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Review of Licensing Provisions

Centre for Customs and Excise Studies Charles Sturt University

July 2014

This report has been prepared by the Centre for Customs and Excise Studies, Charles Sturt University, for and on behalf of the Australian International Trade and Transport Industry Development Fund.

Key contributors: Professor David Widdowson and Senior Research Fellow Geoff Short.

Acknowledgements

The researchers would like to thank those who provided assistance in completing this study, which include:

The customs administrations of: Afghanistan; Angola; Austria; Australia; Azerbaijan; Belize; Bhutan; Canada; China; Fiji; Finland; Greece; Guatemala; Indonesia; Ireland; Israel; Latvia; Maldives; Mauritius; Montenegro; Namibia; New Zealand; Pakistan; Philippines; Seychelles; Sierra Leone; Solomon Islands; South Africa; South Korea; Sri Lanka; Sweden; Tonga; Turkey; United Kingdom; Uruguay; and Vietnam;

Representatives of: APC Logistics, Sydney; Asian Development Bank; Australian Department of Agriculture; Australian Federation of International Forwarders; Begley, Hobba & Manton, Melbourne; Brisbane Customs Brokers, Brisbane; Charles Sturt University; David Brush & Associates, Melbourne; Conference of Asia Pacific Express Carriers; Centre for Customs & Excise Studies, Thailand; CEVA Freight, Brisbane; Concordia International Forwarding, Sydney; Connor Anderson International, Sydney; Cornish International, Freight Forwarders, Sydney; Customs Brokers & Forwarders Council of Australia; Customised Clearing & Forwarding, Zambia; DHL Global Forwarding Angola; DHL Express Cameroon; DHL Global Forwarding Ghana; DHL Global Forwarding Melbourne; DHL Norway; DHL Russia; DHL Global Forwarding USA; Ethiopia University; Fracht Australia (Logistics) Sydney; Hodder Logistics, Melbourne; KPMG Peru; L C Loynes & Associates, Brisbane; Paul Hannah Customs Law & Tariff, Victoria; PWC China; Qantas Freight, Sydney; Smith-Channon & Company, Adelaide; Target, Geelong Victoria; TNT India Pty Ltd; TNT Express Worldwide Thailand; Tradewinds Customs & Freight, Brisbane; University of Canberra; Wallace International Pty Ltd, Brisbane; and Worldwide International, Perth; and

The following individuals: Moomina Adam; Mohamed Amir; John Arndell; Harry Asher; Paul Bagnall; Richard Bargh; Craig Beal; John Begley; Craig Birchall; Sara Bitton; Bryce Blegen; Nina Brinckley; Paul Brooks; Quita Brunell; David Brush; Lili Ceric; Geoff Clark; Teresa Conolan; Susan Danks; Ernie Dean; Bekele Demissie; Declan Dwyer; Max Erenimae; Guillermo Ericastilla; Rob Fawkes; Madalena Filomena Ferreira; Bob Fraser; Michelle Gannon; Hans Garoeb; Peter Gasnier; Paul Golland; Leon Glucina; Lynne Goodwin; Agneta Gustafsson; Geoff Gutterson; Paul Hannah; Aqthar Hassen; Kent Heazlett; Kevin Heffernan; Lizbal Heroe; Peter Hodder; Mohammad Ehteshamul Hoque; Brian Hurrell; Heli Isometsa; Patricia Jones; Mikhail Kashubsky; Ronald Kaltenbaeck; Hart Krtschil; William Kucera; Manoj Kumar; Li Li; Gideon Lourens; Brian Lovell; Charles Manga; Vincent Philip Cuan Maronilla; Alessandro Milan; Steve Morris; Andrea Mostafa; Brian Munyari; Azhad Najeeb; Sharon Nyakuengama; Dennis O’Brien; Igor Obradovic; Naa Opoku; Paul Adem Opoku; Damon Paling; L Parry; Mayra Perez; Tuan Dung Pham; Elena Pogodina; Nick Porter; Rob Preece; Sooryadev Singh Purmah; David Rabbitt; UKDA Ratnakumara; Victor Recinos; Peter Rickard; Muhammad Rasyid Ridla; Jenny Robinson; Niko Rabuli Rokodravu; Mehmet Sefa Saral; Valerie Sesia; Zubair Shah; Vince Shaw; Amanda Skinner; Abdul Samad Stanekzai; Fotina Starida; Wayne Terpstra; Wangchuk Thayey; Sue Thorpe; Aija Tukisa; Migue Leasar Jose Tumba; Kelemete Vahe; Oscar Vasquez; John Wetch; Praiw al Wattanasirang; Bob Wallace; Bill Wray; and Jisoo Yi.

© AITTIDF 2014

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without prior permission.


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Contents

Abbreviations and Acronyms ......................................................... iv

Executive Summary ........................................................................ 7

1. Background ........................................................................... 9

2. The Research Project ........................................................... 10

3. Methodology ...................................................................... 11

4. Australian Regulatory Review ............................................. 13

4.1. Overview of arrangements subject to licensing................................... 13

4.2. Customs Brokers ................................................................................ 16

4.2.1. Overview ............................................................................................................. 16

4.2.2. Historical perspective .......................................................................................... 16

4.2.3. Agriculture ........................................................................................................... 20

4.3. Depots ............................................................................................... 24

4.3.1. Overview ............................................................................................................. 24


4.3.3. Agriculture ........................................................................................................... 27

4.4. Warehouses ....................................................................................... 28

4.4.1. Overview ............................................................................................................. 28


4.4.3. Agriculture ........................................................................................................... 31

4.5. Themes Arising .................................................................................. 31

4.5.1. Policy Justification ............................................................................................... 31

4.5.2. Progressive Harmonisation ................................................................................. 31

4.5.3. Persistent Reliance on Licensing ......................................................................... 33

4.5.4. Increased Stringency ........................................................................................... 33

5. Judicial Consideration ......................................................... 34

5.1. Customs Brokers ................................................................................ 34

5.2. Warehouses ....................................................................................... 35

5.3. Themes Arising .................................................................................. 35

6. International Trends ........................................................... 36

6.1. Customs Brokers ................................................................................ 36

6.1.1. World Trade Organization Trade Facilitation Agreement ................................... 36


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6.1.2. Revised Kyoto Convention .................................................................................. 36

6.1.3. European Union ................................................................................................... 38

6.1.4. United States ....................................................................................................... 41

6.1.5. New Zealand ........................................................................................................ 42

6.1.6. China .................................................................................................................... 42

6.1.7. Thailand ............................................................................................................... 44

6.1.8. Other Countries ................................................................................................... 44

6.2. Depots ............................................................................................... 45

6.2.1. World Customs Organization .............................................................................. 45

6.2.2. European Union ................................................................................................... 47

6.2.3. United States ....................................................................................................... 48

6.2.4. New Zealand ........................................................................................................ 50

6.2.5. China .................................................................................................................... 51

6.2.6. Thailand ............................................................................................................... 52

6.2.7. Other Countries ................................................................................................... 52

6.3. Warehouses ....................................................................................... 53

6.3.1. World Customs Organization .............................................................................. 53

6.3.2. European Union ................................................................................................... 55

6.3.3. United States ....................................................................................................... 57

6.3.4. New Zealand ........................................................................................................ 57

6.3.5. China .................................................................................................................... 58

6.3.6. Thailand ............................................................................................................... 59

6.3.7. Other Countries ................................................................................................... 60

7. Feedback from Interviews ................................................... 61

7.1. Licensing and the Customs Broking ‘Profession’ .................................. 61

7.2. Broker Licence Conditions .................................................................. 63

7.3. Customs Broker Qualifications and CPD .............................................. 64

7.4. Level Playing Field .............................................................................. 65

7.5. Relationship with the Authorities ....................................................... 66

7.6. Depots ............................................................................................... 66

7.7. Warehouses ....................................................................................... 68

8. Business and Regulatory Contexts ....................................... 69

8.1. Information Technology ..................................................................... 69

8.2. International Trading Environment .................................................... 70

8.3. Government Policy Settings and Priorities .......................................... 71


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9. Key Considerations and Conclusions ................................... 73

9.1. Licensing Proposition ......................................................................... 73

9.2. Constitution of NCBLAC ...................................................................... 75

9.3. Alternative Customs Broker Licensing Models .................................... 76

9.3.1. Option 1 ............................................................................................................... 76

9.3.2. Option 2 ............................................................................................................... 76

9.3.3. Option 3 ............................................................................................................... 78

9.3.4. Option 4 ............................................................................................................... 78

9.3.5. Option 5 ............................................................................................................... 81

9.4. EEG Considerations ............................................................................ 81

10. Recommendations .............................................................. 83

11. Next Steps ........................................................................... 84

12. End Notes ........................................................................... 85

13. References .......................................................................... 91

14. Appendices ......................................................................... 95

Appendix 1: Background Paper for Interviewees ........................................... 95

Appendix 2: Surveys on International Policy and Practice ............................ 101

Appendix 3: Quarantine Approved Premises Criteria ................................... 103

Appendix 4: Example of QAP Facilities Lists ................................................. 107

Appendix 5: RKC General Annex Guidelines to Chapter 8 ............................. 109

Appendix 6: Broker Licensing – Country Summaries ..................................... 114

Appendix 7: Depot/Warehouse Licensing – Country Summaries .................. 118

Appendix 8: Process for Becoming a Registered Tax Agent........................... 123

Appendix 9: Comparison of Broker Licensing & Tax Agent Schemes ............. 127

Appendix 10: Process for Obtaining Customs Brokers Licence ...................... 131

Appendix 11: Tax Agents’ Code of Professional Conduct .............................. 138

Appendix 12: RKC Guidelines to Specific Annex D ........................................ 139


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Abbreviations and Acronyms

AAT Administrative Appeals Tribunal

ACBPS Australian Customs and Border Protection Service

ACN Australian Customs Notice

ACS Australian Customs Service

AEO Authorised Economic Operator

AEP Automatic Entry Processing

AEPCOMM Scheme

Automatic Entry Processing for Commodities Scheme

AFIF Australian Federation of International Forwarders

AFP Australian Federal Police

AICCC AQIS/Industry Cargo Consultative Committee

AITTIDF Australian International Trade and Transport Industry Development Fund

AIWGB Australian Industry Working Group on Biosecurity

AQIS Australian Quarantine and Inspection Service

ASIC Australian Securities and Investments Commission

ASIC Aviation Security Identification Card

ASX Australian Stock Exchange

ATO Australian Taxation Office

BAS Broker Accreditation Schemes

bn billion

CAPEC Conference of Asia Pacific Express Carriers

CASE Customs-approved Area for Storing Exports

CBAFF Customs Brokers and Freight Forwarders Federation of New Zealand

CBFCA Customs Brokers and Forwarders Council of Australia

CBP US Customs and Border Protection

CCA Customs Controlled Area

CCES Centre for Customs and Excise Studies, Charles Sturt University

CEO Chief Executive Officer

CFR Code of Federal Regulations

COAG Council of Australian Governments

CPD Continuing Professional Development

CPE Continuing Professional Education

CTO Cargo Terminal Operator

Customs Act Customs Act 1901

DAFF Department of Agriculture, Fisheries and Forestryi


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DAg Department of Agriculture

DIAC Department of Immigration and Citizenshipii

DIBP Department of Immigration and Border Protection

ECA Export Council of Australia

EEG Excise Equivalent Good

EU European Union

FCA Federal Court of Australia

FCL Full Container Load

FCX FCL with multiple house bills

FID Formal Import Declaration

GACC General Administration of Customs of the People’s Republic of China

GST Goods and Services Tax

HS Code Harmonized Commodity Description and Coding System

ICS Integrated Cargo System

ICT information and communication technology

IFIS Imported Food Inspection Scheme

INS Infringement Notice Scheme

IT information technology

LCL Less than Container Load

MSIC Maritime Security Identification Card

NCALAC National Customs Agents Licensing Advisory Committeeiii

NCBLAC National Customs Broker Licensing Advisory Committee

NCCC Scheme Non Commodity for Containerised Cargo Clearance Scheme

Organised Crime Act

Customs and AusCheck Legislation Amendment (Organised Crime and Other Measures) Act 2013

OPS Operational Procedures Statement

OTS Office of Transport Security

PEQ Post Entry Quarantine

PIN Personal Identification Number

PRC People’s Republic of China

QAP Quarantine Approved Premises

SAL Shipping Australia Limited

RCB Registered Customs Broker

Revised Kyoto Convention

International Convention on the Simplification and Harmonization of Customs Procedures (as Amended)

RFID radio-frequency identification

RKC Revised Kyoto Convention


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RTA Registered Tax Agent

RTO Registered Training Organisation

UCC Union Customs Code

TPB Tax Practitioners Board

ULD Unit Load Device

USC United States Code

UUI Unique Use Identifier

WCO World Customs Organization

WTO World Trade Organization

i Previous name of the Australian Department of Agriculture. ii Previous name of the Australian Department of Immigration and Border Protection.

iii Previous name of the National Customs Brokers Licensing Advisory Committee (NCBLAC).


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Executive Summary

Background

This review examines licensing arrangements under the Customs Act 1901 relating to Depots, Warehouses and Customs Brokers. The project was commissioned by industry, as it has been more than 15 years since the last comprehensive review of the Depot licensing provisions and over 30 years since the Warehouse and Customs Broker licensing provisions were enacted. The review is designed to identify any changes to the regimes that may be required or desirable, together with options for optimising the regulation of the sectors while minimising the impact on the businesses of the licensees.

To this end, this research, which has been commissioned by the Australian international trade and transport industry, develops an industry position on the appropriateness of the various licensing schemes in the context of Customs law and practice and the commercial realities of the 21st century. It assesses the various schemes against equivalent schemes in other countries, including comparable developed economies.

Research Findings

The research has identified a stark contrast between the business and regulatory contexts which prevailed at the time of the last substantive amendments to the respective licensing regimes and those which prevail today. Key changes since 1980 that have materially affected the context in which depots, warehouses and customs brokers are subjected to licensing requirements include the significant advances in information technology, general business practices and the way in which international trade is conducted, and Government policy settings and priorities, including how Customs manages its charter – along with more general economy-wide changes.

With the exception of warehousing arrangements for Excise Equivalent Goods (EEGs), industry participants were found to be generally satisfied with the regulatory requirements relating to licensed premises, but expressed some concerns about the way in which they are being administered. However, the general observations of industry on the effectiveness of customs broker licensing were varied and wide-ranging.

The licensing of customs brokers is used by regulators in many countries around the world as a means of regulating the profession. In countries where brokers are not licensed, they are usually formally recognised by the regulating agency in some other way such as by registration, certification or approval.

The espoused rationale for customs broker licensing in Australia has been two-fold – to protect the revenue and to ensure compliance with the ‘Customs Acts’ (undefined). It is debatable whether these two imperatives are, or should be, the only or even the dominant public policy drivers justifying the licensing of customs brokers in the current environment. Regardless, government priorities and, consequentially, the role of licensed customs brokers, have changed in recent years.

The research concludes that, given the changing government priorities and the fact that the work of customs brokers touches upon a range of public policy issues that are much broader than the remit of the Australian Customs and Border Protection Service (ACBPS), the wider interests of the Commonwealth should be involved in any assessment of a person’s suitability to be a customs broker. It also identifies the need


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for a clear differentiation between the regulation of customs brokers (i.e. individuals) and that of customs brokerages (i.e. commercial operations).

Conclusions

The research findings indicate the need for a new approach to licensing, which:

1. Facilitates the authorisation of depots for both customs and quarantine purposes;

2. Removes the dual licensing and control requirements that currently apply to warehouses used by importers of EGGs;

3. Replaces the current customs broker licensing arrangements with either:

a. a registration scheme for both individual customs brokers and customs brokerages, or

b. a registration scheme for individual customs brokers and a licensing scheme for customs brokerages, for which the governing body would include the broader interests of relevant regulatory agencies; and

4. Establishes a public register of Registered Customs Brokers, Licensed Depots, Licensed Warehouses and, if applicable, Licensed Customs Brokerages.

The study recommends that the above issues be addressed by way of a joint review of relevant government agencies and industry, to be led by ACBPS in the context of the comprehensive review of its legislative and regulatory frameworks as proposed in the ACBPS Blueprint for Reform 2013-2018.


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1. Background

This review examines licensing arrangements under the Customs Act 1901, relating to:

Depots (Part IVA of the Customs Act);

Warehouses (Part V); and

Agents and Customs Brokers (Part XI).

The concept of a ‘licence’ or ‘licensing’ is also referred to in a variety of other contexts in the Customs Act including licences for importing goods, exporting goods, possessing or using a firearm, etc. However, this review is not concerned with these types of licence.

Part IVA relating to Depots, was added to the Customs Act in 1997 as part of a package of Bills for the implementation of a cost recovery regime for import related services delivered by the then Australian Customs Service (ACS). Specifically, the Bill introduced a new licensing regime in relation to depots handling imported goods to address certain perceived inadequacies in the then existing provision of the Customs Act under which depots were appointed.

Part V of the Customs Act, relating to Warehouses, was replaced in 1980. Serious deficiencies in the existing provisions had been exposed in the previous year by a judgment of the Federal Court of Australia (FCA) in which it was held that a Collector of Customs acted beyond the powers available under the Customs Act when he purported to revoke a warehouse licence for reasons other than default in payment of licence fees. As many of the provisions relating to warehouses had remained virtually unchanged since their original inclusion in the Customs Act, they were all revised. Key amongst the changes was the introduction of a ‘fit and proper person’ test for persons controlling and operating warehouses.

Part XI of the Customs Act, relating to Agents, was part of the original Customs Act as enacted in 1901. Further provisions were added to Part XI of the Customs Act in 1959 to transfer the power to suspend or cancel customs agents’ licences from the Collector of Customs to the Minister, to establish the grounds on which a licence may be suspended or cancelled and to provide for Committees of Inquiry to investigate matters involving the conduct of customs agents and to report to the Minister.

Divisions 1, 2 and 3 of Part XI were then repealed and substituted in 1980 to provide a revised legislative scheme for the licensing and control of customs agents, including enabling licences to be granted to partnerships and corporations as well as to individuals, and the establishment of the National Customs Agents Licensing Advisory Committee (NCALAC) to investigate and report on all matters involving licensing of customs agents.

Various provisions in each of the three Parts of the Customs Act have been amended, some several times, in the intervening years.

In general scope, however, it is more than 15 years since the last comprehensive review of the Depot licensing provisions and over 30 years for the Warehouse and Agents and Customs Brokers licensing provisions. The last few decades have seen extensive and increasingly rapid changes in information technology, general business practices, the


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structures of international trade and, importantly, Government policy settings and priorities. This trend can be expected to continue to accelerate. Against this background, it is timely that a comprehensive review be undertaken of these current licensing regimes to identify any current shortcomings from the regulators’ or licensees’ perspectives, along with any changes that might be required to the regimes to best accommodate anticipated future trends in technology, business practices and the regulatory environment.

2. The Research Project

The research project is a review of the appropriateness of the current licensing regimes applying to Depots, Warehouses and Agents and Customs Brokers under the Customs Act, including associated provisions under the Quarantine Act 1908 (Quarantine Act) and the Quarantine Regulations 2000 (Quarantine Regulations) that have an impact on these arrangements. It assesses the appropriateness of the regimes as they currently stand by comparing the contexts in which they were originally created with the regulatory and business contexts of today, and also briefly examines how those contexts might change in the future.

Specifically, the project is designed to provide an industry position for consideration and, if deemed appropriate (and agreed), presentation to Government that identifies changes which might be required or desirable to the regimes and options for optimising the regulation of the sectors while minimising the impact on the businesses of the licensees. In doing so, the project draws on input from both the Australian regulators and the licensees, and also considers how regulators in other economies around the world manage their counterpart industry sectors. It also takes account of the work in progress on the Trusted Trader Scheme and other arrangements announced in the ACBPS Blueprint for Reform 2013-2018.

The project is funded through the Australian International Trade and Transport Industry Development Fund (AITTIDF) with the support of the Customs Brokers and Forwarders Council of Australia Inc. (CBFCA), the Export Council of Australia (ECA), the Australian Federation of International Forwarders (AFIF), the Conference of Asia Pacific Express Carriers (CAPEC) and Shipping Australia Limited (SAL).

The research project is designed to contribute to AITTIDF’s specific objectives of promoting, supporting, advancing and enhancing:

Projects in Australia which benefit the commercial, operational, legislative and regulatory processes supporting Australia’s international trade, transport and customs brokerage Industry;

Projects in Australia to facilitate Australia’s international trade with its trading partners; and

Projects in Australia that encourage more efficient international supply chain solutions.

The guiding principle of the project is the recognition of the need to optimise the level of regulatory control of these important sectors of customs administration while minimising the regulatory compliance burden on industry. The outcome of the project will potentially benefit the relevant sectors of industry that fall within the scope of the


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three licensing regimes, including owners and operators of Depots and Warehouses, and Customs Brokers.

3. Methodology

The project is comprised of four principal components. The first is a review of the legislation relating to licensed depots (Part IVA of the Customs Act), licensed warehouses (Part V of the Customs Act) and Agents and Customs Brokers (Part XI of the Customs Act), together with a review of relevant aspects of the Quarantine Act and Quarantine Regulations that have an impact on the operational activities of depots, warehouses and customs brokers.

The second component involves an examination of Australian regulatory and business perspectives on the various licensing regimes including their effectiveness, cost/benefits and shortcomings, together with industry views on the way in which the business and regulatory environment is changing and the implications for licensing, as well as their views on possible alternatives to licensing.

The third is a review of international benchmarks, policies and practices, including relevant international conventions and guidelines.

The fourth component of the project is an analysis of the first three components, with a focus on identifying options for amending the existing regimes to remedy any shortcomings, and any redesign of the regimes to optimise their relevance and effectiveness into the future.

The approach to the research has been iterative, drawing on multiple types of data. The initial step was to conduct a desk-based study of the relevant legislation and supporting policy and administrative documents. These include primary documents such as the Customs Act and the Customs Regulations 1926 (Customs Regulations), the Quarantine Act and the Quarantine Regulations, and the International Convention on the Simplification and Harmonization of Customs Procedures (as Amended),1 amongst others, together with academic papers and commentaries published in academic journals or by relevant international and national organisations.

The initial desk-based review was followed interview-based research, the findings of which were used to further inform the initial review as well as provide the basis for the study’s analysis and recommendations. Interviewees were provided with background material that was designed to inform them of the background and purpose of the review (see Appendix 1).

Interviews were conducted in Brisbane, Sydney, Melbourne and Canberra. In addition, a number of telephone interviews were conducted with operators in those cities as well as Adelaide and Perth. A total of 46 participated in the interviews. The purpose of the industry interviews was to obtain the perspective of those who are required to meet the licensing requirements on a daily basis. The interviews focused on the way in which the licensing policies and practices impact commercial operations, any concerns licensees may have with the current arrangements, and views on ways in which the provisions may be improved. Some specific issues explored during the course of the interviews included:

the perceived effectiveness of licensing


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the perceived benefits and costs of licensing

key failings / shortcomings of licensing

predictions about the business and regulatory environment in the next 10 - 20 years and the implications for licensing

views on alternatives to licensing, e.g. industry self-regulation, co-regulation, reliance on intelligence-based risk assessment strategies, etc.

In addition, members of AFIF were consulted and invited to provide input to the review at their National Conference2.

Surveys were also conducted to assist in identifying international policies and practices (see Appendix 2). These were sent to two groups – international alumni of customs universities and national customs administrations. A total of 56 responses were received (35 alumni and 21 administrations), which provided information on the regulatory framework of 47 countries.

The overall analysis included:

1. Based on industry and regulatory feedback, comparing the contexts - information technology, general business practices, the structures of international trade and Government policy settings and priorities – which prevailed at the time of the last substantive amendments to the respective licensing regime, with those which prevail today.

2. Examining subsequent changes to the policy and practice that have been introduced, including the introduction of CPD requirements, and assessing how those contexts are expected to change in the coming years.

3. Based on the findings of (1) and (2), and taking account of international benchmarks, policies and practices, assessing the relevance of, and identifying existing shortcomings in, the regimes (from both the regulators’ and licensees’ perspectives) and identifying the hallmarks of effective regimes operating into the future.

4. Making recommendations for changes to the existing regimes to remedy any shortcomings, and any redesign of the regimes to optimise their relevance and effectiveness into the future.

Note that the research team sought specialist assistance from industry representatives in relation to the following activities:

Researching the legislative history of the three licensing regimes and Government policies

The comparative context analysis

Investigation of counterpart foreign regimes and comparison with Australian regimes

Consultations with licensees.


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Relevant parts of the Draft Report were circulated to Australian Government agency representatives to enable any further comment and to ensure the report was factually correct.3

Before preparing the Final Report, the researchers sought feedback from AITTIDF on the issues that were raised in the Draft Report. This was done to ensure the usefulness of the research, and to identify any areas that may, in AITTIDF’s opinion, require further consideration, emphasis or explanation.

4. Australian Regulatory Review

4.1. Overview of arrangements subject to licensing Customs Brokers

A customs broker acts as an intermediary with Customs for traders who either do not have the relevant in-house expertise to manage their regulatory responsibilities, or who opt to engage professional assistance to ensure such responsibilities are met. The following ACBPS explanation serves to identify the role of customs brokers in the Australian context.

A customs broker is an entity who holds a customs broker's licence granted in accordance with Part XI of the Customs Act. Under the Customs Act an owner of goods may authorise an agent to act on his or her behalf for the importation of goods into Australia.

There are three categories of customs brokers:

Corporate

Sole trader

Nominee

A corporate customs broker is a company or a partnership that is licensed to act on behalf of owners of imported goods. A corporate customs broker must employ nominee customs brokers to lodge customs declarations.

A sole trader is an individual that is licensed to act on behalf of owners of imported goods. A sole trader may also employ nominee customs brokers. A sole trader cannot be employed by a corporate customs broker.

A nominee is a natural person that is licensed to act as a customs broker but only as an employee of a corporate or a sole trader customs brokerage. A nominee may be employed by more than one corporate or sole trader brokerage at any one time.

The Customs Act allows for the licensing of a natural person, company or partnership. A trust entity is not eligible to be licensed as a customs broker. A trustee may be licensed if the nominated entity in the Trust Deed is a natural person, company or partnership. 4


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Depots

Imported goods can generally be unloaded only at places that are designated for that purpose. When determining whether a place may be used for that purpose, customs administrations are required to consider industry requirements as well as changing trade patterns. The World Customs Organization (WCO) notes that, ‘In some instances Customs may only allow certain types of goods to be unloaded at some of the designated places. Such a restriction may be placed on goods like oil or bulk goods or hazardous goods which can only be unloaded at terminals or depots that are specially equipped for handling such specialized cargo.’5

According to the WCO, ‘The conditions to be fulfilled and Customs formalities to be accomplished for procedures and practices ... shall be specified in national legislation and shall be as simple as possible’.

The following ACBPS explanation serves to identify the role of depots in the Australian context.

Depots are licensed under section 77G of the Customs Act and allow importers to have goods moved away from the wharf or airport for short-term storage and unpacking/deconsolidation. Once all legislative requirements are met, the goods can be released into home consumption or moved to a Customs warehouse for storage. Depot licence holders may only use the premises for the following purposes:

Holding of imported goods subject to the control of Customs;

Unpacking of imported goods subject to the control of Customs;

Holding of goods for export subject to the control of Customs; and / or

Packing of goods for export subject to the control of Customs into containers etc.

All section 77G depots are required to be electronically linked to the Integrated Cargo System (ICS) to enable the reporting of cargo. Storage of goods subject to Customs control in a licensed depot is permitted until the end of the month after the month of receival in the depot. The depot may seek an extension under section 77P to hold the goods for a further month. If legislative import requirements have not been met and this period has elapsed, the goods must be transferred to a licensed warehouse (if possible) or arrangements be made for the disposal/destruction of the goods.6

Warehouses

In international trade it is sometimes not known at the time of importation how the imported goods will finally be disposed of. This means that the importers are obliged, or may choose, to store the imported goods for some time before they are finally disposed of. When the goods are intended for clearance for home use, the Customs warehouse procedure enables the importer to delay the payment of the import duties and taxes until the goods are actually taken into home use. The importer may also choose to place the goods in a warehouse until they can meet the conditions relating to restrictions or prohibitions. 7


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Goods deposited in a Customs warehouse do not become liable to the payment of import duties and taxes until the goods are cleared for home use from the warehouse. If the goods are re-exported, then there is a waiver of import duties and taxes. It also affords the person warehousing the goods sufficient time to negotiate their sale, either on the home market or abroad, or to arrange for the goods to be processed or manufactured, transferred to another Customs procedure or otherwise disposed of in an authorised manner. 8

The scope of this procedure may not be restricted to imported goods. For example, some administrations allow goods that are liable to, or have borne, internal duties and taxes (whether of national origin or previously imported against payment of import duties and taxes) to be stored in a Customs warehouse in order that they may qualify for exemption from or repayment of such internal duties and taxes. 9 The following ACBPS explanation serves to identify the role of warehouses in the Australian context:

Warehouses are licensed under section 79 of the Customs Act 1901 (the Act). Goods entered for warehousing on a Nature 20 warehouse declaration may be held indefinitely at a warehouse either without payment of any duties and taxes until the goods are entered for home consumption or until they are exported. The holder of a warehouse licence is responsible for the safe custody and accounting of these goods to the satisfaction of Customs and Border Protection. Failure to do so will result in the warehouse licence holder being liable for any unpaid revenue. There are a number of categories of warehouse licences, mainly:

Private Warehouse - The licence holder is the owner of the warehoused goods

General Warehouse - The licence holder is storing goods on behalf of other owner/s

Providores and Flight Catering Bonds - The licence holder stores goods which are then supplied to international aircraft or vessels as aircraft or ships stores

Duty Free Store - The licence holder is permitted to sell goods to relevant travellers in a retail-type environment

Activities permitted in warehouses are limited to ensure the security of the goods and the revenue payable to the Commonwealth is protected. Apart from approved storage, blending, unpacking, repacking and packaging of certain types of goods, any activities that involve ‘value adding’ are not permitted.10

Australia also provides for EEGs to be kept in a licensed warehouse, including imported alcohol, tobacco and fuel. From 1 July 2010, the Australian Taxation Office (ATO) assumed administrative responsibility for the warehousing of such goods.


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4.2. Customs Brokers

4.2.1. Overview Part XI of the Customs Act 1901 provides for the licensing of customs brokers by the CEO of the ACBPS.

Obtaining a licence

To be entitled to apply for a licence, a person must: complete a prescribed course of study and pass the National Exam; provide evidence of industry experience; meet the “fit and proper person” test; make an application to the Licensing Section of the ACBPS.

An applicant will not meet the ‘fit and proper person’ test if he/she: is convicted for a prescribed offence in the preceding ten years; is refused a Transport Security Identification Card or had one suspended or cancelled; becomes an undischarged bankrupt; makes any misleading statement in the application; or makes a knowingly false statement in the application.

The CEO may grant a licence after an investigation by and recommendation from NCBLAC.

Maintaining a licence

A customs broker’s licence is valid for three years. Maintenance of the licence requires: compliance with all conditions attaching to the licence which are imposed by the Customs Act and Customs Regulations or by the CEO, including undertaking required Continuing Professional Development (CPD).

Revoking a licence

Where the CEO considers that the customs broker has breached a condition of the licence or has taken one or more proscribed actions, he/she may refer the matter to NCBLAC for investigation and report. The CEO may suspend the licence pending the NCBLAC report.

Upon receipt of the NCBLAC report, the CEO may suspend the licence, further suspend the licence, reprimand the customs broker, order that the licence not be renewed or cancel the licence.

Breach of a condition of a licence is also a strict liability offence subject to penalty.

More detailed descriptions of the customs broker licence application processes are at Appendices 9 and 10.

4.2.2. Historical perspective Pre-1959

Prior to 1959, the then Department of Customs and Excise licensed customs agents to carry out customs business on behalf of other persons and the Customs Regulations prescribed the conditions relating to those licenses. Those regulations provided for possible cancellation of licences by the Collector of Customs (with a right of appeal to the Minister) but did not specify the grounds on which the licence might be cancelled.


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1959

Under the Customs Act 1959, applications for customs agents’ licences were made to the Collector, who could refuse an application if, in his opinion, the applicant was not a ‘fit and proper person’ (that term was not defined.) The Customs Act 1959, however, removed the power of the Collector to revoke an agent’s licence and authorised the setting up of ad hoc Committees of Inquiry to inquire into and report to the Minister on matters which may involve suspension or revocation of a licence.

The Minister was granted the power, after receiving the report of the Committee, to suspend or revoke a licence. Revocation could only be on certain limited ‘prescribed grounds’ set out in the Customs Act 1959. Restricted power was left with the Collector to suspend a licence pending the hearing of the case by the Committee when he considered it necessary in the public interest to do so. ‘Public interest’ was not defined. Upon receipt of the Committee's report, the Minister was granted the power to remove the suspension, further suspend or revoke the licence. The grounds upon which a licence could be suspended or revoked were specified in the Customs Act 1959. The Customs Act 1959 provided for a right of appeal to a Supreme Court against any decision of the Minister to suspend or revoke an agent’s licence.

1980

The Customs Amendment Act (No 3) 1980 made four major innovations.

First, it recognised that the industry had developed over the course of the preceding twenty years such that, in the main, customs agents’ services were now delivered by corporations and partnerships. The licensing provisions of the Customs Act, however, only provided for the granting of customs agents’ licences to individuals. Accordingly, the Customs Act was amended to provide for the granting of licences to companies and partnerships.

Second, it required a corporate agency to nominate an individual agent (a nominee) for each of its places of business.

Third, it made it a condition of granting a licence that the applicant was a ‘person of integrity’. This test was applied to individual applicants for a customs agent’s licence but was also applied to nominees and to all persons participating in the management of the agency. In determining whether an applicant was a person of integrity, the Comptroller was required to have regard to:

(a) any conviction of the person for a prescribed offence committed within the 10 years immediately preceding the making of the application;

(b) whether the person was an undischarged bankrupt;

(c) any misleading statement made in the application by or in relation to the person; and

(d) where any statement by the person in the application was false - whether the person knew that the statement was false.

These considerations reflected, in part, the ‘prescribed grounds’ under the Customs Act 1959. An agent’s licence was also made subject to such other conditions as are specified in the licence, being conditions considered by the Comptroller to be necessary or desirable for the protection of the revenue.


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Fourth, it established the NCALAC to investigate and report on all matters concerning licensing. Where the Comptroller received an application for a customs broker’s licence, he was required to refer it to NCALAC for a report on whether to grant or refuse to grant a licence.

The Customs Amendment Act (No 3) 1980 also provided for the Comptroller to give notice to a customs agent in a number of circumstances, including where the Comptroller had reasonable grounds to believe that:

the customs agent had ‘ceased to perform the duties of a customs agent in a satisfactory and responsible manner’;

the customs agent was ‘guilty of conduct that was an abuse of the rights and privileges arising from his licence’; or

it otherwise appeared to him to be ‘necessary for the protection of the revenue’ or otherwise ‘in the public interest’ to give the notice.

The Customs Amendment Act (No 3) 1980 provided that a customs agent was taken to have ceased to perform the duties of a customs agent in a satisfactory and responsible manner if the documents prepared by the customs agent for the purposes of the Customs Amendment Act (No 3) 1980 contained errors that were unreasonable having regard to the nature or frequency of those errors. The other subjective concepts mentioned were not defined in the Customs Amendment Act (No 3) 1980. The issuing of a notice was a precursor to the Comptroller referring the matter to NCALAC for investigation and report to the Minister. In these circumstances, the Comptroller was given the power, if he considered it necessary for the protection of the revenue or otherwise in the public interest to do so, to suspend the licence of the customs agent pending the investigation and report of the Committee.

Upon receipt of the NCALAC report, the Minister was granted the power to do a number of things including cancel the licence, order that it not be renewed, reprimand the agent or suspend the licence.

It is noteworthy that the Second Reading Speech accompanying the introduction of the Customs Amendment Bill (No.3) 1980 notes that:

‘Although the amendments introduce certain new features into the licensing procedure, the intention has not been, and nor do the provisions reflect, any attempt to create a closed shop. Safeguards have been built in so that such a situation will not arise. I stress that it is not the Government's intention or policy to create a closed shop.’11

2012

2012 saw the introduction of an obligation on customs brokers to undertake CPD. This obligation, along with other requirements, was attached as a condition to each customs broker’s licence and did not require legislative amendment. Details were notified through Australian Customs Notices (ACNs) 2012/29 and 2012/43.12 The new licence conditions were declared to be ‘Necessary and desirable for the protection of the revenue or ensuring compliance with the Customs Acts.’13

The declared aim of the CPD scheme was to:


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reinforce the concept of a licensed customs broker as a practitioner in a distinct and valuable profession;

provide opportunity and motivation for all licensed customs brokers to maintain and update their professional knowledge and skills;

afford greater protection for the Commonwealth and the Australian public that licensed customs brokers will be better able to provide their services with propriety, skill and expertise; and

complement and support other ACBPS initiatives designed to increase and enhance compliance with the laws relating to goods under Customs control.14

The additional conditions attached to customs brokers’ licences included:

an obligation to notify any change of circumstances;

the ‘person of integrity’ test – but the criteria for satisfying the test remained unspecified;

the licence being subject to such other conditions as are specified in the licence, being conditions considered by the Chief Executive Officer (CEO) to be necessary or desirable for the protection of the revenue or for the purpose of ensuring compliance with the ‘Customs Acts’;

an obligation to provide a Consent to Obtain Personal Information form to allow ACBPS to undertake an integrity check for each relevant person;

prohibition against allowing ACBPS systems or information provided by ACBPS to be used for an unauthorised purpose or to assist, aid, facilitate or participate in any unlawful or illegal activity; and

an obligation of the licence holder to undertake accredited CPD.15

2013

The next major legislative amendment affecting customs brokers came with the Customs and AusCheck Legislation Amendment (Organised Crime and Other Measures) Act 2013 (Organised Crime Act), which came into effect on 28 November 2013. These changes were introduced to deter and prevent infiltration by serious and organised crime into Australia’s seaports, airports and cargo supply chain – i.e. to harden the cargo supply chain against infiltration by criminal groups.

In respect of customs brokers, the changes included:

replacing the term ‘person of integrity’ with ‘fit and proper person’;

changes to the criteria for ‘fit and proper person’ tests;

changes to the notification requirements of a customs broker licence holder;

new provisions empowering the CEO of the ACBPS to impose additional conditions and vary existing conditions on customs broker licences at any time including the ability to consider the suspension, refusal or cancellation of an Aviation Security Identification Card (ASIC) or Maritime Security Identification


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Card (MSIC) when determining whether the person is fit and proper under the Customs Act;

a new offence for breaching conditions of a customs broker’s licence; and

other amendments that affect all members of the international trade and transport industry, including new offences for using information held by Customs, changes to the Infringement Notice Scheme (INS), increased record keeping obligations and increased penalties for certain offences.

4.2.3. Agriculture Compliance Agreements

When an import declaration, also known as a formal import declaration (FID) is lodged in the Integrated Cargo System (ICS) for consignments of food or shipments that are subject to certain quarantine conditions, there is generally a requirement for supporting documentation to be submitted to the DAg for assessment. This enables DAg to determine the appropriate level of pre-clearance inspection and analysis required under Australia’s quarantine requirements and/or the Imported Food Inspection Scheme (IFIS). However, certain schemes have been established which allow customs brokers and importers a degree of self-assessment, thereby waiving the need to submit documentation to DAg in certain circumstances.

Section 66B(1) of the Quarantine Act provides that a Director of Quarantine may enter into a Compliance Agreement with a person in connection with:

(a) the application of particular procedures in respect of goods; and

(b) the supervision, monitoring and testing of the person’s compliance with those

procedures.

Under section 66B(6) of the Quarantine Act, a quarantine officer may release goods to which a compliance agreement applies from quarantine on the basis of a certificate or assurance, given by a person authorised under the agreement to give such a certificate or assurance, that all the procedures to which the agreement refers have been complied with in respect of the goods.

Similarly, section 35A(1) of the Imported Food Control Act 1992 provides that the Secretary may enter into a Compliance Agreement with a person in connection with:

(a) the application of particular procedures in respect of food; and

(b) the keeping of records by the person in respect of the person's compliance with

those procedures; and

(c) the supervision, monitoring and testing of the person’s compliance with those

procedures.

Also, under section 35A(5) of the Imported Food Control Act 1992, an authorised officer may allow food to which a compliance agreement applies to be dealt with on the basis of a certificate or assurance, given by a person authorised under the agreement to give such a certificate or assurance, that all the procedures to which the agreement refers have been complied with in respect of the food.


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In all cases, the particular procedures covered by a Compliance Agreement are specified in the Table of Schedules and Schedules to the agreement.16

Two such compliance agreements relate to activities that are performed by customs brokers:

the Non Commodity for Containerised Cargo Clearance (NCCC) Scheme;17 and

the Automatic Entry Processing for Commodities (AEPCOMM) Scheme.

Non Commodity for Containerised Cargo Clearance (NCCC) Scheme

The first scheme to be established under the Compliance Agreement arrangements was the Containerised Cargo Clearance scheme for FCL18 and FCX,19 followed by the Automatic Entry Processing (AEP) for FCL and LCL20 packing schemes. These three schemes were collectively known as the Broker Accreditation Schemes (BAS), but have since been replaced with the NCCC Scheme, which focuses on the clearance of non-commodity concerns for containerised sea freight (FCL, FCX and LCL consignments).21

The scope of the NCCC Scheme is limited to:

determination of cargo type;

assessment of non-commodity concerns for FCL, FCX and LCL sea-freight consignments;

assessment of unpack destination postcodes of FCL and FCX sea-freight consignments;

reporting of non-commodity concerns related to these consignments to DAg; and

direction of these consignments to a Quarantine Approved Premises (QAP) for

further DAg intervention.22

Among other things, a prerequisite to becoming a signatory to the NCCC Scheme is the allocation of a Branch Identifier by ACBPS,23 and a requirement that at least one accredited person is employed or otherwise utilised to undertake those tasks within the Operational Procedures Statements (OPS) that are specifically designated to accredited persons.

The Processes and Outcomes Document for the NCCC Scheme24 sets out the processes and associated outcomes that must be met when undertaking an assessment of non-commodity statements and documentation relating to FCL, FCX and LCL sea freight consignments and, where relevant, directing consignments to Quarantine Approved Premises (QAP) for further DAg intervention.25

Essentially, the NCCC Scheme allows a customs broker (or importer) who is accredited under the Scheme to determine whether a consignment poses an impediment in terms of quarantine barrier concerns. It is not necessary to present documents to DAg to obtain Barrier Concerns Clearance in the event that the importer on whose behalf the customs broker is lodging the Import Declaration is a party to the Scheme and:

the customs broker assesses that the consignment is covered by acceptable non-commodity documentation; and


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in the case of FCL and FCX consignments, the consignment is being unpacked at a metropolitan postcode with DAg authority for delivery.26

In the event that the customs broker considers the non-commodity documentation to be unacceptable, or that an FCL/FCX consignment is being unpacked at a place other

than a metropolitan postcode with DAg authority for delivery, the consignment must be referred to DAg.27

Automatic Entry Processing for Commodities (AEPCOMM) Scheme

The AEPCOMM Scheme was introduced in 2006. It allows accredited customs brokers (and importers) to assess documents for commodity-related quarantine concerns and, on the basis of that assessment, select an ICS processing type that relates to the treatments or inspections required. They are also able to select the required QAP for the necessary treatment or inspection. As such, the Scheme eliminates the need to send documents to DAg and have its officers process the entry. 28

The scope of the AEPCOMM Scheme includes the assessment of documentation and self-direction of consignments (including FCL, LCL, air freight and break bulk). The Processes and Outcomes Document for the AEPCOMM Scheme29 sets out the processes and associated outcomes that must be followed for the assessment of documentation and self-direction of consignments of those specific commodities that are covered by the Scheme. Commodities that are currently included in the AEPCOMM Scheme are listed in Figure 1.

Figure 1: Commodities included in the AEPCOMM Scheme

Commodity Country Mode of Transport

New Zealand Finfish New Zealand Air freight

New Zealand Dairy Products New Zealand Air freight and FCL

New Tyres All countries Air freight and FCL

New and Used Non-Passenger Vehicles All countries FCL and Break Bulk

Used Passenger Vehicles All countries Break Bulk

Used Machinery All countries FCL and Break Bulk

New/Used Vehicle & machinery parts All countries FCL, LCL or Air freight

Manufactured Wooden Articles and Plywood and Veneer Articles

All countries Air freight, FCL, LCL

Plywood and Veneer Sheets All countries FCL only

Milled rice All countries FCL only

Green coffee beans All countries FCL only

Fresh asparagus All countries Air freight only

Fresh garlic and Garlic Shoot All countries Air freight or FCL

Fresh tomatoes New Zealand Air freight only

Fresh onions and shallots New Zealand, USA, Netherlands and China only

FCL only

Source: Department of Agriculture Fisheries and Forestry (2013) Process and Outcomes Document: AEP for Commodities Scheme, Canberra, January 2013, p.10.


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Having determined that a commodity is in scope and having ascertained the commodity-related concerns, accredited customs brokers (and importers) are able to self-direct the consignment by entering the AQIS Processing Type into the relevant field in the ICS and, where appropriate, nominating the QAP where the specified inspection is to take place30.

Customs brokers who are not accredited under the AEPCOMM Scheme are required to present documents to DAg for all consignments of interest to the department, including those commodities that are in scope under the Scheme.

In 2011-2012, the Department of Agriculture, Fisheries and Forestry (DAFF), as it was then known, undertook a post implementation assessment of the AEPCOMM Scheme31 and, among other things, found that 89% of interviewed users of the scheme were satisfied or extremely satisfied with the scheme, such users indicating that the scheme had improved or greatly improved their efficiencies. 32

Achieving Accreditation under the NCCC and AEPCOMM Schemes

NCCC Scheme

Prior to July 2013, customs brokers wishing to be accredited under the NCCC Scheme were required to successfully complete what was known as the Broker Accreditation Preliminary course, which was conducted on-line. The course covered two subjects - ‘Quarantine Awareness’ and ’Compliance Agreements’, which were provided by the Australian Industry Working Group on Biosecurity (AIWGB).33

In May 2013, DAFF announced the outcome of its review of the NCCC Scheme, which concluded that, ‘the face-to-face training currently being delivered by DAFF is consistent with the “Carry out quarantine procedures” unit of competency which forms part of the National Customs Brokers course. Due to this duplication DAFF will cease delivering the face-to-face training from 30 June 2013. Successful completion of the “Carry out quarantine procedures” unit will meet DAFF’s accreditation requirements under the NCCC Scheme and will promote national consistency’.34

Since 1 July 2013, those seeking accreditation under the NCCC Scheme have been required to successfully complete the ‘Carry out quarantine procedures’ unit of competency, either as a stand-alone unit, or as part of the National Customs Brokers course. Further, the NCCC Scheme is no longer reaccredited by DAg, and those who hold an accreditation certificate for the NCCC Scheme dated 6 May 2009 or later are deemed to continue to hold valid accreditation.35

AEPCOMM Scheme

Customs Brokers who wish to process import declarations under the AEPCOMM Scheme must firstly attain accreditation under the NCCC Scheme. That is because the assessment of non-commodity related documentation forms an integral part of the AEPCOMM Scheme processes. However, as a result of the 2013 review, all licensed customs brokers are in effect accredited under the NCCC Scheme.

To achieve AEPCOMM accreditation, customs brokers must also successfully complete the ‘AEP for Commodities’ Training Package, a training course that has been specifically designed for AEPCOMM Scheme accreditation which is delivered on-line through the AIWGB website.36 However, the AEPCOMM Scheme is no longer reaccredited by DAg,


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and customs brokers with an accreditation certificate for the AEPCOMM Scheme dated 8 October 2009 or later are deemed to continue to hold valid accreditation.37

4.3. Depots

4.3.1. Overview Part IVA of the Customs Act 1901 provides for the licensing of customs depots by the CEO of the ACBPS.

Obtaining a licence

All applicants for a depot licence (natural persons, partnerships and companies) and all employees participating in the management of the depot must meet the “fit and proper person” test.

The physical security of the depot must be adequate.

The records to be kept in relation to the proposed depot must be suitable to allow the ACBPS adequately to audit those records.

The location of the depot must not be too remote from the nearest place where ACBPS officers perform their functions to enable them to conveniently check whether the Customs Acts are being complied with at the depot.

Any depot for imported goods must have facilities that would enable the applicant to communicate with the ACBPS electronically.


Depot licences are valid until the end of 30 June each year and are subject to renewal.

Maintenance of a depot licence is subject to compliance with conditions prescribed by the Customs Act including, amongst other things: reporting changes in the management or control of the depot; reporting of offences, receivership, insolvency etc; refusal, suspension or cancellation of a transport security identification card; reporting material changes to the physical security or record-keeping of the depot; the stacking and arranging of goods to allow ACBPS officers reasonable access to them; retention of all relevant commercial documents for five years; and, in respect of imported goods, removal of the goods to a warehouse by the end of the month following the date of their receipt into the depot.

Additional conditions may be imposed by the CEO of the ACBPS.

Breach of a depot licence condition is a strict liability offence subject to penalty and can result in cancellation of the licence.

Revoking a licence

In certain circumstances, including a change to the grounds on which the licence was obtained or an alleged breach of a depot licence condition, the CEO may give notice to the licence holder of the intended cancellation of the licence and invite the licence holder to provide the CEO with a written statement as to why the licence should not be cancelled. Pending resolution, the CEO may suspend the licence.

If the relevant circumstances are confirmed, the CEO may cancel the licence.


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4.3.2. Historical perspective Under Australian law, a licensed depot is a place to which importers can move goods away from the wharf or airport for short term storage and unpacking/deconsolidation. Once all legislative requirements are met, the goods can be released into home consumption or moved to a Customs warehouse for storage.

Depots are used for the short-term storage and unpacking/deconsolidation of goods prior to delivery to consignees or warehouses. Longer-term storage of goods subject to Customs control and duty deferral occurs in a warehouse.

Depot licence holders may only use the premises for the following purposes:

Holding imported goods subject to the control of Customs;

Unpacking imported goods subject to the control of Customs;

Holding goods for export subject to the control of Customs; and / or

Packing goods for export subject to the control of Customs into containers etc.

1997

In 1997, section 17 of the Customs Act provided that ‘The Comptroller may by Gazette notice … (b) Appoint places for the examination of goods on landing.’ The regime based on this very spare legislative power had a number of perceived defects:

it did not clearly spell out the process of application for appointment of a depot;

it did not state the grounds on which Customs made or refused to make such appointments;

appointees were not subject to any legal obligations in relation to the appointment; and

other than by withdrawing the appointment, Customs had no alternative way of dealing with appointees who failed to comply with requirements in respect to Customs control of the cargo.

The Customs Amendment Act (No.1) 1997 sought to remedy these defects by repealing paragraph 17(b) and inserting new Part IVA into the Customs Act. That part introduced a new licensing regime which included the following elements:

the requirement for applications to be made in order to obtain a depot licence (new sections 77G and 77H);

making a depot licence subject to certain conditions set out in new sections 77N and 77Q. In relation to depots handling imported goods, a condition setting limits to the length of time goods under Customs control may be kept in a depot before they are required to be moved to a Customs licensed warehouse (new section 77P);

renewal provisions, with licences automatically renewed on 1 July of each year (new section 77S) upon the payment of the annual renewal charge. If the licensee failed to pay the depot licence charge by 1 July, then the licence expired after a further period of 90 days, during which time Customs had the


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power to refuse permission for goods under Customs control to move to the depot (new sections 77T and 77U);

the power to revoke a depot licence (subsequently amended to a two stage suspension/cancellation process), to provide the circumstances in which Customs may cancel a depot licence and the manner in which this might be done (new section 77V). The revocation decision was made subject to AAT review; and

Customs was given the power to issue written directions to the operator of a licensed depot about the movement and storage of goods under Customs control and the packing or unpacking of goods under Customs control into or from receptacles. Further, Customs was able to give directions to the licence holder about goods under Customs control to prevent interference with such goods (new section 77Y).

The Customs Depot Licensing Charges Act 1997 imposed charges associated with the new depot licensing regime.

The second reading speech for this Customs Depot Licensing Charges Act 1997 notes that:

‘Given that these places are an extension of the wharfs and airports, and hold cargo which is still under Customs control, the new licensing arrangements will help to ensure that the control of cargo prior to Customs release is acceptable and in keeping with the intent of the Customs Act in regard to control and release of cargo.’38

The rationale for the laws is expressed a number of times throughout the provisions of the Customs Amendment Act (No.1) 1997, namely:

ensuring compliance with the ‘Customs Acts’; and

protecting the revenue.

The mechanisms chosen to achieve these objectives included the requirement that depot licence applicants (whether individuals, partners within a partnership or officers of a company) be ‘fit and proper persons’ – the same test applied to applicants for warehouse and customs brokers’ licences.

Cargo Terminal Operators

An applicant seeking to provide Cargo Terminal Operator (CTO) services from an off-airport site must firstly meet the requirements for grant of a Section 77G depot licence, and secondly demonstrate a capacity to meet and maintain a range of supplementary conditions, specified in accordance with Section 77Q. In addition, it must supply an outline of the application’s context (e.g. an interim proposal prior to moving operations air side), a detailed description of the proposed cargo movement process and a declaration of all third party service providers who will have access to the cargo.

2013

As noted above, the Organised Crime Act introduced a package of measures to deter and prevent infiltration by serious and organised crime into Australia’s seaports, airports and cargo supply chain, effective 28 November 2013.


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In respect of depots, it introduced:

additional criteria for ‘fit and proper person’ tests, e.g. whether the person has been refused an aviation or maritime security identification card (ASIC or MSIC);

additional notification requirements for depot licence holders; and

other amendments that affect all members of the international trade and transport industry, including new offences for misusing or disclosing information held by Customs, changes to the INS, increased record keeping obligations and increased penalties for certain offences.

In respect of CTOs, it places new obligations on cargo terminal operators and people who load and unload cargo, which are similar to those imposed on holders of depot and warehouse licences.

These obligations include mandatory reporting of unlawful activity to ensure the physical security of relevant premises and cargo, and fit and proper person checks.

4.3.3. Agriculture DAg approves Quarantine Approved Premises (QAPs) as places where post-entry quarantine requirements may be carried out on a wide range of plants, animals and plant and animal products. QAPs may also be approved for the quarantine handling of items of non-animal or plant origin; for example, those dealing with auto parts, scrap metal, cars and machinery39.

QAPs are categorised according to the type of commercial operations being undertaken and the various quarantine activities that are authorised to take place at such premises.40 There are 44 different classes of QAP (see Appendix 3): 41

Class 1.1 to 1.3

Premises used for the deconsolidation of sea and air cargo, inspection and treatment of goods, containers and ULDs.

Class 2.1, 2.2, 2.3, 2.5.1, 2.5.2, 2.6, 2.7, 2.8

Premises used for the deconsolidation, handling, storage, inspection or examination and treatment of cargo and containers subject to quarantine. The criteria in class 2 are for general cargo, agricultural products, bulk commodities, fresh fruit and vegetables, cold storage facilities, container parks and imported grain storage facilities.

Class 3.0, 3.1

Facilities where goods such as bulk maize, wheat, barley, sorghum, hides and feathers are handled. The class 3 criteria are for general cargo, agricultural products, bulk commodities and imported grain facilities where treatment and processing is undertaken.

Class 4.1 to 4.6

Premises used for the treatment and or cleaning of goods, containers and packaging. The standard sets out the requirements and responsibilities relating to facilities where goods such as seeds, car parts and ores are handled. The class 4 criteria are for


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quarantine cleaning, seed cleaning, ore treatment, gamma irradiation, heat treatment and fumigation facilities where treatment is undertaken.

Class 5.1 to 5.4

Containment facilities, where the premises are used for research, analysis and / or testing of imported biological material including micro-organisms, animal and human products and soil. These types of premises include microbiological facilities, animal facilities and plant laboratories, whether integral or separate to the facility.

Class 6.1, 6.2, 6.4, 6.11

Premises used for the post entry quarantine (PEQ) of nursery stock, i.e. open and closed facilities where nursery stock such as aquatic plants, bulbs, seed lines, cuttings and other medium risk nursery stock are handled.

Class 7.1 to 7.12

Animal containment facilities, where the premises are used for holding imported animals. These types of premises include animal holding facilities, whether integral or separate to the facility.

Class 8.1 to 8.4

Premises used for the disposal of biosecurity waste, including autoclave, deep burial, incineration and all other disposal treatments.

The DAg website provides comprehensive lists of current QAP facilities (see Appendix 4).42 According to DAg, by making provision for the registration of suitable places that conform to the department’s requirements, it is possible to avoid placing many restrictions on importers and to ensure that registered places provide an appropriate degree of security and control against the introduction of exotic pests and diseases. 43

4.4. Warehouses

4.4.1. Overview Types of Warehouses

Part V of the Customs Act provides for the licensing of customs warehouses by the CEO of the ACBPS. It provides for a number of categories of warehouse licences, mainly:

Private Warehouse - the licence holder is the owner of the warehoused goods

General Warehouse - the licence holder is storing goods on behalf of other owner(s)

Providores and Flight Catering Bonds - the licence holder stores goods which are then supplied to international aircraft or vessels as aircraft or ships’ stores

Duty Free Store - the licence holder is permitted to sell goods to relevant travellers in a retail-type environment.

Activities permitted in warehouses are limited to ensure the security of the goods and the revenue payable to the Commonwealth is protected. Apart from approved storage,


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blending, unpacking, repacking and packaging of certain types of goods, any activities that involve ‘value adding’ are not permitted.

While the goods are stored in a licensed warehouse, the licence holder is responsible for the physical security of the goods, accounting for the goods and satisfying all ACBPS licensing requirements. This applies even if the licence holder is not the owner or importer of the goods. There is no time limit on the duration of storage of goods within a warehouse.

Obtaining a licence

All applicants for a warehouse licence (natural persons, partnerships and companies) and all employees participating in the management of the warehouse must meet the “fit and proper person” test.

The physical security of the warehouse must be adequate.

The plant and equipment to be used in the warehouse must be suitable.

The records to be kept in relation to the proposed warehouse must be suitable to allow the ACBPS adequately to audit those records.


Warehouse licences are valid until the end of 30 June each year and are subject to renewal.

Maintenance of a warehouse licence is subject to compliance with conditions prescribed by the Customs Act including, amongst other things: reporting changes in the management or control of the warehouse; reporting of offences, receivership, insolvency, bankruptcy, winding up etc; refusal, suspension or cancellation of a transport security identification card; reporting material changes to the physical security, plant and equipment or record-keeping of the warehouse.

Additional conditions may be imposed by the CEO of the ACBPS.

Breach of a warehouse licence condition is a strict liability offence subject to penalty and can result in cancellation of the licence.

Licence holders are also subject to an obligation to stack and arrange goods to allow ACBPS officers reasonable access to the goods, provide adequate space and facilities for examination of the goods, provide sufficient labour and materials for the ACBPS to deal with the goods etc. Breach of these obligations is a strict liability offence subject to penalty but is not cause for cancellation of the licence.

Revoking a licence

In certain circumstances, including a change to the grounds on which the licence was obtained or an alleged breach of a warehouse licence condition, the CEO may give notice to the licence holder of the intended cancellation of the licence and invite the licence holder to provide the CEO with a written statement as to why the licence should not be cancelled. Pending resolution, the CEO may suspend the licence.

If the relevant circumstances are confirmed, the CEO may cancel the licence.


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4.4.2. Historical perspective 1980

The 1979 decision of the FCA in Collector of Customs v Brian Lawlor Automotive Pty Ltd44 was the trigger for the repeal and substitution of Part V of the Customs Act, dealing with customs warehouse licences. The Court decided that a Collector of Customs had acted beyond the powers available to him under the Customs Act when he purported to revoke a warehouse licence for the reasons that ‘your company is not, in my opinion, a fit and proper person to hold a customs warehouse licence’. At the time, Part V did not contain any express power to revoke a warehouse licence and the Court held that there was no such power implied by that Customs Act or any other legislation. While there were pecuniary penalties for breaches of certain obligations imposed on licence holders by the Customs Act, there was no express or implied power to revoke a warehouse licence. This defect needed to be remedied.

Many of the provisions dealing with warehouses had remained unchanged since their original enactment in the Customs Act, so the Government undertook a complete review of the regime, implemented by the Customs Amendment Act (No.3) 1980.

The key features of the Customs Amendment Act (No.3) 1980 in respect of warehouse licences were:

the insertion of a fit and proper person test for licence holders;

the insertion of specific grounds for suspension or cancellation of a licence;

the insertion of a two stage suspension / cancellation process under which a licence could be suspended for 28 days to allow a licensee to show cause as to why the licence should not be cancelled; and

making the decision to cancel a licence reviewable by the AAT.

2010

From 1 July 2010, responsibility for the administration of warehoused EEGs (i.e. imported alcohol, tobacco and fuel that, if produced or manufactured in Australia, would be subject to excise duty) transferred from the ACBPS to the ATO.

While the ATO administers the Excise Act 1901 obligations of providores, flight catering bonds and duty free stores, the Customs Act obligations of such organisations, including warehouse operations continued to be administered by ACBPS. Consequently, with the exception of businesses in the duty free, catering bond and providore industries, the ATO has administrative responsibility for warehouses in which the operator:

intends to store EEGs in the warehouse; or

is an operator of one or more warehouses and at least one of the warehouses deals with EEGs.45

2013

As noted above, the Organised Crime Act introduced a package of measures to deter and prevent infiltration by serious and organised crime into Australia’s seaports, airports and cargo supply chain, effective 28 November 2013.


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In respect of warehouses, it introduced:

additional criteria for ‘fit and proper person’ tests, e.g. whether the person has been refused an aviation or maritime security identification card (ASIC or MSIC);

additional notification requirements for warehouse licence holders;

a new permission regime for constructive warehousing; and

other amendments that affect all members of the international trade and transport industry, including new offences for misusing or disclosing information held by Customs, changes to the INS, increased record keeping obligations and increased penalties for certain offences.

4.4.3. Agriculture DAg does not differentiate between depots and warehouses in the same way as ACBPS. Both depots and warehouses that are licensed under the Customs Act may also be approved under the Quarantine Act as QAPs, thereby allowing post-entry quarantine requirements to be carried out, as described in the previous section of the report.

4.5. Themes Arising The above review of the legislative and policy history of the licensing of customs brokers, customs depots and customs warehouses reveals a number of themes.

4.5.1. Policy Justification Two justifications have been consistently offered for the creation and ongoing development of the licensing regimes through legislative amendment, subordinate legislation in the form of regulations and administrative action such as attaching conditions to licences or issuing directives through ACNs, namely:

protection of the revenue, and

compliance with the ‘Customs Acts’.

More recently, the policy justification for the Organised Crime Act was declared to be to deter and prevent infiltration by serious and organised crime into Australia’s seaports, airports and cargo supply chain.

These policy imperatives deserve consideration from two perspectives:

are they still valid? For example, given the relatively small (and decreasing?) revenue currently generated by customs duties, is protection of the revenue still a valid policy justification?

to the extent that they remain valid, are there alternatives to achieving them without exclusive reliance on licensing regimes? Would there be room, for example, for some form of self-regulation by the industry, co-regulation or increased use of intelligence-based risk assessment techniques?

4.5.2. Progressive Harmonisation It is apparent that each of the three regimes had a different genesis (albeit all were present in one form or another in the original Customs Act) and that respective Governments have responded to changing business and regulatory environments by


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enacting legislative amendments as they have seen fit. For example, the Second Reading Speech accompanying the introduction of the Customs Bill 1959 notes:

‘The last few years have seen a change in the methods of moving under bond cargo within Australia. At federation, and for many years thereafter, almost all cargo was moved from port to port by ships. The provisions of the Customs Act controlling such movements are based primarily on this mode of transport. However, increasing use is now being made of faster means of transport such as road, rail and air to move customable goods, and the measures designed to control movement of goods by ship have had to be adapted to meet these means of transporting goods.

The Department of Customs and Excise, realising these changing conditions, carried out a comprehensive review of methods of control, and the present bill embodies the legislative changes which will enable simplified and changed procedures recommended as a result of the review to be put into operation.’46

The Explanatory Memorandum for the Customs Amendment Bill (No.2) 1996 notes that it:

‘will also address the inadequacies of the current provision in the Customs Act under which depots are appointed, which may be summarised as follows:

the provision does not clearly spell out the process of application for appointment of a depot;

the provision does not state the grounds on which Customs makes or refuses to make such appointments;

appointees are not subject to any legal obligations in relation to the appointment; and

other than by withdrawing the appointment, Customs has no alternative way of dealing with appointees who fail to comply with· requirements in respect to Customs control of the cargo.

The new Part IV A proposal seeks to address the shortcomings of the current appointment regime under paragraph 17(b) with the introduction of a new licensing regime …’47

The Second Reading Speech accompanying the introduction of the Customs Amendment Bill (No.3) 1980 notes that:

‘Serious deficiencies in the existing provisions were exposed last year by a judgment of the Federal Court of Australia wherein it was held that a Collector of Customs acted beyond the powers now available under the Customs Act when he purported to revoke a warehouse licence for reasons other than default in payment of licence fees … As many of the provisions relating to warehouses have remained virtually untouched since their inclusion in the original Commonwealth Customs Act of 1901, the opportunity has been taken to revise all these provisions.’48


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Throughout most of their history, however, the administration of the respective regimes has been independent of one another and there has been no apparent co-ordination of the legislative amendments affecting each regime. More recently, however, there have been concerted efforts to ensure that customs brokers and owners/operators of customs warehouses and depots are dealt with in the same way. Examples include the obligation on all such persons to meet the ‘fit and proper person’ test, to report to the ACBPS, to prevent misuse of relevant information, to comply with conditions attaching to their licences and their exposure to prosecution for offences related to the performance of their activities under their licences. Presumably, this development reflects an appreciation that the three regimes are interconnected parts of the entire supply chain and that effective regulatory control of the overall supply chain requires a harmonised approach to regulation of its various parts.

It is reasonable to assume that this trend to harmonised regulation of the three regimes will continue and that the ACBPS will increasingly look to apply standardised processes to them rather than recognise differences justifying separate approaches.

4.5.3. Persistent Reliance on Licensing The review reveals a strong and persistent tendency for the ACBPS to rely upon licensing provisions to achieve regulatory outcomes. The dependence of customs brokers and owners/operators upon the grant and renewal of a licence confers significant power in the ACBPS over those parties. The ability to attach conditions to those licences facilitates regulatory control without the need for amendment of the Customs Act or even subordinate legislation in the form of regulations. It is a quick, effective, inexpensive and flexible mechanism for regulating these key sectors.

4.5.4. Increased Stringency The trend over recent years has been for the ACBPS to increase the stringency of the statutory regulatory regimes and, in particular, to attach increasingly strict and burdensome conditions to the respective licensing models. This trend is given even greater heft by the creation of offences for breaching those conditions. It is apparent that the approach of the ACBPS to dealing with developments in the business sector (including the infiltration into it of criminal elements) and to changes in government policy and priorities, is to impose ever more stringent requirements on customs brokers and owners/operators through the licensing regimes. There are no outward indications of an openness to consider alternative methods of achieving the desired outcomes.


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5. Judicial Consideration

5.1. Customs Brokers Decisions relating to the issue or cancellation of a customs broker’s licence have been considered by the Administrative Appeals Tribunal (AAT) on a number of occasions.

In Zacharia Zacharia and Collector of Customs,49 the Collector had refused to grant a customs broker’s licence to the applicant. The AAT noted that there were two essential requirements to fulfil the requirements for the grant of a customs broker’s licence - academic achievement and experience. The applicant had met the academic requirements. ‘What remains is to consider whether the applicant has acquired experience that, in the opinion of the Comptroller (and therefore of this Tribunal), fits him to be a customs agent.’50

Relying upon evidence adduced at the hearing as to the experience required to fit an applicant to be a customs broker, the AAT concluded that the applicant lacked that experience and affirmed the decision of the Collector.

In describing the relevant provisions of the Customs Act, the AAT noted that: ‘Sub-section 181(4), in effect, grants a statutory monopoly to holders of these licences to perform certain named functions.’51 This is an interesting contrast to the words of the Minister at the time of introducing the Bill that inserted the relevant provisions – i.e. that ‘it is not the Government's intention or policy to create a closed shop.’52

In Control Customs Pty Ltd and CEO of Customs,53 the AAT again introduced the legislative provisions by noting: ‘A statutory monopoly to enter goods on behalf of their owner is conferred upon customs brokers by section 181 of the Customs Act 1901 (‘the Act’). Effectively only the owner of goods and authorised employees of the owner or an authorised licensed customs broker, can make import entries of goods.’54

The Respondent, in not granting the corporate customs broker licence, maintained that a director of the Applicant was not a person of integrity. The AAT had regard not only to the terms of the Customs Act but also to the Macquarie Dictionary definition of ‘integrity’. It found, on the facts, that the director was not a person of integrity and, consequently, affirmed the CEO’s decision.

In BR Williams Customs and Freight Forwarding Pty Ltd and Chief Executive Officer of Customs,55 the CEO, after considering a report from NCBLAC, had decided to cancel the customs broker’s licence. The issue for determination was whether, in the circumstances of the case and having regard to the report of the NCBLAC, the licence of the applicant should be cancelled or whether some other action should be taken.

Again, the AAT noted that: ‘Only licensed customs brokers, and authorised employees of importers, can enter imported goods into Australia on behalf of importers, creating a “statutory monopoly”‘.56

After considering all the facts of the case, the AAT decided that the decision to cancel the customs broker’s licence should be set aside and that the customs broker should be issued with a reprimand.

http://www.austlii.edu.au/au/legis/cth/consol_act/ca1901124/s181.html

http://www.austlii.edu.au/au/legis/cth/consol_act/ca1901124/


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5.2. Warehouses As noted above, the decision of the Federal Court in Collector of Customs v Brian Lawlor Automotive Pty Ltd was the trigger for the repeal and substitution of Part V of the Customs Act, dealing with customs warehouse licences.

In that case, the Court decided that a Collector of Customs had acted beyond the powers available to him under the Customs Act when he purported to revoke a warehouse licence for the reasons that ‘your company is not, in my opinion, a fit and proper person to hold a customs warehouse licence’. At the time, Part V did not contain any express power to revoke a warehouse licence and the Court held that there was no such power implied by the Customs Act or any other legislation. While there were pecuniary penalties for breaches of certain obligations imposed on licence holders by the Customs Act, there was no express or implied power to revoke a warehouse licence.

5.3. Themes Arising Infrequency of Challenges

The research suggests that challenges to the relevant decision-makers in matters involving the granting or cancellation of licences are relatively rare.

Observations by the AAT

The AAT has consistently made the observation that the licensing regime for customs brokers effectively bestows on them a statutory monopoly to provide their services – i.e. only persons with a customs broker’s licence may enter goods on behalf of their owner. Discussions with industry representatives explored the extent of this statutory monopoly, its value in the hands of customs brokers and how it sits with the then Government’s stated objective of not creating a ‘closed shop’.

Cause and Effect

It is clear that the decision of the FCA in Collector of Customs v Brian Lawlor Automotive Pty Ltd led directly to legislative amendment. It is possible that some of the uncertainties associated with the qualification for entitlement to a customs broker’s licence and, in particular, the ‘person of integrity’ test which were considered in the Zacharia Zacharia and Control Customs cases influenced the content of the 2013 Organised Crime Act which replaced that test with the ‘fit and proper person’ test and set out specific criteria for that test. It remains to be seen if the BR Williams case will be a harbinger for further legislative amendments.


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6. International Trends

6.1. Customs Brokers Generally speaking, the customs broker profession is regulated worldwide, with some exceptions. The reason is, again in general terms, to ensure that customs brokers are sufficiently knowledgeable about customs and relevant commercial matters to ensure compliance with customs requirements and protect the financial interests of the economies involved to the greatest extent possible.

In most countries, customs brokers must hold some form of government licence, registration or accreditation to act on behalf of a third party. Such recognition is typically obtained by demonstrating to the authorities that they have the necessary competence to act as a customs broker, and that they are fit and proper persons. The assessment of competency is generally based on two elements - formal study and practical experience.

6.1.1. World Trade Organization Trade Facilitation Agreement In December 2013, the World Trade Organization (WTO) published its Draft Ministerial Decision on its Trade Facilitation Agreement. Article 10 deals with Formalities Associated with Importation and Exportation, and Transit. Paragraph 6 deals with the ‘Use of Customs Brokers’.

Sub-paragraph 6.1 provides that ‘Without prejudice to the important policy concerns of some Members that currently maintain a special role for customs brokers, from the entry into force of this agreement Members shall not introduce the mandatory use of customs brokers.’ This allows members which currently require the mandatory use of customs brokers to continue to do so.

Sub-paragraph 6.2 provides that, ‘Each Member shall notify and publish its measures on the use of customs brokers. Any subsequent modifications thereof shall be notified to the Committee and published promptly.’

Sub-paragraph 6.3 provides that, ‘With regard to the licensing of customs brokers, Members shall apply rules that are transparent and objective.’

According to the WTO, the above provisions would allow Members to license customs brokers. However, any such licensing requirements must be ‘objective’, set out in legislation or administrative policy, and made publicly available.57

6.1.2. Revised Kyoto Convention Chapter 8 of the International Convention on the Simplification and Harmonization of Customs Procedures (as Amended) 58 (Revised Kyoto Convention) or (RKC) addresses the relationship between customs administrations and third parties. The following Standards apply:

8.1: Persons concerned shall have the choice of transacting business with the Customs either directly or by designating a third party to act on their behalf.

8.2: National legislation shall set out the conditions under which a person may act for and on behalf of another person in dealing with the Customs and


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shall lay down the liability of third parties to the Customs for duties and taxes and for any irregularities.

8.3: The Customs transactions where the person concerned elects to do business on his own account shall not be treated less favourably or be subject to more stringent requirements than those Customs transactions which are handled for the person concerned by a third party.

8.4: A person designated as a third party shall have the same rights as the person who designated him in those matters related to transacting business with the Customs.

8.5: The Customs shall provide for third parties to participate in their formal consultations with the trade.

8.6: The Customs shall specify the circumstances under which they are not prepared to transact business with a third party.

8.7: The Customs shall give written notification to the third party of a decision not to transact business.

A third party is defined in the Revised Kyoto Convention as ‘any person who deals directly with the Customs, for and on behalf of another person, in connection with the importation, exportation, movement or storage of goods’.59 This includes agents and customs brokers, but also covers other service providers such as freight forwarders and carriers. According to the RKC, ‘The most common of these are Customs brokers or Customs agents who are essentially concerned with presenting and processing Customs documentation on behalf of importers or exporters’.60

The General Annex Guidelines to Chapter 8 of the RKC (see Appendix 5) states:

The facilities granted to third parties in this Chapter offer advantages to all concerned. Importers and exporters are able to employ specialists to deal with complicated and detailed Customs procedures that may be unfamiliar to them and who can act on their behalf at times and places which they themselves would find inconvenient ... Customs are able to more steadily and predictably clear goods, thereby better managing their own resources and the release times for the trade. In some countries, Customs also benefit from dealing with agents and brokers who are often more expert at handling the requirements for Customs procedures than some of their customers. 61

The RKC notes that, while some customs administrations are liberal in their dealings with third parties, others have imposed certain restrictions on third party transactions. These restrictions are to ensure that the third party acts with a certain degree of professionalism and responsibility, thereby allowing Customs to fulfil its own responsibilities to ensure compliance with Customs law.62

The RKC also notes that some administrations require third parties to be licensed, and that the licensing criteria may include the third party’s age, education, professional competence, moral and financial integrity and record keeping standards. It further notes that they may be required to pass qualifying examinations.

The conditions that may apply to third parties, which must be specified in national legislation, include their liability for any duties and taxes and for any irregularities in


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compliance with Customs requirements. In this regard it notes that, in some countries, third parties and the persons they represent may be held jointly and severally responsible, including for any relevant fines or penalties. However, the guidelines indicate that Customs:

may wish to take account of certain practical differences between a principal, that is, the direct declarant, and someone acting on his behalf. The principal usually has a closer knowledge of and a clearer responsibility for the accuracy of the information set out in the declaration or other submission to Customs than does the agent, broker or representative. Thus while Customs should hold third parties firmly accountable for all duties and taxes, they could give sympathetic consideration to lifting or mitigating certain penalties. For example, if the infraction is a misstatement and a similar offence that arose solely from defects in the data supplied by the principal, and the third party can show that he had taken reasonable steps to provide accurate and correct information, Customs could take these factors into account before deciding to impose a penalty.63

6.1.3. European Union Currently customs brokers in the European Union (EU) are regulated at the national level. Because of this, the regulatory environment across the EU varies quite considerably, with some countries imposing strict regulatory controls, while others do not.

In order to achieve greater consistency across the EU and to modernise its legislation to properly provide for the electronic environment of contemporary trade and customs administration, in 2008 the European Commission introduced the Modernised Customs Code.64 This built on the EU’s existing customs legislation, the Community Customs Code, which was introduced in 1992.65 Although the Modernised Customs Code66 entered into force on 24 June 2008, the EC decided to recast it as a Union Customs Code (UCC) before it became applicable. The UCC entered into force on 30 October 2013, but its substantive provisions will not apply until May 2016.67

Consequently, the current arrangements that are in place in the EU are those of the Community Customs Code, which will be superseded by the UCC when it comes into effect. The two codes approach the regulation of the customs broker profession quite differently. In particular, the provisions of the UCC will, under certain conditions, enable a customs broker who is registered in one Member State of the EU to represent third parties in other Member States68.

Community Customs Code

Community Customs Code Title I, Chapter 2, Section 1, Article 5 provides, among other things, that:

1. …any person may appoint a representative in his dealings with the customs authorities to perform the acts and formalities laid down by customs rules…

2. Such representation may be:

direct, in which case the representative shall act in the name of and on behalf of another person, or


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indirect, in which case the representatives shall act in his own name but on behalf of another person.

A Member State may restrict the right to make customs declarations:

by direct representation, or

by indirect representation,

so that the representative must be a customs agent carrying on his business in that country's territory…

4. A representative must state that he is acting on behalf of the person represented, specify whether the representation is direct or indirect and be empowered to act as a representative.

Union Customs Code

The preamble to the UCC states:

‘In the interests of facilitating business, all persons should continue to have the right to appoint a representative in their dealings with the customs authorities. However, it should no longer be possible for that right of representation to be reserved under a law laid down by one of the Member States. Furthermore, a customs representative who complies with the criteria for the granting of the status of authorised economic operator for customs simplifications should be entitled to provide his or her services in a Member State other than the Member State where he or she is established.’69

This introduces the opportunity for customs brokers that are registered in one EU Member State to represent third parties in other Member States, provided they attain Authorised Economic Operator (AEO) status.

Provisions relating to customs representation are contained in section 2, Article 18 of the UCC:

1. Any person may appoint a customs representative.

Such representation may be either direct, in which case the customs representative shall act in the name of and on behalf of another person, or indirect, in which case the customs representative shall act in his or her own name but on behalf of another person.

2. A customs representative shall be established within the customs territory of the Union.

Except where otherwise provided, that requirement shall be waived where the customs representative acts on behalf of persons who are not required to be established within the customs territory of the Union.

3. Member States may determine, in accordance with Union law, the conditions under which a customs representative may provide services in the Member State where he or she is established. However, without prejudice to the application of less stringent criteria by the Member State


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concerned, a customs representative who complies with the criteria laid down in points (a) to (d) of Article 39 shall be entitled to provide such services in a Member State other than the one where he or she is established (emphasis added).

4. Member States may apply the conditions determined in accordance with the first sentence of paragraph 3 to customs representatives not established within the customs territory of the Union.

Article 39 relates to the granting of status of AEO, which includes:

(a) the absence of any serious infringement or repeated infringements of customs legislation and taxation rules, including no record of serious criminal offences relating to the economic activity of the applicant;

(b) the demonstration by the applicant of a high level of control of his or her operations and of the flow of goods, by means of a system of managing commercial and, where appropriate, transport records, which allows appropriate customs controls;

(c) financial solvency, which shall be deemed to be proven where the applicant has good financial standing, which enables him or her to fulfil his or her commitments, with due regard to the characteristics of the type of business activity concerned;

(d) with regard to the authorisation referred to in point (a) of Article 38(2), practical standards of competence or professional qualifications directly related to the activity carried out (emphasis added)…

Article 38 relates to the application and authorisation of AEOs, and includes:

2. The status of authorised economic operator shall consist in (sic) the following types of authorisations:

(a) that of an authorised economic operator for customs simplifications, which shall enable the holder to benefit from certain simplifications in accordance with the customs legislation; or

(b) that of an authorised economic operator for security and safety that shall entitle the holder to facilitations relating to security and safety.

3. Both types of authorisations referred to in paragraph 2 may be held at the same time.

4. The status of authorised economic operator shall, subject to Articles 39, 40 and 41, be recognised by the customs authorities in all Member States.

Combined, these provisions will enable a customs broker who obtains AEO status to represent third parties throughout the EU, a key determinant of eligibility being evidence of practical standards of competence or professional qualifications directly related to the activity carried out.

According to Gwardzińska, ‘there will not be a need to apply to central administrative bodies to have their qualifications verified and, where the required qualifications differ


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in various Member States, they will not need to undertake retraining or sit examinations. Verification is provided by AEO status, which is acknowledged in all EU Member States’. 70

6.1.4. United States Title 19, United States Code (USC) section 1641 provides the statutory basis for the regulation of the customs broker profession in the United States. It provides that “No person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license issued by the Secretary under paragraph (2) or (3).” These two paragraphs provide the legal basis for licences for individuals and business entities, respectively. The scope of activity defined as “customs business”71 is a broad one, and encompasses the bulk of activities necessary to import goods commercially into the US.

The statute, 19 USC, requires the detailed requirements for obtaining a customs broker’s licence to be promulgated in regulations by US Customs and Border Protection (CBP). The key requirements of the licensing regime established by the regulations72 are set out below.

Obtaining a licence

Customs brokers may be private individuals or businesses. In the case of businesses, they must be US-established partnerships, associations or corporations. Individuals must be US citizens, at least 21 years of age, possess good moral character, and must not be a current Federal Government employee. Individuals must pass a government-administered customs broker licence examination and submit a formal application. The license approval process can take up to a year. Corporations, partnerships and associations also must apply for a business broker licence to transact Customs business. The entity applying for a business broker licence must have at least one officer, partner or associate licensed as a broker on an individual basis to qualify the entity's licence.73

Ongoing requirements

Once an individual has obtained a licence, there is no requirement for continuing education or further examination. The only ongoing requirement for licence holders is the submission of the so-called ‘triennial status report’ to CBP and payment of a fee every three years. The triennial report requires some basic contact information as well as an affirmation by the licence holder that they have not engaged in any conduct which could constitute grounds for licence suspension or revocation.74

Suspension and revocation

The regulation75 provides that a “…Customs officer may initiate proceedings for the suspension, for a specific period of time, or revocation of the license or permit of any broker for any of the following reasons:

(a) making false or misleading statements with respect a material fact, or omitting any material fact in any application for any license or permit, or report filed with Customs;

(b) conviction for any felony or misdemeanour which involved the importation or exportation of merchandise, arose out of the conduct of customs business, or involved larceny, theft, robbery, extortion, forgery,


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counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds;

(c) violation of any provision of any law enforced by Customs or the rules or regulations issued under any provision of any law enforced by Customs;

(d) inducing, aiding or abetting the violations by any other person of any provision of any law enforced by Customs or the rules or regulations issued under any provision of any law enforced by Customs;

(e) knowingly employing any person who has been convicted of a felony, without written approval of Customs;

(f) wilfully or knowingly deceiving, misleading or threatening any client or perspective client in the course of customs business, with intent to defraud; or

(g) no longer meeting the applicable requirements of sections 111.11 and 111.19.

6.1.5. New Zealand While New Zealand does not license customs brokers, there is a requirement for brokers to be qualified for lodging documentation with New Zealand Customs Service, which requires a New Zealand Customs Unique User Identifier (UUI), commonly known as a Personal Identification Number (PIN). To gain PIN accreditation, a minimum 80% pass in three exams run by the Customs Brokers and Freight Forwarders Federation of New Zealand (CBAFF) is required.

In addition, customs brokers are required to maintain the same records as the principal they represent for a period of seven years. The relevant legislative provisions are contained in section 95 of the Customs and Excise Act 1996, which deals with keeping of business records.

6.1.6. China General Administration of Customs of the People’s Republic of China (GAC) Order No. 221 of 200776 provides for the licensing/registration of customs brokerages, whilst GAC Order No.146 of 200677 provides for the licensing/registration of individual customs brokers/agents.

Obtaining a licence - Brokerage

To be qualified to obtain a customs brokers / agents licence, the applicants shall meet the criteria covering the following points: 1) qualified as a business legal entity; 2) the legal representative has no smuggling record; 3) no record of licence revoking by the Customs due to illegal smuggling activities; 4) owning fixed operation location and facilities for the brokerage services; 5) other conditions as required by the Customs supervision.

The applicant shall prepare the application form together with relevant supporting documents to the Customs in charge. Provided that the applicant meets all the statutory requirements, Customs will issue the written approval to the applicant, together with the PRC Registration License for Customs Declaration Entity.


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Maintaining a licence - Brokerage

The validity term for the licence is two years. To extend the licence, the customs broker shall lodge an application 40 days before the licence expiry date to the Customs. The same supporting documents as that for obtaining the licence shall be submitted for the extension application as well.

Revoking a licence - Brokerage

Customs will revoke the licence under any of the below situations: 1) no extension application being lodged upon the expiry date of the licence; 2) the declaration entity ipso jure being terminated; 3) the licence being ipso jure cancelled or suspended; 4) the licensed proceedings are no longer operatable due to force majeure; 5) other situations as stipulated in the laws or regulations.

The brokers are entitled to consult the customs for its declaration practice. The brokers are responsible for record keeping of the relevant certifications such as the registration licence as well as the submitting documents for registration practice and the authenticity of information therein.

Obtaining a licence – Individual Broker

The individual broker is required to meet the following criteria to obtain the licence: 1) PRC nationality; 2) passing the exam and owning Broker Qualification; 3) having a contractual relationship with a declaration entity. With the relevant application documents, an individual can apply for the broker licence. Provided that the criteria are met, then a Broker Licence will be issued.

Maintaining a licence– Individual Broker

The validity term for the individual broker licence is two years. To extend the licence, the customs broker shall lodge an application 30 days before the licence expiry date to the Customs.

Revoking a licence– Individual Broker

Customs brokers shall apply to Customs for licence revocation under any of the following situations: 1) brokers are no longer engaged in the brokerage practice; 2) brokers resign; 3) the contract relationship is renounced with the declaration entity; 4) the licence of the declaration entity is revoked.

Moreover, Customs will revoke the licence under any of the following situations: 1) no extension application being lodged upon the expiry date of the licence; 2) the decease or loss of capacity for civil conduct of the broker; 3) the licence being ipso jure cancelled or suspended; 4) the broker’s qualification for practice being ipso jure cancelled by the customs; 5) the licence of the engaged declaration entity ipso jure being revoked; 6) other situations as stipulated in the laws or regulations.

Brokers shall conduct the brokerage practice under the name of the declaration entity. The customs broker could consult Customs for its declaration practice and reject the illegal requirements of the customs officials. Upon disagreement with the customs, the brokers are entitled to the right to state, argue or lodge a


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complaint over the decisions made by the Customs. The Customs broker may apply for administrative review or appeal and require compensation for damage to legal rights caused by illegal activities of Customs.

6.1.7. Thailand78 Chapter XIV of the Customs Act BE 2469 (1926) as amended provides for the use of ‘Agents’ in the various import and export processes. The use of agents applies not only to importers and exporters of goods,79 but to agents acting for vessel owners, etc.80 In order to act as an agent there is a need for the owner to authorise the person to act on their behalf.

The Customs Act BE 2469 (1926) does not outline a process for becoming, maintaining and revoking a licensed broker, however, the concept is utilised and appears to be through an administrative process with the following information being supplied:

Obtaining a licence

An application form to become a licensed Customs broker

Certification of being a legal person by the Department of Business Development within the previous 30 days

VAT registration

A list of stakeholders, certified by the Department of Business Development

A list of clients and a copy of signature sample cards of the owner or manager, or certification and registration or an employment certification or evidence of employment

Estimated amount of duty liabilities, duty drawback liabilities and estimated amount of security in case the goods are cleared 3 months prior to filing the request


Enter into a bond contract with Customs within 30 days from the date of receiving an approval notice from Customs (in the form of a bank guarantee)

Revoking a licence

A licence may be revoked in the event that a licensed Customs broker is found to commit offences against Customs and related laws and regulations, or intending to avoid the payment of applicable taxes and duties, or intending to commit fraud under duty drawback and tax compensation schemes.

The security bond for licensed Customs Brokers can be set between 2 and 10 million Thai Baht.

6.1.8. Other Countries An overview of country-specific arrangements is at Appendix 6. State practice with regard to regulation of customs brokers/agents varies considerably. In the majority of cases that have been examined during the course of this research (39 of 46 countries) customs brokers/agents are required to be licensed. Licences are typically issued by


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national customs administrations, although in some cases they are issued by the ministry that oversees customs affairs, and in a number of cases the ministry’s endorsement is in addition to the approval of the customs administration. In some countries, in addition to the requirement of being licensed, customs brokers must also be registered with or become members of the national customs broker association or equivalent industry body.81

While some countries82 do not require customs brokers/agents to be licensed, they generally require such entities to be registered with the customs administration, another government agency83 or a relevant industry body.

6.2. Depots The Guidelines to RKC Specific Annex A indicate that goods entering the Customs territory can generally be unloaded only at places that are designated for this purpose, and that, when determining places that may be so designated, Customs should consider industry requirements as well as changing trade patterns. It further states that ‘In some instances Customs may only allow certain types of goods to be unloaded at some of the designated places. Such a restriction may be placed on goods like oil or bulk goods or hazardous goods which can only be unloaded at terminals or depots that are specially equipped for handling such specialized cargo.’84

It should be noted that the general principles of the RKC also apply to temporary storage arrangements, including Standard 1.2 of the General Annex, which requires that ‘The conditions to be fulfilled and Customs formalities to be accomplished for procedures and practices ... shall be specified in national legislation and shall be as simple as possible’.

6.2.1. World Customs Organization Under the RKC, depot operators are regarded as one of several third parties, i.e. a ‘person who deals directly with the Customs, for and on behalf of another person, relating to the importation, exportation, movement or storage of goods’.85 As noted above, the RKC states that ‘Some administrations require third parties by law, regulation or Customs ruling to be licensed. These licensing requirements may stipulate specified criteria that the third party must meet such as age, education, professional competence or moral and financial integrity. Additional criteria generally are that the third party have a registered business premise and meet professional standards for record-keeping’.86

Revised Kyoto Convention Specific Annex A relates to the arrival of goods in a Customs territory. Chapter 1 of RKC Specific Annex A addresses formalities prior to the lodgement of the goods declaration, and includes the following Standard:

15: National legislation shall specify the places which are approved for unloading.

Chapter 2 of RKC Specific Annex A addresses the temporary storage of goods, i.e. ‘the storing of goods under Customs control in premises and enclosed or unenclosed spaces approved by the Customs (hereinafter called temporary stores) pending lodgement of the Goods declaration’.87 It includes the following Standards and Recommended Practices:


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2. (Standard): The Customs shall authorize the establishment of temporary stores whenever they deem it necessary to meet the requirements of the trade.

3. (Recommended Practice): Temporary storage should be allowed for all goods irrespective of quantity, country of origin or country from which they arrived. However, goods which constitute a hazard, which are likely to affect other goods or which require special installations should be admitted only into temporary stores specially equipped and designated by the competent authorities to receive them.

6. (Standard): The Customs shall lay down the requirements as regards the construction, layout and management of temporary stores and the arrangements for the storage of goods, for stock-keeping and accounting and for Customs control.

The Guidelines to RKC Specific Annex A note:

For a variety of reasons, some time may elapse between the arrival of the goods and the lodgement of the relevant Goods declaration. In these circumstances Customs require the goods to be kept under Customs control and they are usually placed in a specified area where they are stored pending lodgement of the Goods declaration. These areas are termed temporary stores and may consist of buildings or enclosed or un-enclosed spaces.88

The Guidelines also note that, for practical reasons, Customs must allow temporary storage of goods for commercial and logistical reasons. For example, the final destination of the goods may not be known at the time of importation, relevant documentation may not be available, there may be a need to ensure compliance with contractual conditions, or the storage facilities available at ports or airports may be inadequate to meet the increasing demands of commerce. The Guidelines further stipulate:

This Standard requires Customs to consider the needs of the trade when authorizing the temporary storage of goods. Customs will normally stipulate conditions that will safeguard the Revenue interests. In accordance with the provisions of national legislation, temporary stores may be managed by Customs, other authorities or by natural or legal persons. Temporary stores may be open to all importers and other persons entitled to dispose of goods being imported, or the use of them may be restricted to specified persons.89

In relation to the management of temporary stores by other authorities, the RKC recognises that animal or veterinary authorities will have a specific interest in such facilities, and will therefore stipulate its own conditions for the use of such facilities in order to ensure compliance with particular legislative requirements. It also clearly states that Customs is generally the government authority with responsibility for determining the location and conditions associated with temporary stores, in order to ensure compliance with Customs requirements.


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6.2.2. European Union Community Customs Code Title III, Chapter 5 (Temporary Storage of Goods) provides as follows:

Article 50

Until such time as they are assigned a customs approved treatment or use, goods presented to customs shall, following such presentation, have the status of goods in temporary storage. Such goods shall hereinafter be described as ‘goods in temporary storage’.

Article 51

1. Goods in temporary storage shall be stored only in places approved by the customs authorities under the conditions laid down by those authorities.

2. The customs authorities may require the person holding the goods to provide security with a view to ensuring payment of any customs debt which may arise under Articles 203 or 204.

Article 52

Without prejudice to the provisions of Article 42, goods in temporary storage shall be subject only to such forms of handling as are designed to ensure their preservation in an unaltered state without modifying their appearance or technical characteristics.

Article 53

1. The customs authorities shall without delay take all measures necessary, including the sale of the goods, to regularize the situation of goods in respect of which the formalities necessary for them to be assigned a customs-approved treatment or use are not initiated within the periods determined in accordance with Article 49.

2. The customs authorities may, at the risk and expense of the person holding them, have the goods in question transferred to a special place, which is under their supervision, until the situation of the goods is regularized.

Article 185 of the Customs Code Implementation Provisions90 further provides that:

1. Where the places referred to in Article 51(1) of the Code have been approved on a permanent basis for the placing of goods in temporary storage, such places shall be called ‘temporary storage facilities’.

2. In order to ensure the application of customs rules, the customs authorities may, where they do not themselves manage the temporary storage facility, require that:

(a) temporary storage facilities be double-locked, one key being held by the said customs authorities;

(b) the person operating the temporary storage facility keep stock accounts which enable the movements of goods to be traced.


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6.2.3. United States In the US, the statutory basis for the licensing/registration of customs warehouses is provided in 19 USC section 1555 and the regulations are found in 19 CFR Part 19. Eleven different classes of bonded warehouse are covered by 19 CFR 19.1, two of which are akin to ‘depots’:

Class 2: Importer’s private warehouse used exclusively for the storage of merchandise belonging to or consigned to the proprietor

Class 3: Public bonded warehouse used exclusively for the storage of imported merchandise.

Obtaining a licence

Under 19 CFR section 19.2, an applicant seeking to establish a bonded warehouse must make written application describing the premises, giving the location, stating the class of warehouse to be established, and except in the case of a class 2 or class 7 warehouse, the application must state whether the warehouse is to be operated as a private or public bonded warehouse.

Among other things, the applicant must prepare and have available at the warehouse a procedures manual describing the inventory control and recordkeeping system that will be used in the warehouse and a certification that the inventory control and recordkeeping system meets the relevant regulatory requirements.

The applicant may also be required to provide a list of names and addresses of all officers, managers and persons who have a direct or indirect financial interest in the warehouse facility, and a list of names and addresses and a set of fingerprints for all company officers, principals, employees and those individuals with access to the recordkeeping information.

On approval of an application, CBP executes its endorsement of a bond containing the relevant bond conditions for the warehouse operation.


The proprietor has responsibility for supervising and complying with regulatory requirements for all transportation, receipts, deliveries, sampling, recordkeeping, repacking, manipulation, destruction, physical and procedural security, conditions of storage, safety in the warehouse as required by law and regulations and other relevant requirements.

The proprietor is also responsible for safekeeping of goods entered in a bonded warehouse as well as the related records91, and must safeguard and not disclose proprietary information contained in or on related documents to anyone other than the importer, importer's transferee, or owner of the merchandise to whom the document relates or their authorised agent. Further, the warehouse proprietor has a responsibility to maintain the warehouse facility in a safe and sanitary condition and ensure the security of all merchandise stored in the facility.

The legislation also prescribes specific requirements relating to the manner in which merchandise must be stored in a warehouse. Merchandise in the bonded area shall be stored in a safe and sanitary manner to minimise damage to the merchandise, avoid hazards to persons, and meet local, state, and federal requirements applicable to


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specific kinds of goods. In addition, goods must be stored in a manner directly identifying them with the relevant customs documentation.

Revoking a licence

19 CFR section 19.3 regulates alterations, relocation, suspensions, and discontinuance of bonded warehouse licenses. CBP may revoke or suspend the right of a proprietor to continue the bonded status of the warehouse if:

(1) The approval of the application to bond the warehouse was obtained through fraud or the misstatement of a material fact;

(2) The proprietor refuses or neglects to obey any proper order of a Customs officer or any Customs order, rule, or regulation relative to the operation or administration of a bonded warehouse;

(3) The proprietor or an officer of a corporation which has been granted the right to operate a bonded warehouse is convicted of or has committed acts which would constitute a felony, or a misdemeanour involving theft, smuggling, or a theft-connected crime;

(4) The proprietor does not provide secured facilities or properly safeguard merchandise within the bonded warehouse;

(5) The proprietor fails to furnish a current list of names, addresses, and required information;

(6) The bond is determined to be insufficient in amount or lacking sufficient sureties, and a satisfactory new bond with goods and sufficient sureties is not furnished within a reasonable time;

(7) Bonded merchandise has not been stored in the warehouse for a period of 2 years;

(8) The warehouse proprietor or its employee discloses proprietary information in, or proprietary information contained on, documents to be included in the permit file folder to an unauthorised person; or

(9) The proprietor of a Class 9 warehouse is or has been unable to provide reasonable assurance that conditionally duty-free merchandise is or was exported in compliance with relevant regulations.

The use of all or part of a bonded warehouse or bonded floor space may also be temporarily suspended for a period of up to one year by CBP on written application of the proprietor if there are no bonded goods in the area. The premises may again later be used for the storage of bonded goods, upon approval of the proprietor’s written application and upon the removal of all non-bonded goods.

CBP may serve notice in writing upon any proprietor of a bonded warehouse to show cause why their right to continue the bonded status of the warehouse should not be revoked or suspended. A decision to suspend or revoke the right to operate a bonded warehouse may firstly be reviewed administratively, and subsequently appealed in the Court of International Trade.


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6.2.4. New Zealand The relevant legislative provisions for obtaining a depot licence are contained in the Customs and Excise Act 1996, which address Customs controlled areas (CCAs), application for licence, grant or refusal of licence, variation or revocation of conditions, revocation or suspension of licence, surrender of licence, closing of CCA, liabilities not affected by ceasing to act as licensee, Customs facilities in CCAs, and storage charges.92

Obtaining a licence

To obtain a licence, an application for an area to be licensed as a CCA may be made by the owner or occupier of, or person operating in the area, and lodged with the nearest Customs office.

The application form must include a plan in the form of a diagrammatic layout of the area to be licensed. Architects’ or other professional plans can be submitted if readily available; if not readily available, plans used for local body or resource management applications should provide the necessary detail. A layperson’s description of the area is also to be included.

On receipt of an application for a licence and any further information requested by the Chief Executive of the New Zealand Customs Service, a licence may be granted for the area, or the licence application may be refused. Any licence granted may be subject to such terms, conditions, or restrictions as the Chief Executive thinks fit.

A procedure statement detailing the conditions, terms or restrictions and the operating procedures required of the licensee is issued with every CCA licence. The contents of the procedure statement are reviewed from time to time.


An annual licence fee is payable in respect of the CCA.

There is no provision to allow the transfer of a Customs controlled area licence. If a new owner-occupier or operator wants an area to remain licensed, a new application must be made. If a licensee moves to new premises a new licence application must be made. The existing licence for the previous premises will then be cancelled.

Revoking a licence

The Chief Executive may, at any time, revoke or suspend a licence where:

a term, condition, or restriction specified in the licence has been contravened, or

the area in respect of which the licence was granted ceases to be used for any of the purposes for which the area is licensed, or

the licensee ceases to be the owner or occupier of, or operator in, the area in respect of which the licence was granted, or

the Chief Executive considers that the licensee is no longer a fit and proper person to hold a licence, or


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the prescribed annual licence fee (if any) is due and has not been paid.93

Notice of the suspension or revocation of the licence shall be given in writing to the licensee.

6.2.5. China Only business legal entities are entitled to apply for a depot licence. The entity must meet certain financial criteria relating to such things as registered capital and ability to pay the relevant tax payments to Customs. The depot itself shall meet certain criteria as well, including the layout of the depot, safety/supervision/operation facility, information technology (IT) management system, depot management and accounting system, as well as special areas etc.

The relevant legislative provision is GACC Decree No.105 of 200394 on Customs rules for bonded warehouse and stored goods.

Obtaining a licence

To obtain the licence, the entity must lodge the application to the local subordinate Customs in-charge with the supporting documents to prove that the requirements for the entity itself and the depot as mentioned above have been satisfied.

The local subordinate Customs in-charge will submit the preliminary opinion together with the application materials to the direct Customs in-charge office within 20 working days and the direct Customs in-charge office will complete the review within 20 working days, either issuing the approval to the qualified entity or sending written notice to the applicant for rejection reasons.


The Depot operator may conduct simple processing such as packaging, resorting, reclassifying, disassembly, assembly, etc., but no substantial manufacturing shall be conducted.

The depot operator shall be responsible for all stored goods, paying additional tax payments for the damaged, lost goods and bearing corresponding legal liabilities.

The Customs depot shall not be sublet or sub tenanted to another party for operation. Customs depots are subject to a categorised management and annual review system.

The entity shall maintain comprehensive and accurate documents and account books. The monthly entry, exit, storage of goods information and annual financial report shall be prepared and sent to the in-charge Customs office.

Revoking a licence

If the depot has not been in operation for over 6 months without appropriate reasons, or failed the annual review, or has missed the annual review, the licence will be revoked.


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6.2.6. Thailand95 The Director-General of Customs may appoint places (upon request) under Chapter II Customs Act BE 2469 (1926) as amended, as ‘places of security’ where uncleared goods may be transferred for unpacking, re-packing and examination away from a port, wharf or quay. The place appointed must be secure by way of fencing and contain office and other accommodation suitable for holding, unpacking, repacking and examination.

These ‘places of security’ are run by traders, owners and/or guardians of goods however, transfers, unpacks and repacks and other activities need prior approval from Customs to occur. Locking of these appointed ‘secure places’ is controlled by the Customs Department.

Obtaining a licence

Applicants must submit a plan for the proposed secure place

Approval, including boundaries will be given by the Director-General in writing (Section 7(3))

Section 7(2) requires Thai Customs to notify an applicant if appointment as a secure place is not to be granted.


Section 7(4) also sees the approval of a secure place remain valid until such time as significant changes are made to the premises and provided the Director-General remains satisfied as to the security of the safe place.

Revoking a licence

See above, approvals stay valid until such time as significant changes are made to the premises and provided the Director-General remains satisfied as to the security of the safe place.

Other relevant provisions include:

An annual licence fee is payable and is set by Ministerial Regulation (section 7A)

Section 7(2) prevents operators from entering their secured premises if it has been locked by Thai Customs

The cost of the maintenance of the premise is the responsibility of the merchants or relevant persons (see section 9)

Where Thai Customs will not appoint a place as a secure place, then the applicant may appeal the decision (see section 7(4)).

6.2.7. Other Countries An overview of country-specific arrangements is at Appendix 7. In the majority of cases that have been examined during the course of this research (43 of 46), depots are required to be licensed, generally by the relevant customs administration. In some cases, however, licences are issued by the ministry that overseas customs affairs,96 or another ministry, 97although in all cases identified, compliance with the licensing provisions appears to be administered by the relevant customs authority.


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In some countries, while depots/ depot operators are not required to be licensed, the operation of a depot may still require the approval of the customs administration, which is contingent upon the depot operator meeting specified conditions, the breach of which constitutes an offence.98

6.3. Warehouses The national legislation of most countries provides for Customs warehousing procedures that allow for the storage of goods without the payment of import duties and taxes while the goods remain in the warehouse. The main purpose of the warehousing procedure is to facilitate the trade to a great extent. Goods deposited in a Customs warehouse do not become liable to the payment of import duties and taxes until the goods are cleared for home use from the warehouse. If the goods are re-exported, then there is a waiver of import duties and taxes. It also affords the person warehousing the goods sufficient time to negotiate their sale, either on the home market or abroad, or to arrange for the goods to be processed or manufactured, transferred to another Customs procedure or otherwise disposed of in an authorised manner. 99

The scope of this procedure may not cover only imported goods. For example, some administrations allow goods that are liable to, or have borne, internal duties and taxes (whether of national origin or previously imported against payment of import duties and taxes) to be stored in a Customs warehouse in order that they may qualify for exemption from or repayment of such internal duties and taxes. Thus the definition of the term ‘Customs warehousing procedure’ covers the warehousing of imported goods since this is the use generally authorised, but the storage of goods of national origin is recommended as an additional case of the use of Customs warehouses. (See also Recommended Practice 9.) Similarly, the deposit in a Customs warehouse of goods that have previously been dealt with under another Customs procedure, such as temporary admission, with a view to subsequent exportation or other authorised disposal is also possible. 100

6.3.1. World Customs Organization As is the case with customs brokers and depot owners, warehouse operators are regarded as one of several third parties, i.e. a ‘person who deals directly with the Customs, for and on behalf of another person, relating to the importation, exportation, movement or storage of goods’,101 and notes that some administrations may require such parties to be licensed.

RKC Specific Annex D relates to customs warehouses and free zones (see Appendix 12). For the purposes of the current study, the specific provisions relating to free zones are not discussed. The RKC defines Customs warehousing procedure as ‘the Customs procedure under which imported goods are stored under Customs control in a designated place (a Customs warehouse) without payment of import duties and taxes’.102

Chapter 1 of RKC Specific Annex D relates specifically to warehouses, and includes the following Standards and Recommended Practices:

2. (Standard): National legislation shall provide for Customs warehouses open to any person having the right to dispose of the goods (public Customs warehouses).


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3. (Standard): National legislation shall provide for Customs warehouses to be used solely by specified persons (private Customs warehouses) when this is necessary to meet the special requirements of the trade.

4. (Standard): The Customs shall lay down the requirements for the establishment, suitability and management of the Customs warehouses and the arrangements for Customs control. The arrangements for storage of goods in Customs warehouses and for stock-keeping and accounting shall be subject to the approval of the Customs.

5. (Recommended Practice): Storage in public Customs warehouses should be allowed for all kinds of imported goods liable to import duties and taxes or to prohibitions or restrictions other than those imposed on grounds of:

public morality or order, public security, public hygiene or health, or for veterinary or phytosanitary considerations; or

the protection of patents, trademarks and copyrights,

irrespective of quantity, country of origin, country from which arrived or country of destination.

Goods which constitute a hazard, which are likely to affect other goods or which require special installations should be accepted only by Customs warehouses specially designed to receive them.

6. (Standard): The Customs shall specify the kinds of goods which may be admitted to private Customs warehouses.

7. (Recommended Practice): Admission to Customs warehouses should be allowed for goods which are entitled to repayment of import duties and taxes when exported, so that they may qualify for such repayment immediately, on condition that they are to be subsequently exported.

8. (Recommended Practice): Admission to Customs warehouses, with a view to subsequent exportation or other authorized disposal, should be allowed for goods under the temporary admission procedure, the obligations under that procedure thereby being suspended or discharged.

9. (Recommended Practice): Admission to Customs warehouses should be allowed for goods intended for exportation that are liable to or have borne internal duties or taxes, in order that they may qualify for exemption from or repayment of such internal duties and taxes, on condition that they are to be subsequently exported.

16. (Standard): In the event of the closure of a Customs warehouse, the persons concerned shall be given sufficient time to remove their goods to another Customs warehouse or to place them under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

The RKC addresses two types of Customs warehouses, i.e. public Customs warehouses (Standard 2) and private Customs warehouses (Standard 3).

Public Customs warehouses are those which may be utilised by an importer, any other person to whom the goods have been sold while in the warehouse, or other persons


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(natural or legal) having title to the goods or the legal right to dispose of them.103 Private Customs warehouses, on the other hand, are intended to meet the particular commercial requirements of industry, and their use is restricted to specified persons who may use them to store goods for their own specific purposes. Whilst the categories of goods that may be stored in private Customs warehouses is usually not restricted, Customs is required to specify the categories of goods that may be stored.104

6.3.2. European Union Community Customs Code Title IV, Articles 98 to 113 relate to Customs warehouses. The following provisions are of particular relevance:

Article 98

1. The customs warehousing procedure shall allow the storage in a customs warehouse of:

(a) non-Community goods, without such goods being subject to import duties or commercial policy measures;

(b) Community goods, where Community legislation governing specific fields provides that their being placed in a customs warehouse shall attract the application of measures normally attaching to the export of such goods.

2. Customs warehouse means any place approved by and under the supervision of the customs authorities where goods may be stored under the conditions laid down.

3. Cases in which the goods referred to in paragraph 1 may be placed under the customs warehousing procedure without being stored in a customs warehouse shall be determined in accordance with the committee procedure.

Article 99

A customs warehouse may be either a public warehouse or a private warehouse.

‘Public warehouse’ means a customs warehouse available for use by any person for the warehousing of goods; ‘private warehouse’ means a customs warehouse reserved for the warehousing of goods by the warehousekeeper.

The warehousekeeper is the person authorised to operate the customs warehouse.

The depositor shall be the person bound by the declaration placing the goods under the customs warehousing procedure or to whom the rights and obligations of such a person have been transferred.

Article 100

1. Operation of a customs warehouse shall be subject to the issue of an authorization by the customs authorities, unless the said authorities operate the customs warehouse themselves.

2. Any person wishing to operate a customs warehouse must make a request in writing containing the information required for granting the authorization, in particular demonstrating that an economic need for warehousing exists. The


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authorization shall lay down the conditions for operating the customs warehouse.

3. The authorization shall be issued only to persons established in the Community.

Article 101

The warehousekeeper shall be responsible for:

(a) ensuring that while the goods are in the customs warehouse they are not removed from customs supervision;

(b) fulfilling the obligations that arise from the storage of goods covered by the customs warehousing procedure; and

(c) complying with the particular conditions specified in the authorization.

Article 104

Without prejudice to Article 88, the customs authorities may demand that the warehousekeeper provide a guarantee in connection with the responsibilities specified in Article 101.

Further, Articles 524 to 534 of the Customs Code Implementation Provisions set out a number of specific requirements relating to Customs warehouses, with Article 524 classifying warehouses as follows:

1. Where a customs warehouse is public, the following classification shall apply:

(a) type A, if the responsibility lies with the warehousekeeper;

(b) type B, if the responsibility lies with the depositor;

(c) type F, if the warehouse is operated by the customs authorities.

2. Where a customs warehouse is private and responsibility lies with the warehousekeeper, who is the same person as the depositor but not necessarily the owner of the goods, the following classification shall apply:

(a) type D, where release for free circulation is made by way of the local clearance procedure and may be granted on the basis of the nature, the customs value and the quantity of the goods to be taken into account at the time of their placing under the arrangements;

(b) type E, where the arrangements apply although the goods need not be stored in a place approved as a customs warehouse;

(c) type C, where neither of the special situations under points (a) and (b) applies.

3. An authorisation for a type E warehouse may provide for the procedures laid down for type D to be applied.


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6.3.3. United States In the US, the statutory basis for the licensing/registration of customs warehouses is provided in 19 USC section 1555 and the regulations are found in 19 CFR Part 19. Eleven different classes of bonded warehouse are covered by 19 CFR 19.1, two of which are akin to ‘depots’ (see above). The remainder include:

Class 1: Premises owned or leased by the Government for the purpose of cargo examination by CBP

Class 4: Bonded areas for the storage of heavy and bulky imported goods, animals, and bulk liquids

Class 5: Bonded bins or parts of buildings or elevators to be used for the storage of grain

Class 6: Bonded warehouses established for the manufacture in bond, solely for exportation, of certain articles105

Class 7: Bonded warehouses established for smelting and refining imported metal-bearing materials for exportation or domestic consumption

Class 8: Bonded warehouses established for the cleaning, sorting, repacking, or otherwise changing the condition of, but not the manufacturing of, imported merchandise, under CBP supervision

Class 9: Duty-Free Stores106

Class 10: Bonded warehouses for goods sold conditionally duty-free aboard aircraft

Class 11: Bonded warehouses for storing unclaimed or un-entered goods.107

Obtaining a licence

See section 6.2.3 above.



Revoking a licence


6.3.4. New Zealand A CCA license (see section relating to New Zealand depots) may also be applied to a Customs warehouse. The relevant requirements for the licenses and responsibilities are those applying to depots.

Moreover if the area is used (whether or not it is used for any other purpose) for the purpose of storing goods for export (temporarily or otherwise) until they are transported to the place of shipment and shipped, the owner or occupier of, or person operating in the area may apply for the Customs-approved areas for storing exports (CASEs) licenses. The arrangements relating to licences for CASEs mirror those relating to CCA, as per the Customs and Excise Act 1996.


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The main rights and responsibilities of Customs warehouse under CASEs licence are as follows:

provide and maintain any operating areas, accommodation, facilities, buildings, equipment, and storage that the chief executive determines are reasonably necessary and suitable for the carrying out of the functions and responsibilities of the Customs;

appeal to a Customs Appeal Authority against that determination or direction by the chief executive within 20 working days after the date on which notice of the determination or direction is given.

Sections 19B-19H of the Customs and Excise Act 1996 deal with areas that may be licensed as CASEs, application for area to be licensed as CASE, licences for CASEs, access of Customs officers to CASEs, examination of goods to be exported and that have been brought to CASE, detaining and searching vehicles for goods to be exported and that have been brought to CASE, Customs facilities in CASEs.108

6.3.5. China If the Customs warehouse is a bonded warehouse, the relevant requirements for the licence and associated responsibilities are those shown for depots (see above).

If the Customs warehouse is for storage of goods whose clearance formalities for export have been completed or for bonded logistics distribution, or for provision of calculative value-added services, then a licence for export-supervised warehouse applies, the main rights and responsibilities for which are described below.

The relevant legislative provisions are GACC Decree No.105 of 2003 on Customs Rules for Bonded Warehouse and Stored Goods, and GACC Decree No. 133 of 2005 on Customs Rules for Export Supervised Warehouses and the Goods.109

Obtaining a licence

The applicant must be a business legal entity and meet certain criteria relating to registered capital, import/export and warehousing operation rights, ability to pay the relevant tax payment to Customs, etc. Application documents are required to be lodged to the local subordinate customs in-charge. Within 1 year of Customs’ approval of the warehouse, the entity must apply to Customs for assessing and confirming the qualification of the warehouse.

Provided that the warehouse itself meets certain criteria, including the layout, safety/supervision/operation facility, IT management system, warehouse management and accounting system, as well as the fire-fighting facilities etc., the direct Customs in-charge will register and issue the licence.


The warehouse operator may conduct simple processing such as packaging, resorting, reclassifying, disassembly, assembly, etc., in the warehouse.

The warehouse operator shall be responsible for all stored goods, paying additional tax payments for the damaged, lost goods and bearing corresponding legal liabilities.


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Customs warehouses may not be sublet or sub tenanted to another party for operation. Customs warehouses are subject to a categorised management and annual review system.

The entity shall maintain comprehensive and accurate documents and account books. The monthly entry, exit, storage of goods information and annual financial report shall be prepared and sent to the in-charge Customs office.

Revoking a licence

If the warehouse has not been in operation for over 6 months without appropriate reasons, or failed the annual review, or has missed the annual review, the licence will be revoked.

The warehouse operator shall ensure that no non-approved goods are stored in the warehouse, the management of the goods in the warehouse is in order, the account books are clear and all other requirements are met. Failure to do so will lead to financial penalty and potential licence revocation.

6.3.6. Thailand110 The Director-General of Customs may appoint places (upon request) under Chapter II of the Customs Act BE 2469 (1926) as amended, as ‘bonded warehouses’ for the purposes of storage and examination away of imported goods. See specifically section 8.

Obtaining a licence

The Director-General may approve the operation of a bonded warehouse for storage and examination of imported goods. Section 8bis further allows for the following activities (i): display and selling, and (ii) further manufacture, mixing, processing, assembling and packing – all subject to Ministerial Regulations.


Section 8 also appears to see bonded warehouse approvals remaining valid whilst the duties and taxes continue to be secured to the satisfaction of the Director-General.

Revoking a licence

See above, approvals appear to stay valid unless the Director-General is no longer satisfied as to the security of duties and taxes.

Other relevant provisions include:

An annual licence fee is payable and is set by Ministerial Regulation (section 8)

The Director- General may require a security deposit to protect duty and tax revenue liability

The cost of the maintenance of the premise is the responsibility of the merchants or relevant persons (section 9).


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6.3.7. Other Countries An overview of country-specific arrangements is at Appendix 7. The situation relating to the regulation and licensing of warehouses is largely the same as that of depots. In most cases examined, warehouses and depots are regulated in the virtually the same manner. Out of 46 countries examined during the course of the research, 43 require customs warehouses to be licensed, and these are typically issued by the relevant customs administration, although in some instances licences are issued by the ministry that overseas customs affairs.111

In those countries that do not administer a licensing regime, operation of a warehouse may nevertheless require some form of approval of the customs administration or may be subject to certain requirements/conditions.112


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7. Feedback from Interviews

With the exception of warehousing arrangements for EEGs, interviewees were generally satisfied with the regulatory requirements relating to licensed premises, but expressed some concerns about the way in which they are being administered.

However, the general observations of interviewees on the effectiveness of customs broker licensing were varied and wide-ranging. In numerous cases, there were advocates both for and against certain propositions. The varying positions held by different interviewees were probably explained by variable factors such as:

Longevity in the industry;

Scale and complexity of the business (interviewees ranged from small family-owned specialist customs brokerages to very large multinational businesses offering freight forwarding and customs brokerage services); and

The weighting of the customs broker’s client base in particular industries which might attract greater or lesser scrutiny by Customs and other agencies.

A common concern expressed by interviewees was the lack of access to a public register of licensees. While some industry associations compile and publish unofficial lists, there is a general perception that ACBPS should publish such information in the interests of informed regulatory compliance. As one respondent noted, ‘if I’m a carrier, how do I know whether someone is licensed?’

7.1. Licensing and the Customs Broking ‘Profession’ Several interviewees emphasised the professional nature of the customs broking industry and, in that context, pointed to the value of licensing as formal recognition of the high standards required to operate in this specialised field. Others suggested that customs broking should be viewed as a trade rather than as a profession, as the entry level qualification was at the vocational rather than the graduate or postgraduate level. Regardless, those in the industry generally appear to be eager to maintain the current entry requirements.

The ‘profession vs trade’ debate of customs broking does, however, introduce an interesting perspective in that regulatory bodies generally licence those involved in vocational trades, for example, surveyors, mechanics and builders, whereas registration is the more common form of regulation for their professional counterparts, such as town planners, engineers and architects.

It is clear that a licence undoubtedly confers a competitive advantage on the holder, that is, it allows the licence holder to engage in business of a type from which non-licence holders are essentially precluded. The consensus among licensed customs brokers was that the qualifications and experience required to obtain a licence warrants this commercial advantage. As such, many customs brokers view their licence as recognition of their status and expertise within the industry, distinguishing them from other operators in the trade and logistics community.

Respondents also claimed that licensing helps to ensure competence in dealing with the complexity of issues faced by customs brokers, and that the education and industry experience requirements help ensure that brokers are competent across a range of


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international trade-related disciplines. In the absence of licensing, it was argued, it would be difficult to guarantee this base level of performance. Some, however, indicated that the strength of a company’s internal governance and compliance processes ensured that correct Customs and Quarantine requirements would be followed regardless of the existence of the licence. This observation suggested that some interviewees were motivated by a customer service philosophy, corporate governance and regulatory compliance culture which, together, matched or exceeded any standards required by the current licensing arrangements.

A recurring argument in support of continuing a licensing regime was that, in the absence of licensing, the industry would be over-run by ‘cowboys’ and compliance would suffer. In a similar vein, it was argued that, in the absence of the disciplines imposed by licensing, the propensity of operators to reduce costs would lead to non-compliant and possibly corrupt behaviour which would be adverse to the interests of both the government and clients. In this context some suggested that the quality of export entries would improve significantly if there was a requirement that they be lodged by licensed customs brokers.

Others suggested that licensing arrangements are necessary to enforce compliance with the law and regulations. While this observation may not be strictly accurate (as the coercive and enforcement powers of Customs and other regulators are applicable to all operators in the supply chain, not just licensed customs brokers), it nevertheless reinforces the credibility and value with which licensing is viewed by some. Conversely, one interviewee indicated that, whilst Customs regularly ‘leans on’ customs brokers, it is reluctant to cancel a customs broker’s licence because of adverse decisions in the AAT (although no evidence has been found to substantiate this claim).

Some simply stated that, as the system is not broken, there is no need to fix it. Interviewees who put this point of view reflected a level of satisfaction with the current licensing arrangements, a willingness to live with any associated flaws or burdens and, in some cases, a general reluctance to contemplate alternatives. A similar viewpoint was that, notwithstanding its associated administrative and cost burdens on customs brokers, licensing is preferable to deregulation of the industry, which is ‘not desirable’.

Some claimed that the licensing requirements of customs brokers were also generally regarded as justification for higher salary and better employment conditions. On the other hand, some considered licensing to be unnecessary, resulting in ‘an expensive product’. In this regard, one employer of licensed customs brokers considered that the work performed by brokers could be performed equally well by suitably trained non-licensed operators, and that the higher costs associated with employment of licensed customs brokers were not justifiable.

It was argued that countries where customs brokers were not licensed (e.g. the United Kingdom and New Zealand) operated perfectly well and at lower cost. Some, however, claimed that the New Zealand experience of removing licensing of brokers represented a backwards step. In this context it is worth noting that, despite the fact that customs brokers are not required to be licensed in New Zealand, they still require access to the customs computer system which requires them to be registered, and deregistration is considered to be as significant a step as licence revocation.

The AAT’s statement that a licence confers a statutory monopoly was claimed by a number of customs brokers to be incorrect, at least to the extent that the roles performed by a licensed customs broker can be, and regularly are, performed by the


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owner of goods acting on their own behalf. Examples include major importer retailers which manage their own customs clearance activities (although it is understood that such companies usually employ licensed customs brokers for this purpose). Further, it was suggested that the incursion of freight forwarders into the traditional role of customs brokers proves the absence of any monopoly in the hands of brokers.

7.2. Broker Licence Conditions There is clearly a degree of confusion over customs broker responsibilities and liabilities, which probably reflects the rapid changes that have been imposed on licensed customs brokers in recent years through legislative amendments (statutes and regulations) and the significantly increased conditions attaching to licences. In this regard, it was suggested that Customs, to meet budget restraints, has reduced its spending on compliance issues and is ‘loading up’ brokers and forwarders to do much of its work. This was a common observation, reflecting a perceived ‘outsourcing’ to customs brokers of activities which were more properly the responsibility of Customs.

A related comment was that the cost of compliance increases but cannot be passed onto customers. This observation reflects the very competitive nature of the customs brokerage business (particularly on the basis of price) and the fact that customs brokers are generally finding it necessary to absorb the additional costs incurred by customs brokerages in meeting the demands of the legislative changes and additional conditions attaching to licences, as they are unable to be passed on to their customers.

Generally, the ‘fit and proper person’ test, which aspiring customs brokers are required to meet, was not a contentious issue amongst interviewees. There appeared to be an acceptance that the test set an acceptable minimum standard for someone to qualify as a licensed customs broker. However, dissent focused on a claimed imprecision and unpredictability in the application of the test, and the assertion that the recently added licence conditions allegedly collided with the customs broker’s obligations under the privacy laws.

The latter specifically relates to conditions requiring the customs broker to do all things necessary to ensure that all persons who participate in the work of the customs broker (or all members of a partnership) are fit and proper persons, and to provide a comprehensive staff list containing full name, gender, date of birth, position in the depot and the details of a valid form of identification including, but not limited to, ASIC/MSIC card, drivers licence, passport, or proof of age card.

In a similar vein, the imposition of an obligation to report/disclose suspect persons or behaviour was claimed to be naïve in the face of the risk of reprisals against reporters or their families by the suspect persons or their associates. A more general comment in this regard was that customs brokers are being ‘required to do the work of government’ and this puts them in an invidious position vis-à-vis their relationship with and obligations to their clients.

Widespread concern and anxiety was expressed about the potential impact of the new INS, including expectations that the number of notices and the number and size of penalties will increase (‘fines under the latest regime are ridiculous’), perceptions that simple errors would be penalised to the same extent as deliberate acts, and perceptions that the scheme was all about revenue raising. It was also claimed that the INS reflects a general lack of trust of customs brokers on the part of Customs. Of particular concern, however, was the uncertainty about who will be held responsible for


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infringements under the INS where an error is made by a nominee of a customs brokerage – will the brokerage itself be held liable, or will the nominee be penalised? In this context, some interviewees suggested that licensing arrangements should be restricted to customs brokerages, and that individuals should simply be ‘registered’ unless they were acting as sole traders.

Several other matters of incidental relevance to this review, but clearly regarded as irritants, were also raised by respondents during the course of the study.

7.3. Customs Broker Qualifications and CPD The fact that the customs broker’s course is being elevated to Diploma level in 2014 is generally seen to be a very positive step. Such an upgrading of the customs broker qualification was seen to reflect the scope and complexity of issues being dealt with by customs brokers. However, some argued that, as the sole purpose of the licence is to enable the licence holder to lodge import declarations, the focus of any prerequisite studies should therefore be restricted to matters of tariff classification, valuation and rules of origin.

However, the view was put that there is a clear disconnect between how Customs and the importing community view customs brokers, with Customs seeing them as simply having to lodge the import declaration correctly, and importers seeing them as providing all necessary solutions to enable the importer to receive the goods as quickly and inexpensively as possible. This view appeared to underlie the healthy degree of cynicism shown for the way in which the CPD scheme is being administered. Interestingly, the scheme itself is generally well received and appreciated, but the perception that Customs is seeking to micro-manage it appears to be causing discontent.

There were, however, conflicting views about the management of the CPD scheme. Some were adamant that industry (CBFCA, AFIF, CAPEC), not Customs, should run the CPD scheme, including determining its content and allocating points to the various training and development initiatives. Industry, it was claimed, better understands the requirements of the profession and is better placed to determine what is required and relevant.

On the other hand, some were equally adamant that Customs should dictate the relevance of CPD courses and the points attributable to them in order to keep the topics relevant and maintain a uniform approach to CPD. A key issue here was the perceived inconsistency that would arise if CBFCA and AFIF were to independently develop CPD programs, although some saw an opportunity for the two organisations to collaborate.

Other concerns related to the linkage between customs broker licensing and a CPD program which included elements relating to business management (Stream 3) which are unrelated to the criteria on which a licence is issued. It was noted by some that, as it is not necessary to gain CPD points from Stream 3, there is no need for it to be included in the program.

A number of interviewees commented that, as Quarantine issues represented a significant part of customs brokerage operations, they should have more prominence in any licensing and CPD arrangements. On this issue, it was widely agreed that DAg should offer a CPD program on Quarantine issues – ‘Compliance with Quarantine requirements is more difficult and more time-consuming than compliance with Customs


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requirements’. However, the comment was also made that the DAg AEP scheme appeared moribund as it is no longer being reaccredited.113

During the course of the review the CPD recognition attributed to two major conferences was noted. The first, the 2014 WCO IT Conference and Exhibition, had a focus on improving economic competitiveness, including ‘implementing trade facilitation measures for legitimate and compliant traders’ and ‘innovative cross-cutting solutions for expeditious and effective completion of border formalities’.114 The conference, which was hosted by ACBPS in collaboration with the WCO, included presentations and addresses from a range of high-level speakers including the Secretary General of the WCO, CEO of ACBPS and Minister Assisting the Minister for Immigration and Border Protection. No CPD points were granted for attendance at the three-day conference.

The second conference, the 2014 AFIF National Conference, succeeded in obtaining CPD recognition for some sessions but not others. The ‘others’ included the addresses by the CEO of ACBPS and the Secretary of the Department of Agriculture. Such outcomes bring into question the credibility of the scheme as it is currently being administered.

In addition, no CPD points were granted to those customs brokers who attended the Lowy Institute for International Policy to hear addresses from the CEO of ACBPS on ‘Border management and its role in supporting national economic competitiveness’115 and the Minister for Immigration and Border Protection on ‘The future of border protection’.116

It is understood that, in the case of the WCO IT Conference and the two Lowy Institute addresses, ‘ACBPS didn’t think of putting them forward for CPD recognition’. As one respondent noted, ‘This gives the impression that, if there’s no CPD points, it’s not worth listening to, as it’s not important to the industry’. Another indicated that the failure of Customs to actively contribute to the CPD arrangements, particularly in relation to activities which Customs itself organises, was a failure on the part of the regulator to recognise its own responsibility in relation to the CPD initiative.

Such inaction on the part of ACBPS not only sends the wrong message to customs brokers, but also disadvantages those who make the effort to attend sessions which, in their opinion, are likely to provide them with information that is of relevance to their professional activities. In this regard it is considered essential that, whenever ACBPS plans to deliver a public statement in a public forum, the question of CPD relevance should be addressed.

7.4. Level Playing Field A number of customs brokers (and depot operators) raised issues relating to a perceived inconsistent treatment of different sectors of the industry. In particular, the requirement for customs brokers to be licensed when freight forwarders are not is seen to result in an ‘un-level playing field’, given the pervasive role of freight forwarders in generating, transmitting and reporting trade data, and their extensive control over the movement of goods – ‘while ever brokers are required to be licensed, freight forwarders should similarly be required to be licensed’.

A common view was that freight forwarders should not only be licensed or at least registered in some way, but should also be subject to CPD and an integrity (fit and proper person) test. Some went further to suggest that anyone with physical or documentary control over imported goods (including importers themselves) should be


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required to meet minimum standards, which may include some form of registration. It was also indicated that non-licensed/registered operators in the supply chain should have the same obligations to report specific information such as security breaches.

One issue that generated particularly spirited debate was the fact that, while prospective customs brokers were required to be fully conversant with topics such as tariff concession applications, anti-dumping and countervailing before being issued with a licence, other industry operators such as tariff consultants were able to operate in these very areas without a licence. It was suggested that any matters that did not require licensing (e.g. any form of business that tariff consultants are allowed to conduct) should not form part of any licensing or CPD requirements. This point reinforces an underlying concern expressed by many respondents, i.e. that while customs broker licensing exists to provide licensees with the authority to lodge import declarations on behalf of third parties, the prerequisites for holding a licence exceed the necessary knowledge, skill and competency requirements to do so.

7.5. Relationship with the Authorities The relationship with Customs and Quarantine was regularly raised by interviewees across the various sectors. A common theme was that, given the competence and integrity requirements to become a licensed customs broker, and the rigorous systems and operational procedural requirements to establish licensed premises, Customs should trust licensees more than is apparently the case at present. Similar comments were made in relation to Quarantine.

Another commonly expressed view was that neither Customs nor Quarantine understands the commercial implications of their respective regulatory requirements, and this is exacerbated by the fact that neither communicates directly with importers, meaning it is left to customs brokers or depot operators to relay and attempt to explain wrong or ambiguous advice from the regulators (and ‘bear the wrath of the importers’). Inconsistent advice from Quarantine was another common theme.

Notably, the reported relationship with Customs, from both customs brokers and depot operators was ‘non-existent’. In one case, a brokerage had not been subjected to a Customs audit for approximately four years and, apart from the normal electronic filing of import declarations and other correspondence, had had no other substantive contact with Customs. While this may be a reflection on the performance and compliance history of the brokerage, the implication was that that performance was driven by the company’s own standards rather than through regular enforcement action by Customs. In another instance, a depot operator had not been visited by Customs for over two years.

Concerns were also expressed about the lack of ‘true consultation’ by Customs with the Industry, particularly over the recent changes to licence conditions, the INS and penalties. A common concern was also the perceived lack of industry knowledge on the part of both Customs and Quarantine, ‘they have no idea how international transactions are conducted’, ‘they are only concerned with their particular requirements and have no idea how they may fit into the bigger commercial picture’. Finally, there is a broad perception that there is no effective interaction between Customs and Quarantine.

7.6. Depots The majority of interviewees emphasised that the proliferation of depots in Australia is a consequence of the lack of capacity of airports (particularly Sydney) and ports to pack


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and unpack imports and exports on their premises, and that by way of contrast, in the UK, the majority of packing and unpacking is done on-site at airports and wharves. Another common observation was that depots perform a useful function in the chain of regulatory control over goods, as the goods are stationary and clearly identifiable, thus facilitating inspections. It was also suggested by some that, with the level of automation of customs procedures, conceivably depots may not be required for customs purposes in the future. Such commentators, however, held the view that the need for depots would continue for the purposes of biosecurity.

Most depot operators indicated that having approval to operate as both a Customs licensed depot and a QAP was considered to be essential from a commercial perspective – ‘you need to be able to offer a full range of services’. Feedback received indicates that, from a regulatory perspective, compliance with quarantine requirements is the key focus – ‘Customs rarely inspects goods, whereas Quarantine inspections are far more regular and frequent’.

Depot operators, like customs brokers, expressed the view that they are being required to ‘do the enforcement work of government’ as more responsibility was being placed on them to ensure compliance. Several interviewees also indicated that, while non-licensed operators often played an integral part in the supply chain, all regulatory obligations tended to fall to depot operators when it came to matters such as theft, loss, breakage, damage and/or pillage of goods and suspected breaches or offences of Customs-related laws.

There was general consensus that the licensing of premises is desirable and it is best managed by Customs/Quarantine rather than by Industry. In this respect, the distinction between licensing a person as opposed to a physical structure was emphasised. However, it was also noted that, since other requirements, including the ‘fit and proper person test’ and acceptable systems and procedures also come into play, Customs and Quarantine should place more confidence in the operators of licensed premises. In this context, concerns about the new INS were again raised.

Of particular concern to depot operators was the fact that they may know nothing about a particular consignment (including any relevant Customs queries or Quarantine holds) until the goods arrive at the depot, and consequently the operator has limited or no capacity to comply with certain reporting obligations in such circumstances. While some simply stated, ‘If Customs had confidence in the depot system, there would be no need for the INS and penalties’, others felt that Customs had shown an unwillingness to listen to what they believe are genuine commercial impediments to meeting certain regulatory requirements. According to the majority of depot operators interviewed, a common message from Customs is, ‘just do what the law says and you won’t have to worry’.

Another concern raised was the need to ‘continually absorb costs’ of compliance with increasingly stringent depot operating conditions, and an inability to pass such costs on to clients due to competition and lack of loyalty of customers. This is clearly reflective of the competitive market, but as some suggested, indicative of potential corners being cut by some operators in the market. Some, however appeared to accept such requirements as simply ‘the cost of doing business’.

More fundamentally, however, there was widespread agreement that the conditions attached to depot licences are not unreasonable and there is nothing notable required by the criteria that a professional operator would not already do in order to comply


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with good management practices or client service obligations. The principal concerns related to the way in which the provisions were being administered, particularly by Quarantine – ‘Quarantine requirements are sometimes nonsensical, non-commercial’, ‘Quarantine’s requirements are often petty and disruptive’.

Another common theme was the perception that customs and quarantine requirements are typically uncoordinated, leading to duplication, conflicting requirements, ambiguity, uncertainty, inefficiency and a difficult environment in which to achieve compliance. In this regard, it was suggested that consideration should be given to including Class 1.1 to 1.3 QAP approval for all depots as a matter of course. In this way, it was argued, all Customs approved depots would be authorised to be used for the deconsolidation of sea and air cargo, inspection and treatment of goods, containers and ULDs for both customs and quarantine purposes. Others pointed to the infeasibility of this proposition, noting that some depots would not have the necessary facilities to clean sea containers, for example. However, it is noted that Class 1.3 QAPs are approved for such purposes ‘when appropriate facilities are available’, and consequently such a suggestion may have merit. This would of course require a degree of collaboration on the part of ACBPS and DAg.

Other issues raised include: ‘a strong need to improve the ICS but Customs appear to have no interest in investing in it’; ‘The cost of gaining and retaining QAP is too expensive’; and ‘The depot operator is charged by the airline to do what he has to do in his depot anyway, which causes a duplication of effort and cost’.

7.7. Warehouses As was the case for depots, there was general consensus that the licensing of customs warehouses is both logical and desirable. However, a significant issue was raised in relation to the warehousing of EEGs.

EEGs are defined in the Customs Regulations117 by way of the Harmonized Commodity Description and Coding System (HS Code) and are effectively imported goods which, if manufactured in Australia, would be subject to excise duties. These include beer, distilled spirits, petroleum and certain alternate fuels and tobacco. Part VAA of the Customs Act then deals with EEGs for which certain requirements are imposed on importers of such products.118

EEGs primarily are imported in a ‘bulk’ format to gain efficiencies in transportation costs, and then on importation are subject to processes of further manufacture such as reduction in alcohol strength, blending, bottling, canning or other re-packaging. Government policy is that all such further manufacturing activity of EEGs should be performed in premises that are licensed under the Excise Act 1901 for that purpose, with administration being the responsibility of the Australian Taxation Office (ATO).

Some importers may deal in ‘packaged’ or ‘finished’ EEGs which, unless cleared immediately for home consumption via an import declaration, will be treated in the same manner as bulk imported EEGs (i.e. as if being further manufactured).

To enable this policy, imported EEGs must be transferred from the controls of the Customs Act to the controls of the Excise Act, the mechanisms for which are found in Sections 105B and 105C of the Customs Act which provide for:

The excise equivalent component of the customs duty being ‘extinguished’ upon the movement of the EEG into production;


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The owner of the EEGs making a weekly manufacturers return in relation to EEGs which are moved into production in the form of an ex-warehousing declaration; and

The owner paying any ad valorem duties payable on the EEGs with the manufacturers return.

To facilitate this, section 105B further requires all importers of EEGs to be licensed under both the Customs Act (section 79) and Excise Act (section 39A) and that the goods be under the control of Customs at the time of manufacture.

Government policy has also transferred full administration of EEGs to the ATO, including applications for licensing under both the Customs Act and Excise Act, applications to move EEGs and other aspects such as remissions, audit, compliance and general enquiries. As a consequence, lodgement of warehousing and ex-warehousing declarations through the ICS remains the only contact between importers of EEGs and Customs.

8. Business and Regulatory Contexts

The project was commissioned because it is more than 15 years since the last comprehensive review of the Depot licensing provisions and over 30 years since the Warehouse and Agents and Customs Brokers licensing provisions were enacted. In the intervening years, much has changed. Indeed, there is a stark contrast between the business and regulatory contexts which prevailed at the time of the last substantive amendments to the respective licensing regimes and those which prevail today.

Key changes since 1980 that have materially affected the context in which depots, warehouses and customs brokers are subjected to licensing requirements include the significant advances in information technology, general business practices and the way in which international trade is conducted, and Government policy settings and priorities, including how Customs manages its charter – along with more general economy-wide changes.

8.1. Information Technology One of the most profound areas of change in recent years is that of information and communications technology. The pace of technological change has increased dramatically since the early 1980s, and in recent years the proliferation of powerful mobile devices, applications and connectivity solutions has revolutionised most aspects of society including the way in which international trade and commerce is conducted.

From a customs broker’s perspective, the current technological environment provides an extremely efficient way of communicating data from the Importer of Record in a format required by the regulators, and in some cases this may involve little or no manual intervention. Indeed, such technologies have led to an environment in which both the international trading community and regulatory authorities have access to a significant breadth and depth of data, together with powerful tools to enable greater data storage, accessibility, transparency, reliability and integrity.

The use of technologies such as the internet, mobile devices, cloud technology, bar-coding, radio-frequency identification (RFID), and other innovations in information and


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communication technology (ICT) have served to totally recast the way in which trade is conducted and regulatory compliance is achieved and assessed. The last point includes the development of single window solutions, real-time access to commercial information and greater interconnectivity among regulatory bodies, both nationally and internationally.

The pace of change is unlikely to abate in the future, as the following extract from the ACBPS’s Blueprint for Reform 2013-2018 suggests:

To ensure we are always ready for the future, we will deliver world-class technology solutions for our people based on evolving trends. We will investigate solutions that support our transformed technology platform, including tools for analytics and advanced facial recognition, and wearable technologies. We will focus on technologies and tools that allow us to evolve and respond to new threats.119

These technological innovations have, however, also resulted in a significant reduction in contact between industry and the regulators which appears to have led to a commensurate reduction in communication and mutual trust.

8.2. International Trading Environment The changes that have occurred in the international trading environment are equally as dramatic. At a very basic level, the proportion of containerised cargo has increased significantly in the past 30 years and, according to Customs, ‘In just four years, our border systems will need to cope with an expected increase of 227 per cent in air cargo and 14 per cent in containerised sea cargo. Longer term projections forecast the volume of freight moved by Australia’s busiest container port to more than double over the next 10 years.120

The way in which trading patterns have evolved and are continuing to evolve is also having a considerable impact on the operation of customs brokers and operators of licensed premises. This includes the globalisation of supply chains, trade liberalisation, the proliferation of free trade agreements and trading blocs, increased trade with emerging market economies - particularly in Asia, the rise of emerging markets in global trade in high-technology products,121 the emergence and growth of high volume, low value on-line shopping, and the increased market share and expanded role of express carriers.

The past 30 years has also seen a greater tendency for delivery of services through corporations rather than by individuals, family businesses and partnerships. This has had the effect of introducing a further layer of regulatory scrutiny through the Australian Securities and Investments Commission (ASIC) and the ATO, among others.

The increased focus on supply chain security since 9/11 and the introduction of a range of industry- and government-led initiatives has also had a major impact on members of the international trading community, including traders, service providers such as customs brokers, freight forwarders, express carriers, airlines, shipping companies, and port and airport operators, as well as industry bodies.

The relevant industry bodies have, in response to the changing international trading environment, also played an increasing role in self-regulation, education, research and the provision of advisory services to support their members. These include industry representative bodies such as the CBFCA, ECA, AFIF, CAPEC, and SAL.122


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Among the many changes impacting Australian industry are the additional regulatory imposts that have recently been introduced such as the introduction of the customs broker CPD scheme, new security arrangements for air cargo exports, changes to the INS, additional conditions attached to customs brokers’ licences, changes to the notification requirements of a customs broker licence holder, increased record keeping obligations, increased reporting obligations and regulatory scrutiny, and increased penalties for certain offences.

8.3. Government Policy Settings and Priorities From an Australian Government perspective, the past decades have seen a considerable shift in focus for its various border management agencies. For example, we have witnessed a reduced focus on import revenue collection and a significantly increased focus on security, counter-terrorism and border protection. In the case of ACBPS, fundamental reforms have also been introduced to combat the potential infiltration of industry and its own administration by organised crime.

In response to the rapidly changing international environment, ACBPS has embarked on a major reform program that is designed to, among other things, improve its ability to work ahead of the border, secure international supply chains and prevent illicit goods from entering the country. To this end, ACBPS comments that, ‘With the right intelligence and tools we can support Australian businesses, ensure effective revenue collection, and minimise interventions in legitimate trade and travel’.123

In its Blueprint for Reform 2013-2018, ACBPS makes clear its intention to facilitate trusted trade. It proposes to achieve this in several ways, including working with industry ‘to provide trusted and compliant traders with expedited border clearance where they have strong security and integrity practices’ and ‘to examine earlier reporting and more effective data sharing. This will include how we can integrate with trusted trader’s logistics systems to enable direct access.’124

ACBPS has also adopted more of a risk-managed approach to regulatory compliance, with an increased focus on identifying potentially high risk entities and consignments, placing less emphasis on physical inspections. This is in fact the philosophy behind the ‘trusted trader’ initiative discussed above, which reflects a more contemporary method of managing compliance. The effectiveness of such an approach hinges on a working relationship between regulators and industry that reflects a mutual commitment to accountability and improving regulatory compliance:

Businesses that enter into such partnerships are generally required to demonstrate a history of providing accurate and timely information about their transactions, establish a good record of regulatory compliance, and demonstrate that their systems and procedures will ensure a continuation of their established compliance record. Generally, this requires them to open their operations to analysis by regulatory auditors and to advise the regulator of any changes to their systems or procedures that may impact on the initial assessment of their level of compliance.

On the other side of the partnership equation, regulatory authorities seek to create an environment in which companies can maximise their entitlements, and meet their obligations for trade compliance with minimal commercial impact. This necessitates providing companies with the means to achieve certainty and clarity in assessing their liabilities and entitlements and to


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allow them to conduct subsequent business without fear of additional regulatory burdens after the transaction is concluded and the opportunity to recover costs has passed.125

In addition to the changing Government priorities relating to Customs, it is pertinent to note that the significance of biosecurity has increased considerably in recent years, particularly in relation to the role it plays in protecting the agricultural sector and supporting Australia’s reputation as a safe and reliable trading nation. According to Beale et al (2008), biosecurity management is becoming increasingly challenging for a number of reasons, including:

globalisation, which is integrating the world economy and increasing the volume and range of products traded internationally;

growth in tourism, passenger and cargo movements, which increases the risks of exotic pest and disease incursions despite the best efforts of border security;

the potential risk of agri-terrorism involving animal rights extremists or political terrorist organisations;

increasing global movements of genetic material as farmers endeavour to increase productivity, which places particular demands on pre- and post-border biosecurity services;

physical constraints for border interception activities, especially at major passenger airports; and

financial constraints, as governments allocate scarce revenue among many competing demands.126

From an industry perspective, the reduced priority of import revenue collection and the increased focus on border protection, including biosecurity, has had a clear impact on the activities of depot operators and customs brokers in particular. However, while QAP accreditation is capable of operating as a ‘stand alone’ arrangement for depot operators, a prerequisite of the AEPCOMM Scheme is that customs brokers must firstly be licensed under the Customs Act.

Another government priority which is of particular relevance to the present review is the deregulation agenda, announced in September 2013. According to the Department of Prime Minister and Cabinet’s Office of Deregulation:

The Government’s red tape reduction programme aims to reduce unnecessary red tape costs on individuals, businesses and community organisations. It applies to any mandatory obligations imposed by legislation, regulations, quasi regulations such as, statutory instruments, standards, codes of practice, or any other aspect of regulator behaviour that has a measurable cost burden on business or individuals. Red tape burden imposed by the Commonwealth’s procurement, grants and cost recovery rules are also included.

The Government’s objective is to reduce the annual cost of red tape for business, community organisations and individuals by at least $1 billion per year.127


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Unlike previous initiatives to reduce red tape, the current policy is aimed at increasing the whole-of-government focus on the deregulation agenda rather than relying on individual departments and authorities to pursue the agenda in isolation. For that purpose, the Office of Deregulation was created to:

provide deregulation policy advice to the Prime Minister and the Parliamentary Secretary assisting the Prime Minister on Deregulation;

oversee and coordinate the Government’s audit of regulation and the $1 billion annual regulation cost reduction target;

facilitate the exchange of information on deregulation across the Government, in particular between deregulation units established in each department;

assist the Prime Minister to establish a deregulation agenda with states and territories through the Council of Australian Governments (COAG); and

monitor and provide reports to the Government on the progress of the deregulation agenda.128

9. Key Considerations and Conclusions

9.1. Licensing Proposition The licensing of customs brokers is used by regulators in many countries around the world as a means of regulating the profession. In countries where brokers are not licensed, they are usually formally recognised by the regulating agency in some other way such as by registration, certification or approval.

It can be argued that licensing provides regulators with the strongest mechanism for controlling the behaviour of customs brokers with features including:

establishing criteria to be met in order to qualify for a licence;

imposing a fixed term for the licence and the need to re-apply for the licence;

imposing a fee for the granting/renewal of a licence;

attaching conditions to the licence; and

the inherent power to suspend or cancel the licence.

Nevertheless, other mechanisms such as registration, certification or approval can also be effective in that they make the customs broker ‘visible’ to the regulator and the public and carry the inherent prerogative in the regulating agency to suspend or cancel the registration, certification or approval etc., thereby depriving the customs broker of the relevant recognition. Of course, much depends upon the precise structure of the relevant mechanism but it is possible that one or more of these lesser forms of recognition of customs brokers may be workable, and even preferable to licensing.

To test this, it is necessary to consider the objectives of regulating customs brokers in Australia, i.e. the public policy outcomes that dictate the need for such regulation.


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As described in the Australian Regulatory Review section of this report, the oft-repeated rationale for customs broker licensing, expressed through Explanatory Memoranda and Second Reading Speeches relating to amending legislation, and through Australian Customs Notices, has been two-fold:

Protection of the Commonwealth Revenue; and

Ensuring compliance with the ‘Customs Acts’.

It is debatable whether these two imperatives are, or should be, the only or even the dominant public policy drivers justifying the licensing of customs brokers.

While it was not expressly stated in the sources referred to above, it is assumed that the Commonwealth Revenue sought to be protected was that derived from customs and import duties on imported goods. As the role of customs brokers includes the proper declaration of the tariff classification, valuation and origin of imported goods and the proper assessment of the duty payable in respect of those goods, the improper discharge of those duties could potentially adversely affect that aspect of the Commonwealth Revenue. But how significant is the contribution of customs and import duties to the Commonwealth Revenue and does the protection of that contribution justify the direct and indirect costs to the Government and the industry of running the current customs brokers licensing scheme?

Certainly, the absolute value of revenue generated by customs and import duties has increased over the years. In 1980, it amounted to A$1.8 billion (bn), while in 2013 it was A$8.1bn.129 But in the same years, the total tax revenue figures were A$39.9bn and A$351.1bn respectively.130 Accordingly, the percentage of total tax revenue contributed by customs and import duties has shrunk from 4.5% in 1980 to 2.3% in 2013.

While A$8.1bn is undoubtedly a large amount, worthy of protection, it represents a very small proportion of total tax revenue. It is valid to question how the customs broker licensing scheme protects that amount and, more particularly, why a different (potentially less expensive and less administratively burdensome) scheme might not deliver the same or greater protection. Amongst interviewees, including regulators, the commonly expressed view was that the majority of importers and customs brokers are honest. This probably accords with the prevailing view of society generally. If that is the case, it might be assumed that ‘most’ of the A$8.1bn in customs and import duty collected in 2013 would have been collected even if customs brokers were not licensed.

By way of contrast, total income taxation revenue in 2013 was A$242.2bn, or 69% of total tax revenue.131 Providing advice in respect of these taxes represents a large part, but not all, of the duties of a tax practitioner. Clearly, tax practitioners are involved in a vastly larger proportion of the Commonwealth Revenue than are customs brokers. However, tax practitioners are not subject to a licensing scheme – rather, they are regulated as RTAs by the independent non-Government Tax Practitioners Board (TPB) under a separate statute (the Tax Agents Services Act 2009) which does not form part of the taxation laws of Australia. This scheme is described in greater detail below. Suffice to say, for current purposes, that ‘protection of the Commonwealth Revenue’ on a vastly larger scale has been achieved in the tax arena without reliance upon licensing. It could be argued, then, that the first part of the rationale traditionally offered for customs broker licensing is not entirely valid.


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The second part of the justification – ‘ensuring compliance with the Customs Acts’ – may also be subject to challenge.

At the time that this justification was relied upon in the source documents, no definition of ‘the Customs Acts’ was offered. It might be assumed that the term was intended to cover the Customs Act 1901, related ‘Customs’ legislation (e.g. the Customs Tariff Act 1995, Customs Tariff (Anti-Dumping) Act 1975 and numerous other statutes containing the word ‘Customs’ in their titles), and, adopting an expansive interpretation, perhaps even the Regulations under each of those statutes. But there are numerous other statutes in respect of which the ACBPS has a role and which bear upon the normal activities of customs brokers. Examples include the Copyright Act 1968, Trade Marks Act 1995, Commerce (Trade Descriptions) Act 1905, Quarantine Act 1908, Imported Food Control Act 1992, A New Tax System (Goods and Services Tax Imposition – Customs) Act 1999 and countless others. In no meaningful usage of the term could these Acts be called ‘Customs Acts’.

It can be readily agreed that ensuring compliance with relevant statutes relating to Customs (and, indeed, with all other laws) is highly desirable. But most laws (including the Customs Act) contain their own enforcement provisions which create offences and impose penalties for breaches of the law. It is not clear how the licensing of customs brokers increases compliance with ‘the Customs Acts’ or, conversely, reduces the instances of breaches of those statutes. Nor is it clear whether - and if so, how - licensing of customs brokers has ensured compliance with the other ‘non-Customs Acts’ under which these customs brokers operate. Is it suggested that compliance of those who are not licensed customs brokers but who operate under ‘the Customs Acts' and the other ‘non-Customs Acts’ (e.g. importers, exporters, freight forwarders, logistics companies, trade consultants, lawyers, accountants and many others) is less assured?

Again, by way of contrast, ensuring compliance with ‘the Taxation Acts’ must be at least an equally important priority for the Government as ensuring compliance with ‘the Customs Acts’ – but the ATO has not felt the need to license tax practitioners in order to achieve this compliance.

Regardless of the conclusion reached about the validity of the traditionally espoused rationale for the licensing scheme, it is undeniable that government priorities and, consequentially, the role of customs brokers, have changed in recent years.

9.2. Constitution of NCBLAC Section 183DA of the Customs Act provides that the NCBLAC will consist of the Chair, a member to represent customs brokers and a member to represent the Commonwealth.

The Chair, appointed by the CEO of ACBPS, is a person who:

is or has been a Stipendiary, Police, Special or Resident Magistrate of a State or Territory; or

in the opinion of the CEO, possesses special knowledge or skill in relation to matters that the Committee is to advise or report on.

The customs brokers’ representative is appointed by the CEO on the nomination of an organisation that, in the opinion of the CEO, represents customs brokers. This has traditionally been the CBFCA.


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The Commonwealth representative is the person ‘holding the office in the Department that the CEO has specified is the office for the purposes of section 183DA’. Note that ‘The Department’ is not defined in the Customs Act but clearly refers to the Department for the time being housing the ACBPS. There is no apparent capacity for the CEO to appoint anyone other than the person in the nominated job description. Accordingly, while he or she might be nominally the Commonwealth representative, it could not be said that he or she represents the broader interests of the Commonwealth (if such broader interests are in fact of relevance to customs broker licensing), but rather those of the ACBPS.

It is widely recognised by both government and industry that customs brokers are engaged by traders to ensure that goods meet both Customs and Quarantine requirements. Given the changing government priorities and the fact that the work of customs brokers touches upon a wide range of Commonwealth public policy issues (indeed not restricted to customs and quarantine), it is considered that those wider interests of the Commonwealth should also be represented in assessing a person’s suitability to be a customs broker, whether as a member of NCBLAC or otherwise.

9.3. Alternative Customs Broker Licensing Models Several alternatives to the current customs broker licensing arrangements have been developed in the context of the above discussion.

9.3.1. Option 1

Abolish the regulation of customs brokers

Abolishing customs broker regulation completely would do little more than restore the ‘level playing field’ by gravitating to the lowest common denominator, and is not considered appropriate. In view of the significant role played by customs brokers in ensuring compliance with regulatory requirements on behalf of third parties, it is considered judicious to maintain some form of regulation or co-regulation.

While the regulation of other sectors of the international trading community does not fall within the scope of the current review, it is also considered prudent to maintain some form of registration for all those who play a role in reporting any element of an international transaction to government on behalf of a third party.

9.3.2. Option 2

Abolish licensing of individual customs brokers but maintain licensing of brokerages

Under the current scheme, customs brokers’ licences are granted to corporations, partnerships and individuals, including ‘nominees’, i.e. customs brokers who are employed or engaged by customs brokerages. One issue which arose in interviews with industry representatives was the prospect of abolishing the licensing of individual customs brokers but maintaining the licensing of brokerages. In the main, these are corporate and partnership brokerages, but include a small number of sole traders.

This approach rested upon a number of propositions:

The customs brokerage industry has become, and continues to become, increasingly ‘corporatized’. The scale of operation of brokerages has grown to a level where the optimal business structure is a company rather than a sole


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trader or partnership, and the level of investment required to operate a customs brokerage is better accommodated by corporations than by individuals.

There are well-established agencies charged with overseeing the operations of corporations – such as the Australian Stock Exchange (ASX), ASIC and the ATO – and regulators, generally, are focused more on corporate behaviour rather than individual behaviour.

A basic tenet of corporate business is that corporations are liable for the acts of their employees. In some cases, this extends to liability on the part of individual directors of the corporation. In the case of customs brokerages, this would mean that the corporate brokerage would be liable for the acts of its individual employee customs brokers. In this regard, it is pertinent to note that a customs brokerage enters into contractual arrangements with its clients, not the individual nominees. Consequently, from a commercial perspective the accountability clearly rests with the customs brokerage, including in the event of negligence or fraud affecting the brokerage’s clients.

Similarly, in a regulatory context, DAg compliance agreements are driven by the corporate entity and not individual nominees; and the Trusted Trader/AEO regime proposed by ACBPS will most likely focus on the integrity of the systems and procedures of corporate brokerages (including governance arrangements relating to the activities of their nominees).

Concerns raised by nominees about who will be held responsible for infringements under the INS would be overcome if customs broking licences focused on the brokerages rather than individuals operating within the company or firm. In this regard, if licensing was restricted to customs brokerages, any liability for penalties arising from a breach of the conditions of a licence or a breach of relevant legislation would clearly rest with the customs brokerage rather than the nominee.

The powers that are conferred on the ACBPS by virtue of the licensing system would be concentrated on a smaller but more accountable population of licensees, being the corporate brokerages. This would reduce the administrative costs of the ACBPS in licensing the many hundreds of individual customs brokers. A further advantage arises from the fact that corporations are more ‘visible’ than individuals because of their reporting obligations to other agencies, can have an existence which exceeds the life of individual customs brokers and can represent a lesser ‘flight risk’ than individuals – all of which enhance the ability of the ACBPS to apply effective enforcement action on the licensee.

Removal of the licensing obligation on individual customs brokers would not mean a reduction in the professionalism or accountability of those brokers. Educational qualifications, CPD obligations, the gaining of relevant experience, compliance with codes of conduct and other requirements on individuals could all be maintained and, preferably, enhanced in collaboration with the relevant industry bodies. But the corporate brokerages would take on an increased responsibility to ensure their employed customs brokers met those standards, not only to ensure that their clients were well-served, but because of their liability to the ACBPS for any failures of those employees.


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9.3.3. Option 3

Retain the existing licensing model but enhance it with input from other agencies

This option recognises the fact that the scope of a customs broker’s regulatory compliance obligations goes beyond the legislation for which ACBPS has administrative responsibility, most notably in the area of biosecurity. Such broader knowledge requirements are reflected in the units of competency which form part of the National Customs Brokers course, which notably has been developed by industry. Interestingly however, the course itself, including both ‘Customs’ and ‘non-Customs’ units, is accredited by ACBPS, despite the fact that it has no administrative authority in matters relating to biosecurity/quarantine, and has no requirement for such elements to be included in the CPD scheme.

This option would retain NCBLAC, but expand its representation to include the wider interests of the Commonwealth. At a minimum, a representative of DAg should be included on the committee, and have input into both the initial licensing process and the CPD arrangements, thereby providing the committee with greater relevance to the operational responsibilities of the customs broker profession.

9.3.4. Option 4

Replace licensing with a scheme based on the RTA model

There are similarities between the roles of licensed customs brokers and registered tax agents. For example:

Each deals with elements of the Commonwealth revenue: for customs brokers - customs and import duties, anti-dumping duties, countervailing duties, Goods and Services Tax (GST) on imports and others; for registered tax agents - taxes on income, profits and capital gains, GST and others.

Each deals directly with the relevant taxing authority: for customs brokers - the ACBPS; for registered tax agents - the ATO.

Each advises the individuals and companies who are liable for the payment of the respective duties and taxes.

The process for becoming a registered tax agent is described at Appendix 8 and a comparison of the customs broker licensing and tax agents schemes is at Appendix 9. There are certain aspects of the RTA scheme which could be applied in the customs broker context.

Separate Act of Parliament:

The current scheme of licensing customs brokers is prescribed by Part XI of the Customs Act which vests the power to grant licences in the CEO of the ACBPS. As the agency with primary responsibility for administration of the Customs Act, and as described in Appendix 10 which summarises the process for obtaining a customs broker’s licence, the ACBPS is integrally involved in most aspects of the customs broker licensing scheme, including:

prescribing the technical study units required to be undertaken by applicants;


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requiring applications to be lodged with its Broker Licensing Section;

appointing the three members of NCBLAC;

appointing an officer of the ACBPS as a member of NCBLAC to nominally represent the Commonwealth;

imposing extensive conditions upon licences;

assessing whether an applicant has acquired experience to fit him or her to be a customs broker;

assessing whether an applicant is a ‘fit and proper person’;

approving the content and allocating the points value of units in the mandatory CPD scheme;

granting the licence; and

as considered appropriate, reprimanding the customs broker, suspending or cancelling the licence.

A number of interviewees considered that such close control of the licensing scheme by the ACBPS was either unnecessary or inappropriate, that it was inimical to a proper working relationship between the agency and customs brokers, or that there should be a better way of regulating the customs broker industry.

The RTA scheme is created by the Tax Agent Services Act 2009, the long title of which is ‘An Act to establish the Tax Practitioners Board (TPB) and to provide for the registration of tax agents and BAS agents, and for related purposes’. The Tax Agent Services Act 2009 and its associated Tax Agent Services Regulations 2009 effectively contain all the legislative powers required to establish and administer the RTA scheme. It has no connection with the Income Tax Act 1986, the Income Tax Assessment Act 1997 or any other taxing laws. While the Secretariat and support staff of the TPB are provided by the ATO, neither the Commissioner of Taxation nor any senior ATO officers have any role in the key functions of the TPB.

Independent Body:

The NCBLAC is constituted by three members appointed by the CEO of the ACBPS. One of those members is required by the Customs Act to be an employee of the ACBPS, ostensibly to represent the Commonwealth but, as a matter of practice, as a representative of the ACBPS. This arrangement cements the close relationship between the NCBLAC and the ACBPS.

The TPB is constituted by eight members appointed by the Minister – currently, the Assistant Treasurer. The Commissioner of Taxation has no control over the appointment of the members.


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Size and Make-Up of NCBLAC / TPB:

The NCBLAC is comprised of just three members, with only one of those members being drawn from the broking industry. As one of the key tasks of the NCBLAC is to assess the suitability of applicants to be granted a customs broker’s licence, there is an argument for increasing the number of industry members to ensure a broad range of industry experience is brought to that task. As discussed in Option 3, there is a consensus that other government agencies (particularly DAg) should be represented on the NCBLAC – necessitating a further increase in the size of the Committee.

The TPB is required by the Tax Agent Services Act 2009 to comprise the Chair and six or more members. It is currently comprised of the Chair and seven members. All eight members have substantial industry experience and, collectively, they hold an impressive range of tertiary and other qualifications, as summarised at Appendix 8. The Tax Agent Services Act 2009 expressly prohibits the Minister from appointing an officer of the Public Service as the Chair. On balance, the TPB appears to be more representative of industry than the NCBLAC and more independent of the Federal bureaucracy.

Code of Professional Conduct:

Section 30.10 of the Tax Agent Services Act 2009 prescribes a Code of Professional Conduct (see Appendix 11). This legislative prescription provides clear instruction to tax agents about the standards of conduct which they must achieve. This approach would seem to be transferable to the customs broker context.

The TPB has produced a 73-page Explanatory Paper,132 which provides a detailed explanation of the TPB’s interpretation of the Code of Professional Conduct. This is a further indication to tax agents of the standards which are expected of them. Similarly, this approach would seem transferable to the customs broker context, although it is doubtful that the NCBLAC, as currently constituted, would have the resources to prepare such a document.

CPD / CPE:

The Tax Agents Code of Professional Conduct requires the tax agent to maintain knowledge and skills relevant to the tax agent services he/she provides. The Explanatory Paper produced by the TPB includes the requirement for a minimum of 90 hours of Continuing Professional Education (CPE) over the 3 year registration period including a minimum 10 hours of CPE per annum. Compliance with a registered tax agents association's CPE requirements is accepted as meeting the TPB's CPE requirements provided the minimum hours are met. The TPB does not accredit or approve CPE activities but relies upon the tax agent's ‘professional judgement when selecting relevant CPE activities to be undertaken’. The TPB does provide guidance on appropriate CPE activities.

This is certainly something that could be adapted to the customs broker context. The regulator could provide industry with a set of criteria and then leave it to industry to determine the individual worth of specific activities. Registered Training Organisations (RTOs) and other relevant organisations, including professional associations and Government agencies, could develop programs of relevance to the customs broking profession based on the relevant criteria. Customs brokers would be required to keep a record of their CPD activities for possible audit (by their industry association or, if necessary, the regulator).


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Public Register:

The TPB website contains an on-line register of all registered tax agents in Australia, searchable by agent name, business name, agent number, street address, postcode or State. This is a highly desirable feature of the RTA scheme.

It is a lamentable defect in the licensed customs broker scheme that no public register of licensed customs brokers is made available by ACBPS.

9.3.5. Option 5

Retain the existing licensing model for customs brokerages, but enhance it with input from other agencies; and replace licensing for individual customs brokers with a scheme based on the RTA model

This option represents a combination of Options 2, 3 and 4. It involves the retention of licensing for customs brokerages, but with input from other agencies; and the replacement of licensing for individual customs brokers with a scheme based on the RTA model. As such, it would:

Maintain the stringency of the existing licensing arrangements for customs brokerages;

Broaden the representation of NCBLAC to include the interests of other regulatory agencies; and

Introduce customs broker registration arrangements for individuals under an independent body with substantial industry experience. This body would also oversee relevant CPD arrangements.

Under this arrangement, licensed customs brokerages would be required to employ or otherwise acquire the services of registered customs brokers.

9.4. EEG Considerations Whilst there is a need to ensure that no ‘compliance gaps’ exist in the process of EEGs from the time of arrival at the first port and uptake to the records of the licensed excise manufacturing premise, there is a question of the efficiency in requiring those businesses dealing only in the import and further manufacture of EEGs to hold dual licenses. Some burden has been lifted for the industry by way of a ‘single entry point’ through the ATO for both customs and excise licensing, however, there appears to be no valid reason for EEG importers to hold a section 79 licence other than to satisfy the provisions of sections 105B and 105C of the Customs Act.

If this requirement was reviewed and repealed, there would be an immediate saving of $4,000 per annum per licensed site, as the section 79 licence currently attracts this annual fee. On top of this, one could reasonably expect there to be compliance cost savings associated with the renewal and payment process. It should be noted that the ATO does not levy any licence fees, and the renewal process for an excise licence has been extended to three years.

It is expected that the EEG industry would support a rigorous and stringent licensing regime for imports of EEGs, and given the revenue at stake from these goods and the risks of unfair competitive advantages from less than scrupulous traders, strong licensing requirements are seen as a key control. However, the licensing regime could


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be based solely on the Excise Act, possibly through an amendment to section 68 of the Customs Act to provide that all EEGs not entered for home consumption via an import declaration be delivered to a premises licensed under the Excise Act for that purpose. This would need to be complemented by relevant changes to sections 105B and 105C of the Customs Act to remove the dual licensing and customs control requirements.

The only policy question this leaves is the payment of any ad valorem customs duties on EEGs. At this point, the issue is limited to distilled spirits (and a limited range of alternate fuels) imported from non-FTA, and/or non developing countries. As these products have had their ad valorem duty deferral already cut from ‘home delivery ex-warehouse’ to ‘movement into production’, the industry position would need to be sought. However, if it was off-set by savings to compliance costs, industry may be open to the concept.

If this could be achieved with those EEG industry sectors with an ad valorem customs duty liability, Customs would need to build an administrative mechanism in ICS such as a new ‘treatment code’ to facilitate delivery to an excise premises and ad valorem duty payments (when required) for importers.


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10. Recommendations

It is recommended that a joint review be undertaken by relevant government agencies and industry, led by ACBPS, with a view to achieving the following outcomes that are designed to optimise the regulation of the relevant sectors while minimising the impact on the businesses of the licensees:

1. Revise the licensing/approval procedures that apply to Depots in order to provide Class 1.1 to 1.3 QAP approval for all depots as a matter of course. In this way, all Customs approved depots would be authorised to be used for the deconsolidation of sea and air cargo, inspection and treatment of goods, containers and ULDs for both customs and quarantine purposes;

2. Amend the licensing provisions relating to Warehouses to remove the dual licensing and control requirements that currently apply to importers of EEGs under the Customs Act (section 79) and Excise Act (section 39A);

3. Abolish the current customs broker licensing arrangements and either:

3(A) Replace them with a scheme based on the Registered Tax Agents model as described in Option 4, that will include:

a. Establishment of a RCB scheme

b. The RCB scheme to be administered by an independent body (‘the Administrator’) that is comprised of a representative of ACBPS, a representative of DAg, a number of customs broker representatives and an independent chair

c. Registration as a customs broker be based on:

i. achievement of a professional qualification

ii. a minimum period (say one year) performing the functions of a customs broker under the supervision of an RCB

iii. being deemed to be a ‘fit and proper person’

iv. meeting the requirements of a Code of Professional Conduct (including CPD); and

d. CPD criteria to be determined by the Administrator, with all CPD operational arrangements managed by industry; or

3(B) Replace individual customs broker licensing with the arrangements described in Recommendation 3(A), and replace the current licensing arrangements for customs brokerages with a licensing scheme that will include:

a. A broader membership of NCBLAC to include the interests of other regulatory agencies;

b. Licensing as a customs brokerage be based on:

i. approved systems and procedures;

ii. use of registered customs brokers;

iii. being deemed to be a ‘fit and proper person’

4. Establish a public register of Registered Customs Brokers, Licensed Depots, Licensed Warehouses and, if applicable, Licensed Customs Brokerages.


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11. Next Steps

This report has been prepared for the AITTIDF with the express purpose of providing an Australian international trade and transport industry position on licensing schemes for its consideration and, if deemed appropriate, presentation to Government.

Should the AITTIDF decide to progress the issues raised in the report, the researchers would be pleased to assist in providing briefings to key agencies and other government representatives.

In considering an approach to Government, it is pertinent to note that the ACBPS Blueprint for Reform 2013-2018 includes a proposed comprehensive review of the legislative and regulatory frameworks. The focus of the review has been on ensuring legislation and regulatory frameworks support the vision for reform. The ACBPS has also declared its commitment to ongoing engagement with industry to achieve that reform. That, combined with the clear preparedness of the new Federal Government to review the efficacy and cost of many entrenched programs, means that the recommendations flowing from the project may find a more receptive audience than has been the case for many years.


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12. End Notes

1 International Convention on the Simplification and Harmonization of Customs Procedures (as

Amended), adopted 26 June 1999 (entered into force 3 February 2006). 2 A total of 111 participants.

3 Any errors contained in the report remain the responsibility of the authors.

4 See Australian Customs and Border Protection Service (2013) Customs Broker, available at

http://www.customs.gov.au/site/page6090.asp, accessed 30 June 2014. 5 World Customs Organization (nd) Kyoto Convention Specific Annex A Guidelines Chapter 1,

section 7. 6 See Australian Customs and Border Protection Service (2014) Warehouse & Depot, available at

http://www.customs.gov.au/site/page6091.asp, accessed 30 June 2014. 7 World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1,

section 1. 8 World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1,

section 1. 9 World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1,

section 1. 10

See Australian Customs and Border Protection Service (2014) Warehouse & Depot, available at http://www.customs.gov.au/site/page6091.asp, accessed 30 June 2014. 11

House of Representatives, Parliament of the Commonwealth of Australia (1980) Customs Amendment Bill (No.3) 1980 – Second Reading Speech, Canberra, 30 April 1980, in House of Representatives Official Hansard No.18, 31

st Parliament, 1

th Session, 5

th Period, p.2469.

12 Australian Customs and Border Protection Service (2012) ‘Customs Broker Licence Conditions

and Continuing Professional Development for Licensed Customs Brokers’, Notice No.2012/29, Canberra, 7 June 2012; Australian Customs and Border Protection Service (2012) ‘Customs Broker Licence Conditions Guidance to Customs Brokers’, Notice No.2012/43, Canberra, 16 August 2012. 13

Australian Customs and Border Protection Service (2012) ‘Customs Broker Licence Conditions Guidance to Customs Brokers’, ACBP Notice No.2012/43, Canberra, 16 August 2012. 14



See for example Department of Agriculture (2014) Compliance Agreement: Standard Terms, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/terms, accessed 30 June 2014; Department of Agriculture (nd) Compliance Agreement Standard Terms: Quarantine Act 1908, available at http://www.daff.gov.au/__data/assets/pdf_file/0003/2391681/sterms.pdf, accessed 30 June 2014. 17

Also known as the CCC scheme or Broker Accreditation Schemes (BAS). 18

Full Container Load. 19

Full Container Load with multiple house bills. 20

Less than Container Load. 21

Department of Agriculture (2014) The Scheme: Non Commodity for Containerised Cargo Clearance (NCCC) Scheme, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/nccc, accessed 30 June 2014. 22

Department of Agriculture Fisheries and Forestry (2012) Process and Outcomes Document: Non-Commodity for Containerised Cargo Clearance Scheme, Canberra, November 2012, p.4.


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23 A Branch Identifier is a facility within the ACBPS Client Register which enables clients to

uniquely identify specific areas of their organisation in dealings with ACBPS. 24

Department of Agriculture Fisheries and Forestry (2012) Process and Outcomes Document: Non-Commodity for Containerised Cargo Clearance Scheme, Canberra, November 2012. 25

Department of Agriculture Fisheries and Forestry (2012) Process and Outcomes Document: Non-Commodity for Containerised Cargo Clearance Scheme, Canberra, November 2012, p.6. 26

Department of Agriculture Fisheries and Forestry (2012) Process and Outcomes Document: Non-Commodity for Containerised Cargo Clearance Scheme, Canberra, November 2012, pp.12-13. 27

Department of Agriculture Fisheries and Forestry (2012) Process and Outcomes Document: Non-Commodity for Containerised Cargo Clearance Scheme, Canberra, November 2012, p.14. 28

Department of Agriculture (2014) Automatic Entry Processing for Commodities (AEPCOMM) Scheme, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/aep-commodities, accessed 30 June 2014. 29

See Department of Agriculture Fisheries and Forestry (2013) Process and Outcomes Document: AEP for Commodities Scheme, Canberra, January 2013. 30

Department of Agriculture Fisheries and Forestry (2013) Process and Outcomes Document: AEP for Commodities Scheme, Canberra, January 2013, p.5. 31

Department of Agriculture Fisheries and Forestry (2012) Post Implementation Assessment of the Department of Agriculture, Fisheries and Forestry Automatic Entry Processing for the Commodities Scheme, Canberra, June 2012. 32

Department of Agriculture Fisheries and Forestry (2012) Post Implementation Assessment of the Department of Agriculture, Fisheries and Forestry Automatic Entry Processing for the Commodities Scheme, Canberra, June 2012, p.2. 33

These were available through the AIWGB ‘Guardian’ training website. See Guardian, available at http://www.iwgq.com.au, accessed 30 June 2014. 34

Department of Agriculture Fisheries and Forestry (2013) ‘Non-commodity for Containerised Cargo Clearance (NCCC) Scheme – Changes to Training Facilitation’, Notice to Industry No.28/2013, Canberra, 31 May 2013, p.1. 35

See Department of Agriculture (2010) Import Clearance Compliance Agreement Accredited Persons Validity, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/validity, accessed 30 June 2014. 36

See Guardian, available at http://www.iwgq.com.au, accessed 30 June 2014. 37

See Department of Agriculture (2010) Import Clearance Compliance Agreement Accredited Persons Validity, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/validity, accessed 30 June 2014. 38

House of Representatives, Parliament of the Commonwealth of Australia (1996) Customs Depot Licensing Charges Act 1997 – Second Reading Speech, Canberra, 7 November 1996, in House of Representatives Official Hansard No.209, 38

st Parliament, 1

th Session, 2

nd Period,

p.6771. 39

Department of Agriculture (2014) Quarantine Approved Premises, available at http://www.daff.gov.au/biosecurity/import/general-info/qap, accessed 30 June 2014. 40

See Department of Agriculture (2014) QAP Facilities, available at http://www.daff.gov.au/biosecurity/import/general-info/qap/qap-facilities, accessed 30 June 2014. 41

Department of Agriculture (2014) Quarantine Approved Premises Criteria, available at http://www.daff.gov.au/biosecurity/import/general-info/qap/qapcriteria, accessed 30 June 2014. 42

Department of Agriculture (2014) QAP Facilities, available at http://www.daff.gov.au/biosecurity/import/general-info/qap/qap-facilities, accessed 30 June 2014. 43

Department of Agriculture (2014) Quarantine Approved Premises, available at http://www.daff.gov.au/biosecurity/import/general-info/qap, accessed 30 June 2014.


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44 Collector of Customs v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307.

45 See Australian Taxation Office (2014) Customs Warehouses Licences, available at

https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Excise-equivalent-goods/Customs-warehouse-licences/, accessed 30 June 2014. 46

House of Representatives, Parliament of the Commonwealth of Australia (1959) Customs Bill 1959 – Second Reading Speech, Canberra, 12 May 1959, in House of Representatives Official Hansard No.20, 23

rd Parliament, 1

th Session, 1

st Period, p.2055.

47 House of Representatives, Parliament of the Commonwealth of Australia (1996) Customs

Amendment Bill (No.2) 1996 – Explanatory Memorandum, Canberra, para iv. 48


st Parliament, 1

th Session, 5

th Period, p.1637.

49 Zacharia Zacharia and Collector of Customs [1994] AATA 96; (1994) 19 AAR 390.

50 Zacharia Zacharia and Collector of Customs [1994] AATA 96; (1994) 19 AAR 390, para 6.

51 Zacharia Zacharia and Collector of Customs [1994] AATA 96; (1994) 19 AAR 390, para 2.

52 House of Representatives, Parliament of the Commonwealth of Australia (1980) Customs

Amendment Bill (No.3) 1980 – Second Reading Speech, Canberra, 30 April 1980, in House of Representatives Official Hansard No.18, 31

st Parliament, 1

th Session, 5

th Period, p.2469.

53 Control Customs Pty Ltd and CEO of Customs [2001] AATA 284.

54 Control Customs Pty Ltd and CEO of Customs [2001] AATA 284, para 7.

55 BR Williams Customs and Freight Forwarding Pty Ltd and Chief Executive Officer of Customs

[2013] AATA 100. 56

BR Williams Customs and Freight Forwarding Pty Ltd and Chief Executive Officer of Customs [2013] AATA 100, para 4. 57

World Trade Organization (2014) WTO Agreement on Trade Facilitation Self Assessment Guide, WTO Doc TN/TF/W/143/Rev.7, World Trade Organization, Geneva. 58

International Convention on the Simplification and Harmonization of Customs Procedures (as Amended), adopted 26 June 1999 (entered into force 3 February 2006). 59

International Convention on the Simplification and Harmonization of Customs Procedures (as Amended), adopted 26 June 1999 (entered into force 3 February 2006), General Annex, Chapter 2, Definitions. 60

World Customs Organization (nd) Kyoto Convention General Annex Guidelines Chapter 8, Relationship Between the Customs and Third Parties. 61

World Customs Organization (nd) Kyoto Convention General Annex Guidelines Chapter 8, Relationship Between the Customs and Third Parties, p.3. 62


World Customs Organization (nd) Kyoto Convention General Annex Guidelines Chapter 8, Relationship Between the Customs and Third Parties, pp.4-5. 64

See for example European Commission, Taxation and Customs Union (2014) The Union Customs Code: A Recast of the Modernised Customs Code, available at http://ec.europa.eu/taxation_customs/customs/customs_code/union_customs_code/index_en.htm, accessed 30 June 2014. 65

European Commission (1992) Council Regulation (EEC) No.2913/92 of 12 October 1992 establishing the Community Customs Code, Brussels; European Commission (2008) Council Regulation (EEC) No.2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No.2913/92 establishing the Community Customs Code, Brussels. 66

European Commission (2008) Regulation (EC) No.450/2008 of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (4 June 2008) Official Journal of the European Union, EU Doc L145, Brussels, p.1. 67

See European Commission, Taxation and Customs Union (2014) The Union Customs Code: A Recast of the Modernised Customs Code, available at


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http://ec.europa.eu/taxation_customs/customs/customs_code/union_customs_code/index_en.htm, accessed 30 June 2014. 68

See for example Gwardzińska, Ewa (2014) ‘The Role of Customs Brokers in Facilitating International Trade’, World Customs Journal, vol. 8, no. 1, pp.63-70. 69

European Commission (2008) Regulation (EU) No.952/2013 of 9 October 2013 laying down the Community Customs Code (recast) (10 October 2013) Official Journal of the European Union, EU Doc L269, Brussels, section 21. 70

Gwardzińska, Ewa (2014) ‘The Role of Customs Brokers in Facilitating International Trade’, World Customs Journal, vol. 8, no. 1, pp.63-70. 71

‘The term “customs business” means those activities involving transactions with the Customs Service concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by the Customs Service upon merchandise by reason of its importation, or the refund, rebate, or drawback thereof. It also includes the preparation of documents or forms in any format and the electronic transmission of documents, invoices, bills, or parts thereof, intended to be filed with the Customs Service in furtherance of such activities, whether or not signed or filed by the preparer, or activities relating to such preparation, but does not include the mere electronic transmission of data received for transmission to Customs.’ 19 USC § 1641(a)(2). 72

The regulations are found in the Code of Federal Regulations (CFR) Part 111. 73

Failure to have a qualifying officer or member (of a partnership) in the business for more than 120 days will result in the revocation of the broker licence. 74

Under regulation 19 CFR 111.53. 75

Regulation 19 CFR 111.53. 76

General Administration of Customs of the People’s Republic of China (2007) Provisions of the Customs of People’s Republic of China for the Administration of Registration of Declaration Entities, Decree of the General Administration of Customs No.127 of 29 September 2007, Beijing. 77

General Administration of Customs of the People’s Republic of China (2006) Administration Rules for Customs Brokers Practice, Order of the General Administration of Customs No.146, Beijing. 78

Note: An unofficial English translation of the relevant Thai law has been used for the purposes of this report. 79

Customs Act BE 2469 (1926) s.106. 80

Customs Act BE 2469 (1926) s.107. 81

For example, Belize, Namibia, Uruguay and Zambia. 82

Including Austria, Finland, New Zealand, Seychelles, Sweden and the UK. 83

For example, the National Board of Patents and Registration in the case of Finland. 84

World Customs Organization (nd) Kyoto Convention Specific Annex A Guidelines Chapter 1, section 7. 85






European Commission (2008) Council Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code, Brussels.


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91 In accordance with the provisions of §19.12, such records must be retained for a period of 5

years after the date of the final withdrawal. 92

Customs and Excise Act 1996 ss.10-19. 93

Customs and Excise Act 1996 s.14. 94

General Administration of Customs of the People’s Republic of China (2003) Provisions of the Customs of the People’s Republic of China for the Administration of Bonded Warehouses and the Goods Stored Therein, Order of the General Administration of Customs of the People’s Republic of China No. 105 of 25 December 2003, Beijing. 95


This is the case in Afghanistan, Bhutan and Turkey. 97

That is, a ministry with no direct customs mandate/responsibility, as is the case in South Korea, where depots (and warehouses) are licensed by the Ministry of Land, Infrastructure and Transport. 98

For example, New Zealand, the Seychelles and the UK. 99

World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1, section 1. 100

World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1, section 1. 101



World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1, section 4.2. 104

World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1, section 4.2. 105

These may also be used for the manufacture of cigars made in whole of tobacco imported from one country, either for domestic consumption or exportation. 106

These stores may also sell other than duty-free merchandise. 107

US Customs and Border Protection, US Customs and Border Protection Bonded Warehouse (2010), Washington DC, February 2010. 108

Customs and Excise Act 1996 ss.19B-19H. 109

General Administration of Customs of the People’s Republic of China (2003) Provisions of the Customs of the People’s Republic of China for the Administration of Bonded Warehouses and the Goods Stored Therein, Order of the General Administration of Customs of the People’s Republic of China No. 105 of 25 December 2003, Beijing; General Administration of Customs of the People’s Republic of China (2005) Measures of the Customs of the People’s Republic of China for the Administration of Export Supervised Warehouses and the Goods Stored Therein, Order of the General Administration of Customs of the People’s Republic of China No. 133 of 28 November 2005, Beijing. 110


For example, Afghanistan, Bhutan, Turkey and Sierra Leone. 112

For example, the UK and Seychelles. 113

A further comment was that the current separate import declaration and quarantine declaration causes unnecessary duplication and should be merged into one process. 114

See World Customs Organization (2014) 2014 WTO IT Conference & Exhibition, available at http://www.wcoomd.org/en/events/event-history/2014/2014-wco-it-conference-exhibition.aspx, accessed 30 June 2014.


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115 Pezzullo, Michael (2013) ‘Border Management and Its Role in Supporting National Economic

Competitiveness’, Address to the Lowy Institute for International Policy, 16 October 2013, available at http://www.lowyinstitute.org/events/lowy-lecture-series-border-management-and-its-role-supporting-national-economic-competitiveness-mr, accessed 30 June 2014. 116

Morrison, Scott (2014) ‘A New Force Protecting Australia’s Borders’, Address to the Lowy Institute for International Policy, 9 May 2014, available at http://www.minister.immi.gov.au/media/sm/2014/sm214247.htm, accessed 30 June 2014. 117

Customs Regulations 1926, Reg 1D. 118

Special Provisions Relating to Excise Equivalent Goods. 119

Australian Customs and Border Protection Service (2013) Blueprint for Reform 2013-2018, Canberra, June 2013, p.41. 120


See for example International Monetary Fund (2011) Changing Patterns of Global Trade, available at http://www.imf.org/external/np/pp/eng/2011/061511.pdf, accessed 30 June 2014. 122

See for example Australian International Trade and Transport Industry Development Fund (2014) Review of Accredited Operator Schemes, April 2014. 123



Australian International Trade and Transport Industry Development Fund (2014) Review of Accredited Operator Schemes, April 2014, p.4. 126

Beale, Roger et al (2008) One Biosecurity – A Working Partnership, The Independent Review of Australia’s Quarantine and Biosecurity Arrangements Report to the Australian Government, p.xiii. 127

See Department of the Prime Minister and Cabinet (2013) Office of Deregulation, available at http://www.dpmc.gov.au/deregulation/, accessed 30 June 2014. 128

See Department of the Prime Minister and Cabinet (2013) Office of Deregulation, available at http://www.dpmc.gov.au/deregulation/, accessed 30 June 2014. 129

Organisation for Economic Co-operation and Development (2014) Revenue Statistics – Comparative Tables, available at https://stats.oecd.org/Index.aspx?DataSetCode=REV, accessed 30 June 2014; Australian Government, Australian Budget Papers, available at http://www.budget.gov.au, accessed 30 June 2014. 130

Organisation for Economic Co-operation and Development (2014) Revenue Statistics – Comparative Tables, available at https://stats.oecd.org/Index.aspx?DataSetCode=REV, accessed 30 June 2014; Australian Government, Australian Budget Papers, available at http://www.budget.gov.au, accessed 30 June 2014. 131

Australian Government, Australian Budget Papers, available at http://www.budget.gov.au, accessed 30 June 2014. 132

Tax Practitioners Board (2010) Code of Professional Conduct, Explanatory Paper TPB 01/2010, available at http://www.tpb.gov.au/TPB/Publications_and_legislation/Board_policies_and_explanatory_information/TPB/Publications_and_legislation/EP/0402_TPB_EP_01_2010_Code_of_Professional_Conduct.aspx, accessed 30 June 2014.


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13. References

Australian Customs and Border Protection Service (2012) ‘Customs Broker Licence Conditions and Continuing Professional Development for Licensed Customs Brokers’, Notice No.2012/29, Canberra, 7 June 2012.

Australian Customs and Border Protection Service (2012) ‘Customs Broker Licence Conditions Guidance to Customs Brokers’, Notice No.2012/43, Canberra, 16 August 2012.

Australian Customs and Border Protection Service (2013) Blueprint for Reform 2013-2018, Canberra, June 2013.

Australian Customs and Border Protection Service (2013) Customs Broker, available at http://www.customs.gov.au/site/page6090.asp, accessed 30 June 2014.

Australian Customs and Border Protection Service (2014) Warehouse & Depot, available at http://www.customs.gov.au/site/page6091.asp, accessed 30 June 2014.

Australian Customs and Border Protection Service (2014) Warehouse & Depot, available at http://www.customs.gov.au/site/page6091.asp, accessed 30 June 2014.

Australian Government, Australian Budget Papers, available at http://www.budget.gov.au, accessed 30 June 2014.

Australian Taxation Office (2014) Customs Warehouses Licences, available at https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Excise-equivalent-goods/Customs-warehouse-licences/, accessed 30 June 2014.

Beale, Roger et al (2008) One Biosecurity – A Working Partnership, The Independent Review of Australia’s Quarantine and Biosecurity Arrangements Report to the Australian Government, Canberra.

BR Williams Customs and Freight Forwarding Pty Ltd and Chief Executive Officer of Customs [2013] AATA 100.

Collector of Customs v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307.

Control Customs Pty Ltd and CEO of Customs [2001] AATA 284.

Department of Agriculture (2010) Import Clearance Compliance Agreement Accredited Persons Validity, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/validity, accessed 30 June 2014.

Department of Agriculture (2014) Automatic Entry Processing for Commodities (AEPCOMM) Scheme, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/aep-commodities, accessed 30 June 2014.

Department of Agriculture (2014) Compliance Agreement: Standard Terms, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/terms, accessed 30 June 2014.

Department of Agriculture (2014) QAP Facilities, available at http://www.daff.gov.au/biosecurity/import/general-info/qap/qap-facilities, accessed 30 June 2014.

Department of Agriculture (2014) Quarantine Approved Premises Criteria, available at http://www.daff.gov.au/biosecurity/import/general-info/qap/qapcriteria, accessed 30 June 2014.



Department of Agriculture (2014) The Scheme: Non Commodity for Containerised Cargo Clearance (NCCC) Scheme, available at http://www.daff.gov.au/biosecurity/import/general-info/co-reg/nccc, accessed 30 June 2014.


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Department of Agriculture (nd) Compliance Agreement Standard Terms: Quarantine Act 1908, available at http://www.daff.gov.au/__data/assets/pdf_file/0003/2391681/sterms.pdf, accessed 30 June 2014.

Department of Agriculture Fisheries and Forestry (2012) Post Implementation Assessment of the Department of Agriculture, Fisheries and Forestry Automatic Entry Processing for the Commodities Scheme, Canberra, June 2012.

Department of Agriculture Fisheries and Forestry (2012) Process and Outcomes Document: Non-Commodity for Containerised Cargo Clearance Scheme, Canberra, November 2012.

Department of Agriculture Fisheries and Forestry (2013) Process and Outcomes Document: AEP for Commodities Scheme, Canberra, January 2013.

Department of Agriculture Fisheries and Forestry (2013) ‘Non-commodity for Containerised Cargo Clearance (NCCC) Scheme – Changes to Training Facilitation’, Notice to Industry No.28/2013, Canberra, 31 May 2013.

Department of the Prime Minister and Cabinet (2013) Office of Deregulation, available at http://www.dpmc.gov.au/deregulation/, accessed 30 June 2014.

European Commission (1992) Council Regulation (EEC) No.2913/92 of 12 October 1992 establishing the Community Customs Code, Brussels.

European Commission (2008) Council Regulation (EEC) No.2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No.2913/92 establishing the Community Customs Code, Brussels.

European Commission (2008) Regulation (EC) No.450/2008 of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (4 June 2008) Official Journal of the European Union, EU Doc L145, Brussels.

European Commission (2008) Regulation (EU) No.952/2013 of 9 October 2013 laying down the Community Customs Code (recast) (10 October 2013) Official Journal of the European Union, EU Doc L269, Brussels, section 21.

European Commission, Taxation and Customs Union (2014) The Union Customs Code: A Recast of the Modernised Customs Code, available at http://ec.europa.eu/taxation_customs/customs/customs_code/union_customs_code/index_en.htm, accessed 30 June 2014.

General Administration of Customs of the People’s Republic of China (2005) Measures of the Customs of the People’s Republic of China for the Administration of Export Supervised Warehouses and the Goods Stored Therein, Order of the General Administration of Customs of the People’s Republic of China No.133 of 28 November 2005, Beijing.

General Administration of Customs of the People’s Republic of China (2006) Administration Rules for Customs Brokers Practice, Order of the General Administration of Customs No.146, Beijing.

General Administration of Customs of the People’s Republic of China (2007) Provisions of the Customs of People’s Republic of China for the Administration of Registration of Declaration Entities, Decree of the General Administration of Customs No.127 of 29 September 2007, Beijing.

Gwardzińska, Ewa (2014) ‘The Role of Customs Brokers in Facilitating International Trade’, World Customs Journal, vol. 8, no. 1, pp.63-70.


st Parliament, 1

th Session, 5

th Period.


st Parliament, 1

th Session, 2

nd Period.


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House of Representatives, Parliament of the Commonwealth of Australia (1959) Customs Bill 1959 – Second Reading Speech, Canberra, 12 May 1959, in House of Representatives Official Hansard No. 20, 23

rd Parliament, 1

th Session, 1

st Period.

House of Representatives, Parliament of the Commonwealth of Australia (1996) Customs Amendment Bill (No.2) 1996 – Explanatory Memorandum, Canberra.


st Parliament, 1

th Session, 5

th Period, p.1637.


st Parliament, 1

th Session, 5

th Period.


st Parliament, 1

th Session, 2

nd Period.

House of Representatives, Parliament of the Commonwealth of Australia (1959) Customs Bill 1959 – Second Reading Speech, Canberra, 12 May 1959, in House of Representatives Official Hansard No.20, 23

rd Parliament, 1

th Session, 1

st Period.

House of Representatives, Parliament of the Commonwealth of Australia (1996) Customs Amendment Bill (No.2) 1996 – Explanatory Memorandum, Canberra.


st Parliament, 1

th Session, 5

th Period.

International Convention on the Simplification and Harmonization of Customs Procedures (as Amended), adopted 26 June 1999 (entered into force 3 February 2006).

International Monetary Fund (2011) Changing Patterns of Global Trade, available at http://www.imf.org/external/np/pp/eng/2011/061511.pdf, accessed 30 June 2014.

Morrison, Scott (2014) ‘A New Force Protecting Australia’s Borders’, Address to the Lowy Institute for International Policy, 9 May 2014, available at http://www.minister.immi.gov.au/media/sm/2014/sm214247.htm, accessed 30 June 2014.

Organisation for Economic Co-operation and Development (2014) Revenue Statistics – Comparative Tables, available at https://stats.oecd.org/Index.aspx?DataSetCode=REV, accessed 30 June 2014.

Pezzullo, Michael (2013) ‘Border Management and Its Role in Supporting National Economic Competitiveness’, Address to the Lowy Institute for International Policy, 16 October 2013, available at http://www.lowyinstitute.org/events/lowy-lecture-series-border-management-and-its-role-supporting-national-economic-competitiveness-mr, accessed 30 June 2014.

Tax Practitioners Board (2010) Code of Professional Conduct, Explanatory Paper TPB 01/2010, available at http://www.tpb.gov.au/TPB/Publications_and_legislation/Board_policies_and_explanatory_information/TPB/Publications_and_legislation/EP/0402_TPB_EP_01_2010_Code_of_Professional_Conduct.aspx, accessed 30 June 2014.

US Customs and Border Protection, US Customs and Border Protection Bonded Warehouse (2010), Washington DC, February 2010.

Widdowson, David et al (2014) Review of Accredited Operator Schemes, April 2014.

World Customs Organization (2014) 2014 WTO IT Conference & Exhibition, available at http://www.wcoomd.org/en/events/event-history/2014/2014-wco-it-conference-exhibition.aspx, accessed 30 June 2014.

World Customs Organization (nd) Kyoto Convention General Annex Guidelines Chapter 8, Relationship Between the Customs and Third Parties.


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World Customs Organization (nd) Kyoto Convention Specific Annex A Guidelines Chapter 1.



World Customs Organization (nd) Kyoto Convention Specific Annex D Guidelines Chapter 1.

World Trade Organization (2014) WTO Agreement on Trade Facilitation Self Assessment Guide, WTO Doc TN/TF/W/143/Rev.7, World Trade Organization, Geneva.

Zacharia Zacharia and Collector of Customs [1994] AATA 96; (1994) 19 AAR 390.


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14. Appendices

Appendix 1: Background Paper for Interviewees

Thank you for agreeing to be interviewed in relation to this research study. This paper is designed to provide you with some useful background information on the study, but it is not essential that you read the paper prior to interview.

Overview

The Centre for Customs and Excise Studies (CCES) is currently undertaking a review of the appropriateness of licensing regimes applying to Depots, Warehouses and Agents and Customs Brokers under the Customs Act and the Quarantine Act and Regulations. A key aspect of the research is a comparison of the regulatory and business contexts in which the current regimes were originally created and those which exist today. It is also considering how those contexts might change in the future, and will identify options for optimising the regulation of these sectors while minimising the impact on the businesses of the licensees.

The project is being funded through the Australian International Trade and Transport Industry Development Fund (AITTIDF) with the support of the Customs Brokers and Forwarders Council of Australia Inc. (CBFCA), the Export Council of Australia (ECA), the Australian Federation of International Forwarders (AFIF), the Conference of Asia Pacific Express Carriers (CAPEC) and Shipping Australia (SA). These organisations have identified the project as an industry priority and have requested that CCES provide recommendations for:

changes to the existing regimes to remedy any shortcomings; and

any redesign of the regimes to optimise their relevance and effectiveness into the future.

In progressing this research, CCES is conducting a series of interviews with licensees in order to obtain the perspective of those who are required to meet the licensing requirements on a daily basis. The interviews, which are being conducted by Professor David Widdowson and Associate Professor Geoff Short, will focus on the way in which the licensing policy and practice impacts on your commercial operations, any concerns you may have with the current arrangements, and ways in which the provisions may be improved. Some specific issues to be explored during the course of these interviews include:

the perceived effectiveness of licensing;

the perceived benefits and costs of licensing;

key failings/shortcomings of licensing;

predictions about the business and regulatory environment in the next 10 - 20 years and the implications for licensing; and

views on alternatives to licensing, e.g. industry self-regulation, co-regulation, reliance on intelligence-based risk assessment strategies, etc.

The Business Environment


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The last comprehensive review of the Depot licensing provisions was conducted more than 15 years ago, and it has been over 30 years since the Warehouse and Agents and Customs Brokers licensing provisions were enacted.

In the intervening years, much has changed in the way international trade is conducted and how Customs manages its charter – along with more general economy-wide changes. One objective of the study is therefore to identify key factors where changes since 1980 have materially affected the context in which depots, warehouses and brokers are subjected to licensing requirements. Some examples include:

Changes in General Business Practices

Higher education level of owners, operators, brokers;

Greater tendency for delivery of services through corporations (with attendant higher scrutiny by the Australian Securities and Investments Commission (‘ASIC’), the Australian Taxation Office (‘ATO’), etc.) rather than by individuals, family businesses, partnerships; and

Acceptance of increased reporting obligations and regulatory scrutiny.

Advancements in Information Technology

Computerisation – transparency, accessibility, breadth/depth of data storage, immediacy of retrieval, greater reliability of data integrity;

Use of Cloud technology;

Enhanced security of information transfers; and

Barcoding and other tracking technologies.

Changes in Structures of International Trade

Increased containerisation of cargo;

Growth of on-line shopping and use of express couriers;

Greater interconnectedness of relevant regulatory bodies, e.g. ACBPS, Australian Quarantine and Inspection Service (‘AQIS’), Biosecurity Australia, Australian Federal Police (‘AFP’), ATO, Office of Transport Security (‘OTS’); use of ACBPS single window;

Post 9/11, the rise of security as a key business focus, matched with Regulated Shipper, Authorised Economic Operator (‘AEO’), Regulated Air Cargo Agent (‘RACA’), and Accredited Air Cargo Agent (‘AACA’) type programs;

Greater globalisation of supply chains;

Enhanced capacity of foreign customs authorities and greater information sharing between them;

Development of CPD schemes; and

Creation of industry associations, advisory bodies, etc. and their work in self-regulation, education, etc.

Changes in Government Policy Settings and Priorities


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Reduced focus on revenue collection;

Increased focus on security, counter-terrorism, border protection;

Greater use of risk management and decreased focus on physical inspections; and

Infiltration of Customs/maritime/aviation operations by organised crime.

Project Scope

The concept of ‘a licence’ or ‘licensing’ is referred to in a variety of contexts in the Customs Act including licences for importing goods, exporting goods, possessing or using a firearm, etc. However, the proposed project is not concerned with these types of licence. It is concerned only with licences relating to Depots (Part IVA of the Act), Warehouses (Part V) and Agents and Customs Brokers (Part XI).

Part IVA of the Act, relating to Depots, was added to the Act in 1997 as part of a package of Bills for the implementation of a cost recovery regime for import related services delivered by the then Australian Customs Service. Specifically, the Bill introduced a new licensing regime in relation to depots handling imported goods to address certain perceived inadequacies in the then existing provision of the Act under which depots were appointed.

Part V of the Act, relating to Warehouses, was replaced in 1980. Serious deficiencies in the existing provisions had been exposed in the previous year by a judgment of the Federal Court of Australia in which it was held that a Collector of Customs acted beyond the powers available under the Customs Act when he purported to revoke a warehouse licence for reasons other than default in payment of licence fees. As many of the provisions relating to warehouses had remained virtually unchanged since their original inclusion in the Customs Act 1901, they were all revised. Key amongst the changes was the introduction of a ‘fit and proper person’ test for persons controlling and operating warehouses.

Part XI of the Act, relating to Agents, was part of the original Customs Act 1901. Further provisions were added to Part XI in 1959 to transfer the power to suspend or cancel customs agents’ licences from the Collector of Customs to the Minister, to establish the grounds on which a licence may be suspended or cancelled and to provide for Committees of Inquiry to investigate matters involving the conduct of customs agents and to report to the Minister.

Divisions 1, 2 and 3 of Part XI were then repealed and substituted in 1980 to provide a revised legislative scheme for the licensing and control of customs agents, including enabling licences to be granted to partnerships and corporations as well as to individuals, and the establishment of the National Customs Agents Licensing Advisory Committee to investigate and report on all matters involving licensing of customs agents.

Various provisions in each of the three Parts of the Act have been amended, some several times, in the intervening years. In general scope, however, it is more than 15 years since the last comprehensive review of the Depot licensing provisions and over 30 years for the Warehouse and Agents and Customs Brokers licensing provisions.

Themes Arising

Research to date has revealed a number of emerging themes:

Policy Justification

Two justifications have been consistently offered for the creation and ongoing development of the licensing regimes through legislative amendment, subordinate legislation in the form


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of regulations and administrative action such as attaching conditions to licences or issuing directives through ACNs:

protection of the revenue, and

compliance with the Customs Acts.

More recently, the policy justification for the Organised Crime Act was declared to be to deter and prevent infiltration by serious and organised crime into Australia’s seaports, airports and cargo supply chain.

These policy imperatives deserve consideration from two perspectives:

are they still valid? Given the relatively small (and decreasing?) revenue currently generated by customs duties, for example, is protection of the revenue still a valid policy justification?

to the extent that they remain valid, are there alternatives to achieving them without exclusive reliance on licensing regimes? Would there be room, for example, for some form of self-regulation by the industry, co-regulation or increased use of intelligence-based risk assessment techniques?

Progressive Harmonisation

It is apparent that each of the three regimes had a different genesis (albeit all were present in one form or another in the original Customs Act 1901) and that respective Governments have responded to changing business and regulatory environments by enacting legislative amendments as they have seen fit. For example, the Second Reading Speech accompanying the introduction of the Customs Bill 1959 notes:

‘The last few years have seen a change in the methods of moving under bond cargo within Australia. At federation, and for many years thereafter, almost all cargo was moved from port to port by ships. The provisions of the Customs Act controlling such movements are based primarily on this mode of transport. However, increasing use is now being made of faster means of transport such as road, rail and air to move customable goods, and the measures designed to control movement of goods by ship have had to be adapted to meet these means of transporting goods.

The Department of Customs and Excise, realising these changing conditions, carried out a comprehensive review of methods of control, and the present bill embodies the legislative changes which will enable simplified and changed procedures recommended as a result of the review to be put into operation.’

The Explanatory Memorandum for the Customs Amendment Bill (No.2) 1996 notes that it:

‘will also address the inadequacies of the current provision in the Customs Act under which depots are appointed, which may be summarised as follows:

− the provision does not clearly spell out the process of application for

appointment of a depot;

− the provision does not state the grounds on which Customs makes or

refuses to make such appointments;

− appointees are not subject to any legal obligations in relation to the

appointment; and


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− other than by withdrawing the appointment, Customs has no alternative

way of dealing with appointees who fail to comply with· requirements in

respect to Customs control of the cargo.

The new Part IV A proposal seeks to address the shortcomings of the current appointment regime under paragraph 17(b) with the introduction of a new licensing regime …’

The Second Reading Speech accompanying the introduction of the Customs Amendment Bill (No.3) 1980 notes that:

‘Serious deficiencies in the existing provisions were exposed last year by a judgment of the Federal Court of Australia wherein it was held that a Collector of Customs acted beyond the powers now available under the Customs Act when he purported to revoke a warehouse licence for reasons other than default in payment of licence fees … As many of the provisions relating to warehouses have remained virtually untouched since their inclusion in the original Commonwealth Customs Act of 1901, the opportunity has been taken to revise all these provisions.’

Throughout most of their history, however, the administration of the respective regimes has been independent of one another and there has been no apparent co-ordination of the legislative amendments affecting each regime. More recently, however, there have been concerted efforts to ensure that customs brokers and owners/operators of customs warehouses and depots are dealt with in the same way. Examples include the obligation on all such persons to meet the ‘fit and proper person’ test, to report to the ACBPS, to prevent misuse of relevant information, to comply with conditions attaching to their licences and their exposure to prosecution for offences related to the performance of their activities under their licences. Presumably, this development reflects an appreciation that the three regimes are interconnected parts of the entire supply chain and that effective regulatory control of the overall supply chain requires a harmonised approach to regulation of its various parts.

It is reasonable to assume that this trend to harmonised regulation of the three regimes will continue and that the ACBPS will increasingly look to apply standardised processes to them rather than recognise differences justifying separate approaches.

Persistent Reliance on Licensing

The review reveals a strong and persistent tendency for the ACBPS to rely upon licensing provisions to achieve regulatory outcomes. The dependence of brokers and owners/operators upon the grant and renewal of a licence confers significant power in the ACBPS over those parties. The ability to attach conditions to those licences facilitates regulatory control without the need for amendment of the Customs Act or even subordinate legislation in the form of regulations. It is a quick, effective, inexpensive and flexible mechanism for regulating these key sectors.

Increased Stringency

The trend over recent years has been for the ACBPS to increase the stringency of the statutory regulatory regimes and, in particular, to attach increasingly strict and burdensome conditions to the respective licensing models. This trend is given even greater heft by the creation of offences for breaching those conditions. It is apparent that the approach of the ACBPS to dealing with developments in the business sector (including the infiltration into it


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of criminal elements) and to changes in government policy and priorities, is to impose ever more stringent requirements on brokers and owners/operators through the licensing regimes. There are no outward indications of an openness to consider alternative methods of achieving the desired outcomes.

Observations by the AAT

The AAT has consistently made the observation that the licensing regime for customs brokers effectively bestows on them a statutory monopoly to provide their services – i.e. only persons with a customs broker’s licence may enter goods on behalf of their owner. Discussions with industry representatives will explore the extent of this statutory monopoly, its value in the hands of customs brokers and how it sits with the then Government’s stated objective of not creating a ‘closed shop’.

International Initiatives

The following international initiatives are also of relevance to this study:

World Trade Organization On 6 December 2013, the WTO published its Draft Ministerial Decision on its Trade Facilitation Agreement. Article 10 deals with Formalities Associated with Importation and Exportation, and Transit. Paragraph 6 deals with the ‘Use of Customs Brokers’.

Sub-paragraph 6.1 provides that ‘from the entry into force of this agreement Members shall not introduce the mandatory use of customs brokers.’ This allows members which currently require the mandatory use of customs brokers to continue to do so.

Sub-paragraph 6.2 provides that, ‘Each Member shall notify and publish its measures on the use of customs brokers. Any subsequent modifications thereof shall be notified to the Committee and published promptly.’

Sub-paragraph 6.3 provides that, ‘With regard to the licensing of customs brokers, Members shall apply rules that are transparent and objective.’

Counterpart Programs in Other Economies To date, an initial survey has been conducted of representatives of 25 other countries- Afghanistan, Angola, Bangladesh, Bhutan, Cameroon, Canada, China, Ethiopia, Fiji, Ghana, India, Indonesia, the Maldives, Norway, Pakistan, Peru, Russia, Sierra Leone, Solomon Islands, South Africa, Sri Lanka, Thailand, USA, Vietnam and Zambia.

In 23 of those 25 countries, customs brokers are subject to licensing regimes – the exceptions being Fiji and Thailand [to be confirmed]. In 21 of those 25 countries, owners/operators of customs warehouses and depots are subject to licensing regimes – the exceptions being Bhutan, Norway, Peru and Vietnam. [to be confirmed].

On current evidence, it appears that licensing is a widely-used mechanism for regulating customs brokers and owners/operators of customs warehouses and depots.

Research on these issues is continuing.


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Appendix 2: Surveys on International Policy and Practice

Survey for Industry

1. What are your details?

Name: Company: Country: Email Address:

2. Are warehouses or depots required to be licensed in your home country?

Yes No (Go to Question 4) Don't know (Go to Question 4)

3. Which government authority administers licensing of warehouses and depots in your home country?

4. What are the relevant legislative provisions which impose these requirements?

5. Are these activities regulated in any other way in your home country, e.g. through self-regulation by industry associations?

Yes, please provide details:____________. No Don't know

6. Are the owners or operators of warehouses and depots required to be licensed in your home country?


7. Which government authority administers licensing of owners and operators of warehouses and depots in your home country?


9. Are these owners/operators regulated in any other way in your country, e.g. through self-regulation by industry associations?


10. Are customs brokers/agents required to be licensed in your country?


11. Which government authority administers licensing of customs brokers/agents in your home country?


13. Are customs brokers/agents regulated in any other way in your home country, e.g. through self-regulation by industry associations?



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Survey for Customs Administrations

1. What are your details?

Name: Position in Administration: Country: Email Address:

2. Are warehouses or depots required to be licensed in your home country?


3. Which government authority administers licensing of warehouses and depots in your home country?


5. Are these activities regulated in any other way in your home country, e.g. through self-regulation by industry associations?


6. Are the owners or operators of warehouses and depots required to be licensed in your home country?


7. Which government authority administers licensing of owners and operators of warehouses and depots in your home country?


9. Are these owners/operators regulated in any other way in your country, e.g. through self-regulation by industry associations?


10. Are customs brokers/agents required to be licensed in your country?


11. Which government authority administers licensing of customs brokers/agents in your home country?


13. Are customs brokers/agents regulated in any other way in your home country, e.g. through self-regulation by industry associations?



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Appendix 3: Quarantine Approved Premises Criteria

Class 1 Quarantine Approved Premises Criteria

Premises utilised for the deconsolidation of sea and air cargo, inspection and treatment of goods, containers and ULDs.

QAP criteria class 1.1 - premises approved for initial non-containerised machinery inspections, rural container inspections, external container inspections and the storage, inspection or treatment of incorrectly certified agricultural products from Khapra beetle countries.

QAP criteria class 1.2 - premises utilised for the deconsolidation of air cargo, inspection and treatment of goods, containers and ULDs.

QAP criteria class 1.3 - premises utilised for the deconsolidation of sea and air cargo, including personal and household effects. These premises are approved for containerised machinery inspections and the fumigation and cleaning of these goods when appropriate facilities are available.


Premises utilised for the deconsolidation, handling, storage, inspection or examination and treatment of cargo and containers subject to quarantine. The criteria in class 2 are for general cargo, agricultural products, bulk commodities, fresh fruit and vegetables, cold storage facilities, container parks and imported grain storage facilities.

QAP criteria class 2.1 - premises utilised for the deconsolidation, handling, storage, inspection and treatment of non agricultural cargo.

QAP criteria class 2.2 - premises utilised for the deconsolidation, storage and inspection of products that are subject to quarantine, but are processed or packaged in such a way as to preclude the possibility of external contamination.

QAP criteria class 2.3 - premises utilised for the receival, storage, inspection and treatment of bulk commodities such as fertiliser and stockfeed.

QAP criteria class 2.5 - premises utilised for the receipt, storage, and inspection of commodities that have temperature controlled storage requirements, and for those that require cold temperature quarantine treatments.

QAP criteria class 2.5.1 - premises utilised for the receival, storage, inspection and thawing of specified baitfish.

QAP criteria class 2.5.2 - premises utilised to undertake temperature controlled storage and handling of imported pig meat.

QAP criteria class 2.6 - premises utilised for the handling, storage, internal examination and treatment of empty shipping containers.

QAP criteria class 2.7- premises utilised for the storage and handling of bulk imported grain commodities such as maize, wheat, barley and sorghum. Imported grains are goods subject


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to quarantine where there is high risk of disease, which may spread to plants in the community.

QAP criteria class 2.8 - premises utilised for the temporary storage of refrigerated containers holding imported pig meat prior to movement to a class 2.5.2 premises (Quarantine Temperature Controlled Storage Facility - Pig Meat) or a pig meat processing premises operating under a DAFF Compliance Agreement.


The criteria sets out the requirements and responsibilities relating to facilities where goods such as bulk maize, wheat, barley, sorghum, hides and feathers are handled. The class 3 criteria are for general cargo, agricultural products, bulk commodities and imported grain facilities where treatment and processing is undertaken.

QAP criteria class 3.0 - premises utilised for unpacking FCL containers and the storage, inspection and processing of goods. The types of commodities which may be processed at this establishment are hides for tanning, hunting trophies for taxidermy (tanneries), sesame seed for manufacture into tahini, feather processing and nut processing.

QAP criteria class 3.1 - premises utilised for the storage, handling and treatment/processing of bulk imported grain commodities such as maize, wheat, barley and sorghum. Imported grains are goods subject to quarantine where there is high risk of disease which may spread to plants in the community.


Premises utilised for treatment and or cleaning of goods, containers and packaging. The standard sets out the requirements and responsibilities relating to facilities where goods such as seeds, car parts and ores are handled. The class 4 criteria are for quarantine cleaning, seed cleaning, ore treatment, gamma irradiation, heat treatment and fumigation facilities where treatment is undertaken.

QAP criteria class 4.1 - premises utilised for the heat treatment of goods subject to quarantine and packaging material.

QAP criteria class 4.2 - premises utilised for gamma irradiation treatment of goods and packaging, as required by DAFF.

QAP criteria class 4.3 - premises utilised for the cleaning of goods, containers and packaging, as required by DAFF, e.g. washing of cars.

QAP criteria class 4.4 - premises utilised for the performance of cleaning seeds, as required by DAFF.

QAP criteria class 4.5 - premises utilised for the treatment of ores, as required by DAFF.

QAP criteria class 4.6 - premises where the fumigation of goods, containers and packaging is undertaken.


The class 5 criteria set out the requirements and responsibilities for containment facilities, where the premises are utilised for research, analysis and/or testing of imported biological material including micro-organisms, animal and human products and soil. This type of


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premises includes microbiological facilities, animal facilities and plant laboratories, whether integral or separate to the facility. Where applicable, class 5 criteria should be read in conjunction with the appropriate Australian/New Zealand Standard TM as listed in individual classes.

QAP criteria class 5.1 - for Quarantine Containment Level 1 (QC1) Facilities - Premises used for goods subject to quarantine of low hazard where standard safe containment practice is adequate to address quarantine risk.

QAP criteria class 5.2 - for Quarantine Containment Level 2 (QC2) Facilities - Premises utilised for goods subject to quarantine of low to moderate risk to animals, plants or humans if disease is spread to the community or environment.

QAP criteria class 5.3 - for Quarantine Containment Level 3 (QC3) Facilities - Premises utilised for goods subject to quarantine which pose significant risks to animals, plants or humans if pest or disease associated with them spread outside the premises and from which significant economic impact would result in the community or environment.

QAP criteria class 5.4 - for Quarantine Containment Level 4 (QC4) Facilities - Premises utilised for goods subject to quarantine which pose serious life-threatening risks to animals, plants or humans if pests or disease associated with them spread outside the premises and from which substantial economic impact would result to people, the community or environment.


Premises utilised for the post entry quarantine (PEQ) of nursery stock. This standard sets out the requirements and responsibilities relating to open and closed facilities where nursery stock such as aquatic plants, bulbs, seed lines, cuttings and other medium risk nursery stock are handled.

QAP criteria class 6.1 - applies to any standard plant house that is to be used for quarantine of nursery stock. Closed quarantine facilities include glasshouses, polyhouses, igloos and tunnel houses; etc (excludes screen houses).

QAP criteria class 6.2 - applies to any premises utilised solely for the performance of PEQ of aquatic plants.

QAP criteria class 6.4 - applies to any open ground area that is to be used for the performance of PEQ of bulbs approved by the department for growth in open ground sites.

QAP criteria class 6.11 - applies to any premises that is utilised for the storage and/or growth of bulbs required undergoing open quarantine.


The class 7 criteria set out the requirements and responsibilities for animal containment facilities, where the premises is utilised for holding imported animals. This type of premises includes animal holding facilities, whether integral or separate to the facility. Where applicable, class 7 criteria should be read in conjunction with the appropriate Australian/New Zealand Standard™ as listed in individual classes.

QAP criteria class 7.1 – premises utilised for the purpose of holding live fresh water and marine ornamental fin fish while undergoing a period of quarantine.


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QAP criteria class 7.2 for Quarantine Insectary Containment (QIC) Level 2 Facilities – premises utilised for goods subject to quarantine which present a moderate hazard to facility personnel or to the environment.

QAP criteria class 7.3 for Quarantine Insectary Containment (QIC) Level 3 Facilities – premises utilised for goods subject to quarantine which pose significant risks to animals, plants or humans if pest or disease associated with them spread outside the premises and from which significant economic impact would result in the community or environment.

QAP criteria class 7.4 for Quarantine Insectary Containment (QIC) Level 4 Facilities – premises utilised for goods subject to quarantine which pose significant risks to animals, plants or humans if the insect, pest or disease associated with them spread outside the premises and from which significant economic impact would result in the community or environment.

QAP criteria class 7.5 – premises utilised for the purpose of holding live laboratory rodents while undergoing a period of quarantine.

QAP criteria class 7.6 – premises utilised for the purpose of holding live laboratory xenopus while undergoing a period of quarantine.

QAP criteria class 7.7 – premises utilised for the purpose of holding live laboratory fish while undergoing a period of quarantine.

QAP criteria class 7.8 - premises utilised for the post-arrival quarantine of returning Australian active service Defence and Police dogs.

QAP criteria class 7.9 – premises approved for the purposes of isolation, examination and testing of live imported zoo animals as required by DAFF Import Permit conditions.

QAP criteria class 7.10 for Hatching Eggs – Post arrival quarantine – premises utilised for the holding of fertile poultry hatching eggs and the resultant stock while undergoing a period of post–entry quarantine.

QAP criteria class 7.11: Commercial Rabbits – Post–Entry Quarantine – premises utilised to undertake the isolation, examination, treatment and testing of imported live commercial rabbits as required by DAFF Import Permit conditions.

QAP criteria class 7.12: Live Horses – premises utilised to undertake the isolation, examination and treatment of live imported horses as required by DAFF Import Permit conditions.


Premises utilised for the disposal of biosecurity waste. Premises within this class include autoclave, deep burial, incineration and all other disposal treatments.

QAP criteria class 8.1 – premises utilised for the incineration of biosecurity waste.

QAP criteria class 8.2 – premises utilised for the deep burial of biosecurity waste.

QAP criteria class 8.3 – premises utilised for the autoclaving of biosecurity waste.

QAP criteria class 8.4 – disposal facilities for all other treatments for biosecurity waste.


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Appendix 4: Example of QAP Facilities Lists


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Appendix 5: RKC General Annex Guidelines to Chapter 8

RELATIONSHIP BETWEEN THE CUSTOMS AND THIRD PARTIES

Introduction

This Chapter of the General Annex concerns third parties and their relationship to Customs. A third party is defined in the Kyoto Convention as ‘any person who deals directly with the Customs, for and on behalf of another person, in connection with the importation, exportation, movement or storage of goods’.

Examples of third parties covered by Chapter 8 are Customs agents and brokers, freight forwarders, modal and multi-modal carriers and delivery services. The most common of these are Customs brokers or Customs agents who are essentially concerned with presenting and processing Customs documentation on behalf of importers or exporters.

Third parties are not persons who deal with Customs in their own right. For example a port authority who is responsible only to present goods to Customs for physical inspection on behalf of an importer or exporter or a bank that is responsible for producing an original bill of lading to comply with documentary credit arrangements are not third parties as defined for the purposes of the Kyoto Convention.

The facilities granted to third parties in this Chapter offer advantages to all concerned. Importers and exporters are able to employ specialists to deal with complicated and detailed Customs procedures that may be unfamiliar to them and who can act on their behalf at times and places which they themselves would find inconvenient. Carriers and delivery services are able to expedite the movement of goods in their charge through Customs controls and to service the steadily growing proportion of time-sensitive consignments. Customs are able to more steadily and predictably clear goods, thereby better managing their own resources and the release times for the trade. In some countries, Customs also benefit from dealing with agents and brokers who are often more expert at handling the requirements for Customs procedures than some of their customers.

Standard 8.1

Persons concerned shall have the choice of transacting business with the Customs either directly or by designating a third party to act on their behalf.

This Standard gives the ‘person concerned’, who is usually the exporter or importer and the owner of the goods, the option of either dealing directly with Customs or designating a third party to deal with Customs. Other ‘persons concerned’ could also include sellers, buyers, consignors or consignees, depending upon the particular transaction. The third party is thus the person who is designated by the ‘person concerned’ to transact business with the Customs on the latter’s behalf.

While some Customs administrations are liberal in their dealings with third parties, some have imposed certain restrictions on third party transactions. These restrictions are to ensure that the third party acts with a certain degree of professionalism and responsibility, thereby allowing Customs to fulfil its own responsibilities to ensure compliance with Customs law.


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Some administrations require third parties by law, regulation or Customs ruling to be licensed. These licensing requirements may stipulate specified criteria that the third party must meet such as age, education, professional competence or moral and financial integrity. Additional criteria generally are that the third party have a registered business premise and meet professional standards for record-keeping. In some countries, third parties must pass qualifying examinations to meet these requirements. Customs’ authority in approving third parties is covered by Standard 8.2.

1. Conditions and Liability

Standard 8.2

National legislation shall set out the conditions under which a person may act for and on behalf of another person in dealing with the Customs and shall lay down the liability of third parties to the Customs for duties and taxes and for any irregularities.

This provision calls for the national legislation to specify the conditions for persons to act as third parties and to stipulate their liability to Customs. This ensures that Customs can safeguard the revenue and other control requirements as thoroughly in dealing with the intermediary as with his principal.

In particular the relevant national legislation should cover the third party’s liability for any duties and taxes and for any irregularities in compliance with Customs requirements.

In some countries third parties and the persons they represent may be held jointly and severally responsible to Customs for duties and taxes and any irregularities, as well as for any concomitant fines or penalties.

In enforcing these and other regulations involving third parties, Customs may wish to take account of certain practical differences between a principal, that is, the direct declarant, and someone acting on his behalf. The principal usually has a closer knowledge of and a clearer responsibility for the accuracy of the information set out in the declaration or other submission to Customs than does the agent, broker or representative. Thus while Customs should hold third parties firmly accountable for all duties and taxes, they could give sympathetic consideration to lifting or mitigating certain penalties. For example, if the infraction is a misstatement and a similar offence that arose solely from defects in the data supplied by the principal, and the third party can show that he had taken reasonable steps to provide accurate and correct information, Customs could take these factors into account before deciding to impose a penalty.

Standard 8.3

The Customs transactions where the person concerned elects to do business on his own account shall not be treated less favourably or be subject to more stringent requirements than those Customs transactions which are handled for the person concerned by a third party.

Standard 8.3 requires Customs to treat principals and their third parties equally. Customs must not impose more stringent requirements on anyone preferring to deal directly with Customs rather than employ a third party for any particular transaction or in general. This is to prevent discrimination in Customs’ relationships with third parties and those who chose not to use a third party. With the growth of electronic commerce in international trading, with many Customs administrations developing more client-oriented service relationships


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with the trade, and with increasingly transparent Customs procedures and practices, many principals such as multinational corporations are choosing to deal directly with Customs.

However, this does not mean that Customs treatment has to be exactly the same for a direct principal as for an authorized third party. For example, the granting of deferred payment facilities by Customs to third parties who regularly clear substantial volumes of goods will not necessarily create a precedent which, under this Standard, would then be automatically available to direct principals with only occasional transactions or poor compliance records.

2. Third party rights

Standard 8.4

A person designated as a third party shall have the same rights as the person who designated him in those matters related to transacting business with the Customs.

This Standard similarly guarantees third parties the same rights as their principals. This can include the right to use modern communication and automated systems to fulfil Customs formalities, and the right of access to Customs information on legislative or procedural changes.

Third parties should also not be required to retain more records for audit and inspection by Customs than those necessary to ensure that they have carried out their duties in a legal and responsible manner. This is particularly important when certain third parties, such as freight forwarders, may carry on other domestic businesses unrelated to international trading.

Customs should not impose requirements on those unrelated records. Furthermore, like all parties who deal with Customs, third parties must also be allowed recourse to appeal procedures.

3. Trade Consultation

Standard 8.5

The Customs shall provide for third parties to participate in their formal consultations with the trade.

This Standard supplements Standard 1.3 of the General Annex that calls for Customs to establish and maintain consultative relationships with the trade, by requiring Customs to include third parties in their formal consultations. The inclusion of third parties with other traders in carefully managed consultative processes is a feature of modern, effective Customs administration. All parties, including Customs themselves, will benefit from timely, friendly and regular consultation on any matters affecting the movement of goods in international trade.

This includes, as an example, proposed legal or procedural changes, especially when these may require substantial changes to the computer and information technology systems of traders. Likewise commercial plans to relocate major operational centres which could entail corresponding redeployment of Customs human and technical resources, as well as those of traders, should be the subject of prior trade consultation.

Co-operation and consultation may be managed through formal Joint Customs/Trade Committees at all national, regional and local levels. At the national level this co-operation is often supplemented by concluding Memoranda of Understanding (MOU’s) between Customs and trade representative bodies or between Customs and individual companies. MOU’s have


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been found particularly useful in some countries for assisting Customs to combat fraud and drug smuggling, and they have brought advantages to the trade in the form of reduced Customs interventions at the frontier. These Memoranda often include joint training and awareness programmes. Such exchanges provide real practical benefits to both sides in terms of better compliance, improved facilitation and more effective resource management.

The consultative process should particularly be encouraged at regional and local levels. By communicating directly at the time and place of trading operations, many problems can be avoided or solved for all parties concerned. Some countries have established regional and local Customs Liaison Committees which deal with day-to-day issues successfully and timely.

(See the Guidelines to Chapters 1 and 3 of the General Annex for other examples of the benefits of consultation and communication with the trade).

4. Customs decision not to transact business

Standard 8.6

The Customs shall specify the circumstances under which they are not prepared to transact business with a third party.

There may be circumstances when Customs will refuse to transact business with a third party. Standard 8.6 requires Customs to state the reasons when this would occur. These exceptional circumstances must be clearly prescribed in national legislation, regulations or Customs rulings and provided to third parties. The reasons or circumstances would include:

Conviction of a serious Customs offence within a specified recent period, or

Consistent failure by the third party to fulfil responsibilities to the principal or to Customs, including repeated instances of gross negligence or infringement of Customs rules.

Unless a third party has committed a very serious offence, Customs should issue written warnings for reprehensible actions or omissions by the third party in dealing with them before Customs decides to suspend or revoke any license or authorization or to refuse to do business with the third party.

Standard 8.7

The Customs shall give written notification to the third party of a decision not to transact business.

The decision not to transact business with the third party is a very important one and Customs should study the implications of such a decision before it is taken. Once Customs decides to withdraw a third party’s facility to transact business with them, Standard 8.7 requires Customs to give written notification of their intention and the reasons for it. This notification should be furnished within a reasonable time in advance of the actual withdrawal or final decision.

What constitutes a reasonable time is dependent upon the cause of the action and the immediate impact to the third party and his principals. For example if the third party has other transactions pending with Customs and Customs can be assured that these will be properly completed, they should provide a window of several days or weeks before the decision will take effect. This would allow the third party sufficient time to conclude his current business and not incur new obligations to principals. The benefit of this ‘grace period’, provided that Customs is satisfied that no further loss or offences would be incurred,


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is for the benefit of innocent principals as much as for the third party or Customs. In such instances the principals concerned who designated the third party in question should be notified of the revocation and informed of any alternative means that may be available for them to carry on their dealings with Customs.

The third party should also be given the opportunity to appeal against the withdrawal by Customs. This may be allowed before the final decision is made depending on the particular circumstances involved. (See Standard 10.2 of the General Annex). However, in cases where the third party has committed a criminal offence, the authorization to transact business with Customs should be revoked with immediate effect.

Refusal to do business with a third party should be open to reconsideration, upon request, after a certain period of time from the original cause of refusal.


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Appendix 6: Broker Licensing – Country Summaries

The following table has been prepared based on survey responses by representatives of Customs administrations and other respondents who participated in the survey.

Country Licence Required?

Licensing Authority

Legislation Other Known Requirements/ Regulation

European Union Countries

Austria No Not applicable Not applicable

Finland No Not applicable Not applicable Registration is required with the National Board of Patents and Registration.

Greece Yes General Directorate of Customs and Excise (Ministry of Finance)

Law 718/77 as amended by Law 4093/12.

Ireland No Not applicable Not applicable

Latvia Yes National Customs Board of the State Revenue Service

Latvian Customs Law, Chapter VI ‘Customs Brokers’.

The person must hold a customs clearance specialist qualification certificate.

Norway Yes Customs and Border Control Department

Customs law and regulations

Sweden No Not applicable Not applicable

UK No Not applicable Not applicable

Other Countries

Afghanistan Yes Customs administration

Articles 15-18 of the Customs Law

Angola Yes Customs Authority, Min. of Finance

Customs Code, Article 378 of the Customs Organic Statute.

Azerbaijan Yes

State Customs Committee

Customs Code (Articles 22-24), Presidential Decree No.782 of 2 September 2002

Bangladesh Yes National Board of Revenue

Unknown

Belize Yes

Customs & Excise Department

Chapter 323:1 of the Customs Brokers and Customs Clerk Act.

Also regulated by the Belize Customs Broker Association.

Bhutan Yes Dept. of Trade on recommendation of Dept. of Revenue and Customs

Sales Tax, Customs and Excise Act 2000


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Cameroon Yes

General Customs Directorate and the Central African Economic and Monetary Community (CEMAC) Administration

National law and regulations and the CEMAC Convention and Code.

Canada Yes

Canada Border Services Agency (CBSA)

Sections 2(1), 10 and 32(6) of the Customs Act 1985, Special Import Measures Act.

China Yes General Administration of China Customs.

General Administration of Customs of the People’s Republic of China (GACC) Order No. 221 of 2007, GACC Order No.146 of 2006.

Ethiopia Yes

Ethiopian Revenue and Customs Authority

Ethiopian Customs Proclamation No. 622/2009.

Fiji Yes Fiji Revenue and Customs Authority

Customs Act and Regulations.

Ghana Yes

Customs Division of the Ghana Revenue Authority

Customs Management Law.

Guatemala Yes Customs Administration

Central American Uniform Customs Code and Regulations of Central American Uniform Customs Code

India Yes Customs Administration

Chapter XVII, Section 146 of the Customs Act.

Indonesia Yes

Customs Administration

Article 6A Law of the Republic of Indonesia No. 17/2006, Regulation of the Minister of Finance No. 63/PMK.04/2011, Regulation of the Director General of Customs and Excise No. PER-21/BC/2011.

Israel Yes

Israel Customs Directorate.

Customs Agents Law, 5725-1964.

Maldives Yes

Maldives Customs Service

Customs Act and Regulations.

At least one person in a broking company must have successfully completed the customs broker course.


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Mauritius Yes

Customs Department of the Mauritius Revenue Authority

Sections 117-119 of the Customs Act.

Sections 122 and 123, Schedule 12 of the Local Government Act 2011

Business Registration Act 2002, Sections 6 and 8.

Montenegro Yes

Customs Administration of Montenegro

Customs Code and the Regulation for Representation before the Customs Authority (‘Sl.list CG’, br. 50/2009).

Namibia Yes

Customs and Excise Authority

Section 73 of the Customs and Excise Act.

Brokers are also regulated and controlled by the Namibia Logistics Association.

New Zealand No

Not applicable Sections 131-136 of the Customs and Excise Act 1996.

Customs brokers are unable to operate unless they are able to access the customs computer system, for which they must be registered with Customs.

Pakistan Yes

Customs Administration

Customs Clearing Agents Licensing Rules of the Customs Act 1969.

Peru Yes Customs Authority

Customs Law and Regulations

Philippines Yes Professional Regulatory Commission

Presidential Decree 223 as amended by Republic Act 1981.

Russia Yes Federal Customs Service

Russian Customs Code

Seychelles No Not applicable Not applicable Customs brokers/agents must be registered with the Tax and Customs Agent Board (TACAB).

Sierra Leone Yes Customs & Excise Department of the National Revenue Authority

Customs and Excise Act.

Solomon Islands

Yes Solomon Islands Customs Service

Customs and Excise Act, Chapter 21, Rule 176

South Africa Yes South Africa Revenue Service, Customs Division - Licensing and Registration

Sections 64B and 99A of the Customs and Excise Act 1964 as amended, and the associated rules.

Brokers are also regulated by South African Association of Freight Forwarders.


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South Korea Yes Ministry of Strategy and Finance

Licensed Customs Brokers Act

Sri Lanka Yes Sri Lanka Customs Department

Section 115(C) of the Sri Lanka Customs Ordinance.

Thailand Yes Thai Customs Department

Sections 106-109 of the Customs Act BE2469 (1926)

Industry bodies are the Thai AEO Customs Brokers Association (TACBA) and the Customs Broker and Transport Association of Thailand (CTAT).

Tonga Yes Tonga Ministry of Revenue and Customs

Part 15 of the Customs and Excise Management Act 2007 and Part 16 of the Customs and Excise Regulations 2008.

Turkey Yes Ministry of Customs and Trade

Articles 225-230 of the Turkish National Customs Code No. 4458; Articles 561-573 of the Implementing Provisions of the Customs Code.

Uruguay Yes Ministry of Economy and Finance

Decree Law 13.925, Decree Law 391/971, Decree Law No. 15.691 on the Uruguayan Customs Code, Section 82.

Brokers also register with Uruguay National Association of Customs Dispatchers.

USA Yes US Customs and Border Protection

Customs Regulations 19 CFR 19, Part 111.

Unknown

Vietnam Yes General Customs Department of Vietnam

Ministry of Finance Circular 128

Unknown

Zambia Yes Customs Services Division of the Zambian Revenue Authority

Statutory Instrument/Gazette Notice.

A person must be a member of the Zambian Clearing Association.


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Appendix 7: Depot/Warehouse Licensing – Country Summaries

The following table has been prepared based on survey responses by representatives of Customs administrations and other respondents who participated in the survey.

Country Licence Required?

Licensing Authority

Legislation Other Known Requirements / Regulation

European Union Countries

Austria Yes Customs Administration

EU Customs Code and Implementing provisions

Finland Yes Customs Administration

Union Customs Code Articles 50-53, 98-112, 166-180 / Customs Code Implementation Provisions, Articles 185-186, 496-534, 799-813.

Greece Yes Customs Administration

Union Customs Code; Minister of Finance decisions T.1460/03, T6525/421/A0019; Article 25, National Customs Code 2960/2001

Ireland Yes Irish Customs Administration

Customs Code Regulation 2913/1992 &Customs Code Implementing Provisions Regulation 2454/1993.

Latvia Yes National Customs Board of the State Revenue Service

Customs Code Regulation 2913/1992 &Customs Code Implementing Provisions Regulation 2454/1993; Cabinet Regulation No 16 ‘Regulation of Operation of Customs Warehouses’ January 2006.

Owners and operators also required to be approved by the Register of Enterprises and the State Revenue Service.

Norway Yes Customs and Border Control Dept. of the Dept. of Finance

Customs law and regulations

Sweden Yes Customs Administration

Customs Code Regulation 2913/1992 &Customs Code Implementing Provisions Regulation 2454/1993

UK No Not applicable Community Customs Code (EU Regulation 2913/92 and Implementing provisions 2454/93. Customs Code Articles 84-113 and Implementing Provisions 496-535.

HM Revenue and Customs must issue an authorisation to operate a customs warehouse


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Other Countries

Afghanistan Yes Ministry of Commerce

Unknown

Angola Yes Customs Authority, Min. of Finance

Customs Code and Article 796 of the Customs Organic Statute No 43199.

Azerbaijan Yes State Customs Committee

Customs Code (Articles 176-183) and the Presidential Decree No.782 of 2 September 2002 ‘On improvement of rules for the issuance of special permits (licences) for certain types of activities’.

Bangladesh Yes National Board of Revenue

Unknown

Belize Yes Customs and Excise Department

Customs Regulation Chapter 49, Sections 64 and 65.

Owners/operators must also be on the Belize Companies Register and registered with the General Sales Tax Department.

Bhutan Yes Department of Trade under the Ministry of Economic Affairs

The Trade Act.

Cameroon Yes General Customs Directorate of the Ministry of Finance

Central African Economic and Monetary Community (CEMAC) Code and national law and regulations

Self regulation through the Cars & Trucks Industry and the manufacturing & production industries.

Canada Yes Canada Border Services Agency

Customs Act, ss. 30, 37(1), 164 & 166; Customs Bonded Warehouses Regulation (SOR/96-46); Customs Tariff Act (section 91) and the Marking of Imported Goods Regulations (SOR/94-10).

China Yes General Administration of Customs

GACC Decree No.105 of 2003

Ethiopia Yes Ethiopian Revenue and Customs Authority

Ethiopian Customs Proclamation No. 622/2009.

Fiji Yes Min. of Finance, administered by Fiji Revenue & Customs Authority

Part VIII of the Customs Act and Part VI of the Customs Regulations.

Ghana Yes Customs Division of the Ghana

Customs Management Law


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Revenue Authority

Guatemala Yes Customs Administration

Central American Uniform Customs Code and Regulations of Central American Uniform Customs Code

India Yes Customs Administration (Ministry of Finance)

Chapter III of the Customs Act 1962

Indonesia Yes Customs Administration

Regulation of the Minister of Finance No. 70/PMK.04/2007 and Regulation of the Director General of Customs and Excise No. P-20/BC/2007.

Israel Yes Israel Customs Directorate

Customs Ordinance and Regulations.

Other regulation is through the Israel Ports company, the Chamber of Commerce and the bonded warehouse association. Additionally, facilities that store medicine, food products and vehicles are also regulated by the Ministries of Health, Agriculture and Transport respectively. Owners and operators are regulated by the Israel Antitrust Authority and must obtain a Certificate of Integrity through the Israeli Police.

Maldives Yes Maldives Customs Service

Customs Act and Regulations

Mauritius Yes Customs Department of the Mauritius Revenue Authority

Sections 67, 68, 85, 97A and 117-119,

The Ministry of Industry, Commerce and Consumer Protection, the Registrar of Business.

Montenegro Yes Customs Administration of Montenegro

Union Customs Code and the Regulation for Implementation of the Customs Code.

Namibia Yes Customs and Excise Authority

Sections 19, 67 and 68 of the Customs and Excise Act.

New Zealand No New Zealand Customs Service

Not applicable NZCS licences Customs Controlled areas for


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the manufacture of goods specified in Part A of the Excise and Excise-Equivalent Duties Table; the deposit/ keeping/securing imported or excisable goods without duty payment, pending export; the temporary holding of imported goods pending examination.

Pakistan Yes Pakistan Customs Customs Act 1969

Peru Yes Customs Authority within the Ministry of Transport and Communications

Customs Law and Regulations

Philippines Yes Bureau of Customs

Tariff and Customs Code Sections 1901-1909, 2001-2004; Customs Administrative Orders 1-2009, 7-2003, 2-2003, 2-1991. Customs Memorandum Orders 2-2011, 3-2011, 40-2010, 19-2005, 6-2000, 3-1998.

Russia Yes Federal Customs Service of Russia

Russian Customs Code

Seychelles No Not applicable Customs Management Act 2011 and the Trade Tax Regulations

Applications must be approved by Customs and is contingent on the warehouse operator meeting specified conditions. The applicant must sign an agreement and any breach of the agreed conditions is an offence.

Sierra Leone Yes Ministry of Trade and administered by Customs and Excise Department of the National Revenue Authority

Customs and Excise Act 2011

Solomon Islands

Yes Solomon Islands Customs Service

Sections 91 - 122 of the Customs Act

South Africa Yes South African Revenue Service,

Section 61 of the Customs


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Division - Licensing and Registration

and Excise Act 1963

Customs and Excise Act, 91 of 1964 (as amended) Sections 64A, 96A, 97-99 and 103

South Korea Yes Ministry of Land, Infrastructure and Transport

Act on the Development and Operation of Logistics Facilities

Sri Lanka Yes Sri Lanka Customs Department

Sections 69, 84, 101, 103 and 104 of the Customs Ordinance Act No 83 of 1988 (Chapter 235).

Import and Export Control Regulation and Exchange Control Regulations.

Thailand Yes Thai Customs Department

Section 8 of the Customs Act BE2469 (1926).

Tonga Yes Tonga Ministry of Revenue and Customs

Part 10 of the Customs and Excise Management Act 2007 and Part 12 of the Customs and Excise Regulations 2008.

Turkey Yes Ministry of Customs and Trade

Articles 93-107 of Turkish National Customs Code 4458 and Articles 518-559 of the Implementing Provisions of the Customs Code

Uruguay Yes National Directorate of Customs with approval by the Ministry of Economy and Finance

Law No. 15.691 on the Uruguayan Customs Code (sections 96-105), Decrees 216/006, 175/007 and 227/009.

USA Yes US Customs and Border Protection

Customs Regulations CFR 19.

Vietnam Yes General Customs Department of Vietnam

Ministry of Finance Circular 128

Zambia Yes Customs Services Division of the Zambian Revenue Authority

Commissioner General rules The holder of a licence must be a member of the Zambian Clearing Association.


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Appendix 8: Process for Becoming a Registered Tax Agent

Regulated through the Tax Agent Services Act 2009 and the Tax Agent Services Regulations 2009

The Act establishes the Tax Practitioners Board (TPB)

Chair + 6 or more members

Functions

Administer the tax agents registration system

Investigate applications and conduct that may breach the Act

Impose sanctions for breaches of Code of Professional Conduct

Issue guidelines to achieve the above

The TPB is independent of the Australian Taxation Office (ATO). While separate, the TPB and ATO work cooperatively to strengthen community confidence in the taxation system. The TPB falls under the portfolio of The Treasury.

The Regulations prescribe the system for recognition of a registered tax agent association to recognise professional qualifications and experience of applicants for RTA. Recognised associations are:

Association of Chartered Certified Accountants Australia and New Zealand

Association of Taxation and Management Accountants

Australian Institute of Quantity Surveyors

CPA Australia

Financial Planning Association of Australia

Institute of Chartered Accountants in Australia

Institute of Public Accountants

Law Society of New South Wales

National Tax Agents' Association Ltd

New Zealand Institute of Chartered Accountants (NZICA)

Royal Institute of Chartered Surveyors Australasia

Self-Managed Super Fund Professionals Association of Australia

TAI Practitioners and Advisers Limited

The Tax Institute (TTI)

ENTITLEMENT TO APPLY

Tax Agents Services Act 2009

Defines eligibility to be an RTA for

Individuals


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Fit and proper person

Meet requirements of Regulations (including qualifications and experience)

Adequate PI insurance

Meets CPD requirements

Partnerships

Individuals are fit and proper persons

Partnerships – have sufficient individual RTAs to provide tax agent services to a competent standard and carry out supervisory arrangements


- Corporations

Each director is a fit and proper person

Not under external administration

No serious tax offence, fraud or dishonesty in previous 5 years

Have sufficient individual RTAs to provide tax agent services to a competent standard and carry out supervisory arrangements


Regulations may allow TPB to accredit professional associations to recognise professional qualifications and experience of individuals (see above)

Criteria for fit and proper person test

Good fame, integrity and character

Not

Any prescribed offences in previous 5 years

Undischarged bankrupt in previous 5 years

Imprisoned in previous 5 years

Tax Agents Services Regulations

Prescribe the requirements of eligibility for registration as an RTA – Part 2 of Schedule 2 – compliance with one of the requirements is sufficient

Tertiary qualifications – accountancy, law or other specialist discipline

Diploma or higher award in accountancy plus other requirements

Eight years full time ‘relevant experience’ (as defined) plus other requirements

Membership of a recognised tax agent association

VALIDITY OF REGISTRATION

Registration is for at least 3 years

Regulations set the fee for registration as an RTA at $500


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REQUIREMENTS OF THE APPLICATION

Applications for registration are made to the TPB

TPB must grant application if applicant is eligible

CONDITIONS ATTACHING TO REGISTRATION

TPB can attach conditions to registration

SANCTIONS AGAINST REGISTERED TAX AGENTS

Act prescribes a Code of Professional Conduct – honesty and integrity, independence, confidentiality, competence, other

For failure to comply with the Code of Professional Conduct, the TPB may

Give a caution

Order certain action (undertake a course etc)

Suspend registration

Terminate registration

Prohibits certain conduct without registration

Providing tax agent services

Advertising tax agent services

Representing that practitioner is an RTA

Other civil penalties

False or misleading statements

Employing/using services of deregistered entities

Improper signing of declarations

Federal Court may order payment of pecuniary penalty for contravening civil penalty provision

CONSTITUTION OF TAX PRACTITIONERS BOARD

Board members are appointed by the Minister (Assistant Treasurer) on a part-time basis. Currently, the Board consists of the Chairman and seven members.

The person appointed by the Minister to be the Chair must not be a person who holds any office or appointment under a law of the Commonwealth on a full time basis, or a person appointed or engaged under the Public Service Act 1999.

The Minister may terminate the appointment of Board members on grounds specified in the Act

The Secretary and staff of the TPB are made available by the ATO

The qualifications of the current Chair and members include:


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Current or former tax partner of Big Four or second tier accounting and consulting firms, professors or lecturers in taxation and related disciplines at various universities, authors of tax-related publications, editor of the Australian Tax Forum, professional non-executive director

Diploma of Education, Bachelor of Arts, Bachelor of Economics, Bachelor of Laws, Master of Business Administration, Master of Commerce, Justice of the Peace,

Fellow of CPA, Fellow of Institute of Chartered Accountants in Australia, office holder of Institute of Certified Bookkeepers, member of the Australian Treasury Standard Business Reporting Advisory Forum, member of the Australian Taxation Office BAS Agents Advisory Group, registered tax agent, Manager at the Association of Taxation and Management Accountants, office holder at Australian Association of Professional Bookkeepers, Chartered Tax Advisor, Solicitor of the Supreme Court of NSW, governor of the Australian Tax Research Foundation, executive of National Institute of Accountants, executive of Australian Association of Accounting Technicians, former Director of the Council of Small Business Organisations of Australia, Fellow of Institute of Public Accountants, Fellow of the National Tax Agents Association, Fellow of the Institute of Company Directors

The Tax Practitioner Service Charter (Charter) sets out what tax practitioners can expect from their dealings with the TPB. The Charter also explains their rights and responsibilities and what they can do if they are not satisfied with the service they received from the TPB.

REGISTER

The TPB website contains an on-line register of all registered tax agents in Australia, searchable by agent name, business name, agent number, street address, postcode or State.


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Appendix 9: Comparison of Broker Licensing & Tax Agent Schemes

Feature Customs Broker Licensing

Registration as a Tax Agent Comment

Regulating Legislation Customs Act Part XI; Customs Regulations;

Tax Agent Services Act 2009; Tax Agent Services Regulations 2009

The RTA scheme is regulated through dedicated legislation, not dependent upon the federal taxation laws. The customs broker licensing scheme, however, is embedded in the Customs Act and Regulations

Administering Authority

CEO of ACBPS grants brokers licences on recommendation of NCBLAC

Tax Practitioners Board registers tax agents

The RTA process is independent of the Commissioner of Taxation; the customs brokers licensing regime is controlled by the CEO of ACBPS

Entitlement to Apply Educational: 11 technical study units as a stand-alone course (2 - 2.5 years) or part of Certificate IV in International Freight Forwarding (Senior Operator); Operational Competence: pass 3.5 hour National Exam; Employment Experience: length and nature of employment plus referees' statements. Meet ‘Fit and Proper Person’ test Make application to Broker Licensing Section of ACBPS

Meet ‘Fit and Proper Person’ test. Either: tertiary qualifications in accountancy, law or other specialist discipline, or Diploma or higher award in accountancy plus other requirements, or 8 years full time ‘relevant experience’ (as defined) plus other requirements, or membership of a recognised tax agent association. Adequate PI insurance Meet CPE requirements Partnerships and corporations – have sufficient individual RTAs to provide tax agent services to a competent standard and carry out supervisory arrangements Corporations: not under external administration, no serious tax offence, fraud, dishonesty in previous 5 years. Make application to TPB.


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‘Fit and Proper Person’ test

Criteria include: Conviction for a prescribed offence in preceding ten years; Refusal, suspension or cancellation of a Transport Security Identification Card; Whether undischarged bankrupt; Any misleading statement made in the application; Making a knowingly false statement in the application.

Good fame, integrity and character; Not any prescribed offences, undischarged bankrupt or imprisoned in previous 5 years

Customs brokers criteria are exclusively negative. Tax agents criteria are a mixture of positive and negative

Continuing Professional Development / Education

CPD compliance is an additional condition of the licence imposed by CEO of ACBPS; total of 30 points per annum (equating to 10 hours) comprising at least 10 points in each of two mandatory streams (‘Broker Obligations, Risk and Ethics’ and ‘Professional Brokerage Skills’) and the balance, if any, from the optional stream ‘Brokerage Management’. NCBLAC reviews proposed course content and recommends to CEO whether to accredit and the point value to be assigned.

The Tax Agents Services Act establishes a Code of Professional Conduct. The Code requires the tax agent to maintain knowledge and skills relevant to the tax agent services he/she provides. The TPB issued a detailed Explanatory Paper to explain the practical effect of the Code including a minimum 90 hours of CPE over the 3 year registration period including a minimum 10 hours of CPE per annum. Compliance with a registered tax agents association's CPE requirements is accepted as meeting the TPB's CPE requirements provided the minimum hours are met. The TPB does not accredit or approve CPE activities but relies upon the tax agent's ‘professional judgement when selecting relevant CPE activities to be undertaken’. The TPB does provide guidance on appropriate CPE activities.

Assessment of Application

NCBLAC assesses application and makes recommendation to CEO of ACBPS.

TPB must grant registration if applicant is eligible.

Validity & fee 3 years. $120 for individual; $1,200 for corporation

3 years. $500

Conditions of Licence/Registration

Extensive conditions prescribed by Customs Act, Customs

TPB may attach conditions to registration.


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Regulations and imposed by CEO of ACBPS

Investigation of Conduct

By NCBLAC at request of CEO of ACBPS

TPB investigates conduct that may breach the Tax Agent Services Act.

Actionable Conduct Conviction of a prescribed offence; becoming an undischarged bankrupt; refusal, suspension or cancellation of a Transport Security Identity Card; company goes into liquidation; ceased to perform duties of a customs broker in a satisfactory and responsible manner; abuse of the rights and privileges arising from the licence; failure to pay prescribed fees within 28 days; make a false or misleading statement in the application; not complied with condition of the licence; not applied for variation of conditions of licence as required; or CEO of ACBPS considers it necessary for the protection of the revenue or otherwise in the public interest.

Tax Agent Services Act prescribes a Code of Professional Conduct requiring honesty and integrity, independence, confidentiality, competence etc. TPB can investigate alleged breaches of the Code of Professional Conduct. Civil penalties apply for false or misleading statements, employing or using the services of deregistered entities and improper signing of declarations.

Sanctions CEO may cancel licence, order it not be renewed, reprimand broker, suspend licence, further suspend licence for a specified period.

TPB may give a caution, order certain action (eg attendance at a course), suspend or terminate registration.

Penalties Breach of condition of licence is a strict liability offence subject to penalty of 60 penalty units ($10,200). Also subject to INS as an alternative to prosecution.

Civil penalty provisions are subject to pecuniary penalty imposed by the FCA.


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Constitution of NCBLAC and TPB

Customs Act prescribes that NCBLAC shall consist of a Chair, a member to represent customs brokers and a member to represent the Commonwealth - all appointed by the CEO. The Chair shall be (a) a current or former Stipendiary, Police, Special or Resident Magistrate of a State or Territory or (b) a person who, in the opinion of the CEO, possesses special knowledge or skill in relation to matters that the Committee is to advise or report on. The customs broker representative is appointed on the nomination of an organisation that represents customs brokers - invariably the CBFCA. The Commonwealth representative is a person for the time being holding the office specified by the CEO. No details of the identity of the members or their qualifications are published on the ACBPS website. NCBLAC does not have its own website.

TPB chair and members (currently 7) are appointed by the Assistant Treasurer. The Chair must not be someone employed in the Public Service. The TPB has its own website and provides detailed information about the identity of the Chair and members and their extensive qualifications and experience. The TPB's Tax Practitioner Service Charter sets out what tax practitioners can expect from their dealings with the TPB. The Charter also explains their rights and responsibilities and what they can do if they are not satisfied with the service they received from the TPB. The Secretary and staff of the TPB are made available by the ATO.

Register There is no register of licensed customs brokers for the public to search

The TPB website contains an on-line register of all RTAs in Australia, searchable by agent name, business name, agent number, street address, postcode or State


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Appendix 10: Process for Obtaining Customs Brokers Licence

Regulated through the Customs Act, Customs Regulations and Administrative Actions of the Chief Executive Officer (CEO) of Australian Customs and Border Protection Service (Customs)

ENTITLEMENT TO APPLY

1. Complete the ‘prescribed course of study’, sit the National Examination and provide evidence of industry experience

11 technical study units prescribed by Customs and offered on-line by CBFCA (trading as the International Trade and Logistics College) and educational institutions (see ACBP Notice 2013/21). These units may be taken as a stand-alone course of study or they may be included within a nationally recognised credential such as a Certificate IV (TLI41610 Certificate IV in International Freight Forwarding (Senior Operator)). The course normally takes two to two and a half years to complete. The study units within the prescribed course are:

Import-Export Documentation

Border Clearance Functions

Permit Issuing Authorities

GST

Quarantine Procedures

Customs Clearance Practices

Customs Valuation 1

Customs Valuation 2

Classification 1

Classification 2

Integrated Border Clearance

Demonstrate operational competence by sitting and passing a 3.5 hour open book National Exam held in May and October each year with a 70% pass mark

Completion of the National Examination conducted by the CBFCA will be taken into consideration by National Customs Broker Licensing Advisory Committee (NCBLAC) and the Chief Executive Officer (CEO) when assessing if an applicant has acquired experience that fits them to be a customs broker.

In addition to the result obtained by an applicant in the National Examination, consideration will also be given to the length and nature of the applicant’s employment experience and to referees’ statements.

Demonstrate compliance with the ‘fit and proper person’ test per s.183CC(1)

Make application to Broker Licensing Section of Customs for broker’s licence


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Application considered by NCBLAC which makes recommendation to Customs. The CEO of Customs grants brokers licences (s.183C)

2. Seek Recognition of Prior Learning (RPL), sit the National Examination and provide evidence of industry experience

RPL is a rigorous exercise and an evidentiary one so the intending customs broker will need to demonstrate to one of the educational institutions which offer the prescribed course of study via a significant portfolio of evidence, that he or she has the necessary skills, knowledge and attributes required for the demonstration of competency in the prescribed course of study. A minimum of three years’ experience in the international trade and logistics industry is required, along with current or recent employment in the industry

If the RPL application is approved, the individual will not have to sit classes within the prescribed course and will be awarded a relevant statement of completion or certificate as if they had passed the course as a classroom student

The same evidence of industry experience will be required from candidates who have successfully achieved RPL in lieu of completing the approved course of study

3. Apply for an interview with the (NCBLAC)

The primary role of NCBLAC under section 183D of the Customs Act is to advise the CEO of Customs as to the standards that customs brokers should meet in the performance of their duties. This extends to advice on the course of study that shall be undertaken and also requires the Committee to make specific recommendations to the CEO regarding applications by individuals for nominee licences

NCBLAC is expected to determine, inter alia, whether the nominee has the ‘acquired experience that … fits him to be a customs broker’ (s.183CC(2)(b)). The primary evidence used by NCBLAC to make this determination is whether the candidate has passed the National Examination however NCBLAC may also conduct an interview with the applicant to determine his / her suitability

VALIDITY OF LICENCE

Valid for three years to 30 June 2012 and renewable then for further three year periods (s.183CH)

Renewal fee for an individual nominee is $120 and for a corporation, $1,200.

Entitles holder to apply for DAFF certification under the Broker Accreditation Scheme

REQUIREMENTS OF THE APPLICATION

Customs Act

Must be in writing, specify the place at which broker proposes to act, and the person to act as nominee (s.183CA(1))

Name and address of each person required to pass the ‘fit and proper person’ test under section 183CC (s.183CA(1))


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Such particulars of those persons and matters which the CEO is required to consider as to whether the person is qualified to be a broker (s.183CC(1)(a)(ii)) and whether the person is eligible to be a nominee (s.183CA(1))

Such other information as is prescribed (s.183CA(1)) (Customs Regulation 157 requires application to mention whether the applicant intends to act as customs broker in his/her own right)

CEO refers the application to NCBLAC to investigate the matters required to be considered by the CEO and then report to the CEO (s.183CB)

An applicant is only qualified to be a customs broker if he/she has completed a course of study or instruction approved under section 183CC(5) and has acquired experience that, in the opinion of the CEO, fits him/her to be a customs broker (s.183CC(2))

CEO may exempt an applicant from the requirement to complete the course of study or instruction on the basis of the experience or training of the applicant (s.183CC(3))

Criteria for ‘fit and proper person’ test include:

Conviction for a prescribed offence in preceding ten years

Refusal, suspension or cancellation of Transport Security Identification Card

Whether undischarged bankrupt

Any misleading statement made in the application

Making a knowingly false statement in the application (s.183CC(4))

CEO, upon recommendation from NCBLAC, may approve a course of study or instruction that fits a person to be customs broker (s.183CC(5))

CONDITIONS OF THE LICENCE

Customs Act

Holder of licence:

Being a natural person, must give CEO, within 30 days, particulars of

Conviction of a prescribed offence

Becoming an undischarged bankrupt

Being refused a transport security identification card or having it suspended or cancelled (s.183CG(1))

Being a corporation, must give CEO, within 30 days, particulars of

Appointment of a receiver

Appointment of an administrator

Execution of a deed of arrangement

Commencement of winding up (s.183CG(1))

Such person must not act as a customs broker in his/her own right while a nominee of a customs broker (s.183CG(2))


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Holder of licence must give CEO, within 30 days, particulars of

Commencement of participation in the work of the broker of a person not named in the application

Nominee dying or ceasing to act as nominee

A person participating in the work of the broker

Is convicted of a prescribed offence

Becoming bankrupt

Is refused a transport security identification card or had it suspended or cancelled

In the case of a partnership

A member is convicted of a prescribed offence or becomes bankrupt

A member is refused a transport security identification card or had it suspended or cancelled

There is a change to the membership of the partnership (s.183CG(3))

Holder of licence shall do all things necessary to ensure that all persons who participate in the work of the broker, and all members of any partnership, are fit and proper persons (s.183CG(4))

Any other conditions as prescribed (s.183CG(5)) (see ‘Customs Regulations’ below)

Any other conditions specified in the licence, considered by the CEO to be necessary or desirable for:

Protection of the revenue

Ensuring compliance with the Customs Acts

Any other purpose (s.183CG(6)) (see ‘Additional Conditions Specified by CEO’ below)

Where a broker fails to comply with a condition of the licence, the CEO may require the broker to comply with that condition within a specified time (s.183CG(8))

The CEO may at any time impose additional conditions which CEO considers necessary or desirable for:

Protection of the revenue

Ensuring compliance with the Customs Acts

Any other purpose (s.183CGA)

The CEO may vary the conditions to which the licence is subject (s.183CGB)

Breach of a condition is a strict liability offence subject to a penalty of 60 penalty units, which is equivalent to $10,200 (s.183CGC)

Applicants for a broker’s licence are required by the CEO to provide a security as prescribed (s.183CK)


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Customs Regulations

Customs Regulation 159 makes it a condition of a licence for a nominee that that broker not act as an agent authorised by an owner under s.181(1)

Additional Conditions Specified by CEO

ACBP Notice 2013/55 specifies the following further conditions which are not specified in the Customs Act:

Broker’s licence holder, upon request from Customs, must ensure that the licence holder and any person participating in the work of the broker completes a Consent to Obtain Personal Information form to allow Customs to make a fit and proper person check for each relevant person.

If the broker’s licence holder becomes aware that information provided to Customs by or on behalf of a client is false, misleading or incomplete, the holder must provide written particulars to the CEO as soon as practicable.

Broker’s licence holder must not allow Customs systems or information to be used for an unauthorised purpose or to assist, aid, facilitate or participate in any unlawful or illegal activity.

A natural person holding a broker’s licence must undertake Continuing Professional Development (CPD), keep auditable records of CPD attendance and notify the CEO of any failure to complete the minimum number of CPD points.

(ACBP Notice 2012/43 explains these four new conditions)

SANCTIONS AGAINST LICENCEES

Customs Act

CEO may give notice to licence holder that CEO intends to refer to NCBLAC for investigation and report to the CEO the question whether the CEO should take action in relation to the licence, if CEO has reasonable grounds to believe the broker

Has been convicted of a prescribed offence

Is an undischarged bankrupt

Has been refused a transport security identification card or had it suspended or cancelled

Being a company, is in liquidation

Has ceased to perform the duties of a customs broker in a satisfactory and responsible manner

Is guilty of conduct that is an abuse of the rights and privileges arising from the licence

Has not paid prescribed fees within 28 days

Made a false or misleading statement in the application

Has not complied with a condition of the licence and has not, within the time specified in the notice, complied with that condition


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Has not applied for a variation of the conditions of the licence contemplated in s.183CP

or it appears to the CEO to be necessary for the protection of the revenue or otherwise in the public interest (s.183CQ(1))

Ceasing ‘to perform the duties of a customs broker in a satisfactory and responsible manner’ includes circumstances where the documents prepared by the customs broker contain errors ‘that are unreasonable having regard to the nature or frequency of those errors’ (s.183CQ(2))

NCBLAC shall, as soon as practicable, investigate and report to the CEO (s.183CQ(7))

Where a notice is issued, the CEO may, if considered necessary for the protection of the revenue or otherwise in the public interest, suspend the licence (s.183CR(1))

Having received the NCBLAC report and being satisfied of any of the matters giving rise to the notice, or on any other grounds that it is necessary for the protection of the revenue or to ensure compliance with ‘the Customs Acts’, the CEO may

Cancel the licence

Order that it not be renewed

Reprimand the broker

Suspend the licence

Further suspend the licence for a specified period

As noted above, breach of a condition is a strict liability offence subject to a penalty of 60 penalty units, equivalent to $10,200 (s.183CGC)

Customs Regulations

Schedule 1ABA of the Regulations makes s.183CGC(1) (breach of a condition of a broker’s licence) subject to an infringement notice

the maximum penalty under an infringement notice for this offence is

60 penalty units x 0.25 = 15 penalty units = $2,550 for an individual

75 penalty units = $12,750 for a corporation (s.243X(2))

unless the penalty can be determined by reference to the amount of duty payable or the value of the goods (s.243X(3))

CONSTITUTION OF NCBLAC

Section 183DA of the Customs Act provides that the Committee will consist of the Chair, a member to represent customs brokers and a member to represent the Commonwealth.

The Chair is appointed by the CEO of Customs and shall be a person who:

a) is or has been a Stipendiary, Police, Special or Resident Magistrate of a State or Territory; or


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b) in the opinion of the CEO, possesses special knowledge or skill in relation to matters that the Committee is to advise or report on.

The customs brokers’ representative is appointed by the CEO but on the nomination of an organisation that, in the opinion of the CEO, represents customs brokers.

The Commonwealth representative shall be the person for the time being holding the office in the Department that the CEO has specified is the office for the purposes of section 183DA.

Information about the current Chair and members of NCBLAC is not readily available but for 2011-2013:

a) The Chair was a former Australian Government Solicitor, Secretary to the Commonwealth Attorney-General’s Department and legal consultant to large law firms

b) The customs brokers representative was the owner of a customs brokerage and former Chairman of the CBFCA

c) The deputy customs brokers representative obtained his broker’s licence in 1971 and was still working as a customs broker

d) There were 8 Commonwealth members (presumably all from the ACBPS)

There is no published information about the qualifications of NCBLAC members

REGISTER

Neither the ACBPS nor the CBFCA website contains a register of brokers who are licensed.


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Appendix 11: Tax Agents’ Code of Professional Conduct

– Section 30.10 of the Tax Agent Services Act

Honesty and integrity

(1) You must act honestly and with integrity.

(2) You must comply with the taxation laws in the conduct of your personal affairs.

(3) If:

(a) you receive money or other property from or on behalf of a client; and

(b) you hold the money or other property on trust;

you must account to your client for the money or other property.

Independence

(4) You must act lawfully in the best interests of your client.

(5) You must have in place adequate arrangements for the management of conflicts of interest that may arise in relation to the activities that you undertake in the capacity of a registered tax agent or BAS agent.

Confidentiality

(6) Unless you have a legal duty to do so, you must not disclose any information relating to a client's affairs to a third party without your client's permission.

Competence

(7) You must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently.

(8) You must maintain knowledge and skills relevant to the tax agent services that you provide.

(9) You must take reasonable care in ascertaining a client's state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client.

(10) You must take reasonable care to ensure that taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client.

Other responsibilities

(11) You must not knowingly obstruct the proper administration of the taxation laws.

(12) You must advise your client of the client's rights and obligations under the taxation laws that are materially related to the tax agent services you provide.

(13) You must maintain professional indemnity insurance that meets the Board's requirements.

(14) You must respond to requests and directions from the Board in a timely, responsible and reasonable manner.


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Appendix 12: RKC Guidelines to Specific Annex D

Chapter 1

CUSTOMS WAREHOUSES

1. Introduction

In international trade it is sometimes not known at the time of importation how the imported goods will finally be disposed of. This means that the importers are obliged, or may choose, to store the imported goods for some time before they are finally disposed of. When the goods are intended for clearance for home use, the Customs warehouse procedure enables the importer to delay the payment of the import duties and taxes until the goods are actually taken into home use. The importer may also choose to place the goods in a warehouse until they can meet the conditions relating to restrictions or prohibitions.

Where it is intended to re-export the goods, it is also in the importer’s interest to place them under a Customs procedure which obviates the need to pay the import duties and taxes.

In order to make these facilities available to importers, the national legislation of most administrations provides for the Customs warehousing procedure that allows for the storage of goods without the payment of import duties and taxes while the goods remain in the warehouse.

2. Purpose and Scope The main purpose of the Customs warehousing procedure is to facilitate the trade to a great extent. Goods deposited in a Customs warehouse do not become liable to the payment of import duties and taxes until the goods are cleared for home use from the warehouse. If the goods are re-exported, then there is a waiver of import duties and taxes. It also affords the person warehousing the goods sufficient time to negotiate their sale, either on the home market or abroad, or to arrange for the goods to be processed or manufactured, transferred to another Customs procedure or otherwise disposed of in an authorized manner.

The scope of this procedure may not cover only imported goods. For example, some administrations allow goods that are liable to, or have borne, internal duties and taxes (whether of national origin or previously imported against payment of import duties and taxes) to be stored in a Customs warehouse in order that they may qualify for exemption from or repayment of such internal duties and taxes. Thus the definition of the term ‘Customs warehousing procedure’ covers the warehousing of imported goods since this is the use generally authorized, but the storage of goods of national origin is recommended as an additional case of the use of Customs warehouses. (See also Recommended Practice 9.) Similarly, the deposit in a Customs warehouse of goods that have previously been dealt with under another Customs procedure, such as temporary admission, , with a view to subsequent exportation or other authorized disposal is also possible.

The provisions of this Chapter do not apply to:

goods in temporary storage (See Specific Annex A, Chapter 2),

goods in free zones (See Specific Annex D, Chapter 2)

the processing or manufacturing of goods conditionally relieved from import duties and taxes (inward processing), even if such processing takes place in premises approved by Customs (See Specific Annex F, Chapter1).

It should be noted, however, that administrations which do allow processing or manufacturing to take place in Customs warehouses are considered to be granting a greater facility to traders as provided for in Article 2 of the Convention.


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3. Definition E1/F1 ‘Customs warehousing procedure’ means the Customs procedure under which imported goods are stored under Customs control in a designated place (a Customs warehouse) without payment of import duties and taxes.

All the definitions of terms necessary for the interpretation of more than one Annex to the Convention are placed in the General Annex. The definitions of terms applicable to only a particular procedure or practice are contained in that Specific Annex or Chapter.

4. Essential Features of the Customs warehousing procedure 4.1. Principle

Standard 1

The Customs warehousing procedure shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.

The revised Kyoto Convention has a set of obligatory core provisions that are contained in the General Annex. The General Annex reflects the main principles considered necessary to harmonize and simplify all the relevant Customs procedures and practices which Customs apply in their daily activities.

As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Customs warehouses. Where a specific applicability is not relevant, the general facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities, Chapter 4 on Duties and taxes, Chapter 5 on Security and Chapter 6 on Customs control should be read in conjunction with this Chapter on Customs warehouses.

Contracting Parties should particularly note Standard 1.2 of the General Annex and ensure that their national legislation specifies the conditions to be fulfilled and the formalities to be accomplished for Customs warehouses.

In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.

4.2. Types of Customs warehouses

Standard 2

National legislation shall provide for Customs warehouses open to any person having the right to dispose of the goods (public Customs warehouses).

Standard 3

National legislation shall provide for Customs warehouses to be used solely by specified persons (private Customs warehouses) when this is necessary to meet the special requirements of the trade.

There are two types of Customs warehouses, namely public and private Customs warehouses.

Standard 2 provides that public Customs warehouses are open to any person who has the right to dispose of the goods stored or to be stored in such warehouses. The person can be the importer, any other person to whom the goods have been sold while in the warehouse, or other persons (natural or legal) having title to the goods or the legal right to dispose of them.


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In accordance with national legislation, public Customs warehouses may be managed either by Customs or by other authorities or by natural or legal persons. Standard 3 further requires national legislation to provide for the establishment of private Customs warehouses. These will meet the special requirements of trade or industry and allow specified persons to store goods in these warehouses for their own specific uses. Generally, private Customs warehouses are located within or near the premises of the manufacturing units.

The categories of goods that may be stored in private Customs warehouses is usually not restricted. However, Standard 6 also states that Customs shall specify the categories of goods that may be admitted to these warehouses.

Some administrations provide additional facilitation to the trade through a simplified warehousing procedure for special categories of goods, e.g. aircraft spare parts where a classification of the parts under the Harmonized System is not required. An example of this simplified procedure is in Appendix 1.

4.3. Establishment, Management and Control

Standard 4

The Customs shall lay down the requirements for the establishment, suitability and management of the Customs warehouses and the arrangements for Customs control.

The arrangements for storage of goods in Customs warehouses and for stock-keeping and accounting shall be subject to the approval of the Customs.

Although the establishment of Customs warehouses is normally subject to the approval of Customs, it is not practicable to enumerate all the requirements concerning the management of Customs warehouses. The requirements may vary according to whether the warehouses are managed by Customs, by another authority or by private persons, , as well as whether the warehouses are public or private. Therefore the requirements may differ according to the circumstances. They will also depend on the risk for Customs of fraudulent removal or substitution of goods and on the amount of the import duties and taxes chargeable on the goods allowed to be stored. In certain circumstances, enclosed sites may also be used for the storage of goods under the Customs warehousing procedure. However, for Customs and the public alike it would be superfluous and detrimental to smooth operations to impose requirements or measures of no practical value or not commensurate with the actual risks involved. In general, Customs should consider the following requirements with a view to ensuring Customs control:

require that Customs warehouses be double-locked (secured by the lock of the person concerned and by the Customs lock)

keep the premises under permanent or intermittent supervision,

keep, or require to be kept, accounts of goods warehoused (by using either special registers or the relevant declarations), and

take stock of the goods in the warehouse from time to time.

The Customs supervision and control may be exercised by physical presence, unannounced spot checks and periodic audits. The arrangement for storage of goods and for stock keeping and accounting is subject to the approval of Customs. The requirements indicated above are not exhaustive and are illustrative to indicate some of the major requirements. (See also the Guidelines to Chapter 6 of the General Annex on Customs control and risk management.)

Many administrations waive the requirement for security where the physical characteristics of the warehouse or the Customs control measures applied make it practically impossible to


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remove or substitute goods without the authorization of Customs. (See also the Guidelines to Standard 5.4 of the General Annex.)

4.4. Admission of Goods and duration of stay

Recommended Practice 5

Storage in public Customs warehouses should be allowed for all kinds of imported goods liable to import duties and taxes or to prohibitions or restrictions other than those imposed on grounds of:

public morality or order, public security, public hygiene or health, or for veterinary or phytosanitary considerations; or

the protection of patents, trade marks and copyrights,

irrespective of quantity, country or origin, country from which arrived or country of destination.

Goods which constitute a hazard, which are likely to affect other goods or which require special installations should be accepted only by Customs warehouses specially designed to receive them.

It should be noted that the prohibitions and restrictions mentioned in the two indents of Recommended Practice 5 are applied when the goods enter the Customs territory and therefore prevent goods liable to these prohibitions and restrictions from being stored in a Customs warehouse.

There are certain other prohibitions and restrictions, however, usually based on economic reasons, which are only applied when goods are cleared for home use. Goods to which such prohibitions and restrictions apply should be allowed to be stored in Customs warehouses. By applying this provision, these goods could be warehoused for the period of time that is required for arrangements to be made to re-export them. In the case of restricted goods, warehousing provides sufficient time for the importer to arrange for licences or permits and documents that may be required for clearance of the goods.

Standard 6

The Customs shall specify the kinds of goods which may be admitted to private Customs warehouses.

Standard 11

The Customs shall fix the authorized maximum duration of storage in a Customs warehouse with due regard to the needs of the trade, and in the case of non-perishable goods it shall be not less than one year.

This set of provisions relates to the types of goods that may be stored in a Customs warehouse and the duration of their stay.

It should be noted that certain prohibitions and restrictions, other than the exceptions listed in Recommended Practice 5, which may be applicable to goods cleared for home use should not apply to the storage of goods in public Customs warehouses. Goods that are prohibited could be warehoused for the period of time that is required for arrangements to be made to re-export them. In the case of restricted items, warehousing the goods provides sufficient time for the importer to arrange for licences or other permits and documents that may be required for the goods to be cleared.

Private Customs warehouses are in a different category, as indicated in Standard 3 of this Chapter, and only those goods for which specific approval has been given can be stored in


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them. Thus Customs are free to specify the classes of goods that can be stored in private warehouses. Customs permit the storage of goods taking into account the special requirements of the trade and therefore do not normally impose restrictions on these goods.

Since the private warehouse is a facility granted for the explicit needs of the trade, any restrictions regarding the goods would relate to the area of activities of the warehouse operator.

Thus a person manufacturing electronic products or components would be allowed to store only goods associated with this area of activity.

As in Recommended Practice 5 for public warehouses, goods which constitute a hazard, which are likely to affect other goods or which require special installations should be permitted for storage in private Customs warehouses only if these warehouses are specially designed to receive them. While fixing the maximum duration of storage in a Customs warehouse as required in Standard 11, Customs should take into account issues such as the nature of the substances to be stored, perishable goods, shelf life and other similar factors.


Admission to Customs warehouses should be allowed for goods which are entitled to repayment of import duties and taxes when exported, so that they may qualify for such repayment immediately, on condition that they are to be subsequently exported.

Recommended Practice 7 provides for a situation whereby the Customs warehousing procedure, in certain instances, can offer the same advantages as the outright exportation of goods. Usually any repayment of duties and taxes at exportation are available only when the goods are actually exported. However, this Recommended Practice provides that goods meant for export could be warehoused prior to the actual export and become immediately eligible for repayment of import duties and taxes when they are admitted into the warehouse. For example this practice could be applied to goods on which drawback is claimed, which are re-exported as not in accordance with contract, or for any other reason recognized under national legislation.

The condition that the goods be subsequently exported is important in the application of this Recommended Practice. Customs may, in some instances, require a security to be furnished to ensure that the obligation to export is fulfilled. This could occur for goods to be placed in a private warehouse before export or for certain sensitive commodities where Customs consider that additional control measures are required.


Admission to Customs warehouses, with a view to subsequent exportation or other authorized disposal, should be allowed for goods under the temporary admission procedure, the obligations under that procedure thereby being suspended or discharged.

Normally for goods admitted under temporary admission subject to re-exportation in the same state or goods temporarily admitted under duty suspension procedures such as the inward processing procedure, the procedure is terminated when the goods or the compensating products are physically exported. However the relevant Chapters in this Convention that deal with these procedures also allow termination when the goods are placed under another Customs procedure. Recommended Practice 8 is a corollary to those other provisions and recommends a situation more facilitative than that provided for in the definition of the Customs warehousing procedure, which only allows for goods to be placed in such warehouses without payment of import duties and taxes. As specified in this Recommended Practice, goods under temporary admission that are placed in a Customs


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warehouse may subsequently on removal be placed under another Customs procedure, for example, Customs transit or clearance for home use.


Admission to Customs warehouses should be allowed for goods intended for exportation that are liable to or have borne internal duties or taxes, in order that they may qualify for exemption from or repayment of such internal duties and taxes, on condition that they are to be subsequently exported.

In normal circumstances the Customs warehousing procedure is intended for the storage of goods under Customs control without payment of import duties and taxes.

Recommended Practice 9 provides a greater facility to the trade in two ways. First, it provides for warehousing of goods intended for export that have borne internal duties and taxes, which is greater in scope than the definition of this procedure. In addition, the trader is eligible to obtain a refund of the internal duties and taxes at the point in time when the goods are placed in the warehouse and prior to the actual exportation.

4.5. Authorized Operations

Standard 10 Any person entitled to dispose of the warehoused goods shall be allowed, for reasons deemed valid by the Customs:

a. to inspect them;

b. to take samples, against payment of import duties and taxes wherever applicable;

c. to carry out operations necessary for their preservation; and

d. to carry out such other normal handling operations as are necessary to improve their packaging or marketable quality or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, and repacking.

The practice of allowing handling and other operations in Customs warehouses is a useful facilitation to traders and owners of the goods. In general the operations that are authorized by Customs are those which do not affect the essential character of the goods. This can include operations necessary for preservation such as fumigating, drying and ventilating.

These operations can also include retail packing from bulk, sorting, grading and repacking to make the goods presentable or marketable. The main purpose of allowing these operations is to preserve the goods while in storage so that they can be finally disposed of. Since the operations are not intended to change the essential character, this provision does not cover blending, processing or manufacture. The Guidelines to Standard 3.9 of the General Annex should also be consulted.

4.6. Transfer of Ownership

Standard 12

The transfer of ownership of warehoused goods shall be allowed.

For commercial reasons, goods may change hands while they are in warehouse. There is no reason for Customs to object to this. However the general conditions of warehousing must be complied with after any transfer of ownership of the warehoused goods, and where the transfer is permitted it should be effected in accordance with national legislation. (See also the Guidelines to Chapter 4 of the General Annex.)


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4.7. Deterioration of Goods

Standard 13

Goods deteriorated or spoiled by accident or force majeure while under the Customs warehouse procedure shall be allowed to be declared for home use as if they had been imported in their deteriorated or spoiled state, provided that such deterioration or spoilage is duly established to the satisfaction of the Customs.

This provision is parallel to Standard 3.44 in the General Annex and its Guidelines that cover goods deteriorated or spoiled by accident or force majeure. Standard 13 does not, however, relieve the importer from any requirements to be met, such as obtaining import licence or permits before the goods can be taken into home use.

4.8. Removal of Goods

Standard 14

Any person entitled to dispose of the goods shall be authorized to remove all or part of them from one Customs warehouse to another or to place them under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

In some administrations the transfer from one Customs warehouse to another is dealt with under a simplified procedure, such as using the accounting from one warehouse to another, without the need for separate Goods declarations. The facility of removing goods piecemeal to be placed under another Customs procedure is also allowed. This enables the person concerned to remove only the quantity of goods that are required for his immediate use.

This provision is not to be interpreted as conferring an absolute right on the person concerned to remove the goods from one Customs warehouse to any other warehouse of his choice, and Customs remain free to lay down the conditions governing such removals.

4.9. Goods not removed from a warehouse

Standard 15

National legislation shall specify the procedure to be followed where goods are not removed from the Customs warehouse within the period laid down.

When the person concerned does not remove goods from a Customs warehouse within the storage period allowed, Customs must take action to ensure such removal. For example Customs might collect the duties and taxes due from the security rather than taking physical custody of the goods. Customs may also sell the goods and hand over the proceeds of sale, after deduction of import duties and taxes and other charges to the person entitled to receive them. (See also Transitional Standard 3.45 of the General Annex.)

The object of this Standard is to protect the interests of both the persons having warehoused goods and Customs who are responsible for ensuring collection of import duties and taxes.

4.10. Closure of a Customs warehouse

Standard 16

In the event of the closure of Customs warehouse, the persons concerned shall be given sufficient time to remove their goods to another Customs warehouse or to place them under another Customs procedure, subject to compliance with the conditions and formalities applicable in each case.

Allowing sufficient time to remove goods from a Customs warehouse that is to be closed is important, so that the person concerned can arrange for transport, to obtain any necessary permits or licenses for a subsequent procedure or to pay the duties and taxes.

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