House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Immigration and Border Protection, Senator the Hon Michaelia Cash)

Background

1. In June 2005, the World Customs Organization (WCO) established the SAFE Framework of Standards to Secure and Facilitate Global Trade (WCO SAFE Framework). The WCO SAFE Framework introduced standards that promote supply chain security and trade facilitation at a global level to allow certainty and predictability of trade moving across international borders. This concept has been adopted by all of Australia's major trading partners such as the United States, Canada, New Zealand, Japan, China and the European Union over the last ten years. The WCO SAFE Framework promotes standards that enable a harmonised and integrated approach to supply chain management for all participants in the international supply chain.

2. Consistent with the WCO SAFE Framework, the Australian Trusted Trader Programme will introduce a differentiated trust-based regulatory framework at the border for those entities that meet or exceed international supply chain security and trade compliance standards. Entities meeting these standards will be assessed as low-risk and benefit from reduced regulatory burden and streamlined customs processes. This will alleviate a significant trade burden and enhance the competitiveness of Australian international businesses.

3. While the Australian Trusted Trader Programme is a trade facilitation initiative based on internationally recognised supply chain security and trade compliance standards, it contributes to a holistic compliance framework as an important element of the compliance continuum that provides a better understanding of the entities moving goods across our borders. This strategy will work to 'shrink the haystack' by removing trusted entities from traditional transaction based border risk assessment.

4. This approach aligns with the Government's deregulation agenda and contributes to the Economic Action Strategy and the Prime Minister's Industry Innovation and Competitiveness Agenda. These reforms are important for managing volume growth and ensuring that resources can be diverted away from highly compliant traders to focus on risk and non-compliance.

5. The approach is also a key component of the World Trade Organization's Agreement on Trade Facilitation and an integral part of the Government's commitment to lower the cost of trading across borders as outlined in the Government's G20 Australia 2014 - Comprehensive Growth Strategy.

6. The Australian Trusted Trader Programme has been co-designed with industry stakeholders, partner agencies and international counterparts both at multilateral and bilateral levels. The Australian Trusted Trader Programme is expected to enhance economic competitiveness, reduce regulatory burden, increase supply chain security, enhance the risk management of goods at the Australian border and support accelerated trade resumption following an international security incident.

7. Participation in the Australian Trusted Trader Programme will be voluntary and allow entities in the international supply chain such as importers, exporters, customs brokers, freight forwarders and transport companies to nominate themselves to participate. The Australian Trusted Trader Programme is a voluntary partnership between government and business underpinned by shared responsibility and transparency. Entities that choose not to participate will not be considered high-risk or targeted for not taking part in the Programme.

8. To participate in the Australian Trusted Trader Programme an entity will be required to meet specified qualification criteria which will be based on the WCO SAFE Framework. The WCO SAFE Framework addresses a number of key areas of business operations to support supply chain security, trade compliance and general best practice. Examples of the requirements include specific standards in the areas of personnel security, information security, physical security and conveyance security.

9. An assessment of how the entity meets the qualification criteria will occur through the consideration of an entity's response to a self-assessment questionnaire and a validation process involving a physical inspection and audit. Once the entity is participating in the Australian Trusted Trader Programme, the entity will be subject to ongoing monitoring and will be required to undergo validation against the qualification criteria at regular intervals and, if necessary, following the identification of an incident or irregularities. The entity will also have a continuing obligation to notify the Department, as soon as practicable, of any changes that may affect their trusted trader status and any supply chain security or trade compliance incidents or irregularities.

10. There are no upfront or ongoing fees and charges associated with making a nomination to participate in the Australian Trusted Trader Programme. However, there may be some additional business costs associated with meeting the qualification criteria. In return for meeting the qualification criteria, entities participating in the Australian Trusted Trader Programme will benefit from reduced regulatory burden and streamlined customs processes. The benefits available to participants will be structured to promote best practice management of supply chain security and trade compliance.