This Output covers:

• cargo regulation, trade facilitation and revenue collection
• the development and management of the electronic Integrated Cargo System
• the investigation of dumping and countervailing complaints and the determination, implementation and review of appropriate measures to address them
• the administration of customs duty and indirect taxes, through the processing of all imported and exported cargo and mail, and items entering and leaving Australia with passengers and crew
• the administration of industry assistance schemes
• the administration of revenue collection activity, including Customs related revenue collections associated with craft movements, and collection of the Passenger Movement Charge, the assessment and collection of goods and services tax, luxury car tax and wine equalisation tax, and the administration of the Tourist Refund Scheme.

Related activities also include:

• tariff classification, valuation advice and rules of origin services
• licensing of depots, warehouses and customs brokers
• the investigation of industry referrals
• the administration of drawback, refund and concessional arrangements for importers and exporters
• the provision of import/export data and statistics
• the administration of various industry import duty concession/levy schemes.

PERFORMANCE AGAINST TARGETS

Figure 30: Performance against targets set in the 2006-07 Portfolio Budget Statements for Output 3~

<sub>~ Reference to country preference schemes, included in the 2006-07 Portfolio Budget Statements, has been omitted from this table. Further information in relation to trade, including country of origin information, is published by the Department of Foreign Affairs and Trade.
* Targets may be performance targets, service level targets or estimates.
** Performance targets cannot be estimated through any reliable statistical or other method.
*** Signifigant revenue in this table is presented net of Automotive Competitiveness and Investment Scheme (ACIS) credits $574.2m and Product Diversification Scheme (PDS) credits of $3.6m applied in the 2006-07 financial year.
> The Minister can approve an extension to the time in which an investigation must be completed. Taking into account approved extensions of time, all investigations were completed within the statutory timeframes.
<> Represents air cargo consignments that have undergone self-assessed clearance by the transporter or importer. As such they will be consignments under $1,000 in value, and do not require further documentation for Customs clearance purposes.
# Revenue adjustment figures includes customs duty and goods and services tax adjustments identified through compliance activities.
+ The difference between the target and performance figure is due to the target estimate including the ACIS input credits ($574.2m) and PDS credits ($3.6m). On accounting advice, these components are not to be included as a duty concession.
< Represents the number of applications for reviews, continuation inquiries and duty assessments.</sub>

Figure 31: Revenue collected on behalf of other agencies ($m)*

<sub>* Figures on an accrual basis.
^ Indirect taxes collected do not include the value of goods and services tax (GST) and wine equalisation tax refunded on behalf of the Tourist Refund Scheme.
# Excludes the GST liability raised on imports which is deferred rather than immediately collected. The Australian Taxation Office acquits these liabilities in subsequent Business Activity Statements from importers. In 2006-07 GST deferred was $16.2 billion.
+ Fees collected on behalf of AQIS.
~ On the spot fines collected on behalf of AQIS including the collections of Quarantine Infringement Notices issued.</sub>

Figure 32: Significant revenues managed by Customs

_{* Estimate for duty was from the Portfolio Budget Statements 2006-07 and has been adjusted for Automotive Competitiveness Investment Scheme credits of $574.2m and Product Diversification Scheme credits of $3.6m to reflect current accounting practice.}

Customs duty for 2006-07 is $29.8m greater than the 2006-07 estimate and $653.1m greater than 2005-06. Duty collected in 2006-07 was close to 20 per cent greater than in 2005-06, due to a continuation of growth in imports to Australia and also a change in arrangements introduced by the Fuel Tax Act 2006. Under this legislation importers of some types of excise-equivalent goods are required to pay duty to Customs (estimated at $250m in 2006-07) and receive a subsequent credit from the Australian Taxation Office, which administers excise.

Goods and services tax (GST) collected and deferred in 2006-07 was $1.3b or 7.5 per cent above 2005-06, which reflects the strong growth rate in imports in 2006-07. The performance against the previous financial year reflects strong import growth and price and volume fluctuations in crude oil. Total GST collections and assessments at $18.9b 2006-07 were marginally below estimate by $43.8m or 0.2 per cent.

Revenue from the Passenger Movement Charge for 2006-07 was $13.2m below estimate although was close to $20m or five per cent greater than in 2005-06. Estimates are based on Tourism Research Australia forecasts. Whilst the growth of 5 per cent from 2005-06 reflects a continuation of the strong growth in traveller number from prior years, it was below the levels of growth that had been forecast for the 2006-07 year and incorporated into the estimate.

Total Import Processing Charge revenue in 2006-07 was $131.2m compared to $119.6m in 2005-06. The increase in revenue collections arose due to an increase in import entry charges introduced on 10 May 2006. This increase follows the decision by government to increase the low value threshold on goods imported by air and sea from $250 to $1,000 in October 2005. Whilst revenue increased in 2006-07 over 2005-06, it ended the year below estimate by $11.6m. The principal factor contributing to performance below estimate is the rapid appreciation of the Australian dollars during 2006-07, which resulted in many consignments falling below the low value threshold of $1,000, in effect exempting these consignments from the Import Processing Charges.

OUTPUT 3 AT A GLANCE

The following provides a brief summary of Customs performance against Output 3.

• Administered trade programs consistent with legislation, policy and international programs, including participation in proposed trade agreement negotiations with China, Japan, Malaysia and the Association of Southeast Asian Nations and amendment of existing trade agreements.
• Provided quality advisory and support services to members of the public, industry and their agents on valuation, rules of origin and tariff classification. This advice extended to international partners and forums.
• Implemented legislative changes and updated administrative systems where revenue policy initiatives affected imported goods. This included amendments to legislation in line with updated trade agreements, amended import concessions, changes to the Harmonized Commodity Description and Coding System and other government policy initiatives.
• Improved the delivery and implementation of Customs trade policy to ensure national consistency. This was achieved through information and awareness programs delivered to staff, updating the Intranet, review of manuals and development of an online learning system about prohibited and restricted goods.
• Increased engagement with industry and external stakeholders to improve implementation of government and industry objectives. This included improving communication processes through regular meetings, revision of manuals and provision of advice through Australian Customs Notices.
• Developed and implemented improved intellectual property rights protection measures through updated legislation, establishing a database and delivery of training to relevant staff.
• Worked with international partners in the Asia-Pacific on skills in recognising weapons of mass destruction and worked with domestic government agencies on amending legislation to prohibit and restrict the facilitation of certain goods.
• Provided improvements to the Integrated Cargo System through input from the Industry Action Group. These include removal of the need for Australian Quarantine and Inspection Service lodgment questions on import declarations, changes to the use of ocean bill of lading numbers, easier search capability added to the diagnostics menu for sea cargo information, inclusion of a diagnostic facility in air cargo manifest search fields, and implementing the first phase of simplified reporting of part shipped import air cargo.
• Delivered improved client services through managing enquiries at the Customs Information and Support Centre and designing an enhanced client management system.

REVIEW OF CUSTOMS FUNCTIONS

Customs has learned many lessons from the development and implementation of its Cargo Management Re-engineering (CMR) project and new electronic cargo reporting system, the Integrated Cargo System (ICS).

There have been two independent reviews of the ICS project by Booz Allen Hamilton in 2006 and the Australian National Audit Office (ANAO). Both reviews made recommendations to improve various aspects including:

• program and project governance
• industry engagement
• improvements in ICS functionality and usability.

BOOZ ALLEN HAMILTON REVIEW

In 2006 Customs commissioned Booz Allen Hamilton to conduct a review of the issues relating to the introduction of the Integrated Cargo System (ICS) import functionality and to identify the lessons learnt from this implementation. The review examined aspects of the ICS project including management, budget, project objectives and timelines. The Booz Allen Hamilton Review made 13 recommendations to improve the ICS, and to better facilitate major programs in the future. Customs agreed with all recommendations and has made significant progress in providing greater strategic direction, and management and control of projects.

ANAO REVIEW ON CUSTOMS CARGO MANAGEMENT RE-ENGINEERING PROJECT

In February 2007 the Australian National Audit Office (ANAO) completed a review of the Customs Cargo Management Re-engineering (CMR) project. The review found that the CMR management framework was lacking a number of requisites for successful implementation of the project. The ANAO noted the work already undertaken to address the Booz Allen Hamilton recommendations and made seven recommendations to improve the ongoing management of the ICS, the Customs Connect Facility, and project management processes. Customs agreed with all recommendations and has made significant progress in addressing the shortcomings identified by the ANAO in this report. These changes include improved contract management practices, project governance arrangements and improved communication with industry. In addition a range of tactical improvements have been made to the system.

OPERATIONAL PERFORMANCE AND IMPROVEMENT INITIATIVES

SYSTEMS PERFORMANCE

The Integrated Cargo System (ICS) has provided a stable platform processing over 26 million messages to facilitate over $353m of trade transactions.

Figure 33: Number of successfully processed ICS messages in 2006-07

Figure 34: Imports successfully processed ICS messages by type during 2006-07

<sub>* Others includes:
- Self assessed clearance declaration
- Sea cargo outturn report
- Air impending arrival report
- Air actual arrival report
- Progressive discharge report
- Cargo list report
- Drawback request
- Sea actual arrival report
- Sea impending arrival report
- Movement application
- Unaccompanied personal effects.</sub>

Figure 35: Exports successfully processed ICS messages by type during 2006-07

<sub>* CTO is Cargo Terminal Operator for air cargo and Container Terminal Operator for sea cargo.
^ Others includes:
- Depot export release notice
- Depot export receival notice
- Request for status
- Warehouse export release
- Warehouse export return.</sub>

INTEGRATED CARGO SYSTEM (ICS) BUSINESS CONTINUITY PLAN (BCP)

In reviewing the ICS BCP, Customs consulted all industry sectors and government users including the Australian Quarantine and Inspection Service.

An Urgent Customs Clearance contingency management service forms part of the ICS BCP. This service applies to import and export transactions where the ICS is available, but for some reason is unavailable for a client or client group. Under these circumstances, Customs will facilitate the clearance of cargo via this service.

Since the revised ICS BCP became operational in December 2006, it has been used on several occasions to assist with client system failures. Customs has been publicly congratulated by industry for the operational effectiveness of the plan following Customs response to an industry system outage.

USER SUPPORT FRAMEWORK

Customs is implementing arrangements to improve delivery of cargo management business services. The main areas being addressed are:

• establishing an industry engagement focus for resolving client issues and improving business practices with industry
• implementing a service level approach to ensure minimal disruption to the movement of cargo
• the design for an enhanced client management system.

An Industry Engagement section was formed to facilitate the prompt resolution of issues impacting the legitimate movement of cargo and facilitation of industry education and training. The cargo support website was redesigned to provide greater visibility of the status of the Integrated Cargo System (ICS), improved access to information about the business continuity process and import and export business procedures. Regular sessions are also provided to clients to increase awareness of business continuity procedures and tips on the use of the ICS.

Information and support for industry

The Customs Information and Support Centre (CI&SC) handles both information calls from the general public and systems support calls for the ICS. These calls total around 1,000 each weekday. Emails and faxes total around 120 per day.

Enhanced client management system

Customs recognised the need to improve the CI&SC technology early in 2006. Improvement in user services was also identified in the 2006 Booz Allen Hamilton review. Customs wanted to provide a more streamlined approach to the services that are provided through better technology and easier access to information. Funding for the new technology was approved in July 2006. Submissions have been evaluated and discussions have commenced with the preferred vendor. The new technology will provide a higher level of client service through:

• a self help web portal in the form of a frequently asked questions database
• an integrated contact channel management (phone, email, fax)
• the provision of consistent information across channels
• the ability to route calls to the most qualified available agent thereby increasing first call resolution rates.

INTEGRATED CARGO SYSTEM (ICS) DEVELOPMENT AND INCIDENT MANAGEMENT

Customs has changed its approach to managing incidents and problems, learning the lessons identified in the Australian National Audit Office's performance audit and the Booz Allen Hamilton review. New incident, problem and change management techniques have been developed. These are compliant with service management best practice methodology and include:

• phasing of large changes to ensure appropriate resource allocation
• preparing users throughout each phase and minimising impacts on other system development priorities
• root cause problem analysis of problems, improving the resolution and timeliness of fixes
• business continuity planning that focuses on the continuity of cargo movement during contingency episodes
• an industry engagement co-design approach to considering, preparing for and adopting, industry and internal changes
• improved help desk arrangements with the development of a knowledge tools database to support the enhanced client management system
• the development of a dedicated cargo support website
• processes to manage late reported cargo compliance intervention combined with client training and educational processes.

Industry continues to raise incidents related to the ICS. These incidents are continuously being resolved in priority order and in consultation with industry. Better planned releases have led to fewer emergency fixes and fewer fast tracks that have been used to address defects stoping the movement of cargo where no workaround exists. The benefits of incident fixes and changes were more effective this year as many changes addressed multiple incidents. Many of the changes to the system improve system performance, reliability and user confidence.

Customs continued to improve communication with industry about general ICS and cargo reporting issues through the release of 22 Australian Customs Cargo Advices during the year.

INTEGRATED CARGO SYSTEM (ICS) COMPENSATION CLAIMS

During the implementation of the imports component of the ICS in October 2005, difficulties were experienced that primarily impacted sea cargo movements until mid to late November 2005. Although Customs and industry operators put extensive contingency arrangements in place that assisted with the movement of cargo, a direct consequence of the delayed movement of cargo was that some importers and industry operators incurred storage and other related costs.

During this time Customs received a number of claims for compensation and established a contact point responsible for the management and administration of these claims. Customs commenced making payments during 2006-07 following a claims assessment process developed jointly by Customs and its insurer, Comcover.

At 30 June 2007, Customs had received 568 claims with a total value of $12.3m. Of these, 549 claims had been either paid, had offers made or had been rejected with the total amount of compensation paid in relation to these claims being $1.7m. The remaining 19 claims were still being assessed or were awaiting the provision of additional information requested from the claimant. Customs is continuing to receive claims, although in small numbers, and is seeking to resolve these claims as expeditiously as possible.

PROHIBITED AND RESTRICTED GOODS

Customs is responsible for facilitating legitimate movement of trade and protecting the community. This is achieved through the provision and application of nationally consistent policy on the treatment of firearms, weapons, strategic goods, drugs and therapeutic substances, wildlife, environment and consumer goods, intellectual property rights, securities and commerce labelling.

Firearms

Customs administered arrangements that require firearm dealers to be certified to hold a specified limit of newly imported handguns. At 30 June 2007, there were 349 gun dealers certified by Customs to hold newly imported handguns. Of these, the majority (almost 95 per cent) were certified to hold an amount of no more than ten.

Customs contributed to technical advice to the Firearms Policy Working Group and the Ministerial Council for Police and Emergency Management on a range of firearms and weapons issues.

Streamlined processes for managing a significant numbers of sports shooting competitors, introduced for the Commonwealth Games in 2006, were used for two additional major firearms events during 2007, including:

• World Police and Fire Games held in Adelaide during March
• International Sports Shooters Federation World Cup held in Sydney during April.

There were over 650 international shooting competitors who came to Australia for these events. The streamlined processes resulted in less paperwork and faster processing times at airports for competitors and event organisers.

We developed procedural firearm handling guidelines and continued to provide advice to other agencies on the treatment of firearms arriving for Asia Pacific Economic Cooperation 2007 events.

The Detained Goods Management System was enhanced in 2006-07 to improve recording and reporting on detained goods, particularly firearms. The system now provides greater flexibility, which better meets our obligations to external agencies. There have also been improvements in data integrity.

Figure 36: Commercial firearm importations and exportations during 2006-07

Figure 37: Firearm detections and seizures 2006-07

Figure 38: Undeclared detections of firearms and disposals during 2006-07

Other weapons

Customs controls the import and export of other weapons including warfare goods, certain bladed weapons, martial arts weaponry and anti-riot equipment. In 2006-07, Customs processed 1,320 applications for permission to import weapons. This is an increase of approximately three per cent over the previous year. Of the 1,320 applications, approximately 81 per cent were approved.

Explosives and other sensitive substances

Controls of security sensitive ammonium nitrate (SSAN) are operating in all states apart from Western Australia, where relevant legislation has not yet been enacted. Customs controls SSAN at the border, only allowing import and export by State and Territory licensed operators where the State or Territory has its licensing arrangements in place.

Export controls for Defence and Strategic Goods

Customs works closely with the Department of Defence to ensure approved exports of military goods, civilian arms, explosives and goods containing dual use technology are permitted to leave Australia. All dual use materials, which are goods that can be used to produce or deliver a weapon of mass destruction, are controlled as prohibited exports. Customs has developed a training package focusing on Australian exports to assist regional operational staff in visually identifying commodities that can be used to produce or deploy chemical, biological, radiological or nuclear weapons of mass destruction. The package is based on initial training provided by the US Department of Energy. Delivery of the training to Customs staff will commence in November 2007.

Customs is working with other Customs and border security agencies in the Asia Pacific Region to strengthen regional capabilities for export controls. This has included capacity building exercises with visits from several delegations including Taiwan, India and Hong Kong. Customs has also attended several international seminars in support of the Australian Government's commitment to counter proliferation and the promotion of strong export controls including visits to Malaysia, Indonesia, Philippines and Thailand.

Import and export controls in support of United Nations Security Council Resolutions against Iran

Customs implemented new regulations restricting the trade of certain goods to or from Iran, without the prior permission of the Minister for Foreign Affairs. The regulations support Australia's obligations under United Nations Security Council Resolutions 1737 and 1747.

International Export Control Regimes

Customs participated in the annual Australia Group plenary meeting held in Paris in June 2007. The Australia Group, chaired by the Department of Foreign Affairs and Trade, aims to ensure that exports of certain goods do not contribute to the development of chemical or biological weapons. It is one of several important export control regimes of which Australia is a member country. Customs chaired the Enforcement Exchange session, which promotes enhancements to export controls and enforcement of non-compliance, particularly through case studies and practical information sharing.

Rough diamonds

In May 2007, a Peer Review Team consisting of international delegates reviewed Australia's implementation of the Kimberley Process Certification Scheme. The scheme is aimed at regulating the movement of rough diamonds associated with the funding of civil conflicts and terrorism. Customs administration of the import and export controls on rough diamonds that underpin the scheme was reviewed during meetings in Canberra and Perth. Australian authorities expect to be notified of the outcome of the review by the end of November 2007.

Intellectual property rights

The effective enforcement of intellectual property rights is an important issue for the Australian Government. Customs was actively involved in developing a number of proposals to strengthen border enforcement measures. Customs initiated amendments to the Trade Marks Act 1995 and the Copyright Act 1968 to reduce the administrative burden and costs associated with right holders making an application under the Notice of Objection scheme. This included the removal of the requirement to lodge a $10,000 (for trade marks) or $5,000 (for copyright) security at the time of filing a Notice of Objection.

Customs has specific provisions to detain and deal with goods that infringe registered trade marks, copyright material or protected Olympic expressions. These provisions are contained within the Trade Marks Act 1995, the Copyright Act 1968, and the Olympic Insignia Protection Act 1987. This legislation provides the foundation for the Notice of Objection scheme Customs enforces. A Notice of Objection is a legal document lodged by a right holder, objecting to the importation of goods that infringe their rights. A Notice gives Customs the power to detain shipments of suspected infringing goods.

Interest in the Customs Notice of Objection scheme has continued to grow as more right holders become aware of the importance of protecting their rights at the border. There has been a significant increase since the changes to the Trade Marks Act 1995 and Copyright Act 1968 were implemented.

As outlined in the following table there were 268 notices in force as at 30 June 2007.

Figure 39: Intellectual property notices of objection in force

During this financial year Customs made 1,375 seizures of suspected counterfeit or pirated goods, comprising a total of 601,900 items. The suspected counterfeit or pirated goods seized included electrical goods, car parts, cosmetics, perfumes, DVDs, pharmaceuticals, toothpaste, watches and sporting equipment. The most significant quantities of goods seized were batteries (218,000 items), clothing and headgear (98,000 items) and toys (81,000 items).

TARIFF CLASSIFICATION

Customs provides tariff classification advice services to importers and exporters of goods. Tariff classification determines the rate of customs duty for imported goods and facilitates the collection of trade statistics by the Australian Bureau of Statistics.

The service includes an internal administrative review process, to deal with appeals lodged by clients where they disagree with any tariff advice.

Figure 40: Tariff advices and reviews

In 2006-07, 101 internal reviews of decisions on tariff advices were undertaken compared with 48 in 2005-06.

Noting the increase in requests for internal reviews and appeals to the Administrative Appeals Tribunal, Customs has focused during the year on enhancing professional skills in tariff classification, administration of the Tariff Concession Scheme, valuation and origin. Formal tariff classification training was provided for staff involved in tariff classification activities, including compliance areas. These courses have an online learning component, supported by face-to-face training. Courses were held in Queensland, New South Wales and Victoria during the year,
and more training is planned.

Schedule 4 tariff concessions

Customs administers or assists in the administration of concessional items under Schedule 4 of the Customs Tariff Act 1995. The concessional items cover a range of goods and people eligible to access concessional arrangements. These are in line with international agreements or industry schemes offered by government agencies including the Department of Industry, Tourism and Resources and the Department of Agriculture, Fisheries and Forestry.

Figure 41 details the number of applications and revocation requests made under the Tariff Concession Scheme, which operates under concessional item 50 of Schedule 4. The number of applications decreased from 1,268 in 2005-06 to 1,110 in 2006-07. The marked increase since 2004 05 is due mainly to the Government's announcement on 11 May 2005 that business inputs imported into Australia would be granted a free rate of duty (rather than three per cent) when the Tariff Concession Scheme applied.

Figure 41: Item 50 in Schedule 4 of the Customs Tariff Act 1995 - Tariff Concession System

<sub>~ Applications finalised after the end of the 2005-06 year are included in the figures for 2006-07 and those finalised after the end of the 2006-07 year are not included.
* The 'Customs Initiated' Revocations for 2006-07 does not include 734 tariff concession orders (TCOs) that were revoked due to the Harmonized Commodity Description and Coding System amendments introduced on 1 January 2007 but includes 453 TCOs revoked under section 269SD(1A) due to two years non-use.</sub>

In 2006-07, 58 internal reviews of decisions on tariff concession applications and revocation requests were finalised, compared with 32 in 2005-06.

All applications, requests for revocation and associated reviews were completed within legislated timeframes.

The 2007 changes to the Harmonized Commodity Description and Coding System resulted in 734 Tariff Concession Orders being revoked and re-issued.

Figure 42 contains a comparative analysis of Customs duty concessions accessed by importers under Schedule 4 of the Customs Tariff Act 1995.

Figure 42: Duty forgone through concessional arrangements ^($m)#@

<sub># Previous annual reports listed here duty credits used under the Automotive Competitiveness Investment Scheme (ACIS). Under accounting advice, these numbers have now been included with the total duty collection figures, and are no longer in this table.
@ This table does not include any duty avoided by use of items 44, 67, 53C, 59 and 17 in Schedule 4 to the Customs Tariff Act 1995. These items clarify administrative situations where import duty was never intended to be collected, rather than cases where duty was conceded as a result of deliberate government policy decisions.
+ Under item 21A of Schedule 4 to the Customs Tariff Act 1995, Customs facilitates the entry of goods imported under the Tradex scheme administered by the Department of Industry, Tourism and Resources. This concedes the duty on imported goods or parts that are intended to be used to produce goods destined for export.</sub>

Valuation

Customs issued 74 binding valuation advices during 2006-07. One valuation advice was subject to internal review and the original advice amended but not overturned. For details of external reviews conducted by the Administrative Appeals Tribunal and the Federal Court refer to Appendix D.

TRADE MEASURES PROGRAMS

Customs administers Australia's anti-dumping and countervailing regime. Dumping occurs when goods are exported to Australia at a price that is below the normal value of the goods. The normal value is usually based on the domestic price of the goods in the country of export. Countervailing duties may be applied, in certain circumstances, where it is found that an exporting country subsidises its exports to Australia and this causes injury to Australian producers.

Dumping is a form of price differentiation between markets. It is not a prohibited practice under international trade agreements. However, remedial action may be taken where dumping causes (or threatens to cause) material injury to an Australian industry. Similarly, not all subsidies are contrary to the World Trade Organization rules.

Anti-dumping measures

At 30 June 2007, 41 anti-dumping or countervailing notices were in place for goods from 17 countries. Of the 22 goods subject to anti-dumping measures, eight involve more than one country.

Dumping/countervailing investigations

In response to industry applications for anti-dumping measures, three new investigations were initiated. This included two dumping investigations and one countervailing investigation. Of the new investigations, two were concluded during the year 2006-07. Seven investigations carried over from last year were completed; two of these related to foodstuffs and five related to metals.

Four provisional measures were taken, in the form of securities to remedy the effects of dumping pending final decisions by the Minister of Justice and Customs (the Minister).

The Minister made final decisions and imposed anti-dumping and countervailing measures following four investigations.

Anti-dumping measures continued, expired or revoked

Anti-dumping and countervailing measures remain in place only as long as and to the extent necessary to counteract dumping and/or subsidisation causing injury. Unless an investigation establishes a need for their continuation, measures expire after five years.

In 2006-07, nine anti-dumping measures expired, none were revoked and two were continued.

Of the ten anti-dumping measures due to expire in 2007-08, Customs has initiated continuation inquiries on three anti-dumping measures as at 30 June 2007.

Reviews (including reviews of existing anti-dumping measures, accelerated reviews and duty assessments)

Customs initiated two reviews of existing anti-dumping measures and reported to the Minister during 2006-07.

No accelerated reviews were completed during 2006-07.

Nine duty assessment applications were initiated in 2006-07, compared to 14 in the previous year. Five of these duty assessments resulted in repayment of interim dumping duty and one resulted in no repayment.

Extension to the publication of the statement of essential facts

Customs sought timeframe extensions for placing the statement of essential facts on the public record for:

• eight anti-dumping investigation which concluded in 2006-07.
• one review of existing anti-dumping measures and zero continuation inquiries.

The Minister agreed to extensions ranging from 22 to 42 days. Reasons for seeking extensions included the large number of interested parties and the additional time needed to verify information on injury, export prices and normal values.

Monitoring

During 2006-07, Customs monitored selected imported goods to ensure exporter and importer compliance with countervailing and anti-dumping measures and identification of cases where circumvention of anti-dumping measures may have occurred. During 2006-07, 11 commodities were subject to monitoring. The selection of goods was based on factors such as requests by Australian industry, other interested parties or Customs risk assessment profiles.

As at 30 June 2007 there were four commodities subject to price undertakings by certain exporters. A price undertaking is essentially an agreement not to export goods below a price agreed to with the Minister. All four commodities were actively monitored. An essential requirement is that exporters must lodge shipping documents with Trade Measures within seven days of the bill of lading date. This allows Trade Measures time to see if the undertaking is likely to be breached before entry of the goods.

Trade Measures Review Officer (TMRO) and court action

Interested parties sought a review by the TMRO on eight matters during 2006-07. The TMRO affirmed Customs decisions on four matters. There were two matters referred back to Customs and both remain underway as at 30 June 2007. The TMRO was considering the remaining two matters as at 30 June 2007. One matter was referred to the Federal Court and one matter was referred to the High Court in 2006-07, compared to two matters referred to the Federal Court in the previous year.

Service delivery and improvement

Customs provides liaison services and guidance to clients regarding anti-dumping and countervailing matters including a hotline to answer inquiries in relation to anti-dumping and countervailing matters. This service includes guidance on new and existing anti-dumping and countervailing measures, reviews or revocations of existing measures, dumping duty assessment and applications for continuation of existing anti-dumping measures. In addition, advice is provided on entering goods affected by anti-dumping and countervailing measures.

In conjunction with the Department of Industry, Tourism and Resources, the Department of Foreign Affairs and Trade and the Trade Measures Review Officer, Customs completed a joint study of the administration of the anti-dumping system to examine areas where services could be improved in 2006-07.

One of the recommendations was the creation of a small-to-medium Enterprise (SME) liaison officer to assist Australian industries with up to 200 employees and less than $10m turnover with potential dumping/countervailing applications.

Since the SME initiative was established on 24 November 2006, there were 12 inquiries from industry. Five of these inquiries resulted in face-to-face visits with the companies concerned.

Other recommendations of the joint study that were implemented in 2006-07 include:

• updating the Trade Measures manual
• improvements to the Trade Measures Intranet to make it more user friendly
• new guidelines for dumping forms
• making the Dumping Commodity Register pages available on the Internet implementing a pre-lodgment screening advice.

TRADE AGREEMENTS

Trade agreements promote stronger trade and commercial ties between participating countries and help to provide opportunities to increase trade and investment opportunities for Australians. Customs assists the Department of Foreign Affairs and Trade (DFAT) in negotiations, specifically providing technical advice on rules of origin, e commerce, intellectual property rights, and customs cooperation.

Australia has established trade agreements with New Zealand, Singapore, Thailand, the United States of America, Canada and Forum Island Countries. Potential trade partners that we are currently engaged in negotiations with include Chile, China, the Gulf Cooperation Council, Japan, Malaysia and together with New Zealand, the Association of Southeast Asian Nations (ASEAN).

In 2006-07, the 19 formal rulings provided certainty for importers and consumers about the preferential tariff treatment of goods imported into Australia.

Australia-New Zealand Closer Economic Relations Trade Agreement

On 1 January 2007 Customs implemented additional rules which were agreed between Australian and New Zealand Trade Ministers. The new rules allow the change in tariff classification approach to rules of origin to operate in parallel to the existing value-added rules under the agreement. The value-added rules will cease to apply on 31 December 2011.

Australia-United States Free Trade Agreement

In 2006-07 a Federal Court judgment led Customs to amending its treatment for the entry of goods for home consumption under the Australia-United States Free Trade Agreement. All United States originating goods entered for home consumption after 1 January 2005 are now considered to be eligible for the preferential rates of duty for such goods under the Customs Tariff Act 1995. Goods that were imported into Australia prior to the commencement of the agreement, but were entered for home consumption after the commencement date, are therefore eligible for a preferential duty rate. For information about the associated Federal Court judgment refer to Corporate Resource Management, Customs Use of Legal Services.

South Pacific Regional Trade and Economic Agreement (SPARTECA)

Customs is participating in a project which aims to enhance trade in the South Pacific region. The project is being coordinated through DFAT and includes technical assistance from Customs, the Department of Industry, Tourism and Resources and the Australian Agency for International Development. Customs' role centres around advice to DFAT, Department of Industry, Tourism and Resources and relevant Fijian government agencies on rules of origin under SPARTECA and cooperation with Fiji Revenue and Customs.

SPARTECA is a non-reciprocal trade agreement under which Australia and New Zealand offer duty-free and unrestricted access or concessional access for all products from Forum Island Countries (FICs). To qualify, goods must meet the SPARTECA rules of origin, which require goods must be produced in a FIC and have at least 50 per cent local area content.

There is an additional scheme for the Fiji textiles industry under SPARTECA textiles clothing and footwear (TCF), which was introduced on 1 March 2001. This scheme provides the Fiji textiles industry with concessional arrangements for TCF goods until 31 December 2011.

Both SPARTECA and SPARTECA TCF have inbuilt review mechanisms.

DEPOT AND WAREHOUSE LICENSING

Customs licenses a total of 436 depots and 531 warehouses, which are renewed annually. These figures include 39 new depots and 44 new warehouses licensed during 2006-07.

Changes were made to both depot and warehouse licence conditions, designed to better inform licensees of their responsibilities, and better align licence conditions with relevant sections of the Customs Act 1901.

Amendments to Regulation 94 of the Customs Regulations 1926 have been developed to expand the range of goods available at inwards duty free stores. This is a government initiative resulting from the Review of Administrative Arrangements for Tourist Shopping.

NATIONAL CUSTOMS BROKERS LICENSING ADVISORY COMMITTEE (NCBLAC)

The NCBLAC advises the Chief Executive Officer (CEO) on customs broker licensing issues. NCBLAC comprises of one member nominated by the Customs Brokers and Forwarders Council of Australia who represents brokers, one Commonwealth member nominated by the CEO of Customs and an independent Chair. All decisions made by the CEO in response to NCBLAC recommendations are open to appeal in the Administrative Appeals Tribunal.

In 2006-07, NCBLAC considered 89 new licence applications consisting of 23 corporate and 66 individual applications. Of these, NCBLAC held hearings for seven applicants who did not meet the required academic standards and two hearings for applicants that did not provide sufficient information to enable the NCBLAC to make a recommendation. After considering the recommendations of the NCBLAC the CEO issued 85 new corporate and individual broker licences in 2006-07. There was also one NCBLAC hearings covering disciplinary matters where the CEO accepted the NCBLAC recommendations.

In response to the low pass rate in the mandatory national broker examination, Customs has been working with the Customs Brokers and Forwarders Council of Australia, which represents brokers, to improve the results.

COOPERATION WITH KEY STAKEHOLDERS

Customs consults at various levels with external organisations and government departments. Key committees, relating to Output 3, that Customs participated in during the year includes:

• Customs National Consultative Committee and Chief Executive Officer's Steering Committee related to Integrated Cargo System improvements
• Cargo Processing Executive Steering Committee
• Industry Action Group.

Customs also participated in Australian Taxation Office and Customs sponsored industry forums including the Tobacco Industry Forum, Alcohol Corporate Consultative Forum and Petroleum Corporate Consultative Forum.

More information on some of the committees mentioned above and other key internal and external consultative forums refer to Corporate Governance, Internal Consultation.

SUMMARY OF KEY LEGISLATIVE CHANGES

The following outlines key Customs related legislative amendments during 2006-07 for Output 3.

PROHIBITED IMPORTS

The Customs (Prohibited Imports) Regulations 1956 were amended to:

• control the importation of all goods containing chrysotile asbestos
• implement United Nations Security Council Resolutions in relation to Sierra Leone, Côte d'Ivoire, the Democratic Peoples Republic of Korea and Iran
• exempt deactivated firearms from the safety testing requirements for firearms
• change the firearms safety test to allow for new firearms technologies to be tested, and allow certain consignments to be passed or failed on the basis of a sample from that consignment
• clarify the definitions of firearms accessory and firearm replica
• clarify the restrictions on the importation of high capacity detachable magazines for pumpaction and lever-action centre fire rifles
• clarify the controls on magazines for fully automatic firearms
• clarify the requirements that apply to the importation of interchangeable firearms parts.

PROHIBITED EXPORTS

The Customs (Prohibited Exports) Regulations 1958 were amended to:

• implement United Nations Security Council Resolutions in relation to Lebanon, the Democratic Peoples Republic of Korea and Iran
• repeal the prohibition on the exportation of human embryos without the permission of the Minister for Justice and Customs.

INTELLECTUAL PROPERTY

Under the Trade Marks Amendment Act 2006 and the Copyright Amendment Act 2006 changes, made by IP Australia and Attorney-General's Department respectively, to the provisions which give rise to the Customs Notice of Objection Scheme. To assist in reducing the administrative burden of re-lodging notices, the term of a Notice of Objection was increased from two years to four years in both acts.

The requirement for a security to be paid at the time of filing a notice has now been replaced with provisions allowing a written undertaking.

HARMONIZED COMMODITY DESCRIPTION AND CODING SYSTEM 2007 (HS2007)

The Customs Tariff Amendment (2007 Harmonized System Changes) Act 2006 amended the Customs Tariff Act 1995 on 1 January 2007 to implement changes from the third review of the International Convention on the Harmonized Commodity Description and Coding System, the HS2007. An additional bill to reflect two HS2007 related anomolies was introduced into Parliament during 2006-07.

Extensive consultation regarding the HS2007 changes was undertaken with relevant government departments and, where necessary, with industry associations. Information seminars for Customs staff and clients were held throughout Australia to promote understanding of the changes. Information was placed on the Customs website.

The HS2007 changes also resulted in 734 Tariff Concession Orders (TCOs) being revoked and re issued. Customs initiated action to ensure that the new TCOs took effect, as intended from 1 January 2007.

BUDGET TARIFF AMENDMENTS

The Customs Tariff Amendment (Incorporation of Proposals) Act 2007 amended the Customs Tariff Act 1995 to implement announcements in the 2005 and 2006 Budgets relating to goods used in the modification of aircraft, certain machinery (mainly used by the mining industry) and the importation of goods by the power and water supply industries.

THAILAND-AUSTRALIA FREE TRADE AGREEMENT

Customs Tariff Proposal (No. 2) 2007 took effect on 1 June 2007. This proposal removed the four per cent duty that applied to certain steel wire products imported under the Thailand-Australia Free Trade Agreement.

AUSTRALIA-NEW ZEALAND COOPERATION AND ECONOMIC RELATIONS AGREEMENT

The Customs Legislation Amendment (New Zealand Rules Of Origin) Act 2006 and the Customs (New Zealand Rules of Origin) Regulations 2006 contained amendments to give effect to the amendments to the Australia-New Zealand Closer Economic Relations Trade Agreement.

AUSTRALIA-UNITED STATES FREE TRADE AGREEMENT

The Customs Legislation Amendment (Border Compliance and Other Measures) Act 2007 contained minor technical amendments to the provisions in Customs Act 1901 which give effect to the Australia United States Free Trade Agreement relating to determining whether goods imported in Australia are US originating goods and thereby eligible for preferential rates of duty.

DUTY DRAWBACK

The Customs Regulations 1926 were amended in October 2006 to simplify the duty drawback procedures and extended the period in which to lodge a duty drawback application from 12 months to four years from the date of export.

BROKER LICENSING PROVISIONS

The Customs Legislation Amendment (Augmenting Offshore Powers and Other Measures) Bill 2006 also included amendments to update the broker licensing provisions to recognise the changing nature of employment in the broker community. Currently the legislation only allows individual customs brokers to be employed full-time by the corporate customs brokers (being companies or partnerships). The amendments accommodate locum or freelance customs brokers who can then be employed by a number of different corporate customs brokers at any one time.

BUILDING FOR THE FUTURE

The following provides a summary of Customs future plans for Output 3.

• Finalise the review into Schedule 2 of the Customs (Prohibited Imports) Regulations 1956 to ensure the continued application of efficient and effective controls.
• Finalise review of import concessions under the 4th schedule of the Customs Tariff Act 1995.
• Commence consultative process with other government agencies and their affected stakeholders and with cargo management industry representatives on amendment proposals under the fourth review of the International Convention on the Harmonized Commodity Description and Coding System.
• Progrees and support the activities and outcomes of the:
  • Booz Allen Hamilton Review of issues relating to the introduction of the Integrated Cargo System
  • Australian National Audit Office Review on Customs Cargo Management Re-engineering project.