International Trade 2021 Comparisons

Last Updated January 06, 2021

Contributed By Moulis Legal

Law and Practice

Author



Moulis Legal is a progressive modern legal business handling major commercial and international matters. The firm's particular focus areas are international trade, energy and resources, intellectual property, government procurement, China business, property acquisition and development, mergers, acquisitions and joint ventures, and major commercial projects. Moulis Legal’s international trade law team comprises nine lawyers across its Canberra, Melbourne and Brisbane offices. It is Australia’s leading international trade and WTO practice firm. The team leads the field as a premium provider of comprehensive legal service-based representation in international trade law matters, especially anti-dumping and countervailing investigations and related legal proceedings, customs-related advisory work, sanctions, and cross-border agreements. Moulis Legal has extensive experience in representing major international companies and government clients in trade remedy and border-related cases.

Australia has been a member of the WTO since it was founded in 1995, and was a founding member of the body that preceded it, the GATT, at its inception in 1947. Australia has signed on to the following plurilateral agreements:

  • the Government Procurement Agreement; and
  • the Information Technology Agreement.

Additionally, Australia is an observer to the Committee on Trade in Civil Aircraft.

Australia is currently party to the following free trade agreements (FTAs):

  • Australia–New Zealand Closer Economic Relations Trade Agreement;
  • Singapore–Australia FTA;
  • Australia–USA FTA;
  • Thailand–Australia FTA;
  • Australia–Chile FTA;
  • ASEAN-Australia–New Zealand FTA;
  • Malaysia–Australia FTA;
  • Korean–Australia FTA;
  • Japan–Australia Economic Partnership Agreement;
  • China–Australia FTA;
  • Comprehensive and Progressive Agreement for Trans-Pacific Partnership;
  • Australia–Hong Kong FTA;
  • Peru–Australia FTA;
  • Indonesia–Australia Comprehensive Economic Partnership Agreement.

At the time of writing, the Pacific Agreement on Closer Economic Relations Plus is due to come into force on 13 December 2020, and an announcement about the signing of the Regional Comprehensive Economic Partnership (RCEP) is imminent.

Australia does not participate in any arrangements similar to the Generalised System of Preferences. Australia is a party to a number of bilateral investment treaties and double-tax agreements.

At the time of writing Australia is negotiating, with differing degrees of progress, the following FTAs:

  • Australia–EU Free Trade Agreement;
  • Australia–Gulf Cooperation Council Free Trade Agreement;
  • Australia–India Comprehensive Economic Cooperation Agreement;
  • Australia–UK Free Trade Agreement;
  • Pacific Alliance Free Trade Agreement.

Additionally, Australia has participated in WTO negotiations regarding the Environmental Goods Agreement and the Trade in Services Agreement and chairs the WTO’s e-commerce negotiations.

In the last 12 months, the following items of note have occurred.

  • In August 2020, Australia and Singapore e-signed the Australia–Singapore Digital Economy Agreement (SDEA). The SDEA upgrades the Electronic Commerce chapter in the Singapore–Australia FTA through a new Digital Economy chapter, providing modernised trade rules that assist businesses and consumers to engage with and benefit from digital trade and the digital economy.
  • In June, the Appellate Body handed down its decision in DS441 confirming Australia’s tobacco plain packaging rules complied with Australia’s TBT Agreement and the TRIPS Agreement obligations.
  • In May, Australia and 15 other WTO members established the Multi-Party Interim Appeal Arbitration Arrangement in order to address the dearth of members of the Appellate Body.
  • Negotiation for the Australia–UK FTA commenced in June 2020, while FTAs with Hong Kong, Peru and Indonesia all came into force throughout 2020
  • In January 2020, the WTO Dispute Settlement Body, adopted the panel report in DS529, finding that Australia’s anti-dumping measures on A4 copy paper exported from Indonesia did not conform with Australia’s obligations under the Anti-Dumping Agreement.

On 15 November 2020, 15 of the 16 original parties to the RCEP negotiations signed the agreement. In November 2019, India exited negotiations due to what it described as “significant outstanding issues”, including concerns regarding what they considered to be inadequate protections from surges of imports arising from the agreement. The signatories to RCEP have confirmed that it remains open for India to accede to the agreement.

Even excluding India, RCEP covers 30% of global GDP, and includes ten of Australia’s top 15 trading partners. It will cover subjects including trade in goods and services, investment, economic and technical co-operation, government procurement, intellectual property, competition, and electronic commerce.

The key authority governing customs’ matters is the Australian Border Force (ABF). The ABF is an “operationally independent body” within the Home Affairs portfolio, and the ABF Commissioner is also Comptroller-General of Customs. Key legislation governing customs matters include:

  • the Australian Border Force Act 2015;
  • the Customs Act 1901; and
  • the Customs Tariff Act 1995.

In addition, there are a number of relevant regulations, including Customs Regulations 2015, Customs (International Obligations) 2015, the Customs (Prohibited Exports) Regulations 1958 (Prohibited Exports Regulations) and the Customs Prohibited Import Regulations 1956.

The ABF has primary responsibility for administering and enforcing Australian customs law. More serious breaches of customs laws will be enforced by the Australian Federal Police (AFP) and the Office of the Commonwealth Director of Public Prosecutions (CDPP).

Australia has no similar law to the European Union’s Trade Barriers Regulation or Section 301 of the US Trade Act of 1974.

The High Court of Australia released a judgment that has significant implications for customs classification issues. In Comptroller-General of Customs v Pharm-A-Care Laboratories Pty Ltd [2020] HCA 2, the High Court accepted that Australia’s tariff schedules were to be interpreted so as to favour a meaning that gives simultaneous effect to all of the terms of the English text and of the French text of the International Convention on the Harmonized Commodity Description and Coding System. The reason being that the Convention was authenticated in both the French language and the English language. Interestingly, this was something that the Comptroller-General of Customs had argued for in defence of his position, but the High Court still considered the Comptroller’s position to be incorrect even when the Comptroller’s interpretative principle was adopted.

This interpretative methodology has been adopted in other classification disputes. For example, in Smoothflow Australia Pty Ltd and Comptroller-General of Customs [2020] AATA 1890, the Australian Administrative Appeals Tribunal set aside the Comptroller-General’s decision to seek dumping duty based on a classification of certain steel pipes that was found to be inconsistent with Pharm-A-Care. Smoothflow is presently on appeal to the Federal Court of Australia. More recently, on 8 December 2020, the government introduced the Customs Tariff Amendment (Incorporation of Proposals and Other Measures) Bill 2020 which, among other things, proposes additional tariff to assist with interpretation, in responses to the above line of authority.

The Australian government is intending to modernise Australia’s trade system and streamline border services. This will be achieved via reducing compliance complexity and extending the Australian Trusted Traders programme to enable accredited trusted traders to pay customs and anti-dumping duty on a deferred basis from 1 July 2021.

Australia imposes two forms of sanctions – those made by the UN Security Council (UNSC) under Chapter VII of the Charter of the United Nations, and Australia’s own autonomous sanctions. These are discussed below.

UNSC Sanctions

Australia’s domestic legal system does not recognise international legal instruments as binding until they are implemented though Australian legislation. So, while Australia is bound to comply with a UNSC decision under Article 25 of the UN Charter, there needs to be an Australian law to give the decision effect domestically. This is achieved via the Charter of the United Nations Act 1945 (Cth) (UN Charter Act) which empowers the Governor-General of the Commonwealth of Australia to create regulations that give effect to the UNSC decision.

Generally, UNSC sanctions will be applied in a distinct instrument. For example, UNSC resolution 1493 (2003) regarding the Democratic Republic of the Congo is primarily implemented via the Charter of the United Nations (Sanctions – Democratic Republic of Congo) Regulations 2008. The complexity of the regulatory regime for a set of UNSC sanctions will vary considerably, depending on the complexity of the sanctions being implemented.

The prohibitions in each regime have been specified by the Minister for Foreign Affairs to be UN Sanctions Enforcement Laws. Legally, this is important, because the main prescription under the UN Charter Act is against engaging in conduct which contravenes a UN Sanctions Law.

Australia’s Autonomous Sanctions

Autonomous sanctions are imposed in a similar fashion. The Autonomous Sanctions Act 2011 (Cth) delegates the power to create sanctions to the Governor-General, who may do so by making regulations. This power is rather broadly drafted, with the Act providing little guidance as to when autonomous sanctions can be made. The Explanatory Memorandum for the Autonomous Sanctions Bill 2010 (being the bill through which the Act was created), does provide some comment, stating that the aims of such measures are:

  • to limit adverse consequences of a situation of international concern;
  • to seek to influence those responsible for giving rise to a situation of international concern to modify their behaviour to remove the concern (by motivating them to adopt different policies); and
  • to penalise those responsible.

The above comments are more a statement of government policy then they are legally binding criteria. Having said that, the powers under the Autonomous Sanctions Act are not as broad as under the UN Charter Act. Essentially, the autonomous sanctions regulations may prohibit the following:

  • making a “sanctioned supply” of “export sanctioned goods”;
  • making a “sanctioned import” of “import sanctioned goods”;
  • providing a “sanctioned service”;
  • engaging in a “sanctioned commercial activity”;
  • dealing with a “designated person or entity”;
  • using or dealing with a “controlled asset”; or
  • the entry into or transit through Australia of a “designated person” or a “declared person”.

Autonomous sanctions instruments are compiled into a single instrument, the Autonomous Sanctions Regulations 2011, which lists all of the prohibitions applicable to a particular situation.

Technically, the Governor-General is empowered to make regulations imposing UNSC or autonomous sanctions but this role is ceremonial rather than substantive. The Governor-General is the Queen’s representative and so is nominally the head of the Executive Government. The delegation of regulating power to the Governor-General represents the delegation by Parliament of its legislative power to the Executive Government – allowing the Executive Government to create legal instruments without going through the lengthy legislative process.

In practice, it is the Minister for Foreign Affairs and the Department of Foreign Affairs and Trade (DFAT) which are responsible for the content, implementation and facilitation of any sanctions.

The Australian Sanctions Office (ASO) in the DFAT is the Australian government sanctions regulator. The ASO works with a number of agencies to enforce those sanctions including, in particular, the ABF and the AFP. The ABF can stop exports to or from sanctioned countries where a breach of sanctions law is suspected. The ASO may also refer breaches of Australian sanctions law to the AFP and ABF for investigation, which can lead to criminal prosecution.

Australia’s autonomous sanctions laws are subject to Section 15.1 of the Criminal Code 1995 which gives it a limited form of extraterritorial jurisdiction. This applies to particular forms of conduct, rather than particular “people”. Conduct constituting a contravention of the sanctions law will be an offence where that conduct occurs:

  • either wholly or partly in Australia (including on an Australian aircraft or ship); or
  • wholly outside of Australia and leads to a result that occurs wholly or partly in Australia (including on an Australian aircraft or ship); or
  • wholly outside of Australia and was undertaken by an Australian citizen or a body corporate incorporated by or under a law of the Commonwealth of Australia or of an Australian state or territory.

UNSC sanctions are more bespoke in nature and will vary depending on the requirements of the UNSC Resolution. Frequently, Section 15.1 of the Criminal Code will apply to a contravention of a UNSC resolution, although this needs to be assessed on a case-by-case basis.

The ASO contains a consolidated list of sanctioned persons. These are known as “designated people” or “designated entities”. The Autonomous Sanctions Regulations include categories of people/entities who may be “designated”. For example, with regard to Iran, a class of person that may be designated is: a person or entity that the Minister is satisfied has contributed to, or is contributing to, Iran’s nuclear or missile programme.

If the Minister considers that a person/entity falls within the class, the Minister may designate the person/entity via a legislative instrument. The ASO will then update the consolidated list.

Australia currently maintains sanction measures against a number of countries and regions, including:

  • 18 UNSC sanctions regimes; and
  • four wholly autonomous sanctions regimes – the Former Republic of Yugoslavia, Myanmar, Russia/Ukraine, and Zimbabwe;

Australia has imposed additional autonomous sanctions against the Democratic People’s Republic of Korea, Iran, Libya and Syria, which supplement the UNSC regimes.

In 4.1 Export Controls, the Weapons of Mass Destruction (Prevention of Proliferation) Act 1995 (Cth) (WMD Act) is discussed. The WMD Act can have the effect of preventing trade against certain entities that are not otherwise subject to Australia’s sanctions regimes. In those instances, ABF diverts exports for entry for certain goods to the Department of Defence (DoD) which will consider whether to prohibit the exportation of those goods under the broad powers of the WMD Act.

Australia does not apply secondary sanctions. See 3.4 Persons Subject to Sanctions Laws and Regulations regarding jurisdiction.

The UN Charter Act and the Autonomous Sanctions Act include offences for contravening UN Sanctions Enforcement Laws or autonomous sanctions laws, respectively. An individual engaging in conduct that contravenes a sanctions law may be liable for imprisonment for a period not exceeding ten years and/or fines. A fine may be the greater of 2,500 penalty units or three times the value of the transaction that constitutes the contravention, per contravention. As of 1 July 2020 a penalty unit is equal to AUD222, meaning that the minimum penalty for an individual is AUD555,000.

A body corporate that contravenes a sanctions law will be liable for a fine the greater of 10,000 penalty units (AUD2.22 million) or three times the value of the transaction.

There are, of course, a range of other penalties that may arise from a breach of sanctions law, depending on the circumstances.

A party can apply to the ASO for a permit to authorise activity that would otherwise be prohibited by a sanctions law. The conditions on which a permit will be granted will depend upon the sanctions measure to which the proposed conduct relates.

For UNSC sanctions the Minister for Foreign Affairs will need to notify and/or seek approval from the UNSC before granting a permit.

Permits tend to be granted on a conditional basis. It is an offence to contravene a condition on permit, punishable via the equivalent penalties to those outlined above in relation to the contravention of a sanctions law.

The violation of a sanctions law is a strict liability offence, meaning that no intent needs be proved for the offence to be established. However, if a body corporate can prove that reasonable precautions were undertaken, and that due diligence was exercised, to avoid contravention of a sanctions law, then offence will not be considered to have been committed. What constitutes “reasonable precautions” or appropriate levels of “due diligence” is not detailed – however, the ASO advises the following as a minimum:

  • conduct of sanctions checks on the person or entity involved in the sanctioned activity;
  • understanding the company structure (if applicable) and any links to designated individuals and entities;
  • understanding the end-user and the end-use of the goods;
  • checking DFAT’s Consolidated List to ascertain if a designated person or entity would be (directly or indirectly) dealt with; and
  • keeping records of the due diligence that is conducted.

The ASO can undertake “indicative assessments” where a party can request advice as to whether a proposed transaction would be affected by Australian sanctions laws. This can be a lengthy process, with the ASO advising exporters to allow three months.

Finally, the author would advise seeking independent legal advice as part of any reasonable precautions/due diligence.

Any party that applies for a sanctions permit is required to keep records and documentation relating to that application for a period of five years. The ASO can issue notices in order to compel a person to provide information of any kind for the purpose of determining whether a sanctions law has been complied with. Failure to comply with such a notice can result in imprisonment for 12 months.

Australia has no blocking statutes at the time of writing, nor any anti-boycott laws. Secondary boycotts – which at a high level is where one party applies pressure to a second party to prevent the second party dealing with a third party – are prohibited in some circumstances under Australia’s Competition and Consumer Act 2010, although this is not what the author understands to be a traditional “anti-boycott” law.

In late in 2019 the current Prime Minister mused about crafting new laws targeting protesters who “would deny liberty”. Any detail regarding this is yet to be seen, but in theory those laws conclude include anti-boycott rules.

The ASO was established on 1 January 2020. Following on from this, the Online Sanctions Administration System was replaced by a new system called PAX – this is an online system that allows entities to apply for sanctions permits, seek indicative assessments, and communicate directly with the ASO.

Beyond that, there have been numerous updates to the consolidated list relating to a number of Australia’s sanctions regimes.

There are no significant pending changes to Australia’s sanctions regulations.

The legislative architecture for Australia’s export controls differs for physical goods or intangible “technology”. Exports of physical goods are dealt with via the Customs Act 1901 (Cth) and subordinate legislative instruments, whereas exports of intangibles are dealt with via the Defence Trade Controls Act 2012 (Cth) (DTCA).

The Customs Act delegates the power to prohibit the exportation of goods from Australia to the Executive branch of the Australian government, similar to the process discussed in relation to sanctions. The Customs Act also creates a number of offences where those prohibitions are contravened.

The relevant prohibitions are detailed in the Prohibited Exports Regulations. Regulation 13E prohibits the exportation from Australia of goods specified in the Defence and Strategic Goods List (DSGL), as well as the exportation of goods containing DSGL technology, unless a permission is granted by the Defence Minister.

The DSGL is also a legislative instrument created under the Customs Act. It contains two parts:

  • Part 1 – defence and related goods; and
  • Part 2 – dual-use goods.

DSGL technology – being, broadly, software or information relating to the design, development, production, manufacture, assembly, operation or other related activities of DSGL goods – is regulated via the DTCA. The DTCA prohibits the “supply” of DSGL technology to a person outside of Australia, subject to certain exceptions and permissions, and the provision of access to DSGL technology, as well as the publication of DSGL technology in some circumstances. However the export of goods that contain DSGL technology – for example, a USB that contains such technology – are regulated under Regulation 13E.

Further there is a catch-all provision in Section 112BA of the Customs Act which allows the Defence Minister to prohibit the exportation of particular goods where they believe the goods would be, or may be, for a military end-use that would prejudice the security, defence or international relations of Australia. Such goods need not be listed on the DTCA.

Finally, the WMD Act broadly prohibits the supply or export of goods and services where the Minister believes they could be used in a WMD programme without a permit.

The Defence Export Controls (DEC) team in the DoD regulates the export of DSGL goods and technologies. The Defence Minister is ultimately empowered to grant permits allowing for exports of controlled goods or supplies of controlled technology.

Australia’s export system is a self-assessment system. Prior to exportation, the exporter will need to lodge an export declaration with the ABF. In doing so, the exporter provides information regarding the goods and the export transaction itself. If the export declaration includes all required information and passes screening, then the ABF will issue an approval to export, known as an “authority to deal”.

In order to export DSGL goods, the exporter will need to include details of the permit that allows for the export to take place. These details will be provided back to the issuing agency so that they can be verified. Additionally, the ABF has data-matching capabilities so it can screen whether export requirements are being met. For example, the particular combination of the goods and their destination may indicate that making the transaction without a permit would breach a sanction law. The ABF will seek further information from the exporter to determine whether an export permission is required. If it is, but no export permission has been granted for that transaction, then the ABF will not issue an authority to deal.

At the sharper end of enforcement, the relevant agency will depend on the severity of the non-compliance. Less serious breaches will be enforced by the ABF, who may respond in a number of ways, including via exporter education, warnings, administrative sanctions or prosecution. Criminal offences would generally fall to the AFP and the CDPP for enforcement and prosecution.

The DEC is responsible for enforcement of the controls imposed on the transfer, publication and brokering of DSGL goods and technology under the DTCA. In this regard, the DEC has discretion to respond to instances of non-compliance and may choose to counsel the entity to ensure it understands its obligations or to impose stringent compliance conditions on the entity’s permit. The majority of the offences that relate to non-compliance with the DTCA are what are known as “indictable offences”, so in serious cases of non-compliance the DTCA can refer the matter to the CDPP for prosecution.

See 4.1 Export Controls and 4.8 Penalties.

Australia does not maintain a list of restricted persons.

The DSGL includes a “sensitive list of dual‑use goods and technologies” as well as a “very sensitive list of dual‑use goods and technologies”. Goods and technologies included on these lists are subject to more stringent permit requirements.

The Prohibited Exports Regulations also include prohibitions relating to non-DSGL goods, such as asbestos, human substances and cat and dog fur.

The most relevant forms of penalties are located in the Customs Act, the DTCA and the WMD Act.

Customs Act Penalties

For less serious violations of export controls, there are two forms of customs offences that are relevant to export controls, namely:

  • exportation of prohibited goods; and
  • unlawfully conveying or having possession of prohibited exports.

The penalty upon conviction for these offences is three times the value of the goods or 1,000 penalty units (AUD222,000). However, the ABF has the discretion to issue an “infringement notice” for such offences where there are “reasonable grounds” to do so. Where an infringement notice is issued to an exporter, the penalty will be either one-quarter of the maximum fine a court could impose or 15 penalty units (for an individual) or 75 penalty units (for a corporation). Payment of an infringement notice penalty discharges any liability of the person for the alleged contravention and prevents the person from being prosecuted in a court for the alleged contravention. Significantly, the person will not be regarded as having admitted guilt or liability for the alleged contravention nor as having been convicted of the alleged offence.

Additionally, any conduct that contravenes the conditions of a licence or permit is punishable by 100 penalty units (AUD22,200).

A more serious breach of export controls is the export, or unauthorised export, of a “tier 2 good”. This is an indictable offence, which can result in imprisonment for ten years, or 2,500 penalty units (AUD555,000) or both.

The Customs Act also provides provision for the forfeiture of any goods whose export is prohibited.

DTCA Penalties

The key offences under the DTCA are:

  • the supply of DSGL technology to a person outside of Australia; and
  • publishing DSGL technology listed in Part 1 of the DSGL (namely, technology related to items on the munitions list).

Penalties arising from these offences can be either or both of imprisonment for ten years or 2,500 penalty units (AUD555,000).

Where a party has received a permit to undertake conduct that would otherwise breach the DTCA, a failure to abide with a permit condition can result in a penalty equal to 60 penalty units (AUD13,320).

The Defence Minister also has the power to publish notices preventing the publication or supply of DSGL technology. Non-compliance with such notices can result in imprisonment for up to ten years or a fine of up to 2,500 penalty units, or both. Additionally, the DTCA contains offences relating to brokering of DSGL technology and goods, as well as in relation to dealings under the Australia–U.S. Defence Trade Cooperation Treaty.

WMD Penalties

The three main penalties imposed under the WMD Act are:

  • supplying goods to a WMD programme;
  • exporting goods to a WMD programme; and
  • supplying services to a WMD programme.

Each of these offences is punishable by imprisonment for not more than eight years.

The second category of offence is specifically limited to goods that are not regulated by the Prohibited Export Regulations, including those listed on the DSGL. In this sense, it operates as something of a catch-all provision to ensure that any exports from Australia that may be used in a WMD programme are regulated. Prosecution under these Sections can only occur if the Attorney-General consents to it.

Other Offences

It is important to note that the above are the primary penalties in relation to Australia’s export controls, but there is a wealth of others that may arise depending on the circumstances. For example, the Criminal Code Act 1995 includes the offence of “international firearms trafficking”. There are also a host of offences related to the provision of false or misleading information when applying for a licence or permit. Addressing all possible types of offences and permutations of penalties that could arise as a result of a breach of export controls is beyond the scope of this summary. However, it should be noted that the risks for exporters are real and, if in doubt, expert advice should be sought.

Licences and permits are available. In order to seek a licence or permit, an exporter needs to register with the DEC. Once registered, the exporter will have access to the Defence Export Controls System (DECS) and will be given a DECS client registration number (DCRN) which will allow it to apply to the DEC for permits to export, supply or broker.

A range of permits can be applied for depending on the goods that are intended to be exported and the purpose of the exportation, as detailed below.

  • Military permits relate to the export or supply of items listed in Part 1 of the DSGL. Generally, these permits are for limited transport runs or exports to specific countries. Permits can be sought for a number of activities, including permanent export, temporary export, or repair and return. These permits may also be designed to facilitate the requirements of specific defence contracts. Permits may relate to single or multiple shipments.
  • Permits relating to dual-goods and technology can be granted for permanent exports, temporary exports, export for repair and return, defence contract exports and supply of dual-use technology. Such permits can be valid for up to five years and can relate to single or multiple shipments of dual-use goods or supplies of dual-use technology.

The DEC can also grant permits for the publication of military technologies and to allow brokering of military and dual-use goods and technology.

The DEC also grants licences, known as Australian General Export Licences (AUSGELs). These are broader permits for pre-approved activities, allowing an exporter to supply goods to specific destinations and for specific purposes over a defined period of time. These can provide more flexibility than DSGL permits, but they are subject to certain exceptions.

The operation of each of these licences is subject to certain caveats. For example, goods and technology listed on the “sensitive list” may or may not be covered by an AUSGEL, and goods and technology listed under the “very sensitive list” must not be covered by an AUSGEL. The complexity and fine differences underline the need for an exporter to properly word its application and to understand the scope of the permission it is granted.

The DEC recommends that organisations wishing to interact with Australia’s export controls system adopt a compliance programme. The DEC website includes a range of resources that can be used by an organisation to that end.

The DEC undertakes monitoring activities in order to ensure export control requirements are being complied with. The DEC works with exporters to prevent and address compliance breaches. However, repeated non-compliance can result in permits being subject to stronger compliance conditions, revocation of permits, or referral for criminal prosecution.

The DTCA requires permit holders to keep records regarding the activities that were conducted under the permit for five years. The Customs Act includes similar requirements. Both Acts also allow for relevant authority to require the production of those records as and when necessary.

Anecdotally, the author has noticed an uptick in compliance requirements in relation to the export controls, as well as increased use of the WMD Act. Whether this relates to a change in risk-assessment philosophy or rather just a cluster of ad hoc matters remains to be seen.

Following a review into the DTCA in 2018, DEC has established a working group that is developing legislative proposals to address gaps identified in the current scheme. One of the areas that the working group is looking at is vesting additional monitoring and investigation powers in the DoD to facilitate export controls compliance.

The key authority governing the imposition of anti-dumping and countervailing measures is the Anti-Dumping Commission (ADC), headed by the Commissioner of the Anti-Dumping Commission (the Commissioner). The ADC undertakes the investigatory functions necessary for the imposition of anti-dumping and countervailing – both the dumping investigation and the injury investigation. If the investigation determines there is a basis to impose anti-dumping and/or countervailing measures then the Commissioner will recommend their imposition to the relevant Minister (currently the Minister for Industry, Science and Technology). The Minister is legally empowered to impose such measures.

Anti-dumping investigations are undertaken in accordance with the requirements of Part XVB of the Customs Act. This is supplemented by the Customs (International Obligations) Regulations 2015 which includes a number of relevant provisions – including specifying how exporters’ costs of production and selling costs are to be determined in an anti-dumping investigation. Finally, the power to impose such measures is provided to the Minister pursuant to the Customs (Anti-Dumping Tariff) Act 1975 (CTAD Act).

Safeguards investigations are undertaken by the Productivity Commission. Safeguard investigations are infrequently initiated – the last one was concluded in 2013. Since the start of the new millennium, there have only been three safeguards investigations (concerning imports of pig meat, processed fruit products and tinned tomatoes), none of which resulted in the imposition of safeguard measures.

These investigations are undertaken under the Productivity Commission Act 1998 which broadly allows the Productivity Commission to undertake “inquiries” where requested to by the government. In undertaking a request for a safeguards inquiry, the Productivity Commission follows the procedures set out in the Commonwealth of Australia Gazette No S 297. These procedures are designed to fulfil the requirements of the WTO Agreement on Safeguards.

The ABF is responsible for the application of all import duties, including interim anti-dumping and countervailing duties, and the administration of any safeguard measures. As noted, Australia’s customs system is a “self-assessment” system – however, the ABF undertakes a number of compliance exercises, such as data-matching and audits, in order to ensure compliance with importers’ duty obligations.

The ADC also has a role in compliance through undertaking “anti-circumvention” inquiries. These inquiries are limited to ascertain whether “circumvention activities” have been undertaken, namely:

  • assembly of parts in Australia;
  • assembly of parts in a third country;
  • exporting of goods through one or more third countries;
  • arrangements between exporters;
  • avoidance of the attended effect of duty; and
  • slight modification of goods.

If a circumvention activity is determined to have taken place, the Minister has broad powers to alter the existing dumping measures to ensure the circumvention is addressed.

More recently the focus on compliance has been at the ABF level, with Australian industry members lobbying for particular interpretations of Australia’s tariff codes to so that anti-dumping measures capture broader categories of product than was initially intended. An importer that falls on the wrong side of these interpretations can face significant duty liability.

Any affected party has the ability to apply for a review of measures. The term “affected party” includes a person representing the Australian industry producing like goods, a person directly concerned with the export or import of like goods, and the government of a country from which like goods are exported. The Minister may also write to the Commissioner to request a review be initiated.

The scope of a review may vary. For instance, an exporter may apply for a review of its individual measures, rather than a broad review of all measures applicable to its own country of export. Exporters and importers usually request narrow reviews, but the Minister will usually broaden them out to encompass all exporters.

There is also a truncated form of review – known as an “accelerated review” – that is open to “new exporters” who did not export to Australia during the investigation period that resulted in the imposition of measures. Exporters that do not undertake this kind of review are subject to the “others” rate of duty, which is generally prohibitively high. An accelerated review allows the new exporter to receive its own dumping margin.

Reviews are ad hoc, initiated on the basis of either an application from an affected party or parties or at the request of the Minister. Affected parties cannot apply for a review within 12 months of the outcome of an investigation or the last review of the measures.

Provided a non-domestic company is an “interested party”, it may participate in a review through the provision of written submissions to the Commission. Interested parties encompass “any person who is or is likely to be directly concerned with the importation or exportation into Australia of the goods the subject of the application”.

In practice, an exporter subject to a review will need to complete an exporter questionnaire within 37 days of initiation. The exporter questionnaire is intended to elicit all information necessary to determine the “variable factors” (export price, normal value, and non-injurious price where relevant) for the responding exporter.

Anti-dumping and countervailing investigations follow the procedure and timelines as set out in the Customs Act. The statutory timelines are as follows:

  • application for investigation;
  • 20 days after receipt of application – initiation of investigation;
  • 37 days after initiation – interested party submissions lodged;
  • 60 days after initiation – a preliminary affirmative determination can be made (such finding would result in securities being imposed on imports);
  • 110 days after initiation – publication of the Statement of Essential Facts (SEF);
  • 20 days after SEF – interested party submissions relating to the SEF;
  • 155 days after initiation – final report made to Minister; and
  • 30 days after Final Report is made – Minister’s decision announced and final report published.

The SEF and reporting dates are almost always extended. As a result, investigations take substantially longer than the legislated 155 days. In these COVID-19-affected times, and given the ADC’s case workload, investigations are presently taking around 12 to 16 months to complete.

The first round of interested party submissions include exporter questionnaire responses. An exporter that needs more time to complete the exporter questionnaire response – and these are complex documents, so that is often the case – needs to write to the ADC and ask for an extension. The Commissioner’s consideration of any extension request is guided by the Customs (Extensions of Time and Non‑cooperation) Direction 2015. Extension requests must be properly justified.

The ADC may accept other forms of submissions throughout the investigation. This reflects Australian administrative review principles, and is particularly important for injury and causation-focussed submissions, as neither the exporter questionnaires nor importer questionnaires expressly invite interested parties to address such allegations. The Customs Act does allow the ADC to consider such submissions, provided doing so will not prevent the timely publication of the SEF or the timely preparation of the report to the Minister.

The ADC’s usual practice is to seek to verify information submitted by exporters, importers and Australian industry members. This will occur prior to the publication of the SEF. The ADC also publishes verification reports outlining their initial findings for each entity following verification, and will tend to accept a submission made in relation to such reports as well.

If the Commissioner is satisfied there is not an appropriate basis to impose measures, the investigation must be terminated. This will generally happen at the time the Commissioner would otherwise be making a report to the Minister.

The ADC is required to maintain a public record which includes the application for an investigation, copies of all submissions from interested parties, the statement of essential facts and a copy of all relevant correspondence between the Commissioner and other persons. Where such documents include confidential or commercially sensitive information, the relevant party is required to provide a non-confidential version of the document, including non-confidential summaries of the relevant information. This is an effective, transparent system that leads to robust interchanges between different interested parties.

Finally, while the ultimate decision rests with the Minister, the Minister invariably accepts the ADC’s recommendations.

The ADC publishes the following on the public record:

  • Consideration Report – outlining the ADC’s reasons for initiation;
  • Day 60 Report – outlining the reasons for or against a PAD;
  • verification reports – outlining the findings on verification;
  • SEF – outlining preliminary findings and proposed recommendations;
  • Final Report or Termination Report – outlining the findings supporting either the termination of the investigation or the imposition of measures. The Final Report will not be published until the Minister’s decision is published.

Section 8(1) of the CTAD Act specifically excludes New Zealand-originating goods from having anti-dumping duties imposed on them.

See 5.4 Ad Hoc and Regular Reviews.

The review process is similar to that outlined with regard to anti-dumping and countervailing investigations.

The Anti-Dumping Review Panel (ADRP) is an administrative review body that has jurisdiction to hear merits appeals of certain anti-dumping and countervailing decisions (“reviewable decisions”). The procedure for such an appeal depends on the specific decision, but in general the following applies:

  • 30 days after reviewable decision made – ADRP appeal filed;
  • approximately a month after application – ADRP appeal initiated;
  • 30 days after initiation – interested party submissions lodged;
  • 30 days after submissions – ADRP report made to Minister;
  • 30 days after report – Minister either affirms or revokes and remakes reviewable decision.

In practice the procedures can be extended quite substantially. The key reason for this is that the ADRP has the power to ask the ADC to reinvestigate certain findings and then report back to the ADRP. If that occurs, the ADC’s practice is to publish preliminary re-investigation reports, to allow interested parties to make submissions, before reporting back to the ADRP. This is quite a laborious process, and also legally unsatisfactory, in that it reintroduces the original decision-maker into the process and allows it to continue to influence the outcome by “reviewing its own finding”.

The ADRP may also hold interested party conferences throughout the appeal, and require interested parties to make submissions regarding these conferences.

The other form of appeal is an appeal to the Federal Court of Australia under either or both the Anti-Dumping (Judicial Review) Act 1977 or the Section 39B of the Judiciary Act 1901 (“judicial review”). Judicial review is focussed on the legality of a decision, rather than its factual merit, although unreasonableness of epic proportions can substantiate legal relief.

Judicial review litigation is initiated via the lodgement of an originating application with the Federal Court Registry, which needs to occur within 28 days of the making of the challenged decision. From there, the timeline for each matter will be set pursuant to orders made by the relevant judge, assisted by the parties who are entitled to agree to, and vary, consent orders for the conduct of the matter agreed to between themselves.

While it will depend on the circumstances, judicial review litigation is generally straightforward, not requiring a great deal of evidence nor many interlocutory hearings. As an approximation, judicial review could be completed within 12 to 18 months of initiation.

COVID-19 has had a significant impact on the ADC’s practices. Unable to travel to verify exporter’s data, the ADC has attempted to adopt remote verification via email, extending a process that in the past would take a week to, in some cases, two months.

In terms of the ADC’s practices, a major development has been the outcome of the WTO dispute concerning Australia’s anti-dumping measures on A4 copy paper from Indonesia (DS529). One of the key issues in this case was the use of a so-called “particular market situation” finding as partial justification for the replacement of one or other of the exporter’s main input costs of production with “competitive market costs” of the input. Such a “particular market situation” finding is part of a narrative that allows the ADC to use a “constructed normal value” based on costs of production, with those costs of production uplifted to a “competitive” level.

The effect of substituting actual costs for competitive costs is the determination of a higher normal value, which increase the likelihood that dumping will be found to have occurred. This practice is frequently used in investigations by the ADC against Chinese exporters of steel and aluminium products.

The panel report in DS529 provides that it is not enough to find a particular market situation in order to implement a constructed normal value. The particular market situation must also affect the comparison of the normal value and the export price. This double-barrel test is a more difficult issue for an investigating authority, given that low input costs rarely differentiate domestic and export sales.

Australia did not appeal DS529 to the WTO Appellate Body (“into the void”, given the non-functioning nature of that body). It is too soon to assess the policy and legal response of the ADC to this development.

In 2021, a new Commissioner will be appointed to head the ADC. The current Commissioner has held the position since 2013. As many a management consultant is keen to point out, culture is set at the top, so this will likely lead to some changes in the ADC’s practices moving forward.

Australia’s foreign investment laws are primarily contained in the Foreign Acquisitions and Takeovers Act 1975 (Foreign Investment Act) and the Foreign Acquisitions and Takeovers Fees Impositions Act 2015 (Fees Imposition Act). The Foreign Investment Act allows the Treasurer to review foreign investment proposals that meet certain criteria. In practice this assessment is undertaken by the Foreign Investment Review Board (FIRB), a non-statutory body which then advises the Treasurer whether the proposed investment should be allowed to go ahead.

FIRB is supported by a secretariat located in the Treasury and by the Australian Taxation Office (ATO). The Treasury runs the day-to-day administration of the framework in relation to business, agricultural land and sensitive commercial land proposals, whereas the ATO administers foreign investment into residential real estate, non-sensitive commercial land and internal reorganisation proposals.

Foreign investment into Australia requires the submission of an application to the FIRB via an e-form. Timeframes for reviewing applications can vary anywhere from 30 days to six months, with a priority placed on urgent applications.

The key question in assessing a notified investment is whether it passes a national interest test. The Treasurer has the power to block a foreign investment proposal or to apply conditions to the way the proposal is to be implemented to ensure that it is not contrary to the national interest.

The Treasurer is the ultimate decision-maker for foreign investment into Australia. The FIRB is the key responsible entity, as described above.

The application of the FIRB regime depends on three key factors – the value of the proposed investment, the nature of the proposed investment and the nature of the application. In broad terms, investors considering the following kinds of investment must consult with the FIRB:

  • business acquisitions – transactions for a “substantial interest” (at least 20%) in an Australian entity;
  • agribusiness – transactions for a “direct interest” (at least 10%);
  • media businesses – investment of at least 5%;
  • investments in land – differing requirements for agricultural land, commercial land and tenements.

Prior to March 2020, there were also monetary thresholds for certain forms of investments. For example, for business acquisitions the general monetary threshold was for entities worth over AUD275 million – note that this may differ where the proponent of the investment was from a country which had an FTA with Australia, whether the proponent was a private or foreign government investor, etc. Additionally, there were also different thresholds for “sensitive businesses” such as media businesses and those in the defence industry.

However, in response to COVID-19 and the concern that decaying economic conditions would result in a significant exposure of distressed assets to acquisition by foreign interests, the threshold has been dropped to AUD0 (zero). This is said to be a temporary measure, which is expected to be changed in the future.

See 6.3 Transactions Subject to Investment Security Measures.

There are a number of exemptions, which are provided for under Part 3 of the Foreign Acquisitions and Takeovers Regulation 2015.

There are a number of penalties under the FIRB regime. A foreign person who makes an acquisition without approval can face significant penalties:

  • criminal penalty – 750 penalty units (AUD166,500) or three years imprisonment for an individual, and 3,750 penalty units (AUD832,500) for a company;
  • civil penalty – 250 penalty units (AUD55,500) for an individual and 1,250 penalty units for a company.

The same penalties apply where a foreign person fails to comply with a condition of an approval.

There are additional and significant penalties relating to residential real investment. Such transactions are best approached with caution, and with independent legal advice.

There are a variety of fees that may apply to a FIRB application, depending on the acquisition involved. The most common fees for a FIRB application are as follows:

  • for residential land, fees can range from AUD5,800 (acquisition value of AUD1 million or less) to AUD106,000 (acquisition value between AUD8-9 million) and possibly higher;
  • for commercial land and actions relating to entities and businesses (eg, acquiring an interest in securities in an entity or a direct interest in an Australian entity or business that is an agribusiness), fees vary across three tiers –
    1. AUD2,100 (acquisition of AUD10 million or less),
    2. AUD26,700 (acquisition between AUD10 million to AUD1 billion), and
    3. AUD107,100 (acquisition of over AUD1 billion);
  • for agricultural land, fees vary across three tiers –
    1. AUD2,100 (acquisition of AUD2 million or less),
    2. AUD26,700 (acquisition between AUD2 million to AUD10 million), and
    3. AUD107,100 (acquisition of over AUD10 million).

In addition, all states and territories charge additional stamp duty surcharges on foreign purchasers of property and certain states and territories charge higher rates of land tax on foreign owners where the property is not their principle place of residence.

The key changes to the current FIRB regime were those that occurred in response to COVID-19, as discussed above.

Significantly, in August 2020 the Treasurer decided to reject the proposed AUD600 million acquisition of Lion Dairy & Drinks by China Mengniu Dairy Company Limited on the grounds of the acquisition being "contrary to the national interest". The Treasurer made this decision even though the Australian Competition and Consumer Commission, FIRB had recommended the acquisition be approved.

Substantial changes to the FIRB regime are expected to take effect on 1 January 2021, in accordance with the Australian government’s intention to address security risks, strengthen compliance and streamline investment in non-sensitive business.

The key elements of the reform include:

  • a new national security test for foreign investors;
  • a national security “last resort” power provided to the Treasurer;
  • enhanced compliance measures and enforcement powers;
  • reduced FIRB approval requirements for various foreign investors for investment into non-sensitive businesses;
  • significant increase in civil and criminal penalties;
  • additional powers to monitor and enforce compliance with foreign investment approvals, including site-based inspections or investigations.

The key restriction on imports relates to the prohibition of parallel imports of books under Section 37 of the Copyright Act 1968. It persists despite Australia’s Productivity Commission recommending it be abolished in 2009, which was later reiterated by the Harper Competition Policy Review in 2015. Additionally, there are restrictions on the parallel importation of automobiles, notwithstanding the fact that Australia’s automotive industry is at an historical nadir after the cessation of local automobile production by Ford (2016), Toyota (2017) and General Motors Holden (2018).

There are a number of ways in which the Australian government offers industry assistance. These include, but are not limited to, small business capital gains tax concessions, research and development tax concessions and government financing vehicles. Arguably, such schemes facilitate and encourage domestic production.

A significant focus of industry policy has been the automotive industry. Cars are no longer manufactured in Australia, and so the government has gone to great lengths to transition suppliers in the automotive supply chain to other industries through programmes such as the Automotive Transformation Scheme, the Advanced Manufacturing Growth Fund and the Next Generation Manufacturing Investment Programme.

The primary body is Standards Australia, a non-government entity which develops relevant Australian standards. Government policy is set by the Department of Industry, Innovation and Science.

The Department of Agriculture and DFAT oversee Australia’s sanitary and phytosanitary (SPS) obligations. In particular, the Department of Agriculture is responsible for setting and administering Australia’s SPS measures, and for maintaining and improving technical market access for Australia’s agricultural and other food exports.

There are no measures the author is aware of that are specifically aimed at reducing imports or encouraging domestic production. That said, measures for the protection of Australia’s unique bio-diversity are often claimed to be disguised trade measures, and Australia is no stranger to being a respondent in WTO disputes under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.

In our experience, clients’ primary concern regarding the SPS system is its administration, particularly how it responds to new and emerging information regarding potential phytosanitary risks. The risk assessment process is often prolonged, with limited transparency, during which time imports are blocked from entry or treated in ways that destroy or degrade their food or floral quality.

There are no specific competition policies or price controls employed in Australia that are aimed are reducing imports or encouraging domestic production.

In the 1990s, Australia went through a wave of privatisation. At present, the majority of government business enterprises tend to be utilities or entities that facilitate government policies – for example, the Clean Energy Finance Corporation.

Australia’s government is multi-layered – from the Commonwealth (federal) government, to the state and territory governments, and to local governments. At each level of these bureaucratic strata, there can be multiple different procurement requirements.

Australia has acceded to the WTO Government Procurement Agreement (GPA) and has reciprocal procurement access requirements under a number of FTAs. These are obviously caveated – for example, they may exclude defence procurement and procurement for health and education services. However, generally, at least at the Commonwealth level, the trend has been toward opening up government procurement.

Commonwealth procurement is undertaken in accordance with the Governance, Performance and Accountability Act 2013 and the Commonwealth Procurement Rules. Consistent with Australia’s GPA obligations, there are no express laws or rules that are aimed at reducing imports. Having said that, there are certain policies that could promote domestic economic growth in the Commonwealth Procurement Rules, including:

  • commitments to source at least 10% of all procurement by value from SMEs and 35% of procurements valued up to AUD20 million (consistent with Annex 7 of Australia’s GPA instrument of accession); and
  • for procurements above AUD4 million, the requirement to consider “the economic benefit of the procurement to the Australian economy”, which arguably could be a way to justify local industry preferences by stating that sourcing locally would support local employment, investment, etc.

Further, the Australian Industry Participation National Framework applies to “major Commonwealth government procurements”, being generally those valued above AUD20 million, and encourages tenderers for certain Commonwealth procurements to prepare and implement an Australian Industry Participation Plan.

Defence procurement has additional requirements, set out in the Defence Procurement Policy Manual (DPPM) and other guidelines.

At the state level, there are more explicit rules. For example, the Victorian Industry Participation Policy (VIPP) sets a minimum local content requirement for government procurement of strategic projects valued at AUD50 million or more that is binding on all project tenderers. The practical effect of this mandate has been that tenderers for the strategic projects have refused to use foreign products to avoid non-compliance with tender conditions.

Further, South Australia has a South Australia Industry Participation Policy (SAIPP) that incorporates an “industry participation weighting”. With regard to the steel industry, the policy provides a minimum 20% participation weighting to form part of the overall evaluation criteria for a project. The stated purpose of this is to “give the local steel industry a competitive advantage against low quality imports”.

Also, the Western Australian government’s Buy Local Policy 2020 includes an “imported content impost”. This is not obligatory, and if used needs to be clearly stated. This allows agencies to apply a 20% price impost that applies to the portion of a bid that comprises goods, services or items that the prospective supplier is proposing to directly import into Australia from another country (excluding New Zealand) as part of the contract delivery.

Australia has two systems for geographical indication registration:

  • GIs for all goods can be registered using the certification trade mark system (CTM); and
  • GIs for wines can also be registered under a separate system, administered by Wine Australia.

The CTM system is provided under the Trade Marks Act, while the wine system is provided under the Wine Australia Act.

A CTM shows that goods or services meet specified standards, which are contained in a set of rules to be provided during the application process. The rules can specify quality, content or production methods.

Throughout 2020, the Australia government has been undertaking consultations in order to update its GPI framework. This is running in parallel with the AUS–EU FTA negotiations. The extent of any changes to Australia’s GPI framework have yet to be announced.

There are no other significant issues or developments in this jurisdiction.

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Moulis Legal is a progressive modern legal business handling major commercial and international matters. The firm's particular focus areas are international trade, energy and resources, intellectual property, government procurement, China business, property acquisition and development, mergers, acquisitions and joint ventures, and major commercial projects. Moulis Legal’s international trade law team comprises nine lawyers across its Canberra, Melbourne and Brisbane offices. It is Australia’s leading international trade and WTO practice firm. The team leads the field as a premium provider of comprehensive legal service-based representation in international trade law matters, especially anti-dumping and countervailing investigations and related legal proceedings, customs-related advisory work, sanctions, and cross-border agreements. Moulis Legal has extensive experience in representing major international companies and government clients in trade remedy and border-related cases.