Australia: Custom, Trade And Transport Update - April 2009

Last Updated: 28 April 2009
Article by Andrew Hudson

The G20, The WCO and Customs

The world's press has been full of the words and sentiment expressed at the recent G20 Summit in London. One of the outcomes from the Summit was the issue of a communiqué from the G20 leaders on 4 April 2009 setting out a list of measures aimed at stopping the world's economy from falling further into recession. Part of those measures was a commitment to assist international trade and resist the obvious temptation to resort to protectionist measures.

The trade parts of the G20 communiqué

The communiqué contained a number of specific commitments from the G20 leaders some of which can be summarised as follows

  • To refrain from raising new barriers (including no new import or export restrictions and no WTO inconsistent measures.
  • That there should be no fiscal protectionism and no restraints on capital flows.
  • To notify the WTO of protectionist measures adopted by any country
  • To promote and facilitate trade and investment.
  • To provide $250 billion over 2 years to support trade finance.
  • To complete the WTO Doha Round.

The WCO response

The World Customs Organisation (WCO) is one of the main bodies tasked to facilitate international trade as it represents customs organisations throughout the world . Clearly, national governments, through their customs organisations, have a direct role in the facilitation of trade through the imposition and collection of revenue on imports and the imposition and administration of border controls such as the physical inspection of goods and quarantine measures.

The WCO responded to the G20 communiqué with one of its own. This endorsed the comments and proposed measures of the G20 and made a number of its own observations, including the following:

  • It noted declining trade volumes (imports and exports).
  • That there was a reduction in duties being collected which would have a particularly adverse effect on developing countries.
  • That the availability of trade finance was declining.
  • That there had been some positive responses in some jurisdictions with deferred duty collection, looser repayment plans, faster duty drawback and flexibility for security (guarantee) requirements.
  • The adoption of some improved Customs modernisation programs.
  • That some countries had been slow to adjust revenue targets with a consequent increase in the physical inspection of cargo to determine if the goods were of the type on which duty was payable.
  • That there had been an increase in some anti-facilitation measures (unnecessary physical inspection and the adoption of new local standards).

The WCO communiqué also contained a number of recommendations including:

  • That there be an increase in Customs to Customs co-operation such as that contemplated by the WCO SAFE Framework to facilitate trade.
  • To promote risk management and other trade facilitation measures and focus intervention on illegal activities such as "pirated" goods.
  • That Customs authorities consult and work with Trade Ministries.
  • That there be an improvement in Customs- to Business Partnerships (such as the AEO concept and other measures contemplated by the SAFE Framework).
  • The use of consolidated border management regulation with one only place of reporting.
  • To use deferred duty payment schemes.
  • The adoption of increased flexibility of in the types of guarantee security required by Customs authorities.

The Australian context

Clearly, our Government has been to the fore with these initiatives. Our Prime Minister was part of the G20 Summit and Australia has for many years been a leading figure at the WCO and has actively engaged with many WCO initiatives. As a result it will be interesting to see how Australia responds to the comments and recommendations contained in the G20 and WCO communiqués.

The next Federal Budget will give some clear guidance here as it will provide an insight into the views of our Government as to reductions in trade levels and the associated reduction of revenue collected by Customs authorities. It should also provide some insight into the fate of some programs and measures of the type recommended by the WCO to facilitate trade. However it is worth noting that the recent history has shown that those measures may not have a place in our jurisdiction. For example:

  • The proposed introduction of deferred recovery of customs duty has had a long and unhappy history and there seems no immediate prospect of it being delivered other than in the "hybrid" fashion now in place which seems to have little support. The full duty deferral model, consistent with GST practice was very much the preferred model which could not be delivered.
  • Following a review by Australian Customs it had been determined that the costs of an AEO program outweighed immediate the benefits of its introduction so that it will not be introduced. However, Australian Customs had affirmed that its introduction will be re considered should it prove that the lack of an AEO program was hindering Australian traders.
  • Following a separate review by Australian Customs, the increased use of RFID and the UCR would not be pursued, again as costs outweighed benefits.
  • Our proposed "Customs to Business Partnership" in the Accredited Client Program has also had an unhappy history tied to the inability of Australian Customs to deliver the full duty deferral model which had been part of the original proposal. This leaves "Frontline" as the main Industry engagement program which is, of course, more aimed at illegal trade across the border.
  • We still have border management regulation which entails reporting to a number of different agencies at the same time and potential penalties payable to each agency for errors in reporting – even if inadvertent. The "single window" concept has been discussed for years but does not appear any closer. To the same effect, the development of a "Standardised Data Set" for one set of information to be provided to all border agencies still seems some time away despite all the good work which has been done on the project.
  • The WCO has called for the increased use of "Modernisation" in all customs authorities. This is consistent to the "Revised Kyoto Convention on the Simplification and Harmonisation of Customs Procedures" to which Australia is a signatory. This underpinned, in part, the CMR/ICS reforms. However, in a larger sense, such a process would cover total reform of regulation the responsibility of Australian Customs. That would include a total reform of the Customs Act 1901 which is groaning under the weight of complex amendments over the years. The recent Time Release Study conducted by Australian Customs did reflect that cargo was released promptly in the majority of cases. While this is an excellent result, it does rely, in part on industry's compliance with its reporting obligations and it should not suggest that there is no room for improvement at all, especially in areas where there are acknowledged problems!

Unfortunately given the state of the GFC, the associated leakage of revenue to Government and the priority to other interesting and speculative projects, those initiatives which the G20 and the WCO have endorsed and recommended may have little real prospect of adoption in Australia in the short to medium term.


Views on opportunities arising from the GFC from Scott Carson, Director of Carson Business Logistics

In these challenging economic times , The "R" word can also be "O" for OPPORTUNITY for Freight Forwarders and Customs Brokers :

  • Talk to your container carrier(s) and see where there may be opportunities for you to both save costs in areas such as two way running to and from client premises (eg. FCL deliveries and/or empty pickups), flexible delivery times and pick up times to/from clients premises, etc – you carrier should be seen as a service partner to your business.
  • For the first quarter of 2009 – analyse job margins for forwarding only, customs only and separately combined jobs per trade area, in to gauge directly the effects of the downturn within each trade area – why continue to service a trade area that the business loses money on unless there is a strategic advantage in doing so?
  • Reduce overheads but don't cut back on customer service levels – there is a limit to the benefit of cost cutting and business retention/lost business replacement in 2009 will be paramount.
  • Consider having minimum volume requirements for service and rate proposals for future potential customer proposals – what a potential customer may have been importing or exporting in volume for 2008 may likely not be the volumes that will eventuate for 2009 – ask for volume projections in writing.
  • Negotiate with your landlord on premises rental – whilst a binding lease is a binding lease – commercial/ industrial lease $$ per sqm are falling in the major capital cities and it will be a fact that when many current leases expire over the next 2 to 3 years, the market $$ per sqm may have reduced, so if you consider that your current premises directly suit your business for the longer term, consider the possibility of talking now to your landlord ("the lessor") or the landlord's agent and try negotiating a reduction in current lease rental costs as a trade off for entering into a new longer lease term – no harm in asking !!
  • Negotiations with shipping lines on services and rates – as there is a lot of volatility and competition In the market as present, this also presents opportunities – forwarders and brokers should consider these negotiations to be handled directly by senior management/the business owner(s) during these times.
  • Consider offering existing clients some additional value added services that are of low cost, but nonetheless no charge additional services – eg. a quarterly newsletter, a formal review/audit of customs tariffs at no charge, assistance with advice on warehousing of their product, etc.

Whilst times are tough at present, one thing to consider is that this situation provides you with the opportunity to make your business more efficient by streamline your operating procedures and processes – then when the economy and international freight volumes start improving, so do existing client volumes, thereby reducing your business' "cost to service" as this situation develops.

Visit for further information.


Competition authorities succeed in actions to gather evidence against SQ and Emirates

As you are all aware, competition authorities around the world have been taking action against alleged price fixing on air cargo services.

Many airlines here (including QF and BA) have settled, but some (including SQ and Emirates) are defending the action.

One element of the action has been efforts by SQ and Emirates in the Federal Court to set aside notices served by the ACCC under Section 155 of the Trade Practices Act 1974 seeking documents and information on the alleged price fixing. These notices are often used by the ACCC to require the production of relevant information and documents. The notices are often drawn very broadly and compliance with the notices is often time consuming and costly, with the associated concern that failure to comply with the notice can, itself, lead to sanction by the ACCC. In this instance, the airlines sought to challenge the ability of the ACCC to serve the notice on the basis that the alleged actions the subject of the notices took place outside of Australia where the ACCC had no jurisdiction.

A single judge of the Federal Court has, however, very recently (2 April 2009) upheld the action of the ACCC and the legality of the notices issued against SQ and Emirates. While that may be the subject of a challenge to the full Federal Court the issue and the judgment may be of interest.


AAT rules to allow joinder

In Dow Agroscience Australia Ltd and CEO of Customs (2 March 2009), the AAT was called to rule on application by Nufarm to be joined to certain AAT proceedings. The proceedings related to an application by Dow for a TCO for certain chemicals. Nufarm produce the chemicals in Australia and was the only objector to the grant of the TCO. Customs decided that the TCO should not be made which decision was affirmed on internal review by Customs. That decision turned on Customs' view that the Australian content of the product produced by Nufarm was at least 25% on which Dow disagreed.

Dow sought review of that decision in the AAT and Nufarm sought to be added as the party joined in the AAT proceedings supporting the decision of Customs.

In terms of the provisions of the AAT Act the issues were whether Nufarm was a "party affected" (which was conceded) and then whether the Member of the AAT should exercise its discretion to allow Nufarm to be joined. In making that decision the AAT had to look at a number of factors including the need to conduct the review as expeditiously as possible, the increase in costs arising from the joinder and what is required to enable the AAT to conduct a fair hearing.

Ultimately the AAT allowed Nufarm to be joined to the proceedings. In doing so the AAT agreed with Customs that Nufarm was uniquely placed to provide information in relation to its business (required to resolve the 25% local content test) and that there would be no additional expense as Nufarm's involvement would be required one way or another and Nufarm would be keen for the matter to be concluded quickly. The AAT also clarified the position of Customs and its legal representatives. Dow had suggested that Customs' lawyers would be well placed to represent and defend Customs' decision meaning that Nufarm would not be required. The AAT found that this contention misrepresented Customs position which was to use its best endeavours to assist the AAT in making its decision, not meaning that it should "defend" its decision or champion the interests of Nufarm, which latter finding also confirmed the idea that Nufarm's position may have been different to Customs.

The decision is also consistent to the decision in Stemcor in which we represented BlueScope and argued that BlueScope should be joined at the earlier "screening" stage whether the application seemed to be valid in the first instance before the substantive issues were considered by Customs


Federal Court upholds interim AAT decision as basis for disallowance of ACIS duty credits

In the Federal Court decision of Robert Bosch (Australia) Pty Ltd –v– Fice (30 March 2009) the Federal Court ruled on an interim decision of a member of the AAT . The AAT matter involved an application by Robert Bosch (Australia) to overturn a decision of the DITR to deny ACIS duty credits to certain investments. The applicant was of the view that the AAT had made certain errors of law in an important interim decision. The applicant brought the action to the Federal Court to overturn the interim decision based on alleged errors in law in the making of the interim decision. The Federal Court upheld the interim decision and presumably the AAT will now continue to finalise its decision in accordance with its interim decision which again presumably is not of assistance to the applicant.


Travel Agents entitlement to commission on surcharges and whether properly disclosed

In the Leonie's Travel case, on 30 March 2009 the Federal Court has also recently ruled in a case on the entitlement of travel agents to commission on the "fuel surcharges" part of an airline ticket. The applicants were ultimately unsuccessful, but were successful in the argument that QF had been "misleading and deceptive" in calling the surcharge a "tax". The decision cites some UK decisions which have been adopted elsewhere in the world.


Registered design allows action against imports infringing that design

The decision of the Federal Court in LED Technologies Pty Ltd –v– Elecspress Pty Ltd allowed an action brought by a local holder of registered designs against the importers of goods produced overseas in breach of the design. In the case the Australian company had registered designs relating to 2 designs of rear combination LED lights for automobiles. The Court held that the products manufactured for the respondents were in fact in breach of the designs of the applicants. However, the Court held that the manufacture did not breach the Designs Act as "primary infringers" because the goods were manufactured overseas for the respondents and the Designs Act did not extend that far. Instead, the Court found that the respondents were "secondary infringers" in having imported and offered for sale in Australia the infringing products, as they "directed, caused or procured and infringing item to be imported or sold".

The Court then went on to consider whether it would be inappropriate for a retailer or importer to check whether all the products designs sold or imported were registered. The Judge concluded that it would be inappropriate to always require a retailer or importer to check whether all the products designs sold or imported were registered. However, in this case the items were sold in packaging labelled with reference to the registered design and its number which created a duty on the importer and retailer to check.


Federal Court confirms the status of original Bills of Lading

In a decision of the Federal Court (November 2008) the Court made some interesting observations regarding the accepted legal status of original Bills of Lading and the need for their production to enable goods to be released.

The case involved a complicated fact situation and dispute as to the freight costs for the transport of wind turbines. As part of the dispute, the turbines were being held by a Sheriff of a Court while the parties sought to resolve the dispute. A resolution was achieved which involved the moneys alleged owing being paid to a Court to allow the goods to be released pending the matter being heard. The parties then sough the release of the turbines from the Sheriff. Unfortunately, the original Bills of Lading, usually required for the release of the goods, were in India.

The parties then sought release of the goods without the Bills of Lading

The Federal Court refused the order, firstly on the basis that no undertaking had been given to the Sheriff for protection against liability for release without the Bills of Lading. However, the Court went on to hold that the Bills of Lading were, in any event, in traditional form (non negotiable) and it was not appropriate to release the goods without the original bills of lading. Such a release would be without protection to the carrier and the Sheriff.

While a traditional decision, it does raise a couple of questions. First, as to the practice of shipping lines releasing goods without Bills of Lading (lost or improperly withheld by a consignor for an additional payment) on the basis of an indemnity from the party seeking release. The case is still a reminder of the risks in the practice and the need for proper inquiry as to reasons for non production of the Bills of Lading and then proper indemnity. Second, what will happen under the new proposed Rotterdam Rules which will provide for electronic Bills of Lading?


Interesting AAT decision on substitutability in TCO matter

There have been a number of cases in recent time which addressed the issue whether Australian goods are "substitutable" for imported goods for the purposes of a TCO application. In the majority of cases the Courts have adopted a very broad approach so that the local Australian goods have regularly been found to be substitutable – questions of cost and quality have been held not to be relevant. However in the AAT decision of Toyota Material Handling –v– CEO of Customs (12 December 2008) the AAT has applied a test which looked at some form of functional difference.

In the case the question was whether the party joined's (Crown's) "walker stacker" was "substitutable" to Toyota's "reach truck" The AAT found that the limits on walker stackers (speed/height) compared to reach trucks meant that they were not substitutable. Rather than taking a technical approach to the issue of the substitutability, the AAT considered the "realities" of the uses of the relevant products.


Full Federal Court upholds parallel importation of clothes in Ralph Lauren

During CBFCA member forums late last year I referred to the Federal Court decision in Ralph Lauren in which the Federal Court held that there was no breach of copyright or design when the importer of legitimate Ralph Lauren goods brought those goods into Australia. The Australian distributor claimed copyright or design rights in the label and "polo" insignia which enabled it to stop the goods being imported. However, the Federal Court found that there was no copyright or design based on the legislative provisions which were aimed at allowing parallel importation of legitimate products. The matter has gone on appeal to the Full Federal Court which has upheld the decision.


Productivity Commission

The Productivity Commission is working in areas which will have an impact on industry. This includes:

  • The issue of a draft Report on Restrictions on Parallel Importation of Books. The Report recommends a relaxation of current restrictions 12 months after the first publication of a book or earlier if local stock is not available. This is open for submissions.
  • The start of the long awaited Inquiry into Australia's Anti – Dumping and Countervailing System. This has been pending for some time and the Productivity Commission is due to finalise a report by December 2009. Hopefully the Terms of Reference will be adequate to cover those recommendations to the 2006 Joint Study which fell outside the terms of that Joint Study. The Commission welcomes submissions.


Customs issues

  • Customs have now issued ACN 2009/16 setting out changes to CoO requirements under SAFTA with effect from 27 March 2009. This was the subject of CBFCA Member Forums last year.
  • Customs have issued new Practice Statements being 2009/01 on Valuation Issues (with associated Instructions and Guidelines on Exchange Rates) and 2009/13 on FTA Rules of Origin. However the latter, although having been published on 4 March 2009, fails to include material on the Chile FTA which commenced on 6 March 2009.
  • Customs has issued its Industry Briefing on Compliance Issues which will be addressed at future CBFCA Conventions and Forums. I will be providing some commentary on those compliance issues at the same functions. This will include focus on SAC's (an issue we raised some time ago) and on VoTI.
  • Unfortunately, Customs has yet to issue the promised Practice Statements on its approach to Revenue Recovery (including who will be the subject of the recovery action which will address the Owner concept) and on the approach to Transfer Pricing
  • Customs continues to press hard on duty recovery, especially on "production assists" issues in the TCF industry. Look out for the treatment of IP and Licence fees, buying commissions, overseas finance costs and the costs of services provided in overseas distribution centres.


Legislative update

  • The Customs Amendment (Strengthening Border Controls) Act 2008 has had forced commencement on 12 January 2009. This includes the new regime regarding treatment of prohibited imports, including allowing for surrender of some imports, for post-importation permission for other imports and for infringement notices for certain prohibited imports.
  • The Enhanced Border Controls Bill (including new penalties for failure to account for goods under customs control) is still before the Senate as is the Bill to change Customs' name to the Australian Customs and Border Protection Services.
  • The TPA Amendment Act requiring all inclusive pricing in selling to individual consumers now commences on 25 May 2009.
  • The provisions associated with the Chile FTA commenced on 6 March 2009.



I will be presenting at the CBFCA State and National Conventions and the CBFCA NSW Symposium on various legal and trade issues. Details can be found at I will also be presenting at the AIEX Seminar in Brisbane on 29 April 2009 on IP issues for exporters. Details can be found at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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