DHL Export Barometer Results: Aussie exporters cope with the high dollar, but feeling the heat

Author: Tim Harcourt
JW Nevile Fellow in Economics & Professor,
UNSW & The Airport Economist

Australian exporters are learning to live with a high dollar but are feeling the intensity of international business competition. The power of proximity is also replacing the tyranny of distance as Australian exporters focus their activities on the Asian Pacific with China and South East Asia leading the charge. That’s the key finding of the 2013 DHL Export Barometer released this month after a comprehensive survey of close to 700  Australian export businesses.

Export confidence was maintained from 2012 when businesses recovered from a GFC ravaged world economy. 58 per cent of exporters anticipate orders will increase, which is just a shade higher than last year’s forecast. Exporters have successfully ridden out the sub-prime storm. But there are competitiveness pressures, as just under half (48 per cent) of exporters expect an increase in profits. Similarly Australia’s exporter labour market remains tight with 58 per cent of exporters expecting to pay a wage increase over the next 12 months.

Australian exporters are still looking to the big three engines of growth in Asia – China, India and ASEAN. But New Zealand and the Middle East are also resilient. 34 per cent of exporters say they focus on a range of markets as a ‘hedge’ to manage fluctuations in the exchange rate but they are focusing their energies regionally.

The Australian dollar is still adversely affecting most exporters; but they are using a range of approaches to deal with exchange rate related competitiveness pressures. Most of them have become importers – around 74 per cent of exporters now import (compared to around a third 10 years ago) and become enmeshed with supply chains. Very few exporters hedge – around 19 per cent – and only 13 per cent think it is an effective method of dealing with exchange rates. A majority look to different markets but only 10 per cent think that is effective given the strength of the dollar across the board.

Despite the online revolution in the retail sector (which is mainly imported consumer items) only 38 per cent of exporters sell online. We may well see a quiet revolution now in online exporting following the trend in importing so far.

To view the a summary of the 2013 DHL Australia Export Barometer report, please click here.

Language and Expanding into International Markets

Former German chancellor Willy Brandt once famously said: “If I am selling to you, I speak your language. If I’m buying from you, dann müssen Sie schon deutsch sprechen”.

When expanding into overseas markets it is important to get the translation of your materials and messaging right. This is even more evident when there are large dollars at stake or sensitive negotiations to take place.

Here is our guide to avoiding getting lost in translation when expanding into export markets.

 1. Pick the dialect of your target market

 Does your target market speak English… US, UK or Australian English? Spanish… South American, or European Spanish? North African or Gulf Arabic? Also consider whether you might want English for non-English mother-tongue readers. When forming your messaging, be specific and be sure to put yourself in the shoes of your target market. The more that you can relate to your audience with language that resonates with them, the more this will help your efforts to expand into the new market.

 2. Understand the culture

To make sure your messaging is sensitive to the country’s culture, have your English source material checked for appropriateness first.

Failure to understand cultural differences can bear serious consequences, and whole campaigns have been pulled due to lack of research into cultural awareness. Last minute redesign and reprinting is not only costly but can be very stressful, so make sure that images and text are culturally appropriate first, before the translation process occurs.

Check to make sure the colours you are using are appropriate for the country. For example, blue is a popular colour associated with the sky and nature. But in Iran, blue is the colour of mourning, and in many countries it is a colour associated with authority and discipline. Green is a very positive colour, associated with good health and life in many parts of the world. In China, green is thought to repel evil, and in the Muslim world it is linked to spirituality, religion and God.

It may seem obvious, but ensure your product names do not sound offensive in another language or another culture. You may remember when Mitsubishi had to rename the Pajero for the Spanish and Latin American market, or Ford their “Mist” car for the German market.

Body parts also play different roles in different countries. A film poster with a man sitting on top of a Buddha statue caused problems in Thailand where most people are Buddhist and the head is the most sacred part of your body.

 3. Use business cards to your advantage

Companies often spend thousands of dollars to have their websites and materials right, but relegate designing and preparing their international business cards to the local copy shop. When expanding into international markets, it is important to make a good first impression. The right business cards are amongst the most powerful means of communication to use.

One of the most important considerations for an international business card is the title, as this will define organisational rank. Foreign businesses and organisations want to assign people of the same rank to deal with you. In Japan, the business card is of paramount importance, with the handing out and receiving done in a ritualistic format.

The names of the person and the company must be transliterated as a guide to pronunciation, and middle initials are often eliminated for simplicity.

However, in some countries, they do not adapt English-like spelling in names, for reasons of readability.  For example, Czechs expect women’s names to end with –ova. Sharon Stone is known as “Sharon Stoneová” and Nicole Kidman as “Nicole Kidmanová”.

 Make sure to arrange numbers in the country’s format. Europeans are used to phone numbers running together, whereas in Australia, we separate the area code and then 4 digits grouped together.

 4. Measure your translating efforts

If you are committing to penetrating your product or service into new countries we highly recommend to put KPI’s in place to check how many new customers you have acquired and the results of your investment in translation activities.

Check your export figures to see the financial outcomes gained from your translation activities. Also check the leads or number of inquiries from the overseas market compared to those from within Australia.

 By keeping a close lid on these figures, you can clearly calculate the profit generated per translation project to determine their effectiveness and which markets merit further investment.

When expanding into export markets, there are many considerations with regards to culture, language and translation. Accredited and professional T/I’s (Translators/Interpreters) are experts at communication and will be able to let you know any technical obstacles to translation, any confusion that could occur and the rationale for certain actions.

It is recommended to build a trusted relationship with an accredited individual or service provider who gets to know your service offerings, messaging, language and your markets. They will give efficiency and consistency to your communications and be able to offer ongoing guidance on your expansion into new markets. 

Written by Tea C. Dietterich, Director of 2M Language Services.

www.2m.com.au

Tea is Managing Director of 2M Language Services. Through her firm 2M, Tea is in charge of providing translations with publication quality into 155+ languages. Further services include foreign language typesetting and DTP, multilingual publications, website & software localization, apps, multilingual voice overs, dubbing and subtitling. 2M also provides cross cultural training and simultaneous conference interpreting for international events. Tea is Board Member of ABIE France (Australian Business in Europe), former President of AUSIT QLD (Australian Institute of Interpreters and Translators), sits on the board of the AUSIT National Council, is a Member of the NAATI RAC (Regional Advisory Council) as well as an active member of the Australian Export Council (AEC/AIEX) and the prime international industry organisations GALA and ELIA.

New OECD Analysis on Trade Facilitation as it Applies to Australia and the World

The Organisation for Economic Co-operation and Development (OECD) recently published the results of research, undertaken to measure the relative economic and trade impacts of trade facilitation measures currently under negotiation in the World Trade Organization (WTO) on trade flows and trade costs across all WTO member countries. 

A series of Trade Facilitation Indicators (TFIs) that identify areas for action and enable the potential impact of reforms to be assessed have been identified by the OCED  to help governments improve their border procedures, reduce trade costs, boost trade flows and reap greater benefits from international trade (see list of indicators in Appendix 1).

“Trade facilitation is about easing access to the global marketplace,” OECD Secretary-General Angel Gurría said. “Complicated border processes and excess red tape raise costs, which ultimately fall on businesses, consumers and our economies. The trade facilitation negotiations offer countries a golden opportunity to reduce or eliminate these bottlenecks, cut the cost of trading, boost the flow of goods and reap greater benefits from international trade,” Mr Gurría said.

A key message from the OECD research is that a multilateral agreement to cut red tape in international trade would have a significant impact on reducing trading costs and add a much needed boost to the global economy (for details on the the progress of a multilateral agreement, see Appendix 2). 

The OECD estimate that comprehensive implementation of all measures currently being negotiated in the World Trade Organization’s Doha Development Round would reduce total trade costs by 10% in advanced economies and by 13-15.5% in developing countries.  Reducing global trade costs by 1% would increase worldwide income by more than USD $40 billion, most of which, according to the OECA, would accrue in developing countries.

TFI analysis was conducted on all WTO member countries to measure their relative trade facilitation performance and reveal areas where more can be done to improve trade flows and costs.

How did Australia rank?

Australia performed significantly better than the OECD average in the areas of appeal procedures, border agency cooperation (internal and external) and governance and impartiality. We performed slightly above the average in most other indicators but performed below average for harmonisation and simplification of documents.

The OECD’s quantitative analysis reveals that, for developed countries, the areas with the greatest impact on increasing bilateral trade flows and reducing trade costs are the following:

• information availability
• advance rulings 
• fees and charges 
• automation and streamlining of procedures 

Taking into account the OECD research, Australia would benefit from continued improvements in the following areas:

Information availability: 

• Introduce a full time hotline (24/7) for addressing reasonable enquiries to Customs.
• Publish decisions and examples of Customs classification on the Customs website.
• Publish examples of judicial decisions on the Customs website.

Advance rulings: 

• Increase the length of time for which the advance ruling is valid, as it remains lower than the OECD average.

Fees and charges: 

• Decrease the number and diversity of total fees and charges collected. Interestingly, in the recent budget announcement the Government announced they will be restructuring the Import Processing Charge (IPC) in order to recover the costs of all import related cargo and trade functions undertaken by Customs, which is obviously in contrast to the above OECD recommendation. For details on the IPC changes, please see Appendix 3.  

Formalities – Procedures:

• Improve the treatment of perishable goods with respect to the separation of release from final determination and payment of Customs duties.
• Further develop the Post-Clearance Audit program.
• Further develop the Authorised Operators program as the number of authorised operators in the total number of traders remains low compared to the OECD average.  However, what the OECD did not mention, or was perhaps unaware, was that Australia does not actually have any Authorised Operators program.
• Continue overall simplification of procedures in terms of both time and costs.

What is the ECA doing?

The ECA has long advocated for a reduction in trade facilitations costs.  In fact, the ECA is currently working on a research project which analyses the fees and charges businesses across a wide range of industries incur in order to be able to export their product overseas. The results of this research will be used to reveal to government how significant these costs in fact are and how they impede exporters and their ability to compete internationally. If you are interested in being involved in this research please contact Lisa McAuley: lisamcauley@export.org.au.   

The ECA has a five point agenda in its Trade Policy paper to be tabled in June. The paper will call on government to:

1. Address International Trade as an essential aspect of domestic economic policy
2. Incorporate International Trade in economic and physical infrastructure and investment
3. Rigorously review all aspects of regulation (both red and green tape) and increase the focus on competition policy
4. Re-evaluate policy settings in foreign trade negotiations to place greater emphasis on trade.
5. Ensure International Trade becomes a “whole of Government” issue

In addition, the ECA is involved in the Future Logistics Living Lab which provides industry and research the opportunity to work together to create innovative solutions to logistics challenges. Ultimately, the projects developed through the Lab improve trade facilitation through the increased availability of information and the automation and streamlining of procedures.

Appendices

Appendix 1
OECD Trade Facilitation Indicators:

1. Information Availability: Publication of trade information, including on internet; enquiry points.
2. Involvement of the Trade Community: Consultations with traders.
3.  Advance Rulings: Prior statements by the administration to requesting traders concerning the classification, origin, valuation method, etc., applied to specific goods at the time of importation; the rules and process applied to such statements.
4.  Appeal Procedures: The possibility and modalities to appeal administrative decisions by border agencies.
5.  Fees and Charges: Disciplines on the fees and charges imposed on imports and exports.
6. Formalities-Documents: Simplification of trade documents; harmonisation in accordance with international standards; acceptance of copies.
7. Formalities-Automation: Electronic exchange of data; automated border procedures; use of risk management.
8. Formalities-Procedures: Streamlining of border controls; single submission points for all required documentation (single windows); post-clearance audits; authorised economic operators.
9. Internal Co-operation: Co-operation between various border agencies of the country; control delegation to Customs authorities.
10. External Co-operation: Co-operation with neighbouring and third countries.
11. Governance and Impartiality:Customs structures and functions; accountability; ethics policy.

Appendix 2:

Trade facilitation refers to the simplification and harmonisation of international trade procedures to assist the movement of goods. Customs, licensing and transit formalities are areas which can involve complicated administrative processes and additional costs to business.

Negotiations on a multilateral trade facilitation agreement were launched as part of the WTO Doha Round in 2004. Nearly 9 years on there is now a draft negotiating text which is said to be a fairly accurate indication of what the final document might look like. With the Doha Round of negotiations at an impasse, it is hoped that headway on the agreement might be made at a high level meeting to be held in Bali this December.

Organisations that are involved in studying the implications of trade facilitation costs and are actively pursuing the ratification of a multilateral agreement include the WTO, the OECD, the World Bank, the EU, the World Economic Forum and other regional trade forums such as APEC, among others.

Most of the gains attributed to a multilateral trade facilitation agreement would accrue to developing nations and would lead to significant gains to world trade.

Appendix 3: Change to Import Processing Charge for full cost recovery

In the recent budget announcement the Government announced they will be restructuring the Import Processing Charge (IPC) in order to recover the costs of all import related cargo and trade functions undertaken by the Australian Customs and Border Protection Service.

The new charges will take effect on 1 January 2014 and will take effect as follows:

• For consignments valued over $10,000 the IPC for electronic sea import declarations will be increased by $102.60 to $152.60 per consignment.
• The IPC for electronic air import declarations will be increased by $81.90 to $122.10 per consignment, for consignments valued at over $10,000.
• For consignments valued over $1,000 and up to $10,000, the IPC will remain at current levels, being $50 for electronic sea import declarations and $40.20 for electronic air import declarations.
• The IPC will continue not to be applied to consignments valued at $1,000 or less.

The increase to the IPC will result in additional revenue of $674.3 million over four years and will be implemented in accordance with the Australian Government's cost recovery policy.

Author

Stacey Mills

Export Council of Australia

Ph: 02 8243 7460

Fax: 02 9251 6492

Email: StaceyMills@export.org.au

Website: http://www.export.org.au/

Education & Training: http://www.aiex.com.au

Twitter: http://twitter.com/Aussieexport

For media queries or further information on the Export Council of Australia, please contact:

Lisa McAuley

National Manager

Export Council of Australia

Ph: 02 8243 7400

Fax: 02 9251 6492

Email: lisamcauley@export.org.au

Website: www.export.org.au

Education & Training: http://www.aiex.com.au

Twitter: http://twitter.com/Aussieexport

Superheroes of Export

Even in these tough times for exporters there are some outstanding success stories to inspire the industry.

With a persistently high dollar, continuing ramifications of the GFC and increasingly high costs of doing business in Australia, it is sometimes quite refreshing to be able to focus on the positive success stories. 

On the 14^th May at Government House in Melbourne, His Excellency the Hon Alex Chernov AC QC will officially present the 2013 Australian Export Heroes Awards to seven outstanding Australians.

“There are many facets to developing our export culture in Australia. As well as adding to the growth of international trade in Australia, the Export Heroes have contributed to Australia's image as a progressive member of the international business community and are role models for future generations of Australian exporters.” Ian Murray AM, Executive Director, Export Council of Australia

Taking a company to export success, as most established exporters can testify, is no small feat and for Australian companies they have an even bigger mountain to climb, given our location. Which is why, just over ten years ago the Australian Export Heroes Awards were created by a group who believed in acknowledging the efforts of those hard working people, who often spend years building their companies and taking them to global success while also supporting Australian industry.

“People who receive an export hero award have fought and won on the international stage. Technically smart, creative and hard working they are able to show the world that Australian’s can not only do anything, but can do it as well and often better than anybody else.” Ian Murray AM, Executive Director, Export Council of Australia

We salute these individuals who have taken on the world and won:

·         Noel Carty - Starena Group

Noel Carty is the Managing Director of Starena Group, a company that commenced business operations servicing the stadium, event and indoor arena industry in Australia and New Zealand. After the successful completion of major projects for the 2000 Sydney Olympics, Noel decided to capitalise on the experience and pursue other major projects overseas. The company now has over 30 distributors worldwide and offices in Cairo, Athens and London which all report back to the head office in Gosford, NSW.

·         Michael Crouch AO – Zip Industries

When Michael took control of a small Sydney manufacturer of domestic water heaters in 1962, little did he suspect that within the next 51 years his enterprise would grow to be the world leader in a highly innovative and rapidly advancing product category – instant boiling water. Michael Crouch has been the recipient of numerous awards and accolades over the years and is described as a visionary, entrepreneur and innovator. Zip Industries products are now in use in over 65 countries worldwide.

·         Robert Dal Sasso – Ecotech

Robert Dal Sasso and his wife Judy founded Ecotech in their backyard in 1976. From this humble beginning, Robert’s passion for air quality monitoring has led him to successfully grow the company over the last 35 years to become a global player in environmental instrumentation. Ecotech today employ over 100 people and exports to over 60 countries worldwide.

• Amanda Hicks - Auto-Bake Pty Ltd

Auto-Bake was founded in 1960 by Kevin and Evelyne Hicks, Amanda’s Parents, in Hornsby on Sydney’s North Shore. Since its foundation, and largely thanks to the hard work and leadership of Amanda, Auto-Bake has evolved from a small time manufacturer in the retail food industry to an international player in the industrial ovens and baking industry, exporting ovens to over 25 countries worldwide.

·         Souhel Khanania – Industrial Engineering Technology

Souhel left high school in year 10 to start an apprenticeship with Smiths Chips, which he successfully completed in 1979. Since this time Souhel has used his intelligence, drive and determination to build himself an award winning international business, Industrial Engineering Technology. Souhel has experienced huge success exporting his industrial burners and ovens to the snack food industry in Asia and North America. His products are renowned for being reliable, excellent quality and highly efficient, saving companies hundreds of thousands of dollars.

·         David Lock – Craig Mostyn Group

David Lock became CEO of Craig Mostyn Group in 2004 and is responsible for the company’s successful restructure, making it more efficient and flexible, as well as an award winning business that competes on the international stage.  David’s leadership skills and strategic thinking, coupled with his drive and energy. The Craig Mostyn Group runs three major export divisions in: Meat & Livestock, Recycling & CM Foods, with the notable standout being the increase in pork export sales into Singapore.

·         Noel Robinson – Noel Robinson Architects 

With over 40 years’ experience in architecture, Noel Robinson has been the recipient of numerous awards and accolades. He has been recognized in Australia and overseas for setting benchmarks in innovative architecture, interior design and urban planning. Noel’s experience and expertise is demonstrated through the large number of internationally successful projects he has delivered across a broad range of disciplines and throughout all corners of the globe.  Noel Robinson Architects currently maintains offices in Brisbane, Melbourne, Muscat and Noosa, with associate offices in Shenzhen, Auckland and Townsville.

 “Whether from big established business or from the family farm or factory, they all deserve special recognition for their vision, passion and sheer hard work. We thank them for their unique contribution and we thank their families for their support in what has undoubtedly been an interesting journey.”

Media Contact

Lisa McAuley

National Manager

Export Council of Australia

T: 02 8243 7400

E: lisamcauley@export.org.au

Kelly and Partners: How the 2013 federal budget impacts cross-border activities

Author: Tony Nunes, Senior Client Director, Kelly and Partners

On 14 May 2013, the Treasurer, Wayne Swan, delivered his sixth Federal Budget. The 2013–14 Federal Budget has had to be framed to deal with the ‘perfect storm of torrid global forces and the high dollar that has smashed our budget revenues’. In his speech at the CEDA luncheon on 1 May 2013, the Treasurer identified the enduring strength of the Australian dollar as having the most impact on keeping domestic prices low and squeezing profit margins which in turn squeezes tax revenues.

While acknowledging the strength of Australia’s economy relative to the rest of the world, the Treasurer pointed out that Australia is facing some very difficult choices and a Budget that will be in deficit for longer than previously forecast. He identified the choices as being between supporting jobs and growth or driving the economy into the ground and putting tens of thousands of jobs at risk and concluded that the Budget would be crafted to support jobs and growth.

Despite this, it appears that most of the tax measures introduced in the 2013-14 Budget with respect to foreign investment both into and out of Australia are designed to discourage foreign investment in the form of:

• Reduced safe harbour limit from 3:1 to 1.5:1 on a debt to equity basis for general entities for the purposes of the thin capitalisation rules;
• Abolishing the deduction for interest on borrowings used to fund foreign investments; and
• Introduction of a 10% non-final withholding tax to apply to the disposal by foreign residents of certain taxable Australian property (which is not limited to real property).

Thin cap ratios reduced

The Government announced that it would address profit shifting by multinationals through the disproportionate allocation of debt to Australia by tightening and improving the integrity of several aspects of Australia's international tax arrangements, with effect for income years commencing on or after 1 July 2014.

The changes announced to thin capitalisation in the Budget include, amongst others:

• increasing the de minimis threshold from $250,000 to $2m of debt deductions which is designed to reduce compliance costs for small business; and
• for general entities the safe harbour limit will be reduced from 3:1 to 1.5:1 on a debt to equity basis (or 75% to 60% on a debt to total asset basis).

The proposed changes to the thin capitalisation provisions was previously announced and expected. The changes would effectively increase the effective tax rates for taxpayers going offshore and reduces Australia’s attractiveness as a destination for offshore multinationals.

Those entities that fall within the threshold levels should re-assess their thin capitalisation positions. This could be done by reducing debt or re-valuing assets. Alternatively, entities should consider re-capitalising to prevent the denial of interest expenditure.

Deduction for interest on borrowings used to fund foreign investments abolished

Under the current rules, section 25-90 of the Income Tax Assessment Act 1997, allows (in most circumstances) an entity to deduct interest when investing in offshore entities. This is despite the fact that the income that is earned, as dividends or the repatriation of branch profits, may be non-assessable, non-exempt (NANE) income. This deduction is now being abolished and the deduction will not be allowed as from Jul 2014.  This is a significant development which will affect all taxpayers using debt to expand offshore (offshore includes New Zealand!).

Prior to 2001 (when section 25-90 was introduced), Australian companies were required to trace debt to ensure interest deductibility. The abolition of section 25-90 means that the position pre-2001 is reinstated. This means that any Australian entity with a subsidiary or branch offshore would be required to distinguish between borrowings used to fund local operations and those borrowings used to fund offshore entities, otherwise potentially a portion of the interest expense incurred could be denied as a deduction.  No details are available at this stage as to how any apportionment calculation would operate, however, clearly, in response to the Budget announcement, a review and possible restructuring of debt should be considered a priority in the coming months.

Further, note that the de minimus threshold applied to thin capitalisation deductions of $2m does not apply here. Consequently, a taxpayer can be allowed a debt deduction under thin capitalisation, but denied a deduction because they are using debt to go offshore.

Foreign resident CGT withholding tax

A 10% non-final withholding tax will apply to the disposal by foreign residents of certain taxable Australian property. In such cases, the purchaser will be required to withhold and remit 10% of the proceeds from the sale. Although to be implemented in the context of CGT, it will apply equally where the disposal of the Australian real property asset by the foreign resident is likely to produce gains on revenue account - and so be taxable as ordinary income rather than as a capital gain.

Currently, withholding taxes target interest, dividends and royalties, which are easily identifiable forms of income to non-residents. This new withholding tax will only apply from 1 July 2016. The Government thus appears to be giving itself plenty of time to legislate for the new withholding tax as, we believe, there are technical and practical difficulties in identifying the source of income and determining whether or not the income should be subject to withholding tax.

So this withholding tax will be something to watch out for as it may impose more administrative burdens on anyone dealing with non-residents.

Other changes affecting international tax dealings

The other significant change announced is that the non-portfolio dividend exemption (section 23AJ of the Income Tax Assessment Act 1936) will be extended to foreign non-portfolio dividends earned by trusts and partnerships. Currently, only non-portfolio (ie a 10% or more interest in foreign companies) dividends earned by companies is treated as NANE income. We will now need to identify similar interests held by trusts and partnerships.

In relation to CFC reform, we are still in a period of uncertainty. The Government initially announced changes to the CFC rules in the 2009-10 budget.  We are now awaiting the OECD report on base erosion and profit shifting to see whether the reforms will progress further.

In general, this budget did not contain many changes to income tax issues affecting SME businesses. It was also designed not to surprise the business community. However, some fundamental changes were announced that affect any entity that operates cross-border. You should keep your eye on the ball as these proposals are debated, because if they are legislated and not taken into account, they could negatively impact your business.

Government announces increase in import processing charge and more dumping legislation in 2013/14 Budget

Author: Andrew Hudson, Partner, Hunt and Hunt Lawyers




Import Processing Charge

Within the exciting detail of last night's Budget, the Government has announced a restructure to the import processing charge ("IPC") to recover the cost of all import related cargo and trade functions undertaken by the Australian Customs and Border Protection Service ("Customs").

According to the various commentaries, the increases will be as follows.

• For consignments valued over $10,000 the IPC for electronic sea import declarations will be increased by $102.60 to $152.60 per consignment.
• For consignments over $10,000, the IPC for electronic air import declarations will be increased by $81.90 to $122.10 per consignment.
• For consignments valued over $1,000 and up to $10,000, the IPC will remain at current levels, being $50 for electronic sea import declarations and $40.20 for electronic air import declarations.
• The IPC will continue not to be applied to consignments valued at $1,000 or less.

The new charges will come into effect on 1 January 2014.

According to information from Customs, the increase to the IPC will result in additional revenue of $674.3 million over 4 years and will be implemented in accordance with cost recovery policy adopted by the Australian government.
It would appear that Government may be asserting that all its costs have not previously been recovered from importers and that new charges are necessary to recover all services provided. Alternatively, the increases would suggest that the recent reform to anti-dumping regulation and the new measures against crime in the supply chain are the cause of this significant increase in costs for all parties involved in import.

Not only will this be a significant additional impost for importers, it will also be a significant additional impost for exporters who import many of their inputs to manufacture. While there is never a good time to impose additional processing charges, given the state of the economy, these additional costs will make life very difficult for importers, exporters and their service providers who will need to pass on these charges.

The retention of the IPC at current levels for consignments between $1,000 and $10,000 and the failure to impose IPC on consignments below $1,000 may also lead to additional pressure on importers and service providers in determining the value of consignments and the associated IPC.

The next question is how the increases have been calculated and whether increased charges mean improvements to services.

We will keep you informed of developments but suggest that those of you who are service providers should pass details of this increase in charges to clients immediately so that they are aware that these are increased charges imposed by government and not by the service provider.

New Dumping legislation

The Government has also announced the proposed introduction of new legislation to "clarify the operation of the anti-dumping system". The content will be interesting given the new tranches of legislation passed recently and the commencement of the Ant-Dumping Commission on 1 July 2013. The speed of regulatory reform dos create its own problems for those affected.

As always, once the Bill is introduced we will provide commentary to readers.

Response to Australia’s position in becoming the food bowl of Asia

The Export Council of Australia (ECA) acknowledges the opportunity increasing global food demand presents to Australia and supports the Australian Government’s initiative to develop a National Food Plan, which will promote a more highly integrated approach to government food policy along the supply chain.

The ‘food system’ is shaped by many factors including population growth, economic conditions and changing food preferences. The value of world demand for food is expected to increase 77 per cent by 2050 with most of this growth occurring in Asia where demand will double. By 2030, Asia’s middle class will reach 3.2 billion people who will be demanding higher quality, protein-rich foods such as meat.

Given Australia’s advanced agriculture sector, which is characterised by cutting edge farming techniques and technologies and sophisticated biotechnology innovations, as well as our vast amounts of arable land and our proximity to Asia, Australia has the potential to be well positioned to meet Asia’s growing food demand.
That being said, the ECA believes there are still improvements that need to be made in terms of reducing red and green tape, as well as reducing the bureaucracy which inhibits companies’ ability to do business efficiently.

Moreover, the ECA encourages the Government to address the shortfalls we will inevitably face in terms of food producers access to technology, skilled labour and the construction and maintenance of important infrastructure.

While the completion of Free Trade Agreements (FTAs) with key trading partners is an important component in increasing Australia’s competitiveness, the ECA believes that significant investment also needs to be made in the following areas:

• Reducing the red and green tape that hinders Australia’s ability to facilitate trade efficiently
• Investment into improving infrastructure across Australia to facilitate trade flows
• Government support to improve areas of productivity and efficiency in Australia’s production capabilities
• Educating Australia’s food export community on how to effectively do business with Asia 
• Building awareness of cultural differences between Australia and each individual Asian market 
• Assisting companies in developing key relationships with buyers and government officials in market

In response to much of the talk about Australia’s position in becoming the food bowl of Asia, the ECA will be launching a national Agribusiness Committee to work with agribusiness exporters in putting a “Voice” to Government on realistically, how Australian can work towards the next “Food Boom.” The first committee meeting will be held in Brisbane in June 2013.