Source:
Photo: Ingram Publishing
INDUSTRY OPINION:
Paul Zalai - Sydney
pzalai@ftalliance.com.au
February 20 2017 - 14:15:00
AUTHORISED Economic Operator (AEO) programs work to secure the international supply chain, while facilitating the movement of legitimate trade. Over the last few years, the Department of Immigration and Border Protection (DIBP) has co-designed with industry an AEO program in an Australian context called the Australian Trusted Trader.
Our border agency deserves significant credit for delivering innovative solutions to meet statutory reporting requirements whilst recognising contemporary supply chain practices. At industry engagement sessions held last week in Melbourne and Sydney, it became evident the Australian Trusted Trader program will deliver significant benefits for industry with duty deferral and streamlined cargo reporting models to be introduced in phases during the 2017/2018 financial year.
We look forward to the DIBP completing further engagement with stakeholders across government and commerce and soon making public announcements on the reforms.
Putting aside the specific details of the reforms, the debate continues whether it is appropriate there will be two streams, being those businesses that are "trusted" and those that remain outside of the program.
One line of argument is that if the government can offer solutions to trusted entities, then why can't they deliver the same benefits to all of industry?
The counter argument is that the Australian Trusted Trader recognises businesses with a demonstrated secure supply chain and compliant trade practices. Those businesses that reach or exceed the required standards should be rewarded.
The Australian Trusted Trader is available to all Australian businesses that have an Australian Business Number (ABN), two years' history of participation in international trade activities and the ability to demonstrate they are financially solvent.
The program is free to join. This leads us to the issue of cost recovery.
Import Processing Charges are currently collected against all Full Import Declarations as a means of recovering border agency operational costs. The stated intent of the IPC is to also to remove cross-subsidisation and deliver efficiencies to industry.
Some industry representatives are using this policy position to suggest that trusted traders should pay a higher IPC to cover the increased costs to administer the early start-up phases of the program.
Perhaps they need to be careful what they wish for in raising this issue for debate.
As more businesses join the programme, economies of scale will be achieved and from a holistic operational perspective, the border agencies will have an opportunity to focus its limited resources on businesses outside of the program.
If we follow a philosophy that we should move away from cross-subsidisation, it would be reasonable for trusted traders (who require less attention from the border agency) to pay a lower IPC.
The border agency will still need to recover ongoing operational costs so that outcome would logically result in a higher charge to be paid by businesses not involved in the programme and / or perhaps an IPC to be recovered from new sources.
The IPC argument has been deferred for now, but will no doubt come under the spotlight again sometime soon.
What are your views … should we have differentiated processes and cost recovery for trusted traders or would it be a fairer to maintain an environment where one size fits all?
Paul Zalai is an advocate for the Australian Freight and Trade sectors
www.FTAlliance.com.au