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Dealing With Customs Compliance Uncertainty Down Under

Posted April 03, 2015

Andrew Hudson, an international trade advisor with the law firm Gadens in Melbourne, wrote a thought-provoking article earlier this week about a rather curious problem that apparently happens “regularly” in Australia, wherein “the dates for the commencement of new regulation arrive but the development of the new regulation has not quite been completed.” This poses a very real question, he says, concerning “how the regulator responds in those circumstances and the extent to which it adopts a benign approach to compliance.” Indeed.

The first case Hudson provides concerns the major overhaul of the Customs regulatory framework that came into effect on April 1st, for which drafts had been previously been released and comments invited, but Customs had, according to Hudson, neither the time or resources to respond to all of the submissions and was therefore unable to share with importers the terms of the final regulation prior to the implementation date.

Despite assurances of continuity from Australian Customs, absent the provisions outlining precisely how various transitional issues would be handled, in a regime where “even the slightest error in reporting can attract a penalty,” the result Hudson suggests was a discomforting sense of unease for importers wondering whether completely inadvertent compliance breaches would be relieved from liability.

The second example is apparently more egregious, involving a total “compliance vacuum” that has been allowed to develop in the operation of the textile, clothing and footwear (TCF) provisions of a trade agreement between Australia and its South Pacific Island neighbours such as Fiji. The TCF provisions were to expire at the end of last year and be switched over to Developing Country Status, but for some mysterious reason the relevant legislation and regulations to facilitate the change-over have yet to materialize. Without any definitive instructions as to how this situation should be handled, importers have been left with the “general sense of unofficial direction” they should continue using the TCF provisions (which technically expired over four months ago) until the new provisions are legislated and effected. Presuming of course that happens...

While there is only so much conscientious importers can do to navigate through various regulatory gaps that might arise from time to time, such situations highlight the importance of ensuring that regulators are properly resourced by the government to ensure such lapses don’t occur in the first place and that rather than being left to hurriedly absorb the changes at the last minute, importers are provided with sufficient advance notification of any transitional measures for them to properly respond and prepare themselves to meet the regulator’s strict compliance expectations. After all, Hudson says, “the aim of law and regulation is not to raise revenue from breaches of an unknown law but to secure the aims of the law and regulation by their observance.”