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Illegal Logging Grace Period Extended

The Department of Agriculture and Water Resources recently released the report of the KPMG review of the impacts of the Illegal Logging Prohibition legislation. The Department indicated that it accepts, in principle, the five recommendations made by KPMG. Amongst these are:

  • Increasing from $1,000 to $10,000 the threshold consignment value at which due diligence requirements apply
  • Allowing reliance on FSC and PEFC (see article below) certificates without the need for additional due diligence inquiries
  • Fast-tracking the development of additional Country Specific Guidelines
  • Funding the development of better and more targeted training for industry.

These changes are subject to completion of a Regulatory Impact Statement and, eventually, legislative amendments. Because of this, the Department has extended the “soft start” (ie no penalties) period until any amendments are in place.

Importers of Timber and Timber Products - Beware!

From May 2016, substantial penalties (including imprisonment, large fines and forfeiture of products) will apply to importers who do not comply with the requirements of the Illegal Logging Prohibition Act and Regulation. Australia has joined the international move to deter the trade in illegally logged timber and timber products. The prohibition on importing illegally logged timber products came into effect at the end of 2014 but the Department of Agriculture has allowed an 18 month period for affected companies to adjust their supply chains to ensure compliance. But that grace period is about to expire and penalties will be imposed from May.

Importing illegally logged timber carries a maximum penalty of five years imprisonment or a fine of $85,000 for individuals/$425,000 for corporations, or both. The timber is subject to forfeiture upon conviction of the importer.

In addition, the Regulation prescribes certain Regulated Timber Products, which are defined by reference to a large range of tariff classifications. They include many timber and timber products (such as furniture) and only products made from 100% post-consumer recycled timber are exempt. Importers of such Regulated Timber Products must have in place a documented Due Diligence System which allows them to assess the risk that the products have been illegally logged. This might involve reliance on a Timber Legality Framework (eg Forest Stewardship Council (FSC) or Programme for the Endorsement of Forest Certificates (PEFC) products), Country Specific Guidelines or an assessment of other risk factors. An importer is required to declare on the import declaration that it has complied with the due diligence requirements. Failure to do so carries a fine of $51,000 per offence.

Importers of timber and timber products should confirm whether their products are covered by the legislation and, if so, implement procedures, including a documented Due Diligence System, to ensure compliance.

ChAFTA Comes Into Effect

Trade and Investment Minister, Andrew Robb, announced on 9 December 2015 that the legislation giving effect to the China Australia Free Trade Agreement had passed the Senate. The FTA will commence in late December 2015. This will bring into effect the first round of bilateral tariff cuts. The second round will follow shortly after on 1 January 2016. This will bring substantial benefits to Australian exporters and consumers.

TPP Agreement Text Published

The text of the Trans-Pacific Partnership has now been published. Any company with trading activities involving Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam or the United States should acquaint itself with the potential benefits available to it under the Agreement. Tanda can provide product- and country-specific advice on the availability of those benefits.

Recent Bilateral Trade Agreements

Australia’s trade agreements with China, Japan and South Korea create great opportunities for access to those markets for Australian exporters. While Australia’s import regime has been very open for many years, there are also additional benefits to importers under these agreements. The scope of those opportunities and benefits is found in the detailed provisions of the agreements. Tanda can provide advice on how these agreements can help grow your business.

Trans-Pacific Partnership Agreement

Widely maligned by mostly uninformed commentary, the TPP will be a boon to importers and exporters in all of its twelve member economies – which represent 40% of the world’s GDP. With implementation likely in 2016, understanding this agreement is essential for all traders in the region.

Australian Trusted Trader Programme

The ATT is Australia’s belated commitment to a supply chain security programme of the type encouraged by the World Customs Organization and already adopted by all of Australia’s major trading partners. By the close of 2015, the Australian Border Force is aiming to have 40 importers and exporters participating in the programme. While there are undoubted benefits to importer participants (eg a dedicated ABF account manager; priority processing of requests for rulings on tariff classification, valuation, origin issues; streamlined reporting procedures; and, potentially, periodic payment of duty), the greatest benefit flows to exporters who, through mutual recognition agreements between Australia and other countries, will achieve highly facilitated access to key foreign markets. Traders need to assess the available benefits against the costs of participation (mostly limited to improving the security of their supply chains), but that assessment is a must for every importer or exporter who wishes to reduce costs, grow markets and obtain better service from government regulators.

National Committee on Trade Facilitation

In 2014, the World Trade Organization concluded its Trade Facilitation Agreement. It will come into force when 107 WTO member countries formally accept the agreement. (By October 2015, 50 members had done so.) The TFA is a game-changer. It moves the needle from the current paradigm of compliance and enforcement prosecuted by Customs authorities around the world, to one of facilitation of trade by adoption of a “whole of government” approach in each country with a focus on simplification, lowering costs, and efficiency. Its success will be measured in terms of the growth of international trade rather than, under the current paradigm, issues such as collection of all revenues owed, and ensuring security and safety at the border.

100% Screening of Airline Freight to USA

In early 2015, the USA’s Transport Safety Administration advised Australia’s Office of Transport Security that current screening protocols for Australian exports to the USA conveyed on passenger aircraft did not meet TSA standards. The TSA effectively requires all such freight to be screened at the piece level (by x-ray, explosive trace detection or physical examination) prior to loading. This has the potential to cause a logistics logjam that will cost exporters dearly in terms of extra costs and extended delays in export clearance. The OTS is working with industry to expand the capacity to conduct such screening and the TSA has agreed to a 1 July 2017 implementation date. The OTS will also establish a new Known Consignor scheme in mid-2016. Any US-bound air cargo that originates from a Known Consignor will not require additional piece-level examination at a later stage in the supply chain. Airfreight exporters to the USA need to investigate both of these options because, from 1 July 2017, unscreened cargo will simply not be loaded onto aircraft.


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