The modern practice of the law now requires significant technological assistance. Mobile phones, emails, twitter and Facebook are all apparently indispensable measures used to deliver services faster than ever before. When I was a young lawyer, the fax machine was the cutting edge of practice – now I hardly see it being used and clients certainly don’t accept it as a means to deliver advice. In the same manner, clients expect comprehensive advice at very short notice together with absolute certainty of outcome as soon as instructions are provided. So, to address many of these requirements I have arranged for a magic crystal ball to be installed on my desk to which I refer many of the issues of the day so that I have an additional resource to enable me to advise exactly on what it likely to happen with an issue and how it will end. It has been quite a wonderful addition to the practice as well as being decorative.
Consequently, when considering my next Update I thought about something on cargo reporting or something about the ongoing reform of the Australian Customs and Border Protection Service (“Customs”). However, I then thought that I should instead turn to the crystal ball to seek details on what would happen to some of the issues on the agenda following our Federal election. So, with appropriate disclaimers as to the accuracy, I set out below some views on what now could be on the Australian Customs and Trade agenda. In doing so, I will draw both on the Coalition Trade Policy and the Coalition Manufacturing Policy (which, in part, addresses Anti-Dumping reform).
In its Trade Policy, the Coalition claimed that “under Labor the Doha multi-lateral trade negotiations have stalled” which seems harsh as Australia, alone, could not ensure the completion of those negotiations. The Coalition also indicated that under Labor, efforts to pursue bilateral or regional free trade agreements have failed and the Export Market Development Grant Scheme had been under-funded and proposed a radical change to both aspects.
It would seem that the Coalition recognises that the Doha round may be unlikely to deliver the desired happy ending of one international reduction in trade barriers so that other avenues will need to be addressed, whether that be the separate Trade in Services Agreement or an increase in negotiations for various bilateral or multilateral FTA. As a result, the Coalition has indicated it will undertake the following:
- Give priority to concluding long-running free trade negotiations and examine the case for FTA with other important trade partners.
- Build our manufacturing export base by progressively restoring funding to Export Market Development Grants starting with an initial $50M boost.
- Enhance Australia’s commitment to APEC, regional trade negotiations and the World Trade Organisation and Doha Round of multilateral trade negotiations.
- Re-establish the Trade Advisory Council as the pre-eminent source of advice from the business sector on trade and investment issues.
- Create a Minister for Trade and Investment whose principal responsibilities will be to encourage exports and direct investment in Australia and Australian-based industries including foreign investment.
Where to on the FTA agenda?
The Coalition has promised to complete the proposed FTA with China, Japan, Korea, Indonesia, the Gulf Co-operation Council and India as well as supporting the completion of the Trans-Pacific Partnership and examining the case for FTA with other trading partners including the EU, Brazil, Hong Kong, Papua New Guinea, South Africa and Taiwan. This will include an improved position for local industry through the appointment of at least one industry representative who will be directly included in the negotiation of FTA (although it does not indicate which industry the representative will represent). However, the completion of all those deals may depend in part of the willingness of the new Federal Government to resile from the position adopted by the former Government some years ago which required all FTA to be comprehensive and for no FTA to include an “Investor/State Dispute Resolution” provision. While the Coalition will be subject to certain pressures from the National Party and its constituents, it appears that it may be better disposed to the further compromises which may be required to allow the FTA with China, Japan, Korea, India, the Gulf Co-operation Council and Indonesia to be completed in the near future. Clearly, the attitude of our trading partners will also have an impact as will the Government’s revised position towards levels of foreign investment permitted before requiring FIRB review.
My view has been that the position on AD is a good guide on the attitude of a Government towards free/fair trade and the degree to which protectionism could surface. Certainly, the WTO has counselled against additional protectionist advances around the world and there is also some political benefit in being seen as supporting local industry and opposing unfair overseas practices. Unfortunately, the Coalition Manufacturing Policy (which includes AD) is of some concern on this issue. It calls for AD to be taken from Customs (which has already happened with the new Anti-Dumping Commission) and has suggested a “reverse of onus” in Investigations (which has already been proposed in legislation rejected before Parliament). The same policy calls for “tougher” action without details and seems to ignore the significant recent reforms. All in all, it’s hard to see how the Coalition would change AD practice very much and any changes would push us further away from the WTO ideal. All things considered, given the extent of recent change which has yet to be completed, it is difficult to see significant change in policy other than additional and more aggressive action by Customs to enforce current measures and stop the attempts to circumvent those measures. Hopefully, upon reflection, the Coalition will allow the new work of the ADC and the new legislative agenda to settle before undertaking any further reforms. Of recent time, there have been new Investigations regarding alleged dumping of certain types of fruit, electrical transformers and wind towers. Those investigations will certainly stretch the resources of the ADC.
The role of Customs?
One traditional conspiracy theory has been that Customs would relinquish its revenue role to the ATO and focus on the “border control” issues. However, at this juncture the only available evidence points to the Coalition supporting the current reform process initiated in relation to Customs. Both major parties supported the “tough” stance on border control and revenue issues as well as ensuring fair trade. On that basis, it is probably fair to expect no major changes and possibly a higher level of enforcement action by Customs against those perceived as failing to comply with statutory obligations.
We face an economy under perceptible stress locally and from overseas. We also see significant pressure for tough measures at the border and to protect local industry against unfair competition from overseas while trying to advance our FTA agenda. The upshot is likely to be the same as is currently the case – continuing the current measures and reform with Customs, a focus on improved compliance and revenue recovery but with the chance of a less “pristine” FTA agenda and an increased likelihood of deals focussing on main issues and less attention on peripheral issues of environment and labour standards. Tougher for all those in industry with the chance of quicker and less comprehensive FTA for the foreseeable future. This all places a premium of maintaining close attention to the current and future agenda and focussing on ensuring compliance at all times – no matter how difficult that may prove to be.