Trade Facilitation and Revenue Collection
2. Trade facilitation and revenue collection
• Enhanced Trade Solutions
• International Trade Single Window
Our trade facilitation and revenue collection program is responsible for
end-to-end cargo processing that supports legitimate trade, the interventions needed to prevent the illegal movement of goods across the border, the collection of trade statistics and the collection of associated revenue. We achieve this through:
- inspection and examination of goods at the border in order to prevent the import or export of prohibited items and to control the movement of restricted items
- referrals to other areas of our organisation and a range of external agencies of matters for possible investigation and prosecution
- development and management of the cargo management processes and information systems
- provision of valuation, classification and rules of origin advice services to ensure that importers and exporters are able to maximise their voluntary revenue compliance or claim concessional benefits to which they are entitled
- collection of import and export data and statistics
- administration of drawback, refund and concessional arrangements, and various industry import duty concession and levy schemes
- investigation of dumping and countervailing complaints and the determination, implementation, monitoring and review of appropriate measures to address them
- administration of customs duty, import processing charges and indirect taxes (including the assessment and collection of GST, Luxury Car Tax and the Wine Equalisation Tax) through the processing of all imported and exported cargo and mail, and items entering and leaving Australia with passengers and crew
- real-time and post-transaction compliance activity related to revenue protection and collection, cargo reporting timeliness and accuracy, export reporting and movement of goods under Customs and Border Protection control
- licensing of customs brokers, depots and warehouses.
The volume of cargo imported into Australia has decreased this year with sea cargo report volumes down 4.3 per cent, and air cargo reports down by 3.9 per cent. The volume of international mail arriving in Australia also decreased by four per cent compared to the previous year. This is consistent with the global economic downturn which has seen cargo volumes drop significantly since November 2008 compared to last year.
The availability of electronic cargo systems to our clients (excluding scheduled outages) was 0.15 per cent below target for the year at 99.55 per cent, however the percentage of cargo we cleared within 15 minutes of receiving final import details was above target at 99.98 per cent.
We represent the interests of more than 30 government agencies at the border. We continued to work in partnership with these agencies and industry to co-design and manage the trade policy framework that facilitates the movement of legitimate goods across the border, the collection of border-related revenue and reporting of national trade data.
Despite the drop in the volume of cargo imported into Australia, there was an increase in the demand for tariff concession and permit management services. There was also an increase in usage of tariff advice and anti-dumping and countervailing applications and advice services.
We work to assure the integrity of our cargo process by identifying and treating residual risk and providing high-quality client service for licensing of brokers, depots and warehouses.
We undertake various risk treatments to improve voluntary compliance within the importing and exporting industry. Compliance treatments include pre-clearance interventions and post-transaction verification of import and export transactions, education of clients and briefing papers to industry on areas of focus and concern, and licensing and monitoring programs to manage the compliance of customs brokers, depots and warehouses.
Performance results for our cargo, trade and compliance commitments to government are outlined in Table 4.
Expansion in regional ports
The project to expand regional cargo examination capabilities is in its final stages. An upgrade of our existing facilities in Darwin is finished and new cargo examination facilities in Newcastle, Townsville and Launceston are due to be completed and fully operational by August 2009.
What this means for our operations is that all high-risk cargo entering Darwin, Launceston, Townsville and Newcastle can now be examined without having to be diverted to major seaports. This minimises our impact on legitimate trade and industry. The availability of secure premises at these locations also enhances our capability to undertake campaign and coverage activities to support our national risk-based approach to cargo intervention. The role of campaigns is covered in Part 2.2
— Border risks.
Like our other cargo and container examination facilities, the new and expanded facilities feature the latest technology including new cabinet X-ray, substance identification and trace detection capabilities. Additional staff resources will also support targeting activity.
The new facilities complement the important border security work already undertaken at Darwin, Launceston, Townsville and Newcastle in the areas of vessel and crew checks. Our expansion of cargo examination facilities at these locations demonstrates our commitment to improving our sea cargo processes and our ongoing role in protecting Australia’s border.
Table 4 shows the number of twenty-foot equivalent units inspected and examined at our container examination facilities across the country.
Enhanced Trade Solutions
Our Enhanced Trade Solutions (ETS) program focuses on preparation for paperless trading and other border management improvements to trade facilitation. Our ETS 2015 paper, released in May 2009, identifies key findings from our work to date and outlines a forward work program for 2009–11. We have adopted a pragmatic, risk-based approach, which recognises that current global economic uncertainty has focused investment priorities towards initiatives that will deliver clear, realisable benefits in the short term.
The first Australian Time Release Study (TRS) was conducted and released. This World Customs Organization (WCO)-endorsed method for measuring import clearance performance showed that Australia performed favourably against other economies, indicating that Customs and Border Protection does not pose a significant impediment to the movement of cargo at the border. The findings were endorsed by industry and favourably received.
Reports on the Authorised Economic Operator Pilot Project and the Customs-to-Customs Data Exchange Proof of Concept were also released as companion documents.
Our study of the application of an Authorised Economic Operator (AEO) program tested the concept and investigated the potential benefits and opportunities that an AEO model might offer. The pilot project demonstrated that the accreditation of security measures was achievable. However, discussions with exporters revealed that most did not consider participation in a formal supply chain security program as a priority given current levels of facilitation and the limited tangible benefits from investment in an AEO scheme. Accordingly, the likely limited uptake would not support government investment at this time.
We undertook Customs-to-Customs Data Exchange proofs of concept to explore if it was possible to obtain earlier information for cargo risk assessment, offer differentiated treatment for industry and reduce the regulatory burden through the international exchange of cargo data. Research was undertaken to investigate the feasibility and benefits of data exchange between governments and industry using the hypothesis that one country’s export is another’s import. While on the surface it seems attractive to combine export and import data to improve trade facilitation and risk assessment, more detailed analysis showed that many of the anticipated benefits — such as reduced reporting burden for industry or earlier certainty of status — were not achievable in the current business environment.
The ETS program will continue to focus on:
- delivery of simple, cost-effective and low-risk short-term solutions that will lay the foundation for future changes
- investigation of opportunities and issues to meet future challenges
- influencing the direction of international standards, supply chains and logistics solutions and uptake of new technologies where we cannot implement unilateral solutions or initiatives.
Business Intelligence Task Force
An outcome of the Enhanced Trade Solutions project was the establishment of the Business Intelligence Task Force in March 2009. The aim of the Task Force is to centralise the tools, systems, processes and data analysts to help us better manage our border risks and make informed, whole-of-agency business decisions.
The Task Force will provide a more efficient and effective business intelligence capability and deliver an enterprise business intelligence strategy and architecture.
Review of cargo intervention
Our Customs and Border Protection Strategic Outlook 2015 report identified the need for flexible and scalable intervention approaches. We reviewed the effectiveness of our cargo intervention approaches and compared the results achieved through mass-screening and risk-based deployment of resources.
Following extensive consultation with relevant stakeholders, we designed and implemented a new Cargo Intervention Strategy which outlined refinements to our intervention approaches to air and sea cargo, which will take effect from 1 July 2009. These refinements enable a broadening of coverage across the range of cargo-handling operations within the cargo environment, and a reduction in the proportion of known low-risk cargo subject to inspection.
Integrated Cargo System enhancements
Our focus on improving ‘certainty of status’ for customs brokers and importers resulted in the implementation of a new Declaration Status Advice message (DSA) in the Integrated Cargo System (ICS). We also introduced improvements to risk assessment processes and the ‘history of events’ functionality.
Additionally, our interactive functionality was enhanced for importers and brokers, with improvements to the declaration amendment functionality and refund processing. Our sea cargo diagnostics capability was improved and additional information was provided to assist industry in out-turning sea cargo. Further, a number of industry issues with underbond movements were resolved as well as providing enhanced messaging functionality to assist the Australian Quarantine and Inspection Service. These key improvements increased the efficiency of cargo processing contributing to our outcome of facilitating Australia’s trade.
We continue to provide users of the ICS with timely and efficient support through our call centre, front counters, information and training sessions and the information on our website. To support this, a new Cargo Support home page was created which provides ICS users with up-to-date information on the status of the system.
Where significant changes occurred, we worked with industry groups to deliver tailored information sessions. For example, in October 2008 we conducted 29 information sessions attended by over 950 attendees across five states as a result of significant enhancements to the ICS. Also, our Customs and Border Protection Information and Support Centre (CI&SC) revised its hours of operation to ensure staff were available during peak call times.
New client engagement model
To better understand our industry stakeholders and their relationship with us, we engaged an independent firm, TNS Social Research, to undertake a comprehensive survey of industry participants. This was achieved through more than 650 telephone interviews, 25 in-depth interviews and 50 online surveys.
Results indicated that our stakeholders are a diverse group and vary from minimal interaction and involvement with us to daily, ongoing relationships. Importantly, they are optimistic about future growth in the industry. The most significant challenges they faced related to time and client pressures rather than our activities. Overall, stakeholders are satisfied with us and generally happy with the service we provide.
Focus areas for improvement include aspects of communication such as access, information, consistency and a flexible two-way relationship. Also, there is considerable desire for greater consultation and collaboration with industry. We plan to run the survey biannually to ensure our improvement strategies are relevant and effective.
In April 2009, the Customs and Border Protection National Consultative Committee (CBPNCC) agreed to a new industry engagement model. It was agreed that the CBPNCC will provide a forum for the discussion of strategic issues which affect the trading community, business and import and export specialists.
We adopted a new approach to our engagement around major change. This co-design approach ensures that we actively work with industry, other government agencies and key stakeholders to develop a shared understanding of the intended outcome and conceptual design of the change. The approach will help us ensure we have an early focus on intended outcomes and ensure that it is maintained throughout the change process. The approach has been successfully applied to the Advance Cargo Reporting and Supply Chain Security projects.
International Trade Single Window
The Asia Pacific Economic Cooperation (APEC) Sub-Committee on Customs Procedures Single Window Working Group, chaired by Australia, will finalise the Phase 2 work program in August 2009. A single window allows traders to report information to government once and have that information distributed to relevant trade-related government agencies.
Single window developments are being pursued by governments around the world as a way to improve the quality of trade information, protect the border and support legitimate trade while reducing the burden on industry. International trade single window developments have been identified as a priority on the APEC trade facilitation agenda.
- the delivery of the capacity building workshop series in Chinese Taipei, Australia and Singapore with learning opportunities aligned to the needs expressed by APEC economies in 2007
- the establishment of an information repository to capture and share the outcomes of pilot projects designed to test new reporting methods and technologies
- the work on international standards and instruments, led by Peru in 2008, which brought greater clarity and understanding to what is available and used in single window design, build and implementation
- the development of a single window implementation guide with framework and roadmap diagrams and information to inform and assist public and private sector decision makers and practitioners.
Working effectively with other agencies
We continue to work with a wide range of policy agencies to ensure that revenue policy and legislation, tariff amendments and border enforcement of regulated and prohibited goods reflected the Government’s intentions for a risk-based approach to trade facilitation.
During the year, legislation was introduced to alter the taxation definitions of beer and wine to ensure that beer and wine based products that attempt to mimic spirit-based products are taxed as a spirit product. The challenge for us was to ensure that the Government’s intentions translated into the international harmonised tariff through tariff proposals and bills. Given the subtle but important differences between the excise tariff and the international harmonised tariff, we worked closely with the Australian Taxation Office and Treasury to ensure the appropriate treatment of import goods was achieved.
|Karen is the Director, International Mail in NSW. She has responsibility for operations at the Sydney Gateway Facility and, along with her counterpart in Victoria, has national policy responsibilities for international mail matters. Karen’s national responsibilities include technology issues, future risk assessment models for international mail, liaison with Intelligence and Targeting, performance measures reporting and analysis and operational matters.
Karen joined us in 1977 after completing a Bachelor of Commerce degree at the University of New South Wales. She initially worked in the cargo control area, then Sydney airport and personnel.
Karen has spent most of her career in corporate areas and became the Director Corporate Support in 1994. During her time in Corporate Support she was involved in a number of initiatives including overseeing the planning of the staffing and training for the 2000 Sydney Olympics and the refurbishment of the Pitt Street and Link Road offices.
In 2002 Karen managed the construction, fit out and relocation of the new Customs House accommodation at Sydney airport. The accommodation was successfully opened by the Minister in 2005. Karen was awarded the Australia Day award for her work on the project.
In 2005 Karen took over responsibility for Air Cargo and Post. When the new structure began in 2007 Karen became responsible for postal operations.
Karen says the Sydney Gateway Facility receives in excess of 100 million postal articles per year from countries across the world and this keeps her work diverse and interesting.
International negotiations and forums
We participated in a number of international forums to promote the tariff harmonisation and strengthen compliance among international administrations on tariff, anti-dumping and subsidies agreements. We also worked closely with the Department of Foreign Affairs and Trade (DFAT) on a range of trade negotiations to ensure that outcomes appropriately reflected government policy intentions on tariff, valuation, origin, anti-dumping and countervailing.
We continued to provide high-level technical advice and support in relation to valuation and rules of origin during free trade negotiations. Negotiations for Free Trade Agreements with Chile and ASEAN-Australia-New Zealand were successfully concluded this year.
Anti-dumping and countervailing
Seven new anti-dumping and three new countervailing applications were formally lodged, with countervailing applications increasing by 40 per cent over the previous year. This increase in new applications, particularly countervailing applications, reflects world-wide trends reported by the WTO.
A number of new initiatives were introduced to more effectively administer Australia’s anti-dumping and countervailing system and respond to the growing workload. Technical exchanges with the Canadian Border Services Agency and the implementation of the Trade Measures 2009–12 workforce capability plan have strengthened the skills and flexibility of our officers performing anti-dumping and countervailing investigations and improved our ability to respond to increased demand.
Risk Management Plan
With the introduction of our Compliance Risk Management Plan (Risk Management Plan), a more robust risk-based and targeted business program has allowed us to direct our compliance resources to areas posing the greatest risk. Also, the plan incorporated an increased number of pre-clearance interventions to supplement the audit program.
This more targeted approach produced significant increases in the value of both audit coverage and pre-clearance intervention. The customs value of declarations checked during pre-clearance import activities increased by over 400 per cent, with values increasing by 150 per cent for import audit activities.
Compliance activity — imports
The customs value of all the goods imported by companies we audited was $126.1 billion. This represents 56.5 per cent of the total value of imports. Of this total amount, we audited imported goods valued at $5.9 billion (2.6 per cent of the total value of all imports into Australia).
Our pre-clearance import intervention activities included actions resulting from profile matches, leverage exercises and industry referrals. We also conducted pre-clearance import intervention activities on a further 23.7 per cent of the value of all imports into Australia.
Compliance activity — exports
The total value of all goods exported by companies subject to post-transaction compliance activity was $16.8 billion, representing 7.2 per cent of the total value of exports. Of this total amount, we audited exported goods valued at $1.4 billion (0.6 per cent of the total value of all exports from Australia).
Pre-clearance export intervention activities included action resulting from profile matches, export events and industry referrals. We checked a further 7.5 per cent of the value of all exports from Australia.
Benchmark audit program
We continued our benchmark audit program during 2008–09. The program tested general levels of compliance and provided a measure of revenue leakage. We confirmed low revenue leakage levels, providing assurance and verification of compliance activities in key areas associated with the declaration of goods.
Introduction of Industry Briefing
In April 2009, we released our inaugural quarterly Industry Briefing on Compliance Issues paper. It provides targeted compliance information to peak industry bodies to enable them to educate their members on compliance matters with the aim of increasing voluntary compliance. The focus is on key compliance messages, information on specific errors and analysis of recent compliance activity.
Cargo reporting compliance strategy
Cargo reporting provides us with information to risk assess cargo prior to its arrival in Australia and allows us to make decisions on which consignments to inspect, while facilitating the early release of low-risk cargo. The timely and accurate reporting of cargo continued to be central to our compliance strategies. Key elements include monitoring the timeliness and the accuracy of cargo reports. We work closely with cargo reporters to provide regular feedback on their level of compliance, to educate and, where appropriate, take action under the Infringement Notice Scheme. Timeliness of cargo reporting has improved, with on-time reporting levels increasing from 86.3 per cent in 2007–08 to 88.2 per cent this year for sea cargo and 94.0 per cent in 2007–08 to 94.3 per cent this year for air cargo.
Infringement notice scheme
This year we issued 75 infringement notices for cargo reporting offences. 71 notices were paid and two notices were withdrawn. The remaining two notices were issued to a company that has since gone into liquidation. The main infringements were:
- false or misleading statements resulting in a loss of duty
- movement of goods without authority
- false or misleading statements not resulting in loss of duty.
National compliance database
We identified and documented the business requirements for a national reporting system to capture the actions and outcomes of our compliance treatments. The system will support future risk assessments and analysis of the health of our cargo processing system.
Working with other agencies
We worked successfully with the Department of Environment, Water, Heritage and the Arts (DEWHA) around the banning of incandescent light bulbs.
An import ban was introduced on 1 February 2009 as the first step in the Government’s strategy to phase out the use of incandescent light globes. This integrated approach allowed time for existing domestic supplies to be diminished prior to the commencement of a domestic retail ban in November 2009.
We implemented a number of strategies to provide importers with advance warning of the impending prohibition. In December 2008 we began notifying importers via an advisory message issued by the cargo clearance system, and wrote to known importers of the goods to alert them to the ban. Trade Policy and Regulation Branch also prepared detailed fact sheets for importers and their agents to assist in identifying the prohibited globes.
FIFA World Cup bid
We supported a whole-of-government approach by working with the Department of the Prime Minister and Cabinet, Treasury and the Department of Health and Ageing in support of Australia’s FIFA World Cup bid for 2018 and 2022.
Anti-dumping and subsidy instructions and guidelines
One of our key priorities was to finalise new Anti-dumping and Subsidy instructions and guidelines which were published for comment in December 2008. We received submissions from industry and international government agencies including the Ministry of Commerce of the People’s Republic of China, the Delegation of the European Commission and the Department of Foreign Trade, Bureau of Trade Interests and Remedies in Thailand. The project end date was extended to provide sufficient time for complete stakeholder response. The experience reinforced the importance of allowing adequate time to fully engage users and expert advisers, especially when dealing with complex processes and information.
The instructions and guidelines form an important part of strengthening our capability to deliver effective investigations in an environment of increasing industry focus on subsidies in international trade. They are expected to be finalised next year.
IMPROVEMENT PRIORITIES FOR 2009–10
- Business Intelligence Task Force
- continued refinement of risk-based intervention approaches
- Productivity Commission’s inquiry into Australia’s anti-dumping and countervailing system
- implement improvements to the administration of the Tariff Concession System
- deliver the Compliance Assurance Strategy
- implement the national system for the collection and reporting of compliance activities.