JULY 2016 – NEWSLETTER
From the MD’s desk – Glenn Allison
As we absorb the outcomes of the recent Federal election and the possible longer term trade implications of the Brexit decision, we are also seeing the introduction of the Verified Container Weight Declaration requirement for exports, and the commencement of the Trusted Trader program, whereby Expressions of Interest were able to be submitted from July 1st onwards.
The drawn-out Federal Election, with the narrow margins and the influx of more narrow-focus parties will be the catalyst for one certainty, and that is uncertainty in the trading and general business community.
How quickly the landscape changes from vote counting to policy implementation will determine the extent of that uncertainty. We, like all involved in international trade, hope the shift to growth policies is the priority. Time will tell.
Brexit was an emotionally charged process and outcome. Britain’s departure from the EU does not have a date set in stone, and a collective deep breath seems to be underway in the UK as the full practical implications of that decision are realised. On an international trade level, there are potential trade flow-on issues in Australia, with possible impacts in exchange rate fluctuations, Free Trade Agreement involvement (such as the mooted EU FTA), and changes in business confidence.
The VGM (Verified Gross Mass) process for the reporting of export container weights has been relatively smooth since the July 1st commencement. The hottest topic around this issue is the introduction of charges relating to VGM; in some cases justified by additional admin or practical work (e.g. coordinating container weighing) and in some cases, charges that are yet to be justified.
In terms of the Trusted Trader Program, Orbit Logistics has already registered our Expression of Interest in this program.
We look forward to our set-up meeting with the TT team from Dep’t of Immigration & Border Protection (DIBP) prior to the commencement of the Self-Assessment Questionnaire.
After our meeting with DIBP, we will be better placed to advise our clients regarding this process, and the overall program. Further information will follow.
Please also see below the article in this month’s newsletter, highlighting the 2nd half year preview from DIBP on what they see as the Compliance issues that will bet the most focus.
Best Regards
Glenn Allison
Managing Director
Calm to prevail as Australian trade prepares for the effects of Brexit
The Brexit decision leaves the world with uncertainty in terms of the future of the EU, the global economy, security and international trade measures.
In a response to the Brexit result, a joint statement from EU politicians stated that any agreement “will have to reflect the interests of both sides and be balanced in terms of rights and obligations.”
Whilst there are strong incentives for all nations to maintain strong partnerships, the statement suggests that trade regimes may have an additional level of complexity in the years to come. The UK will now likely have to renegotiate its entire portfolio of trade agreements with the other 161 World Trade Organisation (WTO) members.
Commentators are also suggesting that the UK not only risks favourable access to European markets, it jeopardises the ongoing existence of the UK itself with a potential break-away by Scotland.
The counter argument is that the UK will benefit by an immediate massive saving by not contributing to the EU budget whilst remaining free to establish its own trade agreements.
Throw into the mix Donald Trump and his views on re-introducing US protectionism and trade barriers and we could have a global economy subject to further radical change.
At the time of the Brexit result, Trump happened to be in Scotland. Nice timing Donald!
Trump told a press conference “there are great similarities between what happened here and my campaign. People want to take their country back”
Time will tell whether or not the Brexit decision is the right one but in the short term there is confusion to say the least.
BMW in Berlin has stated while there will now be a “period of uncertainty” there will be no immediate change to their UK operations until “future regulatory and legislative arrangements are agreed”.
What cannot be argued is the immediate decline in global markets.
Let’s hope that we do not witness a “rabbit-in-the-headlights” phenomenon where businesses do not want to make new decisions, or new investments, because they are uncertain about the future.
So what will be the direct impact on Australia?
According to the Department of Foreign Affairs and Trade, the UK is Australia’s seventh largest two-way trading partner. In 2014-15, two-way trade was worth around $21.1 billion, with Australian exports worth $8.6 billion and imports from the UK $12.6 billion.
Kerry Stokes, the executive chairman of Seven Group Holdings, provided a measured statement to the Sydney Morning Herald that he did not think there would be much of an impact on trade with Australia “Sensible people will negotiate sensible outcomes,” he said. “And there is two years to negotiate a trade exit for Great Britain. I would expect by the time they finish [negotiating] a trade agreement will be favourable for both parties and life will go on.”
Ironically, Kerry’s statement closely resembles the UK second world war posters “keep calm and carry on”
Fascinating times ahead!
Paul Zalai – FTA
Australian Trusted Trader Program – a trade initiative via the Dep’t of Immigration and Border Protection (DIBP)
Australian Trusted Trader is a voluntary trade facilitation initiative. It recognises businesses with a secure supply chain and compliant trade practices, rewarding accredited businesses with a range of trade facilitation benefits.
Australian Trusted Trader is an Authorised Economic Operator (AEO) programme. AEOs work to secure the international supply chain, while facilitating the movement of legitimate trade.
Benefits of Australian Trusted Trader
Current benefits
Trusted Traders receive a suite of trade facilitation benefits:
- Dedicated Account Manager/point of contact between DIBP and the Trader
- Priority service when requesting advanced rulings on tariffs, valuation and origin
- Differentiated and prioritised cargo examinations for low risk traders.
Mutual Recognition Arrangements are being established between the Australian Government and our key trading partners. The arrangements will enable Trusted Traders to access trade facilitation benefits of the reciprocal trading partner—reducing the customs regulatory burden for Australian exporters entering foreign markets.
Benefits from 2017-18
From financial year 2017-18, Trusted Traders will receive:
- Deferral of duty payments on imported goods for a set period
- Streamlined reporting arrangements to reduce the administrative burden involved in importing and exporting goods.
Exploring future benefits
DIBP are currently exploring a range of new trade facilitation benefits that could apply to Trusted Traders, including:
- Enhanced cross-agency collaboration with other border agencies
- Labour mobility and trade in services
- Secure trade lanes.
- Opportunity to work with DIBP to test new benefits and influence the development of future benefits.
Eligibility
Australian Trusted Trader is free to join and accreditation is available to all Australian businesses that are active in the international trade supply chain, and meet or exceed the required standards.
Eligibility requirements
- An Australian Business Number (ABN)
- Two years history of participation in international trade activities
- The ability to demonstrate they are financially solvent.
Applying for Australian Trusted Trader (including service providers)
To apply:
- register for an account and obtain a login
- complete an expression of interest (EOI) (382KB PDF)
- complete the self-assessment questionnaire (SAQ) (719KB PDF)
- be verified through an on-site validation
- enter into an ATT agreement (202KB PDF).
Depending on the size and complexity of your business, submitting an expression of interest and self-assessment questionnaire might take between 20 and 200 hours. You are not required to use a consultant to complete any part of the application process.
More information about the application process is available.
For further information or guidance on this process from Orbit Logistics, please refer to:
David Browne, General Manager – Operations
david.browne@orbitlogistics.com.au +61 3 9330 2625
GOODS COMPLIANCE UPDATE
The Department of Immigration & Border Protection (DIBP) have issued their latest Compliance Update.
A little like the ATO announcing their planned focus on certain taxation areas or groups, so too does DIBP announce their planned focus areas for 2nd half of 2016.
Of note:
- Customs Valuation: – the base value calculation against which duty & GST is calculated.
- Production Assists Costs will be a particular focus. This is where the importer supplies or funds part of the imported product and the value of these assists needed to be added into the customs valuation. This is rarely obvious from commercial invoices or similar documents, so it is reliant on the importer providing the Broker of any potential production assists. Our Brokers can assess these costs and advise if they need to be included in the value for duty & GST calculations.
- Tariff Concessions Orders – the instruments that allow duty free importation for certain types of goods; this remains a hot topic. DIBP is going through some changes of practice in how they are interpreting qualification for goods under TCOs. This is a big, industry-wide issue, as DIBP are significantly tightening their interpretation, especially so for goods that are considered to be ‘more than’ what is described in the TCO. Retrospective duty demands going back 4 years as well as possible penalties are real possibilities. DIBP have (finally) acknowledged this as an industry area of concern and plan to issue update guidelines on TCO interpretation. We have no doubt whatsoever that this will result in disputes on TCO eligibility that will escalate to AAT hearings and beyond.
- Voluntary disclosures: a highly encouraged practice, whereby importers, exporters, Brokers etc should make voluntary disclosures on contentious matters (especially those matters that have a duty element, such as the 1st two topics above). Early voluntary disclosure may avoid expensive administrative Strict Liability penalties or legal action. Please speak to one of our Brokers confidentially if you have any concerns or questions in this regard. Voluntary Disclosures have identified over $37million in understated revenue in the 9 months to the end of April 2016. It is a very important matter for all clients to consider.
For the full Goods Compliance Update for June 2016 click HERE.
VIC ROADS UPDATE – Westgate Distributor Project
http://www.cbfca.com.au/documents/WGD_Stage_1_Info_Update.pdf