Bills Digest no. 125 2014–15
PDF version [579 KB]
WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Tarek Dale, Economics Section
Juli Tomaras, Law and Bills Digest Section
18 June 2015
Contents
The
Bills Digest at a glance
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Other provisions
Concluding comments
Date introduced: 3
June 2015
House: House of
Representatives
Portfolio: Immigration
and Border Protection
Commencement: Schedule
1 commences on the later of 1 July 2015 or the day after Royal Assent. (The
commencement provision for Part 2 of Schedule 1 refers to the Australian
Border Force Act 2015, which
commences on 1 July 2015).
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
The Bill allows the
Comptroller-General of Customs (CGC) to establish, through legislative
instrument, the ‘Trusted Trader Programme’ (the programme) as a trade
facilitation measure. Under the programme, the CGC may specify, through
legislative instrument, how ‘trusted trader agreements’ can be used to meet
current import and export requirements legislated under the Customs Act 1901.[1]
In simple terms, the programme reduces the entities and
transactions that require compliance monitoring removing ‘accredited entities’
from traditional transaction-based border risk assessment, thereby reducing ‘regulatory
and administrative burden through simplified procedures (such as streamlined
reporting arrangements) and [providing] client service managers as a single
point of reference in dealing with ACBPS [the then Australian Customs and
Borders Protection Service]’.[2]
The programme aims to enhance the competitiveness of Australian businesses by
decreasing ‘the time-to–availability of their goods, offering trusted traders
opportunities for marketing and reputational benefits’.[3]
The Bill provides significant flexibility for the CGC to
establish the programme through legislative instrument; little detail about the
programme is included in the Bill itself.
While the programme may reduce regulatory requirements for
some participants, no regulatory impact statement is included with the Bill’s
Explanatory Memorandum, making it difficult to evaluate the exact regulatory
impact.
The purpose of the Customs Amendment (Australian Trusted
Trader Programme) Bill 2015 (the Bill) is to amend the Customs Act 1901[4]
(Cth) to establish the legislative framework for the Australian Trusted
Trader Programme (the programme) as a trade facilitation measure. The details
of the programme will largely be set through legislative instrument, based on
provisions in the current Bill.
Part 1 of the Bill establishes the programme. Part 2 of
the Bill makes a consequential amendment to the Australian Border Force Bill
2015 to specify that the Comptroller-General of Customs may not delegate the
ability to make rules by legislative instrument in relation to trusted trader
agreements.
In its 2013 publication, Blueprint for reform 2013–2018,
the then Australian Customs and Border Protection Service (ACBPS) identified
work in ‘Facilitating trusted trade’ and ‘Connected cargo systems’ as ‘key
areas of focus to transform our trade and goods approach’.[5]
The ACBPS established an industry advisory group in 2014
in relation to developing the programme. The terms of reference for that group
outlined the fundamental challenge which the programme seeks to address:
Sea and air cargo volumes are rapidly increasing, with
forecasts of future growth of 85 per cent in air freight and 20 per cent
in containerised sea cargo by 2016-17. The Australian Customs and Border
Protection Service’s (ACBPS) current transaction based control model is
unsustainable in the face of industry’s requests for differentiated approaches
to border clearance based on risk.
ACBPS is developing a Trusted Trader Programme (the
Programme) to enhance the competitiveness of Australia’s traders and better
align Australia with international standards and evolving models of trade.
ACBPS’ focus is to alleviate unnecessary administrative and regulatory burden
while also meeting the demands placed on ACBPS by increased trade flows and a
growing array of border risks.[6]
Meetings were ongoing between August 2014 to at least
February 2015, and included discussion over a range of technical issues.[7]
In a speech in May 2015, the Assistant Minister for
Immigration and Border Protection stated:
... the intention is to build a trusted trader programme that
provides for an easily understood and simplified border clearance process. The
long-term ambition here, after significant research and engagement with
stakeholders, is to be able to provide traders that have strong security and
integrity practices with expedited border clearance. Trusted, compliant traders
could look forward to priority service and increased certainty that will enable
better supply chain management and cost savings. This approach will encourage
legitimate trade and support economic growth, while also allowing Customs and
Border Protection to redirect resources to areas of high risk to ensure a
stable, secure border.[8]
Subsequently, the Minister announced in a budget press
release that:
A total of $5.6 million has been allocated to start a pilot
phase of a Trusted Trader Programme. The pilot will start with four industry
partners focusing on seaborne container exports and rapidly expand over the
year to imports and air cargo involving around 40 Australian exporters and
importers and their supply chains.
Faster clearance of low risk cargo for traders with a history
of high trade compliance and commitment to supply chain security will again
enable border officers to focus on high risk consignments.[9]
Trade facilitation
The programme is what is known as a ‘trade facilitation’
measure. According to the Department of Foreign Affairs and Trade:
Trade facilitation refers to the simplification and
harmonisation of international trade procedures to assist the movement of
goods. Customs, licensing and transit formalities involve complicated
administrative processes and burdensome documentation requirements. Businesses
can suffer significant costs as the result of complicated or unnecessary,
procedures.[10]
Informed by the potential benefits of reducing red tape
barriers to international trade (improving trade and economic growth) World
Trade Organisation (WTO) Members (including Australia) concluded the Agreement
on Trade Facilitation (ATF) at the ninth Ministerial Conference on 7
December 2013.[11]
The ATF contains ‘provisions for expediting the movement, release and clearance
of goods, including goods in transit. It also sets out measures for effective
cooperation between customs and other appropriate authorities on trade
facilitation and customs compliance issues’.[12]
The Department of Foreign Affairs and Trade notes that:
At a WTO General Council meeting on 27 November 2014, WTO
Members agreed to adopt the Protocol to implement the ATF. The ATF will now
formally enter into force after it has been accepted by two thirds of WTO
Members.[13]
Australia formally accepted the ATF on 4 June 2015 and
tabled the Agreement in Parliament on 18 June 2014 following
the recommendation of the Parliamentary Joint Standing Committee on Treaties
that binding treaty action be taken.[14]
The programme is intended to be consistent with trade
facilitation measures outlined in the WTO’s ATF:
The programme will have an exports focused element based on
the Authorised Economic Operator (AEO) concept, a key feature of the World
Customs Organization’s Framework of Standards to Secure and Facilitate Global
Trade (SAFE Framework).[15]
Australia’s role in securing the
ATF
According to the DFAT website:
Australian negotiators, led by DFAT representatives at
Australia's WTO mission in Geneva, played a pivotal role in securing the successful
conclusion of this agreement after almost 10 years of negotiations. Australia
played a particularly important role in co-sponsoring and pushing for
obligations to provide advance rulings and to prioritise the clearance of
perishable goods. Implementation of these obligations by WTO Members will
provide significant benefits to Australian exporters.
Two-thirds of the expected benefits of the Agreement are
anticipated to flow towards developing countries. The full implementation of
the agreement by developing countries will boost economic growth and create
millions of jobs. Australia is working to assist developing countries to
implement the agreement. [16]
Senate Legal and Constitutional
Affairs Committee
The Bill was referred to the Senate Legal and Constitutional
Affairs Committee for inquiry and report by 15 June 2015.[17]
However the Committee resolved ‘not to conduct an inquiry’, because:
... the Bill is uncontroversial and ... the details of the
programme will be in subordinate legislation available to the Parliament for
its consideration ... and given the time critical nature of the Bill ...[18]
Senate Standing Committee for the
Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills sought
‘detailed justification’ from the Minister as to why the key elements of the
programme are not set out in the Bill, rather than being left to legislative
instruments.[19]
The Australian Labor Party supports the Bill.[20]
Other non-government members have not commented on the Bill at the time of
writing.
Australian Chamber of Commerce and
Industry
The Australian Chamber of Commerce and Industry (ACCI) indicated
that it was supportive of developing the programme. In a press release in
October 2014 the ACCI Director of Trade and International Affairs, Bryan Clark,
stated:
... the Government’s announcements in relation to the
development of a Trusted Trader scheme are welcomed. Such schemes improve the
process of border crossing and reduce the 'hay stack' within which Customs
officials need to look for the compliance and security 'needles'. ACCI looks
forward to working with Customs in the development of this scheme.[21]
Australian Federation of
International Forwarders
The Australian Federation of International Forwarders
supports the pilot of the programme, and has stated that:
AFIF welcomes the Pilot trial to test and refine the
processes of the TTP scheme before full implementation and will continue to
engage with ACBPS and keep members informed of progress.[22]
Export Council of Australia
The Export Council of Australia has recommended the adoption
of a trusted trader programme, stating in its Trade Policy Recommendations
2014/15 that Government should:
Adopt measures to support trade facilitation advancements and
the Trusted Trader Programme (TTP), including the allocation of the appropriate
resources necessary to develop and implement TTP within the specified
timeframe. This should include an educational outreach campaign to all parties
in the supply chain.[23]
The Explanatory Memorandum to the Bill states that the
Bill has ‘no financial impact’.[24]
However, in a media release on 12 May 2015 the Minister for Immigration and
Border Protection, Peter Dutton stated:
A total of $5.6 million has been allocated to start a pilot
phase of a Trusted
Trader Programme.[25]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011, the Government has assessed the Bill’s
compatibility with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of that Act.
The discussion of human rights in the Explanatory
Memorandum includes consideration of the rights to equality and
non-discrimination, privacy and a fair and public hearing, but concludes that ‘the
Bill is compatible with human rights’.[26]
At the time of writing this Digest, the Parliamentary Joint
Committee on Human Rights had not considered the Bill.[27]
Trusted trader agreements
The Bill amends the Customs Act 1901 in order to
allow the Comptroller-General of Customs (CGC) to enter into a ‘trusted trader
agreement’ (TTA).
A TTA is initially established as an ‘interim’ TTA. Once
the CGC is satisfied that an entity meets qualification criteria (set out in
rules), then the CGC may ‘vary’ the TTA. ‘Varying’ the TTA confers ‘ongoing
trusted trader’ status on the entity, which can then satisfy obligations imposed
under the Customs Act through the TTA.
In simple terms, the programme reduces the entities and
transactions that require compliance monitoring removing ‘accredited entities’
from traditional transaction-based border risk assessment, thereby reducing
‘regulatory and administrative burden through simplified procedures (such as streamlined
reporting arrangements) and [providing] client service managers as a single
point of reference in dealing with ACBPS’.[28]
The programme aims to enhance the competitiveness of Australian businesses by
decreasing ‘the time-to–availability of their goods, offering trusted traders
opportunities for marketing and reputational benefits’.[29]
Regulatory impact
The overall impact of the Bill appears intended to reduce
regulatory requirements. The Explanatory Memorandum states:
... there may be some additional business costs associated with
meeting the qualification criteria. In return for meeting the qualification
criteria, entities participating in the Australian Trusted Trader Programme
will benefit from reduced regulatory burden and streamlined customs processes.
The benefits available to participants will be structured to promote best
practice management of supply chain security and trade compliance.[30]
Although it appears likely that the programme will have
some impact on regulatory requirements, no regulatory impact statement is
included in the Explanatory Memorandum. It is therefore difficult to evaluate
the extent to which the programme is expected to reduce regulatory
requirements, and whether it will result in a net reduction in regulatory
requirements for the relevant entities.
Commenting on early announcements, KPMG Customs and Excise
Specialist Leonie Ferretter stated:
The question remains as to whether these benefits [of the
Trusted Trader Programme] will eventuate. Over the past two decades there has
already been significant reduction in cargo clearance times. Furthermore, the
current timeframes for customs rulings has increased from 28 days to over 45
days.[31]
Key provisions
Schedule 1—Australian Trusted Trader Programme
Item 1 inserts two new definitions into subsection
4(1) of the Customs Act, including for the term ‘trusted trader
agreement’. This is an agreement (the terms of which may vary from time to
time) entered into under proposed section 176A by an entity and the CGC.
The significance of the trusted trader agreement is that
for any level of accreditation as a trusted trader, an entity will need to
enter into an agreement with Customs regarding the terms of that accreditation.
Division 1A of Part IV of the Customs Act sets out
requirements relating to the importation of goods. Item 2 inserts into
this part of the Customs Act proposed section 49C. Proposed
section 49C specifies that obligations under Part IV of the Act may be
satisfied in accordance with a TTA, except for requirements in relation to
prohibited imports. Thus the entity is released from obligations they would
otherwise have to comply with under Part IV and will not be in breach of the
Act if the obligation is:
- of
a kind prescribed by the rules dealing with TTAs under proposed Part XA
- specified
in those rules as an obligation from which an entity may be released and
- specified
in a TTA between the CGC and the entity.
Item 3 inserts proposed Division 1AAA into
Part VI of the Customs Act, which deals with the requirements relating
to the export of goods. This amendment basically mirrors the amendments made by
proposed section 49C, effectively allowing for requirements under
Part VI relating to exportation of goods to be satisfied in accordance with a
TTA, except for requirements in relation to prohibited exports.
Item 4 inserts proposed Part XA into the Customs
Act. Proposed Part XA sets out the framework for the Australian
Trusted Trader Programme. Specifically:
- proposed
section 176 enables the CGC to establish the programme
- proposed
section 176A allows the CGC to enter into a TTA with an entity that
nominates itself to participate in the programme, where the CGC ‘considers that
it is reasonably likely that the entity will satisfy the qualification criteria
set out in the rules’.[32]
The TTA confers ‘interim trusted trader status’
- proposed
section 176B sets out the self-nomination process, which may be completed either
in writing or electronically
- proposed
section 177 specifies that where a TTA exists and the CGC ‘is satisfied
that the entity satisfies the qualification criteria set out in the rules’,
then the CGC may ‘vary’ the TTA.[33]
If a TTA is ‘varied’, it provides ‘ongoing trusted trader status’, and the
benefits as specified by the CGC.[34]
In effect, this means that after an interim TTA is entered, where the CGC is
satisfied that qualification criteria have been met, then the CGC can vary the
TTA to allow the entity to meet obligations under the Customs Act
through the TTA. The heading to proposed Subdivision B of Part XA (which
contains section 177) provides that the validation of the qualification
criteria will be ‘based on physical inspection and audit’.[35]
- proposed
sections 178-178A specify that TTAs may be subject to conditions in both
the TTA and rules, and that the CGC may ‘vary, suspend or terminate’ a TTA if
the CGC reasonably believes that the entity has not complied with a condition[36]
- proposed
section 178B requires the CGC to maintain a register of TTAs that is
publicly available and
- proposed
section 179 allows the CGC, by legislative instrument, to prescribe rules
for a wide range of issues relating to TTAs, including qualification criteria,
conditions, the benefits available under TTAs, and a number of other details.
Section 273 of the Customs Act lists the decisions
that may be reviewed by the Administrative Appeals Tribunal (AAT). Item 5
inserts proposed paragraphs 273GA(1)(jc) to (je), which provides
that the following decisions by the CGC are reviewable by the AAT:
- a
decision to refuse to enter into a TTA
- a
decision to refuse to ‘vary’ a TTA or
- a
decision to ‘vary, suspend or terminate’ a TTA.
Part 2 amends the Australian Border Force Act
2015 to specify that the CGC may not delegate the CGC’s power under proposed
section 179 of the Bill (to make a range of rules by legislative instrument
in relation to TTAs).
The Bill provides a framework for a proposed ‘trusted
trader’ programme. It does this by allowing the Comptroller-General of Customs
to specify through legislative instrument a framework for exemptions from
current requirements in the Customs Act.
Members of Parliament may wish to consider whether this
broad power strikes an appropriate balance between providing flexibility for the
regulator during a pilot phase, and allowing for Parliamentary scrutiny of
changes to Australia’s legislated import and export requirements.
While the programme may reduce regulatory requirements for
some participants, no regulatory impact statement is included with the Bill’s
Explanatory Memorandum, making it difficult to evaluate the exact impact.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Customs Act 1901
(Cth), accessed 15 June 2015.
[2]. Australian
Customs and Border Protection, ‘Panel
session: Trusted Trader Program’, Industry Summit 2014, Customs
website, July 2014, accessed 9 June 2015.
[3]. Ibid.
[4]. Customs Act 1901,
accessed 15 June 2015.
[5]. Australian
Customs and Border Protection Service (ACBPS), Blueprint
for reform: 2013–2018, ACBPS, Canberra, July 2013, p. 36, accessed 18
June 2015.
[6]. ACBPS,
Trusted
Trader Programme Industry Advisory Group – terms of reference,
Canberra, 15 July 2014, accessed 4 June 2015.
[7]. ACBPS,
‘Trusted
trader industry advisory group: agendas’, ACBPS website; ACBPS, ‘Trusted
trader industry advisory group: previous discussion papers’, ACBPS website,
both accessed 4 June 2015.
[8]. M
Cash (Assistant Minister for Immigration and Border Protection), Address
to the World Customs Organisation IT Conference, Brisbane, speech, 5
May 2014, pp. 4–5, accessed 18 June 2015.
[9]. P
Dutton (Minister for Immigration and Border Protection), Benefits
for consumers, travellers and industry from red tape cuts and new technology,
media release, 12 May 2015, accessed 18 June 2015.
[10]. Department
of Foreign Affairs and Trade (DFAT), ‘Trade and
investment topics: Agreement on Trade Facilitation’, DFAT website, accessed
15 June 2015.
[11]. World
Trade Organisation (WTO), ‘Agreement
on Trade Facilitation’, WTO website, 7 December 2013, accessed 17 June
2015.
[12]. WTO,
‘Trade
facilitation’, WTO website, accessed 15 June 2015.
[13]. Department
of Foreign Affairs and Trade (DFAT), ‘Trade and investment
topics: Agreement on Trade Facilitation’, op. cit.
[14]. Parliamentary
Joint Standing Committee on Treaties, Report
147, Treaties tabled on 18 June, 24 November, 2 December 2014 and 25
February 2015, ‘Chapter 2: World Trade Organization (WTO) Agreement on
Trade Facilitation’, Canberra, March 2015, accessed 15 June 2015.
[15]. Australian
Customs and Border Protection, ‘Panel
session: Trusted Trader Program’, op. cit.
[16]. Department
of Foreign Affairs and Trade (DFAT), ‘Trade and
investment topics: Agreement on Trade Facilitation’, op. cit.
[17]. Parliament
of Australia, ‘Customs
Amendment (Australian Trusted Trader Programme) Bill 2015 homepage’,
Australian Parliament website, accessed 4 June 2015.
[18]. I
Macdonald (Chair of the Legal and Constitutional Affairs Legislation
Committee), Letter
to S Parry (President of the Senate), 11 June 2015, accessed 17 June
2015.
[19]. Senate
Standing Committee for the Scrutiny of Bills, Alert
Digest No. 6 of 2015, The Senate, Canberra, 17 June 2015, p. 18,
accessed 18 June 2015.
[20]. M
Thistlewaite, ‘Second
reading speech: Customs Amendment (Australian Trusted Trader Programme) Bill
2015’, House of Representatives, Debates, 16 June 2015, p. 50,
accessed 18 June 2015.
[21]. Australian
Chamber of Commerce and Industry (ACCI), Improving
Australian global competitiveness, media release, 14 October 2014,
accessed 18 June 2015.
[22]. Australian
Federation of International Forwarders (AFIF), ‘Weekly
news highlights and activities update’, AFIF website, 6 February 2015,
accessed 4 June 2015.
[23]. Export
Council of Australia (ECA), Trade policy
recommendations 2014/15, ECA, 10 November 2014, p. 4, accessed 18 June
2015.
[24]. Explanatory
Memorandum, Customs
Amendment (Australian Trusted Trader Programme) Bill 2015, p. 3, accessed
18 June 2015.
[25]. P
Dutton (Minister for Immigration and Border Protection), Benefits
for consumers, travellers and industry from red tape cuts and new technology,
op. cit.
[26]. The
Statement of Compatibility with Human Rights can be found at pages 5–8 of the Explanatory
Memorandum to the Bill.
[27]. Parliamentary
Joint Committee on Human Rights, Committee
Reports, The Senate, Canberra, accessed 18 June 2015.
[28]. Australian
Customs and Border Protection, ‘Panel
session: Trusted Trader Program’, op. cit.
[29]. Ibid.
[30]. Explanatory
Memorandum, Customs Amendment (Australian Trusted Trader Programme) Bill 2015,
op. cit., p. 10.
[31]. L
Ferretter, ‘Are
you a customs trusted trader?’, KPMG website, 1 August 2014, accessed 15
June 2015.
[32]. Proposed
paragraph 176A(1)(b).
[33]. Proposed
paragraphs 177(1)(b) and 177(2)(a).
[34]. Proposed
subsection 177(5).
[35]. Section
13 of the Acts
Interpretation Act 1901 (accessed 18 June 2015) provides that headings
are part of an Act. This means that headings can be used in interpreting an
Act.
[36]. Proposed
subsection 178A(1).
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