House of Representatives

Explanatory Memorandum

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

Schedule 1 - Australian Trusted Trader Programme

Part 1 - Main amendments

Customs Act 1901

Item 1 - Subsection 4(1)

18. Item 1 amends subsection 4(1) of the Customs Act 1901 (the Customs Act) to define two new terms referred to in this Act which relate to the Australian Trusted Trader Programme. These new terms are outlined below.

rules, in relation to Part XA has the meaning given by section 179.

trusted trader agreement means an agreement entered into under section 176A between the Comptroller-General of Customs and an entity, and includes such an agreement as varied and in force from time to time.

Item 2 - At the end of Division 1A of Part IV

19. This item inserts a new section into Part IV of the Customs Act. Part IV deals with the importation of goods.

20. Under the Australian Trusted Trader Programme, agreements may be entered into with an entity under new Part XA of the Customs Act (as set out below). These agreements may, after the interim status stage, be varied to allow an entity to either be released from a statutory obligation or to satisfy a statutory obligation in a different way. This will only apply in respect of obligations in Part IV (other than Division 1) or Part VI (other than Division 1) of the Customs Act which are set out in the rules and specified in an agreement.

Section 49C - Obligations under this Part may be satisfied in accordance with a trusted trader agreement

21. New subsection 49C(1) provides that an entity is released from an obligation that the entity would otherwise be required to satisfy under Part IV (other than Division 1), if the obligation is:

(a)

of a kind prescribed by the rules for the purposes of Part XA; and

(b)

specified in those rules as an obligation from which an entity may be released; and

(c)

specified in a trusted trader agreement between the Comptroller-General of Customs and the entity.

22. This will put it beyond doubt that the entity does not have to comply with the relevant statutory obligation in the Customs Act and will not be in breach of the Act if it fails to so comply.

23. New subsection 49C(2) applies if an obligation must be satisfied under a provision of Part IV (other than Division 1) and the obligation is:

(a)

of a kind prescribed by the rules for the purposes of Part XA; and

(b)

specified in those rules as an obligation that may be satisfied in a way other than required by Part IV; and

(c)

specified in a trusted trader agreement between the Comptroller-General of Customs and an entity.

24. This provision states that, despite the relevant provision in the Customs Act, the entity may satisfy the obligation in the way specified in the agreement. This means that the entity will not be in breach of the Customs Act if it satisfies the obligation in the way specified in the trusted trader agreement.

Item 3 - Before Division 1 of Part VI

25. This item inserts a new division into Part VI of the Customs Act. Part VI deals with the exportation of goods.

26. Under the Australian Trusted Trader Programme, agreements may be entered into with an entity under new Part XA of the Customs Act (as set out below). These agreements may, after the interim status stage, be varied to allow an entity to either be released from a statutory obligation or to satisfy a statutory obligation in a different way. This will only apply in respect of obligations in Part IV (other than Division 1) or Part VI (other than Division 1) of the Customs Act which are set out in the rules and specified in an agreement.

Division 1AAA - Preliminary

Section 107 - Obligations under this Part may be satisfied in accordance with a trusted trader agreement

27. New subsection 107(1) provides that an entity is released from an obligation that the entity would otherwise be required to satisfy under Part VI (other than Division 1), if the obligation is:

(a)

of a kind prescribed by the rules for the purposes of Part XA; and

(b)

specified in those rules as an obligation from which an entity may be released; and

(c)

specified in a trusted trader agreement between the Comptroller-General of Customs and the entity.

28. This will put it beyond doubt that the entity does not have to comply with the relevant statutory obligation in the Customs Act and will not be in breach of the Act if it fails to so comply.

29. New subsection 107(2) applies if an obligation must be satisfied under a provision of Part VI (other than Division 1) and the obligation is:

(a)

of a kind prescribed by the rules for the purposes of Part XA; and

(b)

specified in those rules as an obligation that may be satisfied in a way other than required by Part VI; and

(c)

specified in a trusted trader agreement between the Comptroller-General of Customs and an entity.

30. This provision states that, despite the relevant provision in the Customs Act, the entity may satisfy the obligation in the way specified in the agreement. This means that the entity will not be in breach of the Customs Act if it satisfies the obligation in the way specified in the trusted trader agreement.

Item 4 - After Part X

31. This item inserts a new Part XA into the Customs Act titled 'Australian Trusted Trader Programme'.

Part XA - Australian Trusted Trader Programme

Division 1 - Preliminary

Section 176 - Establishment of the Australian Trusted Trader Programme

32. This section provides that the Comptroller-General of Customs may, in accordance with this new Part XA, establish a programme to provide trade facilitation benefits to entities.

33. A programme established under this Part is to be known as the Australian Trusted Trader Programme.

Division 2 - Trusted trader agreement

Subdivision A - Assessment of qualification criteria based on documentary evidence

Section 176A - Trusted trader agreement may be entered into

34. New subsection 176A(1) allows the Comptroller-General of Customs to enter into a trusted trader agreement with an entity if:

(a)

the entity nominates itself to participate in the Australian Trusted Trader Programme; and

(b)

the Comptroller-General of Customs considers that it reasonably likely that the entity will satisfy the qualification criteria set out in the rules.

35. The standard of reasonably likely in this context means that it is probable that the entity will satisfy the qualification criteria set out in the rules upon physical inspection and audit.

36. In deciding whether to enter into a trusted trader agreement, new subsection 176A(2) provides that the Comptroller-General of Customs must consider:

(a)

any matter set out in the rules; and

(b)

any other matter that he or she considers relevant.

37. Other matters that the Comptroller-General of Customs may consider relevant might include things like the role of the entity in the international supply chain, the nature of the goods that the entity may handle, the location of the entity's premises, and the various points of activity in the international supply chain.

38. New subsection 176A(3) provides that if a trusted trader agreement is entered into with an entity:

(a)

the agreement confers an interim trusted trader status on the entity; and

(b)

the entity may receive benefits of a kind prescribed by the rules and specified in the agreement.

39. Unless the agreement is suspended or terminated, this 'interim trusted trader' status will be conferred on the entity until the Comptroller-General of Customs is satisfied, following validation, that the entity meets the qualification criteria. The validation will require a physical inspection and audit of the entity to assess them against the qualification criteria and verify the information supplied in their nomination. Details regarding the validation will be specified in the trusted trader agreement.

40. As an 'interim trusted trader', the entity will not be entitled to represent itself expressly or by implication as an Australian Trusted Trader or a Trusted Trader. This is because these terms have international connotations and have been promoted by the Department domestically and internationally as a term for those entities that have undergone the full accreditation process, including physical inspection and audit.

41. As an 'interim trusted trader' an entity will only be eligible to receive limited administrative benefits such as enhanced client service including a dedicated Department account manager; priority when seeking tariff, valuation and origin advices; and priority when applying for a drawback or refund of duty.

42. The administrative benefits that may be provided to an entity with an 'interim trusted trader' status will be based on the risk assessment of the entity and the role of the entity in the international supply chain. Because of this, certain benefits will not be relevant for some entities. For example, the benefit of priority when seeking tariff, valuation and origin advices would not be relevant to a domestic transport company as they would not apply for such advices.

Section 176B - Nomination process

43. As participation in the Australian Trusted Trader Programme is voluntary, entities are required to nominate themselves to the Department if they wish to participate.

44. New subsection 176B(1) provides that a nomination to participate in the Australian Trusted Trader Programme may be made by an entity by document or electronically.

45. New subsection 176B(2) requires that if a nomination is made by document it must:

(a)

be communicated to the Comptroller-General of Customs; and

(b)

be in an approved form; and

(c)

contain the information required by the approved form; and

(d)

be signed in a manner indicated by the approved form.

46. New subsection 176B(3) provides that an electronic nomination must communicate such information as is set out in an approved statement.

47. While entities may nominate themselves by document or electronically, the intention is for entities to access, complete and submit their nomination electronically through the Trusted Trader Portal. The Trusted Trader Portal will be made available through the Department's website and will allow entities to access all relevant information concerning the Australian Trusted Trader Programme. The ability for an entity to make a nomination by document has been provided as a contingency only, in case an entity is unable to access, complete and submit their nomination electronically through the Trusted Trader Portal.

48. The nomination will be a self-assessment questionnaire (in an approved form or approved statement) which will contain questions addressing the qualification criteria set out in the rules. It will also contain general information questions to allow the Comptroller-General of Customs to gather sufficient information to form a comprehensive view of the entity and identify any risks in its international supply chain.

49. The self-assessment questionnaire will be available on the Trusted Trader Portal and, where possible, will be tailored to the entity depending on its role in the international supply chain. This will be facilitated through an administrative expression of interest (EOI) process before the entity formally nominates itself to participate in the Programme. The EOI process will require the entity to identify itself and describe its business operations. This information will then be used to identify relevant parts of the self-assessment questionnaire that will require completion. For example, a freight forwarder that never accepts physical possession of goods will not be required to answer questions relating to cargo security. Guidance will be provided to the entity on the type of information that will need to be included in the self-assessment questionnaire and the level of detail required in their responses.

Subdivision B - Validation of qualification criteria based on physical inspection and audit

Section 177 - Variation of trusted trader agreement

50. This section allows a trusted trader agreement to be varied by the Comptroller-General of Customs if:

(a)

a trusted trader agreement has been entered into with an entity; and

(b)

the Comptroller-General of Customs is satisfied that the entity satisfies the qualification criteria set out in the rules.

51. In determining whether an entity satisfies the qualification criteria set out in the rules, a validation process will need to occur. This will require a physical inspection and audit of the entity to assess them against the qualification criteria and verify the information supplied in their nomination (self-assessment questionnaire). The validation will be undertaken by the Department and is intended to occur within 12 months of entering into the trusted trader agreement, unless otherwise agreed. Details relating to the physical inspection and audit will be specified in the trusted trader agreement.

52. If, after the validation process, the Comptroller-General of Customs is not satisfied that the entity meets the qualification criteria set out in the rules, then depending on the degree of non-compliance, the agreement may be varied, suspended or terminated unilaterally by the Comptroller-General of Customs under section 178A. In this circumstance, to the extent possible, the Comptroller-General of Customs may also provide advice to the entity about how they can improve their standards or procedures to address the non-compliance. This may allow the entity to address the non-compliance in order to meet the qualification criteria necessary to gain ongoing trusted trader status at a future time.

53. If following validation, the Comptroller-General of Customs is satisfied that the entity satisfies the qualification criteria set out in the rules, then he or she may vary the trusted trader agreement under this section.

54. New subsection 177(2) provides that the Comptroller-General of Customs may vary a trusted trader agreement to provide for:

(a)

the entity to be released from an obligation, of a kind prescribed by the rules and specified in the agreement, that the entity would otherwise be required to satisfy under Part IV (other than Division 1) or Part VI (other than Division 1); or

(b)

the entity to satisfy an obligation, of a kind prescribed by the rules and specified in the agreement, that the entity would otherwise be required to satisfy under Part IV (other than Division 1) or Part VI (other than Division 1) in a way specified in the agreement.

55. New subsection 177(2) is necessary to support the provision of streamlined customs procedures to an entity where the Comptroller-General of Customs is satisfied that the entity satisfies the qualification criteria set out in the rules. The note at the end of this subsection clarifies that Parts IV and VI of the Customs Act deal with the importation and exportation of goods, respectively. Part IV of the Customs Act includes obligations relating to the reporting of cargo, the entry, unshipment, landing and examination of goods and import declarations. Part VI of the Customs Act includes obligations relating to entry and clearance of goods for export, examining goods for export that are not yet subject to Customs control and exportation procedures after certificates of clearance are issued.

56. New subsection 177(3) provides that the Comptroller-General of Customs may vary a trusted trader agreement to provide for benefits of a kind prescribed by the rules and specified in the agreement. This will allow an agreement to be varied to provide additional administrative benefits to an entity.

57. In deciding whether to vary a trusted trader agreement, new subsection 177(4) provides that the Comptroller-General of Customs must consider:

(a)

any matter set out in the rules; and

(b)

any other matter that he or she considers relevant.

58. New subsection 177(5) provides that if a trusted trader agreement is so varied:

(a)

the agreement confers an ongoing trusted trader status on the entity; and

(b)

the entity may receive benefits of a kind prescribed by the rules and specified in the agreement.

59. As an 'ongoing trusted trader', the entity will be entitled to represent itself expressly or by implication as an Australian Trusted Trader or a Trusted Trader. They may also be eligible to receive further administrative benefits and legislative benefits. Legislative benefits relate to the obligations that an entity may be released from under Part IV (other than Division 1) or Part VI (other than Division 1), or obligations under those Parts (other than Division 1) that the entity may satisfy in an alternative manner.

60. The benefits (both administrative and legislative) that may be provided to an ongoing trusted trader will be based on the risk assessment of the entity, the role of the entity in the international supply chain and whether the entity demonstrates best practice. Certain benefits may require the entity to satisfy additional criteria as prescribed in the rules.

Subdivision C - General provisions relating to trusted trader agreements

Section 178 - Terms and conditions of trusted trader agreements

61. This new section provides that a trusted trader agreement may be subject to conditions prescribed by the rules and terms and conditions specified in the agreement.

Section 178A - Variation, suspension or termination of trusted trader agreements

62. New subsection 178A(1) provides that the Comptroller-General of Customs may vary, suspend or terminate a trusted trader agreement if he or she reasonably believes that the entity to which the agreement relates has not complied, or is not complying with any condition prescribed by the rules; or any term or condition specified in the agreement.

63. In deciding whether to vary, suspend or terminate a trusted trader agreement, new subsection 178A(2) provides that the Comptroller-General of Customs must consider:

(a)

any matter set out in the rules; and

(b)

any other matter that he or she considers relevant.

64. Under new subsection 178A(3), if a trusted trader agreement is varied, suspended or terminated under subsection (1), it must be done in accordance with the procedure prescribed by the rules. The procedure prescribed by the rules is intended to be fair and proper and in accordance with the principles of procedural fairness.

65. Despite the unilateral power of the Comptroller-General of Customs in this section, a trusted trader agreement may also be varied, suspended or terminated by mutual consent under general or common law.

Division 3 - Register of Trusted Trader Agreements

Section 178B - Register of Trusted Trader Agreements

66. New subsection 178B(1) provides that the Comptroller-General of Customs may maintain a register, to be known as the Register of Trusted Trader Agreements, containing information of a kind prescribed by the rules in relation to each trusted trader agreement entered into under new Part XA.

67. New paragraph 179(1)(j) allows the Comptroller-General of Customs to prescribe rules, by legislative instrument, for and in relation to the kinds of information that may be published in the Register of Trusted Trader Agreements, including:

•

that an entity has entered into a trusted trader agreement (subparagraph 179(1)(j)(i)). This may include the name and ABN/ACN of the entity;

•

whether the agreement confers interim or ongoing trusted trader status on the entity (subparagraph 179(1)(j)(ii)). This information may be published on the Register to provide the current status of the entity;

•

the kinds of benefits that the entity is receiving, or will receive, under the agreement (subparagraph 179(1)(j)(iii));

•

whether the agreement is in force (subparagraph 179(1)(j)(iv)). This information may be published on the Register to provide the current status of the agreement;

•

whether the agreement is or has been suspended (subparagraph 179(1)(j)(v)).This information may be published on the Register to provide the current status of the agreement and to provide a status history of the entity to identify whether the entity's agreement has been suspended in the past and if so, the period of that suspension; and

•

whether the agreement has been terminated (subparagraph 179(1)(j)(vi)). This may be published on the Register to provide a status history of the entity to identify whether the entity's agreement has been terminated in the past and if so, the period of that termination.

68. New subsection 178B(2) provides that the Register of Trusted Trader Agreements is to be made publicly available. The Register of Trusted Trader Agreements is intended to be publicly available on the Department's website and through the Trusted Trader Portal.

69. The information contained in the Register of Trusted Trader Agreements will be collected, stored, used and disclosed in accordance with the Privacy Act 1988 (Cth).

70. For the avoidance of doubt, new subsection 178B(3) provides the Register of Trusted Trader Agreements is not a legislative instrument.

Division 4 - Rules

Section 179 -Rules

71. New subsection 179(1) provides that the Comptroller-General of Customs may, by legislative instrument, prescribe rules for and in relation to the following:

(a)

the qualification criteria in relation to which a trusted trader agreement may be:

(i)

entered into under section 176A; or

(ii)

varied under section 177;

(b)

the matters that the Comptroller-General of Customs must consider when deciding whether to:

(i)

enter into a trusted trader agreement under section 176A; or

(ii)

vary the agreement under section 177;

(c)

the conditions on which an entity participates in the Australian Trusted Trader Programme;

(d)

the kind of obligation under Part IV (other than Division 1) or Part VI (other than Division 1) that an entity may be released from, or required to satisfy in a way other than required under those Parts, under a trusted trader agreement;

(e)

the kind of benefits that an entity may receive under a trusted trader agreement;

(f)

any criteria to be satisfied for an entity to receive benefits of a kind mentioned in paragraph (e);

(g)

any other conditions to which a trusted trader agreement may be subject;

(h)

the procedures that the Comptroller-General of Customs must follow when varying, suspending or terminating a trusted trader agreement under section 178A;

(i)

the matters that the Comptroller-General of Customs must consider before deciding whether to vary, suspend or terminate a trusted trader agreement under section 178A; and

(j)

the kinds of information that may be published on the Register of Trusted Trader Agreements, including:

(i)

that an entity has entered into a trusted trader agreement;

(ii)

whether the agreement confers interim or ongoing trusted trader status on the entity;

(iii)

the kinds of benefits that the entity is receiving, or will receive, under the agreement;

(iv)

whether the agreement is in force;

(v)

whether the agreement is or has been suspended; and

(vi)

whether the agreement has been suspended terminated.

72. New subsection 179(2) provides that for the purpose of paragraph (1)(d):

(a)

a rule prescribed for the purposes of subparagraph (1)(d)(i) must specify that the obligation is one from which an entity may be released; and

(b)

a rule prescribed for the purposes of subparagraph (1)(d)(ii) must specify that the obligation is one that may be satisfied by an entity in a way other than required by Part IV (other than Division 1) or Part VI (other than Division 1).

73. New subsection 179(3) provides that the Comptroller-General of Customs may, by legislative instrument, also make rules prescribing matters:

(a)

required or permitted by this Part to be prescribed by the rules; or

(b)

necessary or convenient to be prescribed for carrying out or giving effect to this Part.

74. For the avoidance of doubt, new subsection 179(4) provides that rules made under this section may not do the following:

(a)

create an offence or civil penalty;

(b)

provide powers of:

(i)

arrest or detention; or

(ii)

entry, search or seizure;

(c)

impose a tax;

(d)

set out an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in this Act;

(e)

directly amend the text of this Act.

75. The reference to 'directly amend' in paragraph 179(4)(e) means to make an amendment that would be required by law to be incorporated in a reprint or compilation of the Act. The paragraph does not prohibit a rule that modifies the effect of a provision, such as by providing that a provision has effect as if it had been amended in a specified way, but does not make a direct amendment of any Act.

76. Subsection 179(4) is a standard provision to clarify the limitations of rule-making powers.

Item 5 - After paragraph 273GA(1)(jb)

77. This item amends subsection 273GA(1) of the Customs Act to ensure that the following decisions of the Comptroller-General of Customs may be subject to external merits review in the Administrative Appeals Tribunal:

(a)

a decision of the Comptroller-General of Customs to refuse to enter into a trusted trader agreement under subsection 176A(1);

(b)

a decision of the Comptroller-General of Customs to refuse to vary a trusted trader agreement under subsection 177(2); and

(c)

a decision of the Comptroller-General of Customs to vary, suspend or terminate a trusted trader agreement under subsection 178A(1).

Part 2 - Consequential amendments

Australian Border Force Act 2015

Item 6 - Subsection 54(1)

78. This item amends subsection 54(1) of the Australian Border Force Act 2015 to insert the words "(other than section 179 of the Customs Act 1901)" after "law of the Commonwealth".

79. The effect of this amendment will mean that the rule-making power in section 179 of this Act will not be delegable by the Comptroller-General of Customs. This is consistent with Office of Parliamentary Counsel Drafting Directions which provide that a rule-making power should not be delegable.