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Australian Federal Budget 2019 – released. Sort of.

Opinion – Andrew Hudson

The Federal Budget 2019 was formally released by the Federal Government on 2 April 2019. However, in an election year, the Federal Government took the unusual path of confirming that the government would not be seeking to pass new legislation implementing that Budget in the remaining Parliamentary sitting days. Instead, the Budget legislation would be left only to pass if the government is re-elected in the next Federal Election which is likely to take place in May 2019.
The Budget was largely positioned to appeal to business and individuals through additional funding, especially for infrastructure spending and additional income tax and other relief for low and middle-income earners. The Budget did not include a prediction of returning to surplus in the 2019-2020 financial year but foreshadowed a return to a budget surplus for the 2020-2021 financial year on the assumption that the current Federal Government is returned to office and that anticipated changes to economic conditions would enable the delivery of that surplus. Clearly, the Federal Government is claiming that it is the most responsible financial manager and that the only way that voters would be able to secure the promised advantages would be to re-elect the Federal Government.
Unfortunately, there was little of surprise in the Federal Budget in the international trade and customs sphere as many of the Budget initiatives had been released before last night’s announcement. However, it is worth reiterating a number of items that did appear in the Budget.

  • A reminder of the recent signing of the Australia-Hong Kong Free Trade Agreement (A-HKFTA) and the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA). The passage of the two Free Trade Agreements (FTA) (if they are passed by the new Parliament) would lead to some reductions in revenue collected from imports from those countries. It will be a real test of Parliament and its processes to see if these two FTA, together with the Peru Australia Free Trade Agreement, will move forward to commencement given the position of the opposition in relation to some provisions of those FTA.
  • There is welcome news for those involved in export with the confirmation of certain additional spending initiative as follows:
    • $68 million made available over three years from 2019/2020 to support exporters in particular additional funding for the Export Market Development Grant (EMDG) program. As readers would be aware I am a director of the Export Council of Australia and we have pressed Government on many occasions to increase this funding. This increase is welcomed and hopefully will lead towards additional funding for the program in future years in line with recommendations of Parliamentary committees.
    • $29.4 million over four years from 2019 to enhance agriculture, including work on the reduction of non-tariff barriers to trade, and assistance with technical market barriers in export destinations.
    • $66.9 million in funding over five years to enhance Australia’s engagement with near neighbours in the Indo-Pacific region of which a large amount is aimed at improving relationships with China on agriculture food safety and regulatory cooperation.
  • Confirmation that while government proposes to proceed with the biosecurity imports levy announced in the previous Budget, the date for implementation has been changed from 1 July 2019 to 1 September 2019. There is currently a review of the proposed levy being undertaken, but it would seem that government has assumed that levy in its current form (or similar) will proceed regardless of the current review and work of the Federal Government’s Steering Committee.
  • Significant increases in customs duty payable on tobacco imports. Readers would be aware of recent changes to proposed regulation for the taxation regime for tobacco including the requirements for permits to be secured before goods are imported and the requirements for import duty to be paid at the point of import. This removes the ability to place goods in bond and only pay customs duty once the goods are released from bond. This has been a contentious issue within industry and has been a subject of significant discussion during my recent forums with the Customs Brokers and Forwarders Council of Australia (CBFCA).
  • An anticipated reduction in customs duty from imports of motor vehicles given that motor vehicles from many of our Asian trading partners are already free from duty due to our existing FTAs. This announcement therefore seems to anticipate the likely completion of the FTA with the EU which, as a central inducement would remove customs duty payable on motor vehicles imported from Europe (and maybe even Luxury Car Tax).

There is no reference to any additional funding for implementing wider brown marmorated stink bugs (BMSB) measures even though the program will expand in the next season. Similarly, there is no additional funding for single-window or other trade facilitation initiatives which have been a key feature of collaborative work between agencies of the Federal Government and the private sector. There was no additional funding for the Anti-Dumping Commission so the promised ‘toughening’ of regulation regarding trade remedies from both the current Federal Government and the Opposition will need to be managed by the Anti-Dumping Commission (ADC) without any additional funding. This may exacerbate the current days and uncertainties associated with investigations through the ADC.
The Federal Budget makes no mention of other initiatives such as additional benefits through the Australian Trusted Trader Program although that may not be unexpected as financial aspects of the program such as the deferral of the payment of customs duty and the other initiatives had been funded in earlier Budget announcements.
It would appear that the Federal Government has taken the position that there are no significant political benefits to be gained by additional expenditure in the customs and international trade portfolio and through the operation of its agencies in that area. We await, with some interest, the response by the Federal Opposition to be delivered tonight and other announcements as to policies from both the Federal Government and the Opposition to be made in the movement towards our next Federal Election.
Andrew Hudson is the Customs & Trade Partner at Rigby Cook Lawyers. ©Rigby Cooke 2019. Reproduced with permission. All rights reserved. This article was first published as Australian Federal Budget 2019 – Released. Sort of. Dated 3 April 2019 on www.rigbycooke.com.au.

World trade momentum weaker but growing, says DHL

According to the latest DHL Global Trade Barometer (GTB), global trade will continue to grow over the next three months.
With an overall index of 61 points, the GTB’s analysis of international air and containerised ocean trade flows indicates that the development of the previous quarters will continue: Indices for all seven countries that constitute the GTB index are above 50 points, which corresponds to a positive growth forecast according to the underlying methodology.
READ MORE: DHL to sell off Chinese supply chain business
The pace of growth, however, is further slowing in all index countries.
This deceleration will be particularly strong in Asia (except for China): Index values for India, Japan and South Korea have dropped by eight, six and five points respectively compared to the previous release of the GTB in September.
With an overall index of 75 points, India, however, continues to be the country with the strongest trade growth forecast.
“The DHL Global Trade Barometer clearly shows that the state of global trade remains solid. Both, air and ocean trade, continue to grow around the world. However, given the smoldering trade conflicts, especially between the US and China, and economists’ expectations that the global economy could cool down, it is not entirely surprising that trade momentum has weakened slightly”, Tim Scharwath, CEO of DHL Global Forwarding, Freight said.
Read more:

 

Trans-Pacific Partnership to begin in 2018 – are you ready?

Russell Wiese

The Trans-Pacific Partnership (TPP) is famous for being a major issue in the 2016 US election. One of the first acts of the new President Trump was to withdraw the US from the agreement.
Fast forward two years and the TPP (without the US) is set to commence on 30 December 2018. This free trade agreement (FTA) is a major reply to the protectionist trade policies of the US and also offers major benefits for Australian traders.
What is the TPP?
The TPP is a comprehensive FTA between Australia and 10 other countries: Japan, Canada, Mexico, New Zealand, Singapore, Peru, Chile, Vietnam, Malaysia and Brunei. It reduces customs tariffs on a range of goods, but also has comprehensive trade liberalisation provisions concerning trade in services, investment, the environment and labour laws.
Initially, the benefits of the TPP will only extend to Australian trade with Japan, Canada, Mexico, New Zealand and Singapore. This is because the other TPP members are yet to pass domestic legislation ratifying the agreement.
What are the benefits?
While Australia already has FTA with 7 of the 10 other countries, the TPP will bring immediate benefits. Those benefits are:

  • For the first time, wide-ranging duty-free entry of goods into Australia from Canada and Mexico (saving of 5%).
  • Increased access generally to Canada and Mexico.
  • Significantly improved access to the Japanese agriculture market.
  • Once ratified, generally improved access to Peru.
  • Slightly improved access to Vietnam and Malaysia (once ratified by those countries).

With the TPP set to commence in late December 2018, there will be one round of tariff reductions on commencement and a second round on 1 January 2019, when year two of the agreement begins.
There are thousands of different outcomes depending on the particular product. Exporters need to be speaking to their trade advisors to find out the new duty rates for their products.
How do I use it?
If you are an exporter, you use the TPP to help your overseas clients import the goods at a lower duty rate. Like most FTA, under the TPP you will need to provide a certificate of origin. However, unlike other FTA, the certificates of origin under the TPP are much easier. There is no set form, the document can be electronic and the documents can be created by the producer, exporter or even the importer. This flexibility will increase the ease of using the TPP and for some exporters, reduce the costs.
This ease of use may mean that some exporters will use the TPP for trade that is currently covered by other FTA, such as the ASEAN FTA, which required government issued certificates of origin.
Be careful
The ease of the TPP is appealing. However, the simplicity of the TPP could be its greatest risk for some traders. The benefits of the TPP only appeal if the goods satisfy the rules of origin. These are the rules that determine whether a good has sufficient connection to the TPP countries to qualify. In a self-assessment system the exporter takes a big risk unless it fully understands how rules of origin work. This risk can be managed, but it first needs to recognised.
If you plan on using  the TPP you need to have a compliance e plan in place to avoid an unpleasant customs duty liability and potential penalties.
Paperwork
While there is no specific form that the certificate of origin must take, there are nine requirements that it must meet such as the inclusion of an HS Code of the goods and details of the parties (including their telephone number if known). These are mandatory requirements and the non-inclusion of one of these requirements will mean the TPP does not apply. The risk of missing a data field is normally low as the parties are using a prescribed template document. Again, there is no prescribed template with the TPP.
If you are planning on using the TPP, you need to ensure you are aware of all of the certificate of origin data requirements. We recommend either using a template created by a trade professional or having your own documents reviewed by a trade professional. We will be creating a template TPP certificate of origin for use by our clients.
The future
The TPP is an agreement that businesses need to build into their long term strategy. While the current benefits will work for some traders, the future potential cannot be ignored. The countries that have expressed an interest in the TPP include the UK, Taiwan, Indonesian, the Philippines, Thailand and South Korea. The future of international trade is uncertain. However, for those countries that are looking to pursue an open trade agenda, the TPP will be a welcome home.
The TPP is an exciting opportunity and represents a reduction in the red tape associated with other FTAs. However, that lack of red tape does not mean there is no legal risk. The same obligations remain, however, it is for the traders to fully self-assess compliance with those obligations. This will mean that the need to work with specialist trade advisors and customs brokers will be heightened.
Russell Wiese is a customs and global trade specialist with a strong focus on helping clients proactively manage customs risks and opportunities. Russell helps importers, exporters, customs brokers and freight forwarders with customs concessions (including Free Trade Agreements), customs compliance, commercial agreements and resolving disputes between parties involved in international trade.

Livinia Nixon to host 2018 Mercury Awards

The votes are coming in, the judges are preparing to deliberate and it’s time to secure your tickets for the 2018 Mercury Awards.

Australian television presenter and actress Livinia Nixon will lead the proceedings, presiding over a night celebrating the very best people, companies, and initiatives Australia’s supply chain industry has to offer.

Theres still time left to submit your nominations – put forward the name of an exceptional individual, company or solution here until voting closes on 12 April.

Livinia Nixon.
Livinia Nixon.

The Awards ceremony, sponsored by the Victorian Government, the Port of Melbourne, Sick Australia and SEW Eurodrive, will take place on Saturday, 12 May, at Peninsula, on Central Pier in Melbourne’s Docklands.

The Mercury Awards is the official awards program of MEGATRANS2018, the business-to-business trade event focusing on the freight and logistics supply chain, which takes place 10–12 May at the Melbourne Convention & Exhibition Centre.

Head to the Mercury Awards website to purchase tickets for individuals and tables.

Freight operators a key component of MEGATRANS2018

MEGATRANS2018 will bring together the entire supply chain under one roof for the first time, to help facilitate national and international collaboration. Freight operators play a vital role in this supply chain and will play an important part of the tradeshow.

With Visa Global Logistics leading the way, MEGATRANS2018 offers a unique platform for fleets and freight operators to engage with their potential customers across a range of industries spanning manufacturing, retail, FMCG, food and beverage manufacturing, mining, as well as with importers and exporters. 

“This is two-pronged approach for us. Given our innovative approach to business, MEGATRANS2018 provides us a platform to be seen as market leaders, and branding at an event like this is crucial. But more importantly, to be able to engage with our core audience of importers and exporters, as well as with the key buyers of freight services across such a wide range of industries – this is such a strong value opportunity for us,” says Visa Global Logistics CEO Simon Hardwidge.

“We understand that as a freight services business we play an important and instrumental role in the freight and logistics sector. It just made sense to be involved”.

Join other freight services businesses at MEGATRANS2018 and be part of the logistics event of 2018.

Australian sales to China thriving: Tmall report

The 2017 Tmall Global Annual Consumers Report has revealed Australia has moved into third spot, on the list of importer countries into China, on Alibaba’s business-to-consumer (B2C) platform. This is up from fourth spot in 2016.
Led by strong demand from Chinese consumers for Australia’s health and nutrition supplements, baby products and milk powder, Australia ranked behind only Japan and the United States, and ahead of Germany and South Korea.
Managing Director of Alibaba Group, Australia and New Zealand Maggie Zhou said: “Since opening our ANZ headquarters in Melbourne last year, we have worked harder than ever to support the success of Australian businesses in China. These incredible results for Australian merchants demonstrate that we are succeeding in our mission to make it easier for local businesses to do business anywhere.
“With 515 million annual active consumers now using our China retail marketplaces the opportunity for Australian businesses remains enormous, and we are excited to be part of the China journey for even more local brands in 2018.”
The 2017 Tmall Global Annual Consumers Report was jointly published by Tmall Global and CBNData, a big data-based business research and integrated marketing communications strategy platform. Elsewhere, it found that Chinese post-millennials have become the main purchasing power for imported products, with content and emotional interaction becoming a major factor in driving consumers’ decisions when buying imported products.
The report highlighted that people born in the 1990s have now become the biggest spenders on imported products, which come from a more diverse range of countries and are consumed more frequently throughout the year.
Tmall Global sustained its position as the largest B2C e-commerce platform for imported products in China, with a market share of 27.6% in the fourth quarter of 2017. There is still significant untapped potential in this sector, with the report estimating annual growth of 20 per cent in transaction volume and a market scale of RMB620 billion by 2019.

Export Council of Australia appoints new CEO

The Export Council of Australia (ECA), which promotes Australian industry in international markets, has announced the appointment of Alina Bain as the organisation’s new CEO.
Bain will commence in the role on 15 March and will be based in Sydney.
Dianne Tipping, Chair, ECA, congratulated Bain on her appointment.
“Alina Bain is a fantastic appointment for the Export Council of Australia, and on behalf of our members I congratulate her for taking on this important role,” said Tipping.
“Alina brings extensive public policy experience to the ECA following over 10 years in senior executive roles for the broadcasting and advertising and marketing industries, most recently a two-year appointment as CEO of the Australian Services Roundtable. Alina’s extensive experience in seeking and delivering positive policy outcomes in highly complex and challenging environment along with her unique skills in skills development and delivering member benefits will help grow the ECA at this critical time for Australia’s exporters.”
Bain added: “I am honoured to be appointed as the CEO of Export Council of Australia, which represents such an important part of the Australian international trade sector.
“I am looking forward to engaging with policy makers and the community about the wonderful work our members do to not only build international success for their own businesses but also build the Australian economy through significant investment and jobs creation.”
Tipping also congratulated outgoing CEO Lisa McAuley for her leadership of the ECA.
“I’d also like to thank Lisa McAuley who has been in the role since 2015,” said Tipping. “Lisa has done a tremendous job working with the board, the management team and our members to ensure that the ECA is the leading advocate for developing the international trade performance of Australian business.
“Lisa has worked tirelessly to develop our offerings through encouraging Australian business to engage in international trade, effective representation to government on market access and facilitation issues, the delivery of practical professional development programs and forums that foster the exchange of ideas and knowledge and reward excellence.
“This has been incredibly important work that means our new CEO will take over the reins of a strong organisation that is even better placed to represent the interests of the community and our members in this wonderful sector.”

E-commerce giant JD.com picks VIC for regional HQ

JD.com, one of China’s largest online retailers, will open its regional headquarters in Melbourne, the Victorian Government has announced.
JD.com has over 266 million customer accounts, and operates China’s largest nationwide fulfilment network, with seven fulfilment centres and more than 400 warehouses in 2,830 counties and districts throughout China.
The company sells a wide range of goods, including vitamins, electronics, clothing and books.
Following a visit by representatives from JD.com to the Food and Beverage Trade Week in Victoria in October, the Andrews Labor Government has been working closely with the company to encourage it to establish a presence in the region.
“This announcement will give more Victorian businesses the opportunity to take their products to the world and is a clear indication that we’re leading the nation on the digital economy,” said Victorian Minister for Trade and Investment Philip Dalidakis.
“We welcome JD.com with open arms and look forward to all the opportunities that this new regional HQ will bring to Victoria, including strengthening our economy and creating more local jobs.”
Patrick Nestel, Manager of JD.com Australia, added:
“Victoria’s wealth of high-quality suppliers, supportive government, 24/7 airport and largest container port in the southern hemisphere made it the obvious choice for JD.com’s new regional HQ.”

Australian Border Force in for MEGATRANS2018

The Australian Border Force, which plays a vital role in protecting Australia’s borders, has signed on to exhibit at inaugural supply chain expo MEGATRANS2018.
Responsible for the protection of Australia’s border in partnership with a range of intelligence, law enforcement and other agencies, Australian Border Force also has a major role in managing the movement of goods across the nation’s borders. This includes Australia’s airports and seaports, making it a significant addition to the MEGATRANS2018 lineup.
The trade show is set to bring together leaders and stakeholders in the wider Australian and international supply chain, including those in the transport, logistics, warehousing solutions, material handling and infrastructure sectors.

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