Where to for Australia on the trade single window?

The European Commission recently passed legislation that will establish a framework for a trade single window (TSW), which raises the question ‘what is Australia doing?’

A version of this article was first published by The DCN in December 2022.

In 2001 when Customs & Trade Partner, Andrew Hudson, presented at an APEC Customs-Business Dialogue in Shanghai he explored the creation of new electronic ways of reporting the movement of cargo. The new system, now known as a TSW, would enable exports, importers, and their service providers to only deal with one reporting platform for all agencies at the border. Parties would lodge a report that was, as far as possible, standardised to include the requirements of all agencies.

21 years later many countries – including Australia – are still yet to create and implement a comprehensive TSW. Some countries (such as Singapore and New Zealand) have developed and implemented various forms of TSW. The European Commission’s recently passed legislation will establish a framework to launch a TSW for the European Union (EU).

Why does the industry need a TSW?

The need for a TSW has been recognised in several international agreements such as the World Customs Organization’s SAFE Framework of Standards to Secure and Facilitate Global Trade, and the World Trade Organization’s Trade Facilitation Agreement (TFA). The TFA has a specific requirement that contracting parties have a TSW.

In Australia’s accession to the TFA, it claimed to have a “TSW for customs” through the Integrated Cargo System (ICS), although that only applies to reporting to a limited number of agencies, rather than to all border agencies as would ideally be included in any TSW. Further, many forms of free trade agreements include chapters on modernising and facilitating trade, including the development of TSWs between the parties.

According to the EU website: “Once fully rolled out, the TSW will streamline and simplify processes for traders, allowing them to submit customs and regulatory information required for import, transit or export of goods only once through a single point of entry, thus strongly increasing the gains for trade facilitation. Customs and other authorities will then be able to automatically verify that the goods in question comply with EU requirements and that the necessary formalities have been completed. This is an ambitious project that will entail investment at both EU and Member State level, with gradual implementation over the next decade or so.”

The TSW process

The European Commission’s legislation includes two main pillars: one for government-to-government digital co-operation and the other for business-to-government digital co-operation. The legislation also provides some detail of the conditions to be included in the TSW process, including technology to be used and a process for passing further regulation.

Understandably, the process will take some time and require further regulation, and the development of technology across all countries in the EU. However, the passage of the legislation demonstrates a firm commitment to creation of the TSW, recognition of the benefits to trade and sets out a process for its technical development. Further, even though the United Kingdom (UK) has left the EU, it is also working on its own TSW which includes a significant financial commitment by the UK.

Australia does not yet have a comprehensive TSW, or an established framework for TSW development and implementation. However, funding was allocated in the last federal budget for 2022-2023 to support a simplified trade system (STS). The STS is to be created by the STS Implementation Taskforce working together with the Australian Border Force (ABF) and other departments’ agencies.

The STS taskforce

The STS funding includes financial support to the STS Implementation Taskforce to develop a ‘second pass’ business case for a ‘tell us once’ trade system to simplify trade interactions with the government for importers and exporters. It also includes additional funding to the ABF to develop technical foundations for modernising Australia’s core trade systems.

The assumption which seems to follow is that the STS, while it may not result in a comprehensive TSW, will be a version of a TSW. For example, it could entail a new border portal of sorts as the one place through which importers, exporters and their service providers report proposed transactions to the government. Proposed transactions would be assessed by technology in that portal and sent for review and processing by the government agencies and their processes behind the border portal.

The STS Taskforce, ABF and other agencies have been working industriously at their task. The STS Taskforce has already:

• provided advice to the government to inform effective investment for cross-border trade reforms, including a maritime single window, a biosecurity self-service portal and modernising agriculture and import systems;
• identified common business pain points, such as problems accessing information, duplicative processes, complex regulation, inflexible technology and border delays;
• calculated that the manual input of trade data adds approximately $450 per sea container and that information duplication costs businesses $431 million annually and $300 million in government charges; and
• recommended foundational projects such as “cross-border alignment” of information to be provided to the government with an initial focus on aligning the 14 “fit and proper person” tests in various regulations of different agencies.

Challenges

Implementing a TSW is not without its challenges, including the following:

• Current funding for developing the framework for the TSW is only for a limited period and is unlikely to be enough to develop a TSW or replacement for the ICS soon. It is estimated that replacing the ICS is a seven-to-10-year project.
• The next federal election could be as early as August 2024 which means that all government parties involved need to complete their work quickly, as future funding may not be forthcoming and the STS Taskforce may not continue in its current form.
• The government may consider that there are other more pressing needs based on the current economic climate.
• The STS Taskforce has plotted the regulation of the import and export pathway carefully and determined that there are 29 agencies with a role at the border, more than 200 pieces of cross-border trade regulations and 145 federal ICT systems supporting cross-border trade. Trying to rationalise and co-ordinate all those agencies and legislating for new reporting processes will be a significant challenge, and there may be some agencies which are not convinced of the benefits of the current arrangements and are concerned on the effect of change.
• The changes will no doubt also require significant reform of the agencies at the border and how the public service operates in those agencies. Questions may well arise as to the need for so many agencies at the border and whether one multi-jurisdictional border agency with officers trained in more than one discipline could be a desirable outcome.
• The government has resisted many requests for legislation change including developing a new Customs Act – how would it respond to recommendations for a much wider review of border legislation, regulation and processes?

The private sector remains committed to supporting this work by responding to requests for assistance and by initiating its own recommendations. After some time, the National Committee for Trade Facilitation and its advisory groups have reconvened. The Committee will facilitate oversight on the work being conducted in many different places and ensure better transparency in the process, which is vital to providing ongoing support.

For advice on all aspects of Australian and international trade and customs obligations, please contact our Customs & Trade team.