. These involvements compelled Australia to ensure that its domestic legislation is consistent with its international obligations and agreements. For example, it requires our legislative regimes in areas such as dumping and subsidies, intellectual property and sanitary and phytosanitary measures to comply with associated WTO agreements. A significant recent WTO agreement to which Australia has acceded is the Trade Facilitation Agreement of 2017 which underpins the current work on trade deregulation and simplification.

Going its own way

The increased “internationalisation” of Australia’s trade agenda and legal structure has accelerated over time. The legal measures available to industry were widened by the codification of legal review of administrative decisions by the Administrative Decisions (Judicial Review) Act 1977 and the Administrative Appeals Act 1975. Tariffs have progressively and unilaterally been reduced by the Commonwealth government, highlighted by the measures initiated during the Hawke and Keating administrations.

Probably the most obvious example of Australia’s willingness to develop its own trade relations with other countries is found in the entry into Free Trade Agreements (FTAs), whether bilateral, multilateral or regional.

For Australia, this commenced with the Closer Economic Relations Agreement with New Zealand on 1 December 1983. We have since added various FTAs with our major trading partners, including the US, South Korea, China, Indonesia, Canada and Japan, and the wider Association of Southeast Asian Nations group of countries. The most recent FTA is the Regional Comprehensive Economic Agreement which commenced on 1 January 2022. Those FTAs are subject to review by Parliament before being ratified and implemented and are subjected to regular review with FTA counterparties. That process is far from complete with the recent signing of the Australia-UK Free Trade Agreement in December 2022, subject to ratification and implementation and the ongoing FTA negotiations with the EU.

A look into the future

It would be interesting to see how surprised (or horrified) our “founding fathers” would now be with the current political, trade and defence alignments.

Assuming a return to current times (as in Bill and Ted’s Excellent Adventure), they may be worried about our move away from Mother England towards a closer alliance with the US during WWII and a subsequent set of international arrangements led by the US. However, they may be comforted with a recent pivot back to traditional relationships with other “colonial” nations such as the UK, New Zealand, Canada and India.

I am sure that the largest shock would be due to reductions in tariffs and other protections for Australian industries and the liberalising of trade with a wide variety of countries. Ultimately, I am also sure that they would be pleased by the position of international leadership that Australia has achieved to advance its own interests.
Through the work of successive Commonwealth governments and their agencies, such as the Department of Foreign Affairs and Trade, we seem to have achieved a level of confidence in our trade and our place in the world. Nothing is guaranteed into the future, but the right attitudes and policies appear, in large part, to be in place.

Perhaps it is now time to look harder at the merit of the remaining “nuisance tariffs”, the complexity of our dumping regime, and further enhancing trade facilitation with government, its agencies and departments working more closely with the private sector. After all, government is not the sole repository of knowledge and expertise in advancing Australia’s international agenda.

For advice on all aspects of Australian and international trade and customs obligations, please contact our Customs & Trade team.

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