Article by Andrew Hudson - Customs & Trade Partner at Rigby Cooke Lawyers
This article was written before we had clarification on the passage of the bill imposing GST on LVT as set out in our GST on LVT to advance – but detail on the model yet to be determined update. This article is relevant for the commencement of the new piece-level examination requirements for air cargo to the US, commencing on 1 July 2017.
In recent times I have written at length on the uncertainties as to whether the proposed imposition of GST on LVT imports would commence on 1 July 2017.
As of late June 2017, that Bill is still before the Senate without any clarity on whether the Bill will pass and on what terms.
However, one certain change – from 1 July 2017 – is the new regime requiring piece-level examination of air cargo to the US.
The story so far?
For a number of years, Australia has held ‘preferred status’ with the US Transport Security Administration (TSA), meaning air cargo headed for the US was approved as ‘providing an adequate level of security’ – and therefore our air cargo did not require additional scrutiny. However, after an audit by the TSA, we were told to prepare for piece-level screening by 1 July 2015.
Only the airlines were ready for the implementation of the changes on 1 July 2015, meaning exports would have faced delays, so efforts were made to convince the TSA and other US agencies to provide an additional two-year period to implement the requirements.
The efforts even involved sending me to meet the TSA to demonstrate industry’s knowledge of the new regime, its willingness to meet the regime and its polite request for a modest two-year extension.
The Australian Embassy in Washington DC sent along a team of diplomats to accompany me.
That collective effort delivered the desired outcome and the TSA agreed to a two-year extension.
The next two years
Having secured the extension, the Office of Transport Security (OTS), convened the industry liaison group, the Cargo Working Group (CWG) on a regular basis to ensure that everyone was ready for the commencement of the new regime on 1 July 2017.
I have been fortunate to have been a member of the CWG, representing the Export Council of Australia (ECA) and the collaborative effort between the CWG and OTS has been admirable – and an example of excellent collaboration between Government and industry.
At the same time, Government moved with legislation to ensure the TSA requirements were met.
This included the development of the new ‘Known Consignor Scheme’ (KCS) which is a version of the ‘trusted trader’ concept by which exporters with a trusted air cargo supply chain deliver cargo directly to airlines, pre-screened.
Other options are to use a freight company that complies with the Enhanced Air Cargo Examination (EACE) Notice or to comply with the TSA’s piece-level examination requirements.
The current status
As we approach 1 July 2017, there is no doubt an exporter must comply with the new regime, which is usefully summarised on the OTS website.
Basically, air exporters to the US need to be in the KCS (unlikely at this stage) or use a freight company operating under an EACE. All by 1 July 2017 as required by legislation – or cargo won’t be loaded.
Is the TSA happy?
The TSA has recently been to Australia to review the arrangements put into place – and it has approved the new regime for the next 12 months to see how it works out in practice. This includes the KCS, which is a new concept – and one which may be applied in other jurisdictions. So, TSA approval is in place and while it will be reviewed in 12 months in a collaborative regime with the OTS and industry, I have full confidence that it can be achieved as required for all parties.
If a similar regime is applied elsewhere in the world for Australian exports the preparations here will assist industry to meet future possible obligations imposed by other authorities overseas.
What do we do now?
1 July 2017 is not far away – it is probably too late to get into and through the KCS, so check that you have a provider compliant with an EACE or you may face a tough time meeting the new requirements and your cargo may never be loaded.
As always, if pain persists, see your lawyer…..
This article was published in Air Cargo Asia Pacific magazine.