-
News Feed
-
Wednesday, 05 December 2018
ONE of the essential elements of good regulation is the need for clear contemporary supporting legislation and associated regulation, writes Andrew Hudson.
That need has underscored new legislation in Australia (the Biosecurity Act 2015) and in New Zealand (the Customs and Excise Act 2018).
In the former case, the Biosecurity legislation succeeded the Quarantine Act 1908 and in the latter case, it was the third iteration of the original New Zealand legislation.
In both cases, the new legislation also included changes to practice and were the subject of a process involving the affected industry ‘co-developing’ the concepts behind the legislation. I was fortunate enough to assist the Customs Brokers and Forwarders Association of New Zealand (CBAFF) which was part of the Stakeholder Reference Group for the New Zealand Act. The concept of co-development is also alive and well in Australia, evidenced by the creation of the Australian Trusted Trader Programme (ATTP) where the aims of the ATTP, its legislation and governing Rule were all the product of extensive work between government and industry.
However, at the same time that government is pressing ahead with its trade modernisation and trade facilitation agenda, it is doing so relying in part on the terms of the Customs Act 1901 (Act), one of the original pieces of Commonwealth legislation which has been substantially amended more than 150 times and is now quite literally bursting at the seams as new provisions are included. For example, the legislation implementing TPP11 (or the CPTPP) includes a new Division 1 GB to the Act being sections 153ZKT to 153ZKZB. In addition there are changes to the Customs Tariff Act and to the Regulations made pursuant to both Acts. By way of other example, the dumping and countervailing provisions also include an extensive number of complicated section numbers. Knowing these provisions in detail is a challenging task and compliance is also difficult, especially where liability is often imposed on a strict basis and the regulator has the option of issuing infringement notices in lieu of prosecution. That can cause more immediate liability to financial penalties. It certainly brings into question the maxim that ‘ignorance of law is no excuse’ when the law is so complex and industry practice requires a lot of precise information to be provided at short notice from parties here and overseas.
Not only is the Act (and related legislation) complex, but it also contains provisions which should be considered at a conceptual level to determine if they deliver proper outcomes in terms of certainty, fairness or modern trade and logistics practices. For example:
* Is it reasonable for government to persist with the idea that any one person in the supply chain can be liable for underpaid Customs duty as ‘owner’, even where that liability is determined years later?
* Is it reasonable to impose that liability for duty on parties merely arranging for the carriage, reporting and clearance of goods such as licensed Customs brokers, express carriers and freight forwarders when they are not part of the contract for the supply and purchase of the goods and who only have ‘constructive’ as opposed to actual physical possession of the goods?
* Is it still reasonable for all individuals working in licensed premises to potentially be liable to amounts equivalent to Customs or excise duty should the goods be stolen through no fault of theirs?
* Government created broad categories of penalties for failures to report properly where liability was imposed on a strict liability basis to encourage compliance. Has that actually secured improvements in compliance to justify the imposition of liability on such a basis with the associated large numbers of Infringement notices?
* There have long been concerns as to the practices and standard of proof used in Customs prosecutions. There is also associated uncertainty on which matters are dealt with under the Act or are referred for prosecution by the DPP under the Commonwealth Crimes Act.
* Should disputes on dumping and countervailing duties still be excluded by direct review by the AAT?
* What type of regime will be required in the Act in the future to enable the adoption of new technologies to govern how trade is undertaken such as single - window or blockchain?
The need to review the Act and perhaps replace it is hardly a new concept. Report 60 of the Australian Law Reform Commission (ALRC) from September 1992 included a new draft Bill to replace the Act. Report 61 of the ALRC (also from September 1992) then proposed amendments to the way that Customs imposed penalties. Report 95 of the ALRC (released in January 2003) found no reason, other than historical practice, why the area of customs and excise should not be brought into line with other federal legislation governing civil and administrative penalties. A report by a House of Representatives Standing Committee on Legal and Constitutional Affairs from May 2004 recommended reform into the usage of averments in Customs prosecutions. The former commissioner of the ABF (and comptroller-general of Customs) invited industry to advise what would be required to assist with trade and compliance, including a rewrite of the Act. As recently as the Department of Home Affairs National Summit on 30 October 2018, industry again called for reform of the Act at which time assistant minister for Home Affairs, senator Linda Reynolds invited industry to do the work creating a new Act. Based on my subsequent research with industry it seems clear that industry does want a new Act and is prepared to work with government to co-develop that new Act, accepting that government remains the only party able to effect legislative change.
Based on recent experiences in the co-development of programs and regulation here and overseas and taking into account the obvious need for reform of the Act, I would invite government to work with industry to determine the underlying principles and needs in reform of the Act. That work could be undertaken through the ‘Legislative Reform Working Group’ at the National Committee of Trade Facilitation with the aim of developing an outline of what manner of reform is needed and how it could be best effected. A model for the program can be found in the recent New Zealand experience creating its new Customs and Excise Act 2018. This has been proposed already and we hope that the idea is actively pursued.
-
News Feed
-
Wednesday, 05 December 2018
CHALLENGES, opportunities and new technological solutions across the supply chain post-Brexit will take centre stage at Multimodal 2019, which takes place at the Birmingham NEC from June 18th to 20th.
Other topics including the growing labour crisis, the transformational effects of AI and robots on logistics, and the so-called ‘Fifth Industrial Revolution’, where machines and humans increasingly collaborate.
The seminar and panel series is a free-to-attend show now in its 12th year.
“We are entering a brave new world for the logistics industry and stakeholders should be doing all they can to prepare,” said Robert Jervis, Logistics Portfolio director of Clarion Events.
“Our new Seminar Steering Committee is working hard to ensure the latest and most-important issues of today will be addressed by top experts in logistics and transport who will share important updates on how companies can innovate in these challenging times.”
The three-day show also includes debates on issues such as logistics as the new retail, as well as reverse logistics, reducing food wastage in the supply chain, and how businesses can take better advantage of Blockchain and Big Data.
The Seminar Steering Committee is comprised of Jervis, plus James Hookham, deputy chief executive, Freight Transport Association; Peter Ward, ceo UK Warehousing Association; Robert Keen, director general, British International Freight Association and Emma Murray, ceo and founder of Meantime Communications.
More than 300 exhibitors from leading logistics service providers are expected to attend, with the confirmed list already including ONE, Cosco Shipping Lines (UK) Ltd, Associated British Ports, Samskip, and Jigsaw Transport.
The FTA Multimodal Awards night, which recognises the best operators in all transport modes, will make a welcome return and nominations for each of the 11 categories will open in the New Year.
Registration opens in January 2019. For more information visit multimodal.org.uk
-
News Feed
-
Wednesday, 05 December 2018
Awareness of Australia’s trading future – short and medium term, especially, but also long-term projections – is vital for the country, the companies and other entities directly involved, and the support services dependent on future patterns, growth probabilities and opportunities. Air cargo, with its increasing role in Australian (and other) international trade, is a prime recipient of such intelligence.
The recent release of Australia’s International Business Survey 2018 (AIBS 2018) marks the fifth consecutive year in which internationally trading businesses have used t
he AIBS platform to share their experiences of key markets, international activities and barriers to earning international revenue.
The survey is available on line at www.austrade.gov.au/aibs2018
AIBS remains the largest study of its kind. The longitudinal survey is commissioned by the Export Council of Australia www.export.org.au with the support of Austrade and the Export Finance & Insurance Corporation www.efic.gov.au
This year the survey was conducted by amr Australia between April 2018 and May 2018.
Over 1,600 unique company respondents have been surveyed over the past five years. AIBS 2018 reflects the opinions of 629 firms from 19 sectors undertaking international activities in over 90 overseas markets.
AIBS 2018 provides detailed information on: The demographics of respondent businesses including size by revenue and employee, international experience and management profile; the nature of businesses’ engagement with the global economy, including trade, inward and outward investment, R&D and other activities as well as their first market; current top markets; the profiles of companies earning international revenue from Latin American markets, including the nature of the barriers faced; the reasons why companies are not engaged in international activity and the most-valued forms of support for companies to start exploring international activity; and the outlook for firms’ international operations and the impact on business employment plans.
In addition to the data gathered, Austrade is offering analysis on its extremely useful economics blog. Commentary is complemented by interactive graphics illustrating some of the main results from the 2018 survey.
It is generated by a team headed by doctor Matthew Durban, Austrade’s manager research and analysis. Apart from a stellar academic foundation (he has degrees from four universities), Durban also has hands-on experience with international trade development, notably on behalf of Australia in Indonesia (he speaks Indonesian as well as English and French).
Durban describes AIBS as “an important source of insight into the activities and opinions of Australia’s internationally active businesses. While much analysis of Australia’s international economic performance takes place at the macro level and focuses on aggregates such as total exports and the trade balance, AIBS provides insights into how individual Australian businesses are adapting to the changing economy.”
The survey does “a particularly good job” of representing the views of internationally-experienced small and medium-sized enterprises, he points out. About 60 per cent of survey respondents had 19 or fewer employees.
“This year’s survey covers familiar ground in providing details on the broad range of cross-border activities undertaken by Australian firms, their views on doing business in key markets, their experience with accessing finance for their international operations and the outlook for future activities including the top target markets for new business over the next two years.
“In addition, new questions in this year’s survey also look at business engagement with Latin America, and use of technology and e-commerce.”
Simon Birmingham, the federal minister for Trade, Tourism and Investment said the report indicated Australian exporters had strong confidence in their ability to grow and expand into new markets.
“Looking into the future, 45 per cent of businesses expect to move into at least four new international markets over the next two years, which is an incredible level of ambition and potential growth.
“Sixty six per cent indicated they expected to have a better financial outlook for their operations than the previous two years and 75 per cent plan to increase employee numbers in Australia in that same timeframe.”
Birmingham observed that “out of the top 20 countries that businesses are looking to expand into, Australia currently has in place or is negotiating a bilateral or multilateral free trade agreement with up to 18 of them, including six within the TPP-11”.
-
News Feed
-
Thursday, 20 September 2018
A study by myclimate claims SkyCell containers cut CO2 emissions per air cargo shipment almost in half.
In a life-cycle analysis, myclimate compared SkyCell 2500 and 1500 containers with a commonly-used competitor’s product, analysing the CO2-footprint on typical cold chain routes as well as the emissions caused by manufacturing through to decommissioning of the containers.
“The big SkyCell 2500 container with a high interior transport volume performs best when looking at the entire life-cycle of the product and shipment, followed by the smaller SkyCell 1500, “said doctor Bettina Kahlert, leader Resource Efficiency at myclimate.
The objective of the ‘Comparative Carbon Footprint Study’ was to compare SkyCell container solutions for the transport of pharmaceutical products in the temperature range 2-8°C with conventional passive solutions. All processes from manufacturing, preconditioning, transport and end-of-life were analysed from cradle-to-grave in order to evaluate the CO2 footprint of the temperature-controlled containers.
The study compared the Global Warming Potential (GWP) of two SkyCell containers (SkyCell 1500, SkyCell 2500) to other commonly-used solutions. All three units are designed for cold chain shipments in the pharmaceutical industry.
“We initiated the study because it has been our goal to develop and run the most efficient and safest pharma container system world wide. We wanted to verify this from an independent and trustworthy source like myclimate”, said Nico Ross, chief technical officer of SkyCell.
Staff at myclimate analysed in detail not only the fuel consumption in air transport on typical routes, but also the complete life cycle of transport containers. Using the ecoinvent database, the environmental impact of transporting SkyCell containers was assessed and compared to a commonly-used solution.
The database allowed the calculation of the exact environmental impact (energy consumption, carbon dioxide, polluting emissions) of transports. “From our analysis, we concluded that the C02 emissions can be significantly reduced with containers that are optimised for weight-volume ratio such as SkyCells,” said Kahlert.
“It is our mission to provide the most reliable and environment-friendly transport solutions for temperature-sensitive shipments and the study by myclimate shows that we have achieved this,” said Richard Ettl, chief executive of SkyCell. “We will keep improving our technology and services in order to eliminate product loss due to temperature excursions and to better protect our climate.”
-
News Feed
-
Thursday, 20 September 2018
Worldwide air cargo yield dropped slightly to US$1.88 in July 2018, 0.6 per cent lower than in June, but still 12.2 per cent higher than in July 2017.
Measured in EUR, the yield decreased by 2.2 per cent month-over-month (MoM), while the year-over-year (YoY) increase was 10.5 per cent, according to the latest WorldACD report.
July was the second month in a row with only limited YoY growth, both in volume (+0.5 per cent) and in Direct Ton Kilometres or DTKs (+0.8 per cent).
WorldACD said: “When DTKs grow more than volume, that means cargo has shifted to longer haul markets. Thus, given the tiny difference of 0.3 percentage-points, the average distance between origin and final destination of air cargo shipments in July hardly increased YoY. Actually, the DTK trend since January 2018 shows that the average distance between origin and destination still grows, but much less so this year than in previous years.”
Although very difficult to quantify, the technical problems faced by Japanese carrier NCA may have negatively influenced YoY growth figures for June and July.
Volumes from the origins Africa and Europe contracted YoY in July. Latin America kept growing (+9.5 per cent), while volumes from other areas hardly changed. The destinations MESA and Europe were the only ones showing more than one per cent YoY growth in July. For the year so far, Latin America is the fastest growing origin region (+11.6 per cent) and Europe the fastest growing destination (+5.6 per cent). Volume growth for the first seven months of 2018 was 3.3 per cent YoY, while DTK growth for the year so far fell to 4.1 per cent YoY.
In the same period, the weight of the average shipment increased by 1.9 per cent YoY. Looking at the so-called ‘weight breaks’ (0-50 kg, 50-300 kg, 300-500 kg, etc), the number of shipments above 1000 kg grew much faster YoY (+4.8 per cent) than the number of shipments in the smaller weight breaks (growth varying between -0.9 and +two per cent). This stronger growth - particularly from Asia Pacific – could be caused by an increase in (consolidated) e-commerce shipments.
The YoY growth percentage for USD-yield was higher for the bigger weight breaks: the smaller the weight, the smaller the yield growth percentage. Shipments over 1000 kgs saw larger yield increases (+17 per cent YoY) than smaller shipments (growth increasing from nine per cent for 0-50 kg to 14 per cent for 500-1000kg). The YoY increase in fuel prices may well play a role here, as the increase in absolute fuel cost, when factored in as a percentage of total yield change, weighs more heavily on the (lower yielding) larger shipments.
This year, it is 10 years ago that air cargo had its ‘last hurrah’ before the crisis of 2009 hit the industry. How did markets develop since 2008, i.e. since just before the crisis?
Worldwide volume growth in those 10 years was 31 per cent (in spite of the considerable YoY volume drops in 2009, for some areas as big as 40 per cent). This figure translates into an average annual growth rate (AAGR) of 2.7 per cent.
The big inter-regional markets performed as follows:
* Asia Pacific to Europe: +20% (AAGR 1.8%)
* Europe to Asia Pacific: +80% (AAGR 6.0%)
* North America to Europe: +9% (AAGR 0.9%)
* Europe to North America: +46% (AAGR 3.8%)
* Asia Pacific to North America: +39% (AAGR 3.4%)
* North America to Asia Pacific: +46% (AAGR 3.8%)
* Europe to Middle East & South Asia: +60% (AAGR 4.8%)
* Middle East & South Asia to Europe: +36% (AAGR 3.2%)
Top origin country (in % growth) in each of six regions:
* Vietnam: +275% (AAGR 14.1%)
* Ethiopia: +151% (AAGR 9.6%)
* Sri Lanka: +133% (AAGR 8.8%)
* Norway: +118% (AAGR 8.1%)
* Mexico: +82% (AAGR 6.2%)
* Ecuador: +65% (AAGR 5.2%)
Top destination country (in % growth) in each of six regions:
* Vietnam: +194% (AAGR of 11.4%)
* Qatar: +163% (AAGR of 10.2%)
* Mexico: +87% (AAGR of 6.5%)
* Russia: +71% (AAGR of 5.5%)
* Kenya: +57% (AAGR of 4.6%)
* Brazil: +37% (AAGR of 3.2%)
-
News Feed
-
Thursday, 20 September 2018
An effective regulatory regime is needed for the major airports in Australia, according to a submission by the Australian Competition and Consumer Commission (ACCC) to the Productivity Commission’s inquiry into the economic regulation of airports.
“In a large country like Australia, airports are critical pieces of infrastructure that provide for services that bring families and friends together, support business travellers and drive tourism and economic growth. Australian airports now provide for over 150 million airline passengers each year,” said Rod Sims chair ACCC.
“Providers of key monopoly infrastructure such as the major airports are typically regulated to ensure that they will not exploit their market power to the detriment of consumers and the broader economy. This is not currently the case with Australia’s major airports.
“It is important that key monopoly infrastructure such as Australia’s major gateways are regulated,” said Sims.
The ACCC can currently undertake only limited monitoring of the airports in Sydney, Melbourne, Brisbane and Perth.
“Monitoring regimes can influence behaviour if there is a credible threat of regulation and this threat may have constrained behaviour in the past when the airports were first privatised. However, we do not consider that the current regime is effective in constraining behaviour,” said Sims.
Airports provide a range of services, including aeronautical, car parking and landside access services. The degree of market power they hold in the supply of those services can vary. As a result, different regulatory approaches are appropriate for the different services.
“It is important to ensure that the regulatory approach is fit for purpose and that the benefits of regulation outweigh the associated costs,” said Sims.
Aeronautical charges
The ACCC noted that the monitored airports have significantly raised aeronautical charges to airlines over time. Over the last decade, revenue per passenger has increased in real terms by 59 per cent at Perth Airport, 36 per cent at Brisbane Airport and 31 per cent at Melbourne Airport. Sydney Airport’s revenue per passenger has increased at a more subdued rate over this time (15 per cent).
However, Sydney still maintains the highest revenue per passenger of the four airports with the airport almost doubling its charges just before it was privatised in 2002. The increases across the four airports over the last decade represent an additional A$1.3 billion in payments from airlines.
Despite these significant increases in charges, only Perth Airport has materially improved its overall quality of service. The ratings for the other airports have changed little over this period, typically ranging between the high end of ‘satisfactory’ and ‘good’.
“High aeronautical charges imposed by airports need to be addressed by a more effective regulatory regime. While commercially negotiated outcomes are preferred, there is an imbalance in bargaining power between monopoly airports and airlines, particularly small airlines. To achieve this, the airlines need better access to information and recourse to commercial arbitration if a commercial deal cannot be struck,” Mr Sims said.
“Given that some of the second-tier airports such as Adelaide and Canberra potentially hold significant market power, the current inquiry provides an opportunity for the Productivity Commission to consider whether other major airports should be subject to similar types of regulatory oversight as the four monitored airports.”
-
News Feed
-
Thursday, 20 September 2018
by ANDREW HUDSON
Notwithstanding the issues associated with changes in the Australian Federal Government (including a new prime minister and new ministers for both Foreign Affairs and Trade), the process of approval of new Free Trade Agreements (FTAs) and parliamentary reviews of FTAs before enabling legislation is introduced to Parliament has continued.
Indonesia
Negotiations on the Indonesia - Australia Economic Partnership Agreement (IA - CEPA) completed on 31 August 2018 and the parties now are working to produce a final completed version in both governing languages.
However, some details have been made available through the DFAT web site at https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/Pages/ia-cepa-key-outcomes-for-australia.aspx with a document summarising key outcomes available at https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/Documents/iae-cepa-key-outcomes.pdf
Of course, Australia already has a form of FTA with Indonesia through our FTA with New Zealand and the ASEAN nations, which includes Indonesia (known as the AANZFTA). This already reduced tariffs on goods passing between the nations. There also was some further enhancement in trade in 2017, (see https://www.homeaffairs.gov.au/Customsnotices/Documents/dibp-notice-2017-30.pdf) but the IA - CEPA seeks to build on that AANZFTA by providing additional benefits. According to the material provided to date, there are a number of improved outcomes for goods, services and investment that are superior to the AANZFTA outcomes.
The process for completion and implementation will include review by the Joint Standing Committee on Treaties (JSCOT), which will also review a National Interest Analysis (NIA). If all goes to plan, legislation will be introduced to give effect to new rules of origin and other “Customs” procedures required for goods to receive preferential treatment. After other procedures, a commencement date will be announced.
PAFTA and EU Framework
The JSCOT approval process has now been completed for the Peru - Australia Free Trade Agreement (PAFTA) and the Comprehensive and Progressive Agreement for Trans - Pacific Partnership (TPP 11).
JSCOT Report 180 also supports the Framework Agreement between the EU and Australia as a precursor to full FTA negotiations and says binding treaty action should be taken.
TPP 11
Report 181 of JSCOT is solely dedicated to TPP 11 which, as readers would be aware, was rescued from the earlier Trans - Pacific Partnership (TPP) after the United States withdrew following the commencement of the Trump administration.
The active provisions of the TPP 11 are much the same as those in the TPP with the exception of suspensions largely associated with provisions affecting the US. JSCOT formed the view that the absence of the US would impact a number of local industries. After consideration JSCOT made the following recommendations:
1. That if the parties to the TPP 11 agree to reinstate the suspended provisions of the TPP then the reinstatement should be subject to a further inquiry by JSCOT.
2. That the Australian Government should review its bilateral FTAs with countries which are parties to the TPP 11 with a view to withdrawing from those which are no longer beneficial to Australian business.
3. That the Australian Government consider implementing a process through which independent modelling and analysis of a proposed FTA is conducted by the Productivity Commission or equivalent body and is submitted to JSCOT along with the NIA.
4. That binding treaty action should be taken.
Shortly after the release of Report 181, a separate ‘Modelling Report’ commissioned by a number of industry bodies indicated there would be discernible benefits to Australia from the TPP 11, although not as much as from the TPP or from a ‘TPP 16’ which would include those parties to the TPP and other countries which had indicated an interest in joining the TPP 11 including Indonesia, Korea, the Philippines, Taiwan and Thailand.
Enabling legislation to implement TPP11 by way of amendments to the Customs Act 1901 and the Customs Tariff Act 1995 was introduced into the House of Representatives on 23 August 2018 under the Law Enforcement and Cybersecurity Portfolio. From there it was referred to the Senate Legal and Constitutional Affairs Legislation Committee with a Report due on 10 October 2018.
At this stage, there does not appear to have been substantive Government response to the recommendations by JSCOT other than the introduction of the enabling legislation to adopt the TPP 11. However, the Government’s ability to pass that legislation in both Houses of Parliament may be tested depending on an election in the House of Representatives and the disposition of those in the Senate. Given the position of certain cross - bench senators the Government may require support from the Labor Opposition in the Senate. Debate on the relevant enabling legislation is expected in the Senate soon.
A full response to the JSCOT report by the Government will be of interest given the recommendation to withdraw from bilateral FTAs with parties to TPP 11 if those FTAs are no longer seen to be beneficial.
In the meantime, other countries that are parties to TPP 11 are in the process of their own ratification procedures.
Notwithstanding the apparent uncertainty regarding the progress of the TPP 11 in Australia, there seems to be general acceptance that steps should be taken to prepare for the introduction of the TPP 11 in the near future, including review of whether the TPP11 or other existing bilateral FTAs will be used, the forms of Certificate of Origin to be used and the manner of shipment of the goods to ensure that preference is not lost through the journey to the destination of the goods.
I hope to be addressing the TPP 11 and associated legislation in my Member Forums for the CBFCA is November this year. Otherwise, don’t hesitate to contact your friendly, neighbourhood Customs and trade lawyer.
The Frankfurt-based cargo carrier is the first airline to support the eDGD standard.
