A new customs program aimed at bringing Australia into line with other major trading nations could substantially cut costs when exporting to Asia.
The Department of Immigration and Border Protection (DIPB) believes that the benefits to the Australian economy of this streamlined export process could be worth up to $1.5 billion for every one per cent increase in efficiency of transport and logistics supply chains.
The pilot for the Australian Trusted Trader (ATT) program launched this month will eventually allow accredited export businesses to gain streamlined customs and security clearance in countries that have a mutual recognition agreement with Australia.
Similar programs have already been adopted by more than 58 international jurisdictions – including China, India, Japan, Singapore, Taiwan and South Korea – since being introduced by the World Customs Organisation (WCO) in 2005.
Known generally as Authorised Economic Operator (AEO) schemes, they provide a framework of standards for trading partners in recognising each other’s customs and security regimes.
According to the Centre for Customs and Excise Studies (CCES) at Charles Stuart University, the goods of exporters who are accredited to the New Zealand AEO scheme are 3.5 times less likely to be inspected or held up on arrival in the US.
Professor David Widdowson, head of school at CCES, and a leading advocate and advisor on the introduction of the ATT, says that accreditation to an AEO is often an imperative for many international supply chains.
“When exporters send goods overseas and they get held up, there’s basically two ways that countries are dealing with them,” he said. “There those that come from a known secure supply chain – such those where a mutual AEO agreement is in place – and they’re treated as low-risk; and then there’s the rest, which are treated as high-risk.
“Without being part of an AEO or trusted trader agreement, Australian exporters are more often likely to fall into the latter category.
“In some jurisdictions it can be very difficult to be accepted onto an AEO scheme as an importer, so big multinationals often actively look for partners and suppliers who are already accredited to a scheme in their own country – and won’t deal with anyone who isn’t. They don’t want to run the risk of their non-accredited parts of their supply chain compromising their status on the scheme.
“So we can see how AEOs are actually now being used by commerce as a key indicator of the standard that business is looking for in terms of protecting their international supply chain.”
The aims of the ATT include expedited border clearance, reduced or priority inspections and priority access to trade services. The DIPB will also explore the possibilities for duty deferral and streamlined reporting arrangements.
Accredited trusted traders are to be assigned an account manager within the DIPB, as a single point of contact to assist with customs and export issues across all federal departments.
To apply to enter the program, Australian exporters and supply-chain businesses – including freight-forwarders, brokers and logistics firms – first need to obtain a self-assessment questionnaire from DIPB.
The information submitted by the business is then audited by the DIPB to ensure that the necessary security systems and procedures are in place, before accreditation can be given. There is no licence or application fee for the program, and Prof Widdowson expects the process to take “a few weeks if it’s a major company or it could be a few days if it’s a medium-sized company”.
The pilot phase will be completed in this current financial year, and only four companies will be taking part initially: Boeing Aerostructures Australia, Devondale Murray Goulburn, Mondelez Australia and Techwool Trading.
Teresa Conolan, assistant secretary of the Trusted Trader and Industry Branch at the DIPB, said more companies would be included in the pilot as it progresses.
“We’re hoping to have around 40 companies over the 12 months in the pilot, across a range of business sectors, so we can actually test the processes and make sure they are not too burdensome,” she said.
“Over four years we’re expecting around 1500 companies to join the scheme – so it’s certainly not going to cover all business.”
Conolan added that preliminary discussions with some countries were already underway, though negotiations on agreements were unlikely to begin until the ATT was fully launched next July.
She said Australia’s key trading partners would be the priority, but expected the negotiations and implementation of agreements with some of them to take a further year.
The rollout of the pilot program follows years of pressure from the Australian business community to embrace AEO, after initial reluctance by the Australian Customs and Border Protection Service (ACBPS).
Following an article by The Australian Financial Review on March 20, 2013, which flagged Australia’s non-participation, business leaders sponsored a research study, undertaken by the CCES, which found that the scheme could be highly beneficial. Business groups began to lobby the federal government, by which time the ACBPS had reversed its attitude and agreed to consider implementing an Australian scheme.
For more information on the Australian Trusted Trader scheme, visit – firstname.lastname@example.org