Trusted Traders Programme

16 June 2015

Dr CHALMERS (Rankin) (17:00):  Thank you, Mr Deputy Speaker, for this opportunity to speak on the Customs Amendment (Australian Trusted Trader Programme) Bill 2015. The member for Kingsford Smith has taken the House through the bill, which establishes a Trusted Trader Program from 1 July this year. This means that certain exporters and importers will be able to enter into a Trusted Trader Agreement with the Comptroller-General of Customs. This will give them special rights and privileges, including enhanced client service, priority trade services and reduced examinations—subject, of course, to risk assessment.

The goal of this program is to make it easier for Australian importers and exporters in low-risk industries to get access to international markets. I am very passionate about this and I am sure that both sides of the House are very passionate about it. This will alleviate significant trade burdens and enhance the competitiveness of Australian international businesses.

There has been a lot of discussion of trade in the media lately. Every day there are stories about the TPP, ChAFTA, KAFTA and JAEPA—an alphabet soup of trade agreements. This flurry of activity in trade has been brought about by necessity due to the changing fundamentals of the international economy. Increasingly, international production is characterised by the emergence of elaborate global value chains.

To take a well-worn example: the iPhone. You have the design, the software and the marketing done out of the US; you have the colour screen and the speakers, which use rare earth elements from Mongolia; you have the chips and batteries made in Korea and Taiwan; and you have other parts made in France and Italy, and then it is assembled in China. That does give a good example of how increasingly in the global economy you can have one device or one product with numerous companies and numerous nations involved in its production.

The McKinsey Global Institute has done a terrific job of quantifying these benefits of global value chains in their recent report, Global flows in a digital age. I commend that particular report to honourable members. It showed that the flow of goods, services and finance around the world in 2012 reached $26 trillion, which is 36 percent of global GDP—1½ times larger than in 1990, not that long ago.

The McKinsey Global Institute found that the flows themselves contribute a great deal to GDP growth, confirming what we as internationalists in this place know intuitively: that trade liberalisation has driven competition, innovation and entrepreneurship. The contribution of these flows to global GDP is as much as $450 billion each year—between 15 to 25 per cent of world economic growth. It is not just decades of liberalisation that have brought about this rise in global exchange; of course we have also had rapid technological advance and digitisation, which is increasingly transforming and supplementing all global flows.

While international trade is rapidly changing, Australia is at risk of falling behind if we are too slow to adapt to changes in the global economy. According to APEC, approximately 40 per cent of exports measured in value-add in Australia originate from services—more than double the representation of services in gross trade statistics. But this number is still below the OECD average of 48 per cent, despite Australia performing well in the OECD Services Trade Restrictiveness Index. Even worse, while New Zealand, the UK and the US outperform us in terms of value-added service exports, they have also increased their share since 1995. In Australia, our share of value-added service exports has actually fallen in that period.

Recent research from the UN Conference on Trade and Development reveals that Australia's participation rate in global value chains is lower than that of 22 of the 25 largest-exporting economies. This means that Australia is missing out on a lot of opportunities to value-add, as we trade increasingly in raw materials instead of using our human capital—our ideas and our imagination—to its greatest advantage.

A Lowy Institute report into Global Value Chains, Border management and Australian trade, released last year, found that Australia has huge potential benefits by increasing our engagement in those global value chains. They estimate that continued liberalisation of trade in services could result in an additional $21 billion in Australian services exports, and an extra 100,000 Australian jobs at a time when, as we all know, jobs are hard to come by. I want to congratulate the Lowy Institute on their report, but it also says:

… the window of opportunity for Australian service providers to entrench themselves in GVCs throughout Asia’s high-growth economies and beyond will not remain open forever.

This is a timely warning.

Christopher Vas from Murdoch University argued in The Conversation in 2013 that Australia's strong trade with our regional neighbours—the big four of China, India, Japan and Korea, as well as Taiwan, Indonesia, Thailand and New Zealand—came down to our regional competitive advantage. In other words: proximity and resources. But he said that our privileged position:

… may soon come under pressure, with other international economies wanting to take advantage of the burgeoning Asian economies.

So for all of these reasons—with all of these pressures, with all of this change and with all of this opportunity swirling around us in the most dynamic part of the global economy—we will support the Australian Trusted Traders Program today, as my colleague the member for Kingsford Smith indicated in his contribution a moment ago.

It was my colleague, the member for Blaxland, when he was the minister for home affairs and justice, who made a first important key step in this direction, which really laid the foundations for this bill that we are supporting today. He released the Australian Customs and Border Protection Service Blueprint for Reform 2013-2018. In it the Labor government, of which he was a part, identified facilitating trusted trade as a key area of focus for reform of Australia's approach to trade and goods.

This bill allows the Comptroller-General of Customs to enter into a trusted trader agreement with entities to provide them with administrative benefits and advantages—and we are all for that.

Exporters and importers wishing to enter into these agreements must be part of an international supply chain for at least two years, have an ABN, have completed a risk assessment, and need to have met robust supply chain security standards—in addition to other important conditions—to make sure that there is integrity in the system so that people are getting the right kind of advantage from being part of it. These trusted traders will get access to priority processing of advance rulings, enhanced client service and reduced examinations if they pass all of those conditions that I just ran through. This will make it easier for importers and exporters to do their job. It will make them more competitive globally and that is a great thing for every Australian. The more competitive our businesses are, the more successful they are in regional and global markets, the better it is for the Australian standard of living more generally.

We know, from the example provided by our friends across the ditch in New Zealand, that these sorts of schemes do work, as the Secure Exports Scheme from New Zealand has shown. Around 120 authorised exporters are part of the New Zealand scheme. In 2013, almost a third of all New Zealand exports originated from these authorised exporters, so you can see the potential in a well-run scheme of this nature. Data from New Zealand shows that despite the fact that Australia has an FTA with the US, New Zealand exporters with no such agreement are 3½ times less likely to see their cargo held up for examination on arrival at a US port.

Again, quoting the authority of the Lowy Institute report:

Australian exporters are left looking like Australian travellers waiting in line at Heathrow Airport, waving passports with Her Majesty's request that that they be offered every assistance, while EU passport holders walk straight through.

That is a colourful way of highlighting the challenges that we are up against here and why it is so important that the Australian Trusted Trader Program will remove some of these barriers for Australian companies.

There is, of course, more to be done in this area. Once the Trusted Trader Program is up and running, Australia will need to push hard to ensure that the scheme is recognised by our major trading partners. In other words, we need to ensure that the trust we place as Australians, as an Australian government, in our trusted traders is reciprocated by our trading partners. Again, I indicate that Labor will be supporting the Customs Amendment (Australian Trusted Trader Programme) Bill 2015. We took the first step in this direction when the member for Blaxland released the Australian Customs and Border Protection Service Blueprint for Reform.

There is a much broader principle at play here. This is an important piece of very specific legislation and we are all for it, but, more broadly, we need to commit ourselves, in this place, to ensuring that businesses of all sizes in this country—big, medium and small—are not left behind in the global economy. We are up for supporting anything which gets Australian businesses a bigger and better slice of the action in the global value chains of the future. Increasingly, we know that those global value chains will be operating in our region—the most dynamic part of the global economy.

We want to send a message from this place, from the House of Representatives, to every Australian business that what we can do to make life easier for you—to make you more wealthy and prosperous—we will do, because there is a flow on impact for every Australian in the jobs and the prosperity that good Australian businesses create, whether they are selling into the domestic market or into the global market beyond.