Welcome to 2017 – real change or more of the same?

24 January 2017

This article first published in Air Cargo Asia Pacific magazine: Issue 246, January 2017

With the inauguration of the new US President in the rear view mirror and the first run of executive orders signed, sealed and delivered, it is looking likely that we may see a new world order focussed on ‘local interests’.

The result of the US election, taken together with Brexit, suggests that the world trade agenda may be very different to that which has been in place for recent years.

It is certainly different to that which may have been anticipated a year ago.

On the basis that the world trade agenda may not be developing as had been anticipated and given that there is a heightened level of uncertainty on what developments will take place I thought it would be useful to focus on known developments in our jurisdiction and how they will affect your business.

  • In my December 2016 update I wrote about the changes being effected by the move to HS 2017 and the expanded WTO Information Technology Agreement with effect from 1 January 2017. I think it is fair to say that the implementation of those changes has not been as smooth as had been intended. The Christmas and New Year period has been far from the usual relaxed holiday period.
  • There appears to be little prospect of any new FTAs being concluded in the immediate future. The RCEP is probably the next likely FTA but, even then the final deal is some way to being completed. In such an FTA ‘vacuum’, given the uncertainty with deals involving the US and the EU, that places more of a premium on extracting the best out of current FTAs.
  • Industry is nervously awaiting the completion of the review of Customs licensing regime which will have an impact on licensed customs brokers and those operating premises licensed by the DIBP, which parties are at the heart of the supply chain in Australia. While the regulators have been keen to express their confidence in those who are licensed the continued delays have created significant uncertainty and concern. The workshop between the DIBP and affected parties on 20 January 2017 will hopefully go some way to raise the veil of secrecy on the intent of the DIBP.
  • The proposed imposition of GST on all low value transactions by 1 July 2017 will potentially have a massive impact on industry. The measure was announced in the 2016/2017 Budget and a position paper was released by Treasury late in 2016 followed shortly by a draft Ruling from the ATO. It represents a significant ‘disruptor’ to trade as it will require new parties to collect and remit GST who had not done so previously – in some cases the ‘electronic platform’ which facilitated the trade and in other cases the freight forwarder. This will lead to additional costs to those using the electronic platforms as well as additional reporting and compliance issued by those who will now be responsible for accounting for the GST and who will also be liable for penalties and interest if their accounting is not accurate.
  • 1 July 2017 will also be a significant date for those involved in air cargo to the US as it will be the date for the full implementation of the ‘100% piece level scanning’ for all exports to the US by air. There appears to remain some scepticism whether this will actually be implemented – from my perspective such an approach is seriously misguided. I was directly and closely involved with the work to secure the deadline of 1 July 2017 and I know how difficult it was to secure the extension. I am also aware of the efforts undertaken by the Office of Transport Security (OTS) and those in industry to assure the US Transport Security Agency (TSA) that the required measures are being implemented according to the agreed timetable. The 1 July deadline appears totally fixed including the implementation of the new regime including the adoption of the new ‘Known Consignor’ program. I can only recommend that parties take the issue seriously and engage with affected clients, service providers and the OTS to ensure that trade continues to be facilitated beyond 1 July. It would be regrettable to see air cargo being interrupted on that day given so much notice of the proposed changes.

These developments place a premium on preparation for change. I think that we would all prefer work to go into ‘front end’ compliance to minimise issues for ‘back end’ logistics. As has been stated in other forums, ‘forewarned is forearmed’ and part of that process involves working with industry associations in a shared exercise developing responses to ongoing issues. Most immediately that includes the member forums which I am delivering for the CBFCA in February 2017 starting in Fremantle on 8 February 2017 followed by sessions in Brisbane, Sydney and Melbourne with thanks to John Park, Bill Murphy, Megan White and Zoran Kostandinoski of the CBFCA. I hope to see you in those forums as we continue to talk on current and future issues for industry.

As always, ‘If pain persists, consult your lawyer’.

Disclaimer: This publication contains comments of a general nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional advice. No responsibility can be accepted by Rigby Cooke Lawyers or the authors for loss occasioned to any person doing anything as a result of any material in this publication.

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