Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

Labor supports the passage of the Customs Amendment (Australian Trusted Trader Programme) Bill 2015. This bill essentially establishes a quality assurance framework for trading entities that operate within the customs framework within Australia. It provides the legislative framework for the establishment of the Trusted Trader Program from 1 July 2015. In June 2005, the World Customs Organization established standards to secure and facilitate global trade, which are known as the WCO SAFE Framework. The SAFE Framework introduced standards that promote supply chain security and trade facilitation at a global level to allow certainty and predictability of trade moving across international borders. The creation of the SAFE Framework was described by the WCO as 'a historic occasion upon which implementation would act as a deterrent to international terrorism, secure revenue collections and promote trade facilitation worldwide'.

The concept of a Trusted Trader Program, or a security and quality assurance framework, has been adopted by all of Australia's major trading partners—including the United States, Canada, New Zealand, Japan, China and the European Union—over the last 10 years. Essentially what we are doing here today is ensuring that our customs framework complements and works in conjunction with other supply chain frameworks throughout the world—in particular, those of our closest trading partners. It is through the WCO SAFE Framework that the promotion of standards that enable a harmonised and integrated approach to supply chain management for all participants is sought. Consistent with the WCO SAFE Framework, the Australian Trusted Trader Program will introduce a differentiated trust based regulatory framework at the border for those entities that meet or exceed international supply chain security and trade compliance standards. Entities meeting those standards will be assessed as 'low risk' and will benefit from reduced regulatory burden and streamlined customs processes. This will alleviate a significant trade burden and enhance the competitiveness of Australia's international businesses.

The previous Labor government, under the former Minister for Home Affairs Jason Clare, released in July 2013 the Australian Customs and Border Protection Service Blueprint for reform 2013-2018. It was in that document that the notion of the Trusted Trader Program was first highlighted. The blueprint said:

Recognising our role supporting economic prosperity and protecting the community, we also support the World Customs Organisation's framework of standards. This framework focuses on cooperation and collaboration between customs administrations and industry in managing the whole-of-trade supply chain.

While the Australian Trusted Trader Program is a trade facilitation initiative based on internationally recognised supply chain security and compliance standards, it contributes to a holistic compliance framework as an important element of the compliance continuum. That provides a better understanding of the entities moving goods across our borders. This strategy will basically work to 'shrink the haystack' by removing trusted entities from traditional transaction based border risk assessment. But I must point out that border risk assessment predominantly relates to administrative processes around the priority of assessment for tariff rulings, the return of customs duties and the like; it does not affect the tests that are ordinarily applied by agencies such as the Australian Federal Police or biosecurity and security tests of any imports coming into Australia.

The program and the agreements that entities within the industry will sign up to have been developed in consultation with industry. In August 2014, Customs established an industry advisory group to provide advice, feedback and input into the design and development of the Trusted Trader Program. Industry groups such as the Australian Federation of Freight Forwarders, the Australian Industry Group and the Australian Peak Shipping Association were involved in that peak body, as well as large firms such as Boeing, Fletcher International Exports, GM Holden Ltd, HP Australia, IBM, Ikea and Qantas. So the approach that is being taken in this bill has the support of industry in Australia who work in the customs framework.

The main amendments in this bill allow for the creation of Trusted Trader agreements. This allows an entity to nominate themselves to participate in the Australian Trusted Trader Program. That will allow the Comptroller-General of Customs to enter into a Trusted Trader agreement with an entity which will provide administrative benefits to that entity if the entity nominates itself to participate in the program and the Comptroller-General of Customs considers that the entity is reasonably likely to satisfy the qualifications set out in the rules, the qualification criteria.

It is at that point that the entity is given provisional agreement, and no privileges extend at that particular point. It is then up to the entity to prove that it meets the minimum qualifications for certification as a trusted trader. Once that has occurred—once those tests have been done and accreditation has been provided—that will then allow the Comptroller-General of Customs to vary the agreement to provide those additional administrative benefits and legislative benefits under part 4, other than division 1, and part 6, other than division 1, of the Customs Act, if he or she is satisfied, as to the validation of the qualifications criteria, that the entity satisfied the qualifications criteria set out in the rules, and to provide that agreements may be subject to conditions prescribed by the rules and terms and conditions specified in the agreement. That will then allow the Comptroller-General to vary, suspend or terminate an agreement unilaterally if he or she reasonably believes that the entity has not complied, or is not complying, with any condition prescribed by the rules or a term or condition specified in the agreement.

The program also allows a decision of the Comptroller-General of Customs to refuse to enter into a trusted trader agreement to be a decision that is subject to review by the Administrative Appeals Tribunal. The legislation also allows a decision of the Comptroller-General of Customs to refuse to vary a trusted trader agreement to be a decision subject to review by the AAT. The program also allows a unilateral decision of the Comptroller-General to vary, suspend or terminate a trusted trader agreement to be a decision that is subject to review. It also allows the Comptroller-General to maintain a public register containing information of a kind prescribed by the rules in relation to each trusted trader agreement entered into, and allows the Comptroller-General of Customs to prescribe rules, by legislative instrument, for and in relation to the operation of the program.

In terms of the qualification that an entity must meet to be considered for, or to be certified under, the trusted trader agreement, those qualification criteria will be included in the program rules, and the rules will be a legislative instrument, which will be subject to parliamentary scrutiny and disallowance. The qualification criteria have been developed having regard to international best practice. The criteria set out in annex III of the World Customs Organization SAFE Framework of Standards to Secure and Facilitate Global Trade and the WTO Agreement on Trade Facilitation are all covered by the proposed rules associated with this program. The qualification criteria to be set out in the rules will require that an entity undertakes activities that form part of the international supply chain; has been operating in the international supply chain for a minimum of two years before submitting their nomination; and is a lawful or legally standing association, corporation, partnership, proprietorship, trust or sole trader that has the legal capacity to enter into agreements or contracts, assume obligations, incur and pay debts, prosecute and be prosecuted in its own right and be accountable for illegal activities. The entity must also have an Australian Business Number, and have completed a security risk assessment that is periodically reviewed by the entity and identifies risks specific to their international supply chain activities and identifies measures that the Comptroller-General of Customs considers are adequate to mitigate those risks in respect of integrity.

The entity must also meet the following requirements relating to criminal history of the principal owners or directors of the entity, or any other person within the entity that is critical to the integrity of the international supply chain. The entity must meet certain financial viability requirements and the entity must be able to meet its financial obligations when they fall due. The entity's record-keeping system is scrutinised and the entity must keep records that contain meaningful and useful information demonstrating compliance with Customs-related laws and records must be secured from misuse and unauthorised access. Also, as to the accuracy and timeliness of communications regarding the importation or exportation of goods, the entity must demonstrate that they have adequate procedures in place to ensure that the communications made regarding the import or export of goods are accurate and secure and submitted in accordance with relevant statutory time frames. The entity must also prove supply chain security standards—namely, that the entity has, having regard to the entity's role in the international supply chain, adequate security measures relating to logistical procedures for security, physical security, cargo unit security, personnel security, third party and business partner security—and, finally, that the entity has trade compliance standards as to the entity's compliance with a Customs-related law as defined in section 4B of the Customs Act.

The Trusted Trader Program initially will be piloted by Customs and Border Protection, and the Trusted Trader Program will exist in a pilot phase for the first 12 months of its operation. It is expected that 40 companies who work in this space will be involved in that pilot. There are benefits that will flow to an organisation during the pilot phase, once they have met the initial compliance standards and have been granted trusted trader status by the Comptroller-General and they have had their agreement varied. Those benefits will flow to the particular entity once those processes have been fulfilled.

The processes are: enhanced client services through the provision of a departmental account manager; priority trade services, such as priority processing of advance rulings in relation to tariffs, origin and valuation advice, internal reviews of tariff advice and processing of refunds of Customs duty or a duty drawback; and reduced examinations which, as I mention earlier, are subject to security assessment and do not undermine processes that already take place in respect of the role of the Australian Federal Police and other security agencies.

On the whole, this is a reform that will ensure that Australia's Customs and supply chain government procedures align with world's best practice through the WCO SAFE Framework. It will align our practices to ensure that they are streamlined and will work in concert with the processes of our major trading partners. On that basis, Labor is happy to support this amendment to the Customs legislation.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker, for this opportunity to speak on the Customs Amendment (Australian Trusted Trader Programme) Bill 2015. The member for Kingsford Smith has taken the House through the bill, which establishes a Trusted Trader Program from 1 July this year. This means that certain exporters and importers will be able to enter into a Trusted Trader Agreement with the Comptroller-General of Customs. This will give them special rights and privileges, including enhanced client service, priority trade services and reduced examinations—subject, of course, to risk assessment.

The goal of this program is to make it easier for Australian importers and exporters in low-risk industries to get access to international markets. I am very passionate about this and I am sure that both sides of the House are very passionate about it. This will alleviate significant trade burdens and enhance the competitiveness of Australian international businesses.

There has been a lot of discussion of trade in the media lately. Every day there are stories about the TPP, ChAFTA, KAFTA and JAEPA—an alphabet soup of trade agreements. This flurry of activity in trade has been brought about by necessity due to the changing fundamentals of the international economy. Increasingly, international production is characterised by the emergence of elaborate global value chains.

To take a well-worn example: the iPhone. You have the design, the software and the marketing done out of the US; you have the colour screen and the speakers, which use rare earth elements from Mongolia; you have the chips and batteries made in Korea and Taiwan; and you have other parts made in France and Italy, and then it is assembled in China. That does give a good example of how increasingly in the global economy you can have one device or one product with numerous companies and numerous nations involved in its production.

The McKinsey Global Institute has done a terrific job of quantifying these benefits of global value chains in their recent report, Global flows in a digital age. I commend that particular report to honourable members. It showed that the flow of goods, services and finance around the world in 2012 reached $26 trillion, which is 36 percent of global GDP—1½ times larger than in 1990, not that long ago.

The McKinsey Global Institute found that the flows themselves contribute a great deal to GDP growth, confirming what we as internationalists in this place know intuitively: that trade liberalisation has driven competition, innovation and entrepreneurship. The contribution of these flows to global GDP is as much as $450 billion each year—between 15 to 25 per cent of world economic growth. It is not just decades of liberalisation that have brought about this rise in global exchange; of course we have also had rapid technological advance and digitisation, which is increasingly transforming and supplementing all global flows.

While international trade is rapidly changing, Australia is at risk of falling behind if we are too slow to adapt to changes in the global economy. According to APEC, approximately 40 per cent of exports measured in value-add in Australia originate from services—more than double the representation of services in gross trade statistics. But this number is still below the OECD average of 48 per cent, despite Australia performing well in the OECD Services Trade Restrictiveness Index. Even worse, while New Zealand, the UK and the US outperform us in terms of value-added service exports, they have also increased their share since 1995. In Australia, our share of value-added service exports has actually fallen in that period.

Recent research from the UN Conference on Trade and Development reveals that Australia's participation rate in global value chains is lower than that of 22 of the 25 largest-exporting economies. This means that Australia is missing out on a lot of opportunities to value-add, as we trade increasingly in raw materials instead of using our human capital—our ideas and our imagination—to its greatest advantage.

A Lowy Institute report Global value chains, border management and Australian trade, released last year, found that Australia has huge potential benefits by increasing our engagement in those global value chains. They estimate that continued liberalisation of trade in services could result in an additional $21 billion in Australian services exports, and an extra 100,000 Australian jobs at a time when, as we all know, jobs are hard to come by. I want to congratulate the Lowy Institute on their report, but it also says:

… the window of opportunity for Australian service providers to entrench themselves in GVCs throughout Asia’s high-growth economies and beyond will not remain open forever.

This is a timely warning. Christopher Vas from Murdoch University argued in The Conversation in 2013 that Australia's strong trade with our regional neighbours—the big four of China, India, Japan and Korea, as well as Taiwan, Indonesia, Thailand and New Zealand—came down to our regional competitive advantage. In other words: proximity and resources. But he said that our privileged position:

… may soon come under pressure, with other international economies wanting to take advantage of the burgeoning Asian economies.

So for all of these reasons—with all of these pressures, with all of this change and with all of this opportunity swirling around us in the most dynamic part of the global economy—we will support the Australian Trusted Traders Program today, as my colleague the member for Kingsford Smith indicated in his contribution a moment ago.

It was my colleague, the member for Blaxland, when he was the minister for home affairs and justice, who made a first important key step in this direction, which really laid the foundations for this bill that we are supporting today. He released the Australian Customs and Border Protection Service Blueprint for Reform 2013-2018. In it the Labor government, of which he was a part, identified facilitating trusted trade as a key area of focus for reform of Australia's approach to trade and goods.

This bill allows the Comptroller-General of Customs to enter into a trusted trader agreement with entities to provide them with administrative benefits and advantages—and we are all for that. Exporters and importers wishing to enter into these agreements must be part of an international supply chain for at least two years, have an ABN, have completed a risk assessment, and need to have met robust supply chain security standards—in addition to other important conditions—to make sure that there is integrity in the system so that people are getting the right kind of advantage from being part of it. These trusted traders will get access to priority processing of advance rulings, enhanced client service and reduced examinations if they pass all of those conditions that I just ran through. This will make it easier for importers and exporters to do their job. It will make them more competitive globally and that is a great thing for every Australian. The more competitive our businesses are, the more successful they are in regional and global markets, the better it is for the Australian standard of living more generally.

We know, from the example provided by our friends across the ditch in New Zealand, that these sorts of schemes do work, as the Secure Exports Scheme from New Zealand has shown. Around 120 authorised exporters are part of the New Zealand scheme. In 2013, almost a third of all New Zealand exports originated from these authorised exporters, so you can see the potential in a well-run scheme of this nature. Data from New Zealand shows that despite the fact that Australia has an FTA with the US, New Zealand exporters with no such agreement are 3½ times less likely to see their cargo held up for examination on arrival at a US port.

Again, quoting the authority of the Lowy Institute report:

Australian exporters are left looking like Australian travellers waiting in line at Heathrow Airport, waving passports with Her Majesty's request that that they be offered every assistance, while EU passport holders walk straight through.

That is a colourful way of highlighting the challenges that we are up against here and why it is so important that the Australian Trusted Trader Program will remove some of these barriers for Australian companies.

There is, of course, more to be done in this area. Once the Trusted Trader Program is up and running, Australia will need to push hard to ensure that the scheme is recognised by our major trading partners. In other words, we need to ensure that the trust we place as Australians, as an Australian government, in our trusted traders is reciprocated by our trading partners. Again, I indicate that Labor will be supporting the Customs Amendment (Australian Trusted Trader Programme) Bill 2015. We took the first step in this direction when the member for Blaxland released the Australian Customs and Border Protection Service Blueprint for Reform.

There is a much broader principle at play here. This is an important piece of very specific legislation and we are all for it, but, more broadly, we need to commit ourselves, in this place, to ensuring that businesses of all sizes in this country—big, medium and small—are not left behind in the global economy. We are up for supporting anything which gets Australian businesses a bigger and better slice of the action in the global value chains of the future. Increasingly, we know that those global value chains will be operating in our region—the most dynamic part of the global economy.

We want to send a message from this place, from the House of Representatives, to every Australian business that what we can do to make life easier for you—to make you more wealthy and prosperous—we will do, because there is a flow on impact for every Australian in the jobs and the prosperity that good Australian businesses create, whether they are selling into the domestic market or into the global market beyond.

Jamie Briggs (Mayo, Liberal Party, Assistant Minister for Infrastructure and Regional Development) Share this | Link to this | Hansard source

In summing up the debate, I thank all the members for participating in this debate. The Customs Amendment (Australian Trusted Trader Programme) Bill 2015 will amend the Customs Act 1901 to establish the Australian Trusted Trader Program. The program will introduce differentiated trust-based regulatory treatment at the border for those entities that meet or exceed international supply chain security and trade compliance standards. The Australian Trusted Trader Program—which has been co-designed with industry stakeholders, partner agencies and international counterparts—is a trade facilitation initiative based on internationally recognised supply chain security and trade compliance principles that contribute to a holistic compliance framework.

The proposed changes to the Customs Act will allow the Comptroller-General of Customs to enter into a trusted trade agreement with an entity that has nominated to participate in the program. A decision of the Comptroller-General of Customs to refuse to enter into a trusted trader agreement is reviewable by the Administrative Appeals Tribunal—the AAT. The bill will allow the Comptroller-General of Customs to vary a trusted trader agreement following validation, including physical inspection and audit, to release an entity from certain statutory obligations or enable the entity to meet certain statutory obligations in an alternative manner. A decision of the Comptroller-General of Customs to refuse to vary a trusted trader agreement is reviewable by the AAT. The bill will allow the Comptroller-General of Customs to vary, suspend or terminate a trusted trader agreement unilaterally. A decision of the Comptroller-General of Customs to vary, suspend or terminate a trusted trader agreement is reviewable by the AAT. The bill will allow the Comptroller-General of Customs to publish and maintain a public register containing information in relation to each trusted trader agreement entered into. The bill will allow the Comptroller-General of Customs to make rules, a legislative instrument, in relation to the operations of the program.

In summary, the reform delivered through this bill will support the government's priority of ensuring Australia's ongoing success as an open economy. This bill will enable the Australian Border Force and the Department of Immigration and Border Protection to create stronger borders by shrinking the haystack. The commencement of this program will enhance Australia's capacity at the border to manage the growth in trade volumes by diverting resources away from highly compliant traders to focus on risk and noncompliance. I commend the bill to the House.

Question agreed to.

Bill read a second time.