Every year, the global supply chain experiences a series of unexpected disruptions, requiring those in the supply chain to adapt quickly to manage those disruptions.
In 2024, disruptions included the ongoing conflicts in the Ukraine and the Middle East, continuing threats to shipping in the Red Sea leading to switches in shipping lanes away from the Red Sea to longer shipping routes, reduction in the use of the Panama Canal and the impact of the collision of a vessel with the Francis Scott Key bridge in Baltimore. Economic challenges were posed by shortages of skilled labour, general economic uncertainty, increased due diligence expectations placed on carriers and the consequences of the increased focus on environmental, social and governance issues as well as the wider use of AI technology.
Challenges escalate late in 2024 and into 2025.
Election of President Trump
The challenges to the supply chain seemed to escalate towards the end of 2024, mainly due to the global trade changes flowing from the election of Donald Trump as US president in November 2024 and his many subsequent statements of impending changes to US trade policy following his inauguration. The comments by then-President-elect Trump referred to increases in tariffs and other international interventions including a proposal to intervene with the increased charges in the Panama Canal.
Possible strikes at US ports
At the same time, the prospects of disruption from strikes by the US International Longshoremen’s Association which were scheduled to take place later in January 2025 at East Coast and Gulf Coast ports increased. * In advance of the possible disruption, Hapag-Lloyd announced port strike surcharges to commence on the date of the Trump inauguration. The Work Disruption Surcharge and the Work Interruption Destination Surcharge were to be effective on 20 January 2025, if the strike commenced. Given experience, other lines may have been preparing separate charges to be imposed and may also have been looking at the force majeure provisions in their shipping contracts to terminate or otherwise unilaterally vary their services.
Changes to the Australian free-trade agenda
UK joins the CPTPP
Again, in late 2024 there were significant changes to the Australian free-trade agenda. The first was the United Kingdom’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 24 December 2024. From that date, goods that are Trans-Pacific Partnership (TPP) originating goods of the United Kingdom are eligible for preferential rates of customs duty under the CPTPP.
Although the UK acceded to the CPTPP for other countries on 15 December, the arrangements between Australia and the UK commenced on 24 December. The CPTPP offers an alternative approach for UK exporters to Australia compared to the Australian-UK Free Trade Agreement (A-UKFTA) as long at the goods are TPP goods and the other terms of the CPTPP are observed. The effect of the CPTPP is to reduce most rates of duty to zero except for cheese and curd goods and certain iron and steel products. Details of the entry into force are detailed in ACN 2024/43 issued by the Australian Border Force.
Suspension and reduction of preferential rates of customs duty
By way of ACN 2024/44, the ABF identified suspension and reduction of preferential rates of customs duty, including reduction of preferential rates under the India-Australia Economic Cooperation and Trade Agreement (ECTA), the Regional Comprehensive Economic Partnership Agreement and the A-UKFTA. The ACN also records that under the A-UKFTA, preferential rates of customs duty may be suspended for iron and steel goods where a global safeguard applies to equivalent goods that are exported from Australia and imported into the UK.
At the time that the A-UKFTA came into force on 31 May 2023 the UK had a global safeguard on certain steel products which safeguards were subsequently extended. The ACN also refers to a further extension of the suspension of preferential rates for steel goods of 74 tariff headings and subheadings in Chapters 72 and 73 in Schedule 3 to the Customs Tariff Act 1995. This reflects the goods subject to the UK global safeguards. The goods classified to the headings and subheadings will be subject to a customs duty of 5% from 24 December 2024 until the end of 30 June 2026.
Review of the Australia-UAE FTA and the IPEF treaties
Once a trade agreement or treaty is entered into by Australia, commencement is still subject to “domestic ratification” which includes review and endorsement by the Parliamentary Joint Standing Committee on Treaties (JSCOT) and the passage of any necessary legislation, usually including amendments to the Customs Act 1901, the Customs Tariff Act 1995 and associated regulations.
On 17 December 2024, JSCOT invited parties to make submissions into treaties being the Australia-UAE Comprehensive Economic Partnership Agreement (CEPA) and three treaties made pursuant to the Indo-Pacific Economic Framework (IPEF). While the three IPEF treaties do not reduce tariffs they refer to other aspects such as frameworks for prosperity, clean economy and a fair economy. There are doubts whether the new Trump administration will support the IPEF. However, both the UAE and Australia are in full support of the CEPA, but it will take some time for both countries to complete their domestic ratification of the CEPA. All parties have been invited to make submissions to JSCOT on the IPEF and CEPA provisions.
At the same time, the Australian legislation to implement the second protocol to the Agreement implement the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) has passed through both Houses of our Parliament and received Royal Assent. The second protocol to the AANZFTA will enter into force when Australia, New Zealand and at least four ASEAN member states have completed their domestic ratification process.
Negotiations into the “full” agreement with India, being the Australia-India Comprehensive Economic Cooperation Agreement (CECA) continue with the CECA to incorporate the terms of the current ECTA.
Developments in the Australian border compliance regime
The ABF and other agencies operating at the border continue a comprehensive compliance agenda focusing on collection of underpaid customs duty arising from supplier undervaluation of goods and the misuse of self-assessed clearance declarations (SACD) for imports with a customs valuation of $1000 which are free from customs duty.
The focus calls for all parties including importers and their service providers (such as licensed customs brokers) to independently verify the value of the goods being imported using SACD. This has been an ongoing focus of the ABF together with the illegal importation of drugs, cigarettes and vapes.
Import controls on engineered stone
For some time, state agencies have collectively resolved to terminate the use of certain engineered stone in building work arising from concerns on the silicone and other material in the stone which are released during the construction process, and which can be deadly for those undertaking the construction who may inhale the silicone dust. This reflects, in part, similar bans on the use of asbestos products.
Consistent with the bans on use of certain engineered stone, its importation has been prohibited with effect from 1 January 2025. Details of the import control can be found in ACN 2024/45 issued by the ABF and in an information paper issued by the ABF to be found on the ABF website. The ban will require additional due diligence by importers of the engineered stone and by freight forwarders and licensed customs brokers who facilitate the import of the stone.
The ABF’s second Goods Compliance Update for 2024
Late in 2024, the ABF also issued its second Goods Compliance Update (GCU) representing a summary of the ABF’s compliance focus as at the date of the GCU.
In addition to the matters described in the proceeding paragraphs the GCU includes summaries of meetings between the ABF and industry, an update on the Australian Trusted Trade program (including those who have been removed from the program), trade services updates (including on the increased use of the voluntary disclosure regime) and guidance on the use of tariff concession orders and other duty concessions. The GCU also includes useful records of results from the ABF compliance programs, including the number of infringement notices issued and in relation to which offences.
Possible other areas for attention early in 2025
The commentary above is only limited to a few items and there is likely to be significant additional changes albeit with the uncertainty in the outcome of the 2025 federal election. Hopefully this will include reforms to competition issues in the supply chain and reform of the use of the SACDs as is the case in the US and in the EU. It is also hoped that the work on the trade modernisation agenda will continue with the ABF and the other agencies operating at the border.
I look forward to continuing my involvement with industry associations also working at the border including the continuing professional development sessions conducted by the International Forwarders and Customs Brokers Association of Australia around the country in 2025.
* This article was written on 31 December 2024 before news arrived in early January 2025 of a possible resolution of the threatened strike between the ILA and the US Maritime Alliance. We are hoping that the resolution will proceed but there may be further associated developments including additional fees for using the ports.
This article appeared in the February | March 2025 edition of DCN Magazine
