Pages 10-15
Are you ready for new global container rules?
Free trade: does it really exist? Page 3
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Page 8
JUNE/JULY 2016
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Page 26
a smarter way to trade
From the editor
I
nternational trade has long been the cornerstone of Australia’s economy. And all major political parties in their policy statements now recognise the importance of trade to drive economic growth and create jobs. Strong trade and investment policies are vital in securing Australia’s economic future. We need policies that will allow business to take up new trade opportunities. We must ensure business has access to overseas trade markets and the tools and facilities to exploit new trade opportunities. In this edition – our Election 2016 special – we highlight the key trade policies of the major political parties and identify major differences. Australia’s lack of competitiveness on the international stage is a major concern. Put simply, we are not as trade-intensive as most other advanced economies. McKinsey Australia has noted that Australia is the 12th largest economy, but only the 21st largest trader. And we are one of three of the world’s 15 largest economies not among the world’s top exporting nations. Fewer than 5 per cent of all Australian businesses currently export. And according to several major surveys, many businesses are not considering exporting despite the opportunities in our region. PwC’s Passing Us By report shows two-thirds of Australian businesses have no intention of exporting into Asian markets in the near future. The Export Council of Australia, the peak industry body for Australian exporters, cites nine key areas where Government can help Australian businesses grow internationally. This includes supporting Australian companies to understand and utilise Free Trade Agreements and focusing more resources on addressing market entry barriers to trade. The ECA has also called for additional funding allocations for the highly successful Export Market Development Grants program to assist exporters to grow their businesses overseas. Whichever party wins Government on July 2 must support our exporters to ensure they have access to key markets. Cutting red tape that deters business from trading with many of our key neighbours might be a good place to start.
//
Our team
We need policies that encourage more Aussie companies to trade
Director and National Sales Manager
Julie Fletcher
julie@dynamicexport.com.au
Editor
Tim Michael editor@dynamicexport.com.au
Production
Veronica Avant IT Manager
Rob Fearn Contributors
Tom Drake, Anthony Fensom, David Gray, Kim Mauch, Ian Smith, Andrew Spence Advertising enquiries:
advertising@dynamicexport. com.au
Editorial submissions: editor@dynamicexport.com.au
Published by: Think Positive Pty Ltd PO Box 221 Waverley NSW 2024 Australia Tim Michael Editor editor@ dynamicexport. com.au
www.dynamicexport.com.au
@dynamicexport
Think Positive Pty Ltd cannot be held liable for any person(s), company or business acting upon or using the information provided in this e-magazine in any way. Information and content in Dynamic Export e-Magazine is provided to the best of our knowledge. We advise that you should seek independent professional advice to verify that all information is accurate and correct.
JUNE/JULY 2016
// 2
comment
ECA TRADE COURSES p. 4-5
Learn more about growing your business globally
news
Free Trade: What is it and how do we know it when we see it? David Gray
6-7
feature
Australia’s Top 20 exports revealed
8-9
finance
Applying for finance now simpler than ever
10-15
election 2016
Trade policies from the major parties
16
travel
Virgin Australia rolls out new business class
17-19
fashion Australian fashion house to open new LA store
20-21
feature
Is your business ready to take on the world?
23
australian made Get set for new labeling laws
24-27
freight
Understanding tariffs for import and export
30
middle east
New export opportunities with Iran
F
ree trade is something of an ideology
However, they are decidedly less
rather than a reality. Beautiful in
sanguine about free trade in areas where
simple slumbering vision but a bit
they do not hold a competitive advantage.
more complex and elusive when
Amongst nations or regions of similar wage, cost of living and social structure
wide awake. In its purest form free trade is the
free trade can potentially work quite well
unrestricted movement of unsubsidised,
as it permits each nation to specialise
unprotected (no tariffs or duties) goods,
and focus on what they may be best at
services, people and money (capital) across
or where natural competitive advantage
all national borders. Discussions of free
exists.
trade are often accompanied by reverential
In such scenarios creating success
whisperings of Adam Smith. Even Ricardo
requires the commercially competitive
and Veblen are mentioned along with Keynes
pursuit of productive efficiencies, value add
in breathless counterpoint.
innovation and imaginative organisational
To the best of my knowledge free trade does not exist anywhere in the world today. There are some parts of the world where
development. Free trade between nations or regions where social structures are markedly
approximations of a free trade system do
dissimilar and wage/cost of living are far
come close – where the ideal and the reality
apart tends to work less well. This is due to
nearly intersect.
the pronounced mismatch, as the poorer
This applies to some small pockets of the European Union with cross border trade
nation only has its cheap labour and or surplus population to offer. The richer nation may try to exploit this
activity. Any nation that boasts a particularly efficient
in isolation, thus creating an economic
sector of the economy or where natural
imbalance or distortion that must
31
advantages of one sort or another may exist
later unravel with usually unpleasant
will tend to promote the concept of free trade
consequences.
Local & international events
but only where they have advantages.
what's on
//
JUNE/JULY 2016
Continued page 22
// 3
TRADE COURSES
Expand your horizons: New ECA international trade courses starting soon Whether you are competing with the world’s best to win international contracts or facing increasing global competition at home, it is critical for business leaders to understand the skills and competencies needed to go global.
I
n its 50 plus years of training
business, taking on new challenges
Venue: Brisbane, CBD
through the Australian Institute
globally and need assistance, or
Times: 9am – 5pm
of Export, the Export Council
would like to upskill in new areas,
of Australia (ECA) has worked
contact education@export.org.au to
Pricing Your Product or Service for
with a number of companies big
learn more. • • •
International Success
and small to help answer the tough questions – Are we export ready? What are incoterms? Where do I find
Getting your international pricing
Upcoming public workshops for June:
strategy right is crucial to the success of your business. It is difficult to go
a logistics expert quickly? and one of
Stage 1: Getting Ready to Grow an
back and renegotiate your price
the worst, My buyer seems to have
International Business
once this has been set and also you
gone missing, how will I get paid?
Are You Ready to Go Global?
ultimately cannot risk potentially
ECA’s Educational Pathway takes
This half-day workshop will cover the
not getting paid. This course will
businesses from the stage of just
basic fundamentals required to access
cover International Costing, Risk
getting started on to conquering new
and prepare your business for entering
Management, Foreign Exchange and
markets. The Educational Pathway
global markets.
International Sales Contracts.
learning pathway that ensures that
BRISBANE
PERTH
participants gain practical skills and
Date: Wed, June 22
Date: Wed, June 22
knowledge of procedures associated
Venue: Brisbane, CBD
Venue: Perth, CBD
with international business.
Times: 9am – 2pm
Times: 9am – 5pm
Centre for Customs and Excise Studies
Stage 2: Export Process – Nuts and
Import
(CCES) and Charles Sturt University to
Bolts
Import Procedures and
deliver international trade education.
Getting the Documentation Right
Documentation Course
structure provides an articulated
The ECA has partnered with the
This partnership means participation
The workshop will cover in detail
The one-day import procedures
in the ECA’S International Business
how to prepare the following
course is tailored for anyone involved
Program can be the first step towards
documentation, including compliance
in International Trade and is relevant
completing the Advanced Diploma of
with Australian Government
to companies and people currently
International Business Management.
requirements.
importing or businesses considering or
The ECA also offers discounts to its members. If you are new to international
beginning to import. BRISBANE Date: Tue, June 21
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JUNE/JULY 2016
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TRADE COURSES
BRISBANE
Venue: Sydney, CBD
Date: Tues, June 14
Time: 9am – 2pm
Time: 9am – 5pm
Venue: Brisbane, CBD Times: 9am – 5pm
Pricing Your Product or Service for BRISBANE
International Success
Date: Wednesday, July 27
Getting your international pricing
PERTH
Venue: Brisbane, CBD
strategy right is crucial to the success
Date: Thur, June 16
Time: 9am – 2pm
of your business. It is difficult to go back and renegotiate your price
Venue: Perth, CBD Times: 9am – 5pm
Upcoming Public Workshops for July:
Getting the Documentation Right
once this has been set and also you
This workshop will cover in detail
ultimately cannot risk potentially
how to prepare the following
not getting paid. This course will
documentation, including compliance
cover International Costing, Risk
Stage 1: Getting Ready to Grow an
with Australian Government
Management, Foreign Exchange and
International Business
requirements.
International Sales Contracts.
This half-day workshop will cover the
MELBOURNE
BRISBANE
basic fundamentals required to access
Date: Tuesday, July 12
Date: Tuesday, July 19
and prepare your business for entering
Venue: Melbourne, CBD
Venue: Brisbane, CBD
global markets.
Time: 9am – 5pm
Time: 9am – 5pm
PERTH
PERTH
MELBOURNE
Date: Tuesday, July 26
Date: Thursday, July 14
Date: Tuesday, July 26
Venue: Perth, CBD
Venue: Perth, CBD
Venue: Melbourne, CBD
Time: 9am – 2pm
Time: 9am – 5pm
Times: 9am – 5pm
SYDNEY
Managing Your International Freight
SYDNEY
Date: Wednesday, July 27
Risks
Date: Thursday, July 28
Venue: Sydney, CBD
This one-day interactive workshop
Venue: Sydney, CBD
Time: 9am – 2pm
will cover VITAL areas that companies
Time: 9am – 5pm
Are You Ready to Go Global?
need to understand including MELBOURNE
Incoterms® 2010, Trade terminology
Import
Date: Thursday, July 28
explained, Common freight costs,
Import Procedures and
Venue: Melbourne, CBD
Choosing the right freight forwarder,
Documentation Course
Time: 9am – 2pm
Marine insurance for air and sea cargo
The one-day import procedures
and the supply chain as a Unique
course is tailored for anyone involved
Value Proposition (UVP).
in International Trade and is relevant
Stage 2: Export Process – Nuts and
to companies and people currently
Bolts Pitching for International Success
PERTH
importing or businesses considering or
This half-day workshop will equip
Date: Wednesday, July 20
beginning to import.
you with the tools to confidently
Venue: Perth, CBD
and effectively pitch for international
Time: 9am – 5pm
SYDNEY Date: Wednesday, July 20
success. SYDNEY
Venue: Sydney, CBD
SYDNEY
Date: Thursday, July 21
Time: 9am – 5pm
Date: Thursday, July 7
Venue: Sydney, CBD
//
JUNE/JULY 2016
// 5
feature
Study reveals Australia’s top 20 fastest growing exports Australian exports are predicted to rise between 10 and 35% over the next five years, according to a new report published by research firm IBISWorld.
R
ecently signed free trade agreements with South Korea, Japan and China are expected to generate much of that growth as they come
into effect over the coming years. "Asian markets, particularly China,
are expected to offer significant growth opportunities for Australian products, valued for their quality, as the burgeoning middle class consumes more imported goods and focuses on greater health awareness," IBISWorld senior industry analyst Jem Anning said. The IBISWorld reports calculates Australia’s top 20 export industries to be worth $260 billion to the Australian
annualised 29.5 per cent over the past
economy, or 15.7% of GDP.
five years.
Food is expected to lead Australia’s
And seafood processing is also forecast to boom, with Vietnam the
The value of rice exports is expected
main destination.
export boom, making up seven of the
to touch $468.1 million by 2020-21, up
Seafood exports have risen by 27.3
top 10 fastest growing industries.
from $380.7 million this financial year.
per cent over the past five years to an
IBISWorld said five of the main
Nearly 97% of the industry is based
industries in the list include rice-
in NSW, with major rice growing
growing, seafood processing,
regions affected by drought and
grape growing, cider production,
flooding over the past five years.
and vitamin and supplement manufacturing. Rice exports, mainly driven by rising demand from Japan, grew by an
But IBISWorld predicts more stability in the next five years due mainly to the development of genetically
year. “International trade has become increasingly important for the Seafood Processing industry over the past five years,” says Anning. “Imports accounted for the majority of domestic demand and exports
modified crops.
//
estimated $1.01 billion this financial
JUNE/JULY 2016
// 6
feature
export, climbing just under 20% to be worth $1.6 billion, despite “challenging conditions” plaguing the industry over the last few years. Government policy, varying made up an increasingly large
weather patterns and fluctuating
proportion of total revenue over the
turnoff rates have all had an impact
past five years.”
on the industry, but a strong demand
Vietnam is expected to receive 62% of seafood exports by 2021. IBISWorld says Asia markets are prepared to pay a premium price
from the Middle East and South-East Asia is expected to help Australia’s beef stocks bring more in. By 2021, IBISWorld expects the beef
for Australian seafood, which is
industry to be turning over $15 billion
considered to be “higher quality.”
dollars annually.
The grape growing industry has
The continuing expansion of
also enjoyed substantial growth, with
Australian vitamin and supplement
exports rising 26.6 per cent annually
exports into the Asia market is also
over five years, to $285.3 million.
expected to continue, driven largely
The lifting of tariffs by Asian FTA partners is expected to significantly boost exports further. And Australia's cider producers have
by major producers Swisse and Blackmores. Industry exports have grown 13.2 per cent annually over five years, to an
enjoyed buoyant growth over the last
estimated $365 million this financial
five years, in part because the signing
year.
of the FTA with Korea led to a surge in cider exports to that country. Exports have risen 25.8 per cent annually. The cattle industry is expected to remain Australia’s biggest food
Meat processing accounted for the largest segment of nonmining exports at $14.1 billion this
According to IBISWorld, these are the top 20 industries in Australia by export growth: 1. Prefabricated wooden building and manufacturing 2. Bauxite mining 3. Rice growing 4. Seafood processing 5. Grape growing 6. Cider production 7. Health snack food production 8. Non-ferrous metal casting 9. Beef cattle farming 10. Citrus, banana and other fruit growing 11. Carbon dioxide production 12. Structural steel fabricating 13. Aircraft manufacturing 14. Toy and sporting goods manufacturing 15. Hay and other crop growing 16. Mattress manufacturing 17. Milk and cream processing 18. Meat processing 19. Vitamin and supplement manufacturing 20. Apple, pear and stone fruit growing
financial year, followed by aircraft manufacturing and repairs, and beef cattle farming, IBIS World said. • • •
//
JUNE/JULY 2016
// 7
FINANCE & BUSINESS
Applying for export finance now simpler than ever
By Tim Michael
Getting finance secured quickly is often essential when negotiating export finance contracts.
F
within as little as nine business days. Launched earlier this year by Efic,
SMEs ability to repay the loan. In a recent interview, Andrew
Australia’s export credit agency, the
Hunter, Efic’s Managing Director and
Small Business Export Loan is aimed
CEO explained to Dynamic Export
at SME exporters with an annual
how this innovative new service was
or many smaller companies,
turnover of less than $5 million
developed.
it can mean the difference
that need working capital of up to
between success and
$250,000.
failure when doing business
overseas. Loan applications through major financial institutions typically take
“We spoke to smaller exporters and they wanted three main things
Applications can only be made online through Efic Direct, Efic’s new online application portal. And with the Small Business Export
when applying for finance,” said Mr Hunter. “Firstly, they wanted loans that were completely unsecured, as many
up to 40 days to process – but not
Loan, funding does not have to be
smaller businesses don’t have any
anymore.
secured.
collateral to offer. Their competitive
Now there’s a new online service that can approve loan applications
Rather than insisting on tangible assets as security, Efic focuses on an
//
JUNE/JULY 2016
advantage may be their brand, intellectual property or technical
// 8
FINANCE & BUSINESS
capabilities. “Secondly, many SMEs may not have the financial expertise to deal with complex finance applications. “They wanted a product that is simple and can be applied for online rather than go through a complex manual process.
‘We are receiving two or three new applications a day’
“And thirdly they wanted an early indication and quick decision on the availability of funding. “So we developed the Small Business Export Loan, which addresses all three concerns.” Previously, Efic has been limited in its capacity to provide working capital to SME exporters, Mr Hunter admits. However, in March last year the Federal Government introduced
technical capability or experience in
new legislation giving Efic broader
a particular market.
lending flexibility.
“We’re really proud of that,” he says. “Over the next three years we will
“We like established exporters who
try to grow the business so that we
have been into a market before and
can be doing between $200-$300
response to the new service,” says Mr
have had some experience, who
million worth of finance for SMEs
Hunter.
aren’t just competing on price – and
every year.”
“We are very pleased with the initial
“To date we have 20 applications in the pipeline and we are receiving
have a product that is unique. “We want to be confident that if the
Just five years ago Efic was lending only $40-$50 million a year.
two or three new applications a day.”
Australia dollar goes up to .85 cents
Mr Hunter says banks often reject
(against the US dollar) or down to .65
It’s all about having a plan and
an SME’s application for funding,
cents, they are not just a low margin
having the right products.”
simply because the business may
business. They must have a strong
not be in a position to offer collateral.
technical capability in what they do.”
“In many of those cases, the banks refer the clients to us,” he says. “The bank not only wants to retain
Mr Hunter, a former senior executive with Macquarie Group, says Efic seeks businesses that have
the client but also wants the client
a competitive advantage into the
to achieve export success and grow
country to which they are exporting.
their business, to potentially become a bigger client. “We try to assist those SMEs that don’t have the traditional security that Australian banks value – like real estate. “Their real value may be their intellectual property, design,
“We prefer businesses that can survive some of the currency
“It’s all about focus,” says Mr Hunter.
Efic also only had full-time staff in Sydney to assist SMEs, but now has expert staff in Melbourne, Adelaide, Brisbane and Perth. “That’s why our SME business is growing,” says Mr Hunter. “That is our core focus and where we are dedicating our resources.” Efic offers a range of loans,
fluctuations that are inevitable in the
guarantees, bonds and insurance
business of exporting.”
products to assist SMEs win
In the past three years since Mr Hunter has been at the helm, Efic has provided more than $330 million in funds to SMEs.
//
JUNE/JULY 2016
business, grow internationally and achieve export success. ••• To find out more phone: 1800 093 724 or visit: www.efic.gov.au
// 9
ELECTION 2016
ELECTION 2016
EXPORT COUNCIL OF AUSTRALIA ECA delivers formula for export success
The Export Council of Australia has thrown down the gauntlet to Australia’s major political parties to adopt its vital recommendations aimed at increasing current trade levels.
E
addressing market entry barriers to trade.
CA CEO, Lisa McAuley says trade and investment are key drivers of jobs, innovation
• Addressing Australia’s competitive landscape to facilitate trade: Focus on improving freight movement efficiency and
and long-term prosperity for Australia. Speaking at a special pre-Federal election
function in Sydney this month, Ms McAuley
infrastructure • Connecting the dots between Innovation and
said Australia boasts 45,000 exporters that export nearly
Globalisation: but tie this more closely to trade support
$320 billion worth of goods and services to the rest of the
programs and strategies that will assist companies in
world.
launching their cutting edge ideas.
“However, just 1% of these exporters accounted for
• Continuing deregulation: Maintain a continued focus
roughly 90% of all Australian goods exports,” she said. “This
on the deregulation agenda in
is much more concentrated than the international average,
Australia by creating a Single
where the top 1% of exporters account for just 53% of goods
Window for Trade. • Supporting Export Market
exports.”
Development Grants: additional
Ms McAuley told guests at the Australia’s Trade Future event that local firms now have more opportunities in
funding allocations for EMDG are
international markets than ever before.
necessary. • Developing a National Brand
“This is in the context of international demand for what this country produces and a growing array of liberalising trade
strategy: Australia needs a strong,
agreements, particularly in Asia.
cohesive branding strategy.
“The challenge for Australia is to capitalise on these opportunities. “Increasing Australia’s level of trade will ultimately play an important role in improving productivity, fostering innovation and sustainable economic growth.” To meet this challenge governments need to encourage
Lisa McAuley… ‘more trade opportunities than ever before’
• Promoting Australia's capabilities: trade promotion and Austrade’s role are crucial in supporting businesses through international networks. Adequate funding should be provided to
more export capable companies and build a skills base to
ensure Australian companies can take advantage of the
succeed internationally, Ms McAuley said.
opening up of global markets.
“There is an ecosystem that sits around trade, but one of the biggest barriers we see in Australia is that the ecosystem is not functioning as effectively as it could.”
• Growing Services Exports: Services exports have the potential to be a growth engine for the nation. Minister for Trade and Investment, Steven Ciobo and Shadow Minister for Trade and Investment, Senator Penny
Government can help Australian businesses grow
Wong were key speakers at the event, organised by the
internationally by: • Supporting Australian companies to understand and
ECA and Australian Chamber of Commerce and Industry. “We believe these are all important issues to take away for
utilise Free Trade Agreements • Addressing Non-Tariff Barriers: Focus more resources on
//
consideration,” Ms McAuley said. • • •
JUNE/JULY 2016
// 10
ELECTION 2016 - COALITION
ELECTION 2016
COALITION TRADE POLICY Government to focus on creating new export opportunities Trade and investment is a central component in the Federal Government’s economic plan to drive jobs and growth.
C
reating export opportunities is critical for
Australian services
Australia’s future growth as the economy
sector, cut costs
transitions from the mining and resources
for Australian
boom, says Trade and Investment Minister
businesses and
Steven Ciobo.
consumers and open up greater
“The Coalition has a strong record in this area,” Mr Ciobo
investment
says.
opportunities,” Mr
“Removing trade barriers lays the groundwork for our
Ciobo says.
transitioning economy.”
The Government
Mr Cibo says Australians will see key benefits from greater access to overseas markets as the result of
has created an
recently signed free trade agreements with key trading
FTA portal to help
partners Japan, South Korea and China.
businesses take full advantage of
The Government, he says also played a key role in the
FTAs with China,
signing of the Trans-Pacific Partnership (TPP) Agreement in February 2016 – the most significant trade and investment agreement finalised in more than two decades with
Japan and Korea. The portal provides comprehensive tariff information and product specific Australian and
member countries accounting for around 40 per cent of
international trade data to help businesses assess how
global GDP.
their products meet the requirements of the FTAs. An additional $1.8 million was allocated in the recent
Other achievements include:
budget to expand the portal and expand Austrade’s Open
• The recently announced strategic partnership
for Business website.
agreement with Singapore • Agreement between the 163 members of the WTO
Also, the government has announced the
in December 2015 to eliminate more than $15 billion
establishment of five Landing Pads to connect Australian
of agricultural export subsidy entitlements, which for
entrepreneurs to global innovation hubs and promote the
decades have threatened the livelihoods of Australian
commercialisation of Australian ideas. Mr Ciobo says the government is also firmly committed to
farmers; • The relaunch of FTA negotiations with Indonesia
the Export Market Development Grants program to assist
• Continuing negotiations for a FTA with India
exporters grow their business internationally.
• Working toward the launch of FTA negotiations with the
“The Coalition will continue to pursue free trade
European Union (EU) – a market that accounts for more
agreements as well as regional and multi-lateral
than 12 per cent of Australia’s total trade.
agreements,” Mr Ciobo said.
“These achievements will boost opportunities for Australian exports, enhance market access for the
//
“We are focused on making sure we have a strong plan to maximize opportunities for Australian exporters.” • • •
JUNE/JULY 2016
// 11
ELECTION 2016 - LABOR - WONG
ELECTION 2016
LABOR
Labor pledge to cut red tape for exporters A Shorten Labor Government has vowed to cut red tape that is now providing a barrier to many Australian exporters and potential exporters.
S
hadow Minister for Trade and Investment
to build community
Penny Wong says complexity regarding
confidence and
rules of origin is discouraging Australian
ensure government is
businesses from trading internationally.
accountable, she said. Labor would improve
“Labor will tackle red tape by working
consultation and
with Australia’s trading partners to
transparency by:
achieve readily understood and more consistent rules of
• Disclosing the
origin,” Senator Wong said. “This will determine whether Australian goods qualify for preferential access to key
Government’s goals at
export markets.”
the commencement of negotiations
Senator Wong said a Labor Government would work
• Providing public
with key Asian trading partners to implement reforms that
updates on each round
encourage more trade by reducing costs and becoming of negotiations
more efficient. A regular Trade Barriers Analysis would be conducted to identify barriers to Australian exports, including non-tariff
• Engaging in more intensive consultation with a wider range of stakeholders • Engaging in more intensive consultation and briefings
“behind the border” barriers. “A Shorten Labor Government will negotiate high-quality international trade agreements that reduce tariffs, quotas and ‘behind the border’ barriers to trade,” Senator Wong
with parliamentarians • Releasing draft texts during negotiations where this is feasible • Tabling the text of proposed agreements in Parliament
said. Labor would seek to boost exports by adopting a strategic approach to promoting trade and exports. “We will work to find new pathways for multilateral trade reform, to strengthen the role of the World Trade Organisation and to revive progress on key objectives
before signing the agreements. “As the Australian economy transitions out of the mining boom we need to find other sources of growth and jobs,” Senator Wong said. “We will realise the export potential of sophisticated
of the Doha Round, including freeing up global trade in
Australian services industries such as education, tourism,
agriculture and eliminating market-distorting subsidies for
and financial and professional services. “We will pursue trade and investment policies that
farm goods,” Senator Wong said. Senator Wong said Labor would also end the secrecy
support Australian jobs and living standards by opening up new markets, driving exports into those markets, and
surrounding trade negotiations. The party is “committed to new levels of transparency”
//
attracting new investment.” • • •
JUNE/JULY 2016
// 12
ELECTION 2016
ELECTION 2016
LABOR
How Australia can remain competitive on the world stage If Australia is to remain an advanced industrial economy we need to produce high-tech, highvalue-added products, says Shadow Minister for Industry and Innovation, Senator Kim Carr.
T
he choice is not whether we need
Commonwealth Procurement Guidelines that allow the
manufacturing – the choice is about what
Government to engage directly with Australian industry,
kinds of manufacturing we should do,” says
while still ensuring the principle of value for money is
Senator Carr.
maintained.
Australia’s food and primary industries are
“And there are exemptions from procurement rules from trade treaties,” he says.
a great example of our export potential, he
He cited the purchasing of
says.
motor vehicles for government
Producers can tap into increasing demand from the
rapidly expanding Asian middle class for safe premium
fleets or for defence-related
food products.
procurement as a prime example. “The question for Australian
But it’s not just in the food and primary industries where
governments is whether we
Australia excels, he says.
want to compete and advance
“We have strengths in the material sciences with carbon fibre, biotechnology and biopharmaceuticals, and even
Australian industries, or whether
steel, with BlueScope’s Colorbond range and Bisalloy
we want to get left behind. “For Labor, the answer to that
Steel’s high-tensile steel plate. “There are many examples where Australian companies can and do produce high-tech, high-valued-added, export competitive products. Senator Carr says Governments should give strong
Senator Kim Carr … backing Australian business
question is simple. Labor is in the business of fighting for Australian jobs and we have a strong preference for backing Australian business.”
preference to locally made products when developing
Senator Carr says Australia can’t compete with China by
procurement policy. “Procurement policy and industry policy are intrinsically
cutting wages. “We don’t want to get locked in a race to the bottom on
linked,” he says. “Government procurement, in particular, is an important
wages.” But like Germany, Sweden and the UK, Australia can
mechanism in advancing Australian industry. “Australian firms have to compete in an open market.
compete by producing high-value-added products for discerning markets where quality matters.
That’s true. “But it’s also true that government, though its purchasing
“We know it is difficult to compete on price with low-wage
power, plays a leading industry development role. This
countries producing for mass markets, but we also know
doesn’t have to conflict with our trading obligations.”
that Australia can compete in discerning markets where quality matters.” • • •
Senator Carr says there are provisions in the
//
JUNE/JULY 2016
// 13
election 2016
ELECTION 2016
NICK XENOPHON TEAM
August 2015 – and is a cornerstone of
Manufacturing is vital for future trade viability
innovation. counterparts – and now has the
Trade is the lifeblood of our economy – and government should be taking a more strategic approach, says Senator Nick Xenophon.
country.
A
have negotiated trade agreements
But Australia is well behind its smallest share of manufacturing in total employment of any OECD “All successful manufacturing nations, the United States, Japan, Germany, South Korea, and others
s leader of the newly
industrial countries) are expanding
which expand trade but still enable
formed Nick Xenophon
manufacturing output, creating new
them to use government procurement
Team party, Senator
manufacturing jobs, and boosting
and other active government policies
Xenophon says a “hard-
manufactured exports – Australia’s
to develop globally competitive
headed” approach
manufacturing sector is in crisis,
manufacturing industries,” Senator
Senator Xenophon says.
Xenophon says.
is needed that supports a diverse economy – including Australia’s manufacturing industry. “I am not against the expansion of trade or negotiating free trade agreements,” he says. “But no country can be an innovation leader without the ability to apply innovation in manufacturing.” Manufactured goods account for over two-thirds of world merchandise trade.
“We are at a tipping point. Over 200,000 manufacturing jobs have disappeared since 2008, and the rate of job loss has accelerated sharply. “Manufacturing employment fell 6
“But that hasn’t been the story in Australia. “As the Productivity Commission has revealed, predictions of growth and jobs from Australia’s free trade
percent in 2015 alone, and there’s more
agreements have rarely been delivered
bad news ahead.”
because the economic models
Senator Xenophon says despite the
employed exaggerate the benefits,
decline, manufacturing is still vital to
ignore many of the costs and assume
Australia’s economy.
away unemployment effects.
While many countries around
Manufacturing still employs hundreds
the world (including high-wage
of thousands of people – 870,000 as at
“The Australian National University’s study of the outcomes of the US
‘These FTAs are more like ‘import agreements’ than export agreements’ - Senator Nick Xenophon
Australia free trade agreement after 10 years showed the preferential agreement diverted trade away from other countries.
“Australia and the United States have reduced their trade by US$53 billion with rest of the world and are
//
JUNE/JULY 2016
// 14
election 2016
worse off than they would have been without the agreement. That study concludes that “deals that are struck in haste for primarily political reasons carry risk of substantial economic damage. “The Coalition Government has claimed that Australia’s FTAs with Japan, South Korea and China will lead to tens of thousands of additional jobs. “Yet the government’s own
GREENS
Greens call for greater transparency with trade deals The Greens say government should be doing more to give preference to local goods and services over imported products.
G
overnment is a significant
principles such as open hearings and
purchaser and is uniquely
the development of case law.
positioned to be able to be able
that the benefits of trade deals ‘trickle
its procurement policy, Greens Senator
down’ equally, he says.
economic modelling, by the
Peter Whish-Wilson said in a recent
Canberra-based Centre for
statement to Dynamic Export.
International Economics, estimates
“However, the Greens’ do not believe
to help shape industry policy through
“Unfortunately, this choice is under
“Government should be aware of the disproportionate effect that trade deals can have on some communities
that by 2035 those three FTAs will
attack from a number of trade
and should structure taxation and
have produced a total of only 5,400
agreements, including the Trans-Pacific
social services to provide assistance
additional jobs. That’s less than 300
to workers and industries that are
jobs a year.”
adversely affected.” The Greens say Australia needs
The same study indicates that the three North Asia FTAs – with Japan,
to become smarter and more
Korea and China – taken together
sophisticated in its industry policy.
will boost total Australian exports by
This includes developing value-
only 0.5 per cent, Senator Xenophon
add industries. The Greens have released an
says.
innovation policy that includes
However imports will be boosted
a suite of measures that would
by 2.5 per cent. “These FTAs are more like ‘import agreements’ than export agreements,” he says.
Partnership and other recent bilateral
support the development of value-add
agreements.
industries.
“These trade deals seek to explicitly
These include establishing an
prevent government’s ability to
Innovation Commissioner, increasing
government to adopt a much more
preference local build for almost
funding to improve the uptake of STEM
hard-headed approach to trade and
everything other than defence
(science, technology, engineering
industry policy.
procurement.
and mathematics) in schools and
Senator Xenophon wants
“I’ve long been arguing for greater
“The Greens support the
universities and reversing the cuts
parliamentary scrutiny of our trade
development of multi-lateral
to the Entrepreneurs’ Infrastructure
agreements, urging assessments
trade deals that are governed by a
Program.
of the costs and benefits by
transparent and democratic rules
independent bodies such as the
based system.”
Productivity Commission,” he says
“Australia is rated 17th in the world on the Global Innovation Index.
Senator Whish-Wilson says the
“This is not good enough, as we fall
current spate of trade deals are
to 72nd in the world when it comes
Xenophon Team will be about in the
overseen by an arbitration system that
to turning research into commercial
next Parliament.” • • •
does not follow fundamental legal
outcomes.” • • •
“That’s very much what the Nick
//
JUNE/JULY 2016
// 15
travel
Virgin Australia unveils new ‘luxury’ business class
Virgin Australia has launched its new international business class cabin, with the first seats having been fitted onto one of its B777-300ER aircraft.
T
he new Business Class is now available on the
with Bellini, Kir Royal or Mimosas served prior to the first
airline’s flights from Australia to Los Angeles,
meal, alongside a Luke Mangan-designed canapé plate. The B777-300ER also comes with an onboard bar and
with Abu Dhabi to follow soon. The business class cabin features 37 individual
lounge area, which will be opened after the first meal
and private suites, arranged in a 1-2-1 configuration,
service. This area will be hosted by the cabin crew, and
guaranteeing direct aisle access to all passengers.
offer a selection of snacks and drinks.
Each seat converts into the length of a queen size bed. The reverse herringbone cabin layout, maximises
And guests can choose to have a continental breakfast at the bar prior to the full breakfast service. Virgin Australia Group chief executive John Borghetti
privacy. A generous side console area provides space to work,
said: “Virgin Australia is committed to product innovation and delivering a superior customer journey on the ground
multitask and store personal items.
and in the air. “With competition increasing from Australia to North
Other features include: • An 18-inch HD in-flight entertainment screen that
America and the Middle East, we believe this will be the
Virgin claims is the largest on any aircraft flying between
best business class on the Pacific, with the product also
Australia and North America.
being introduced to Abu Dhabi later this year.
• Special bedding consisting of triple-layer seat
“With our new Boeing 777 Business Class cabin and
cushions, memory foam mattress toppers and high-
refreshed Premium cabin, Virgin Australia will be the
grade cotton pillows.
number one choice for premium travellers.”
• New improved entertainment seatback system with
The airline also unveiled major improvements to its Premium Economy cabin on the Boeing 777-300ER.
intuitive user interface.
The cabin, renamed Premium, now features 24 seats with Passengers can choose from new menus designed by
more legroom than any other Australian airline. All five of the airline’s Boeing 777-300ER aircraft are
leading Australian chef Luke Mangan. Also, a cocktail and canapé service has been introduced,
//
expected to be refitted by the third quarter of 2016. • • •
JUNE/JULY 2016
// 16
fashion
An Aussie fashion house with a strong online following will officially open a bricks and mortar store in downtown Los Angeles this weekend. Alannah James
Australian fashion house to open store in LA
K
nown for high quality fashion items under $200, BNKR Online is a destination for those who want the look without the expensive price tag.
“We know that the LA market loves our product and we are excited to offer them within our retail store.” Each of the labels sold by BNKR service a different style in the
Adelaide-based Australian Fashion Labels was
founded in 2007 by husband and wife team Dean and Melanie Flintoft. Its labels include C/MEO Collective, Finders Keepers, Keepsake, TY-LR, Jaggar and The Fifth.
same young demographic. Melanie said the LA store would continue the model of assisting with styling, sizing and helping shoppers with outfit inspiration. “This LA store is truly incredible and we are able to give the
The Flintofts launched BNKR Online in 2011, which now has a customer database of 150,000 subscribers.
customer the full experience from the minute they walk in,” she said.
The rapid success of BNKR Online led to the opening
“We’ve already received huge interest from LA locals. Our
of the flagship BNKR Retail store in the South Australian
amazing network of bloggers and influencers cannot wait to
capital, Adelaide in 2014, providing shoppers with a one-stop
have an Australian shopping destination at their fingertips.
destination for face-to-face fashion advice.
“It’s a huge novelty for LA to have access to the leading
Co-owner Melanie Flintoft said increasing online sales in
Australian brands all in one place.”
the US was confirmation that Australian Fashion Labels’ first
The LA store is in a historic building on the corner of Broadway
international bricks and mortar store would succeed in LA.
and 9th Street and is steps away from other fashion leaders Acne
“Currently our US BNKR online sales are seeing incredible growth. Figures are increasing by 30 per cent every month,”
and ALC. A Grand Opening event has been planned for this Saturday. • • •
Melanie said.
Source: The Lead, South Australia
//
JUNE/JULY 2016
// 17
fashion
Uniqlo makes a global fashion statement Japanese apparel retailer Uniqlo has arrived in Australia, with ambitions to become the top global retailer by 2020. But the trade is not all one-way, with Australian companies also recently making inroads into Japan’s notoriously competitive retail market. Anthony Fensom
I
n a May 4 presentation to the Queensland Japan Chamber of Commerce and Industry,
Shoichi Miyasaka, CEO Uniqlo Australia, told the Brisbane business audience that there were both cultural and strategic factors behind the Japanese brand’s international success. “Uniqlo’s concept is life wear – every product must be functional, but created as parts for people’s life, based on our ‘SPA’ business model of controlling planning, production and sales,” Miyasaka said.
Miyasaka also pointed to the necessity of product
translates as “everyone as a
place. The company has
business leader.”
converted the ground floor into a product showcase,
“While we don’t own
innovation, including its
“At Uniqlo, even floor staff
any factories, we send
air-conditioning “AIRism”
need to think like a business
using innovative store design
our people out from
innerwear, which blends
owner, as the customer
to help bring customers even
every Tuesday morning to
three different fabrics, and its
sees each staff member as
to the top of the 12-story
Thursday night to check
heat-generating “HeatTech”
a representative of Uniqlo,”
building.
every production line, and
developed with Japanese
Miyasaka said.
if we find any defects we
textile manufacturer Toray.
stop the line until we find
The Japanese company
Uniqlo’s non-conventional
Since its first store in Hiroshima, Japan in 1984,
thinking is also seen in its
Fast Retailing Co.’s Uniqlo
a solution. If we identify
also puts a focus on
choice of a global flagship
has grown to encompass
that the problem can’t be
customer service, with each
store in the high-fashion
more than 1,700 stores in
easily solved, we stop doing
store manager trained to
Tokyo district of Ginza – an
17 countries and regions,
business with that factory
think and act like “a small
area where mass market
including 10 across Australia’s
– that’s how we control the
company CEO” as part of its
brands like Uniqlo previously
east coast. But the Japanese
quality of our products.”
culture of “zen-in keiei,” which
would have looked out of
giant has plans to become
//
JUNE/JULY 2016
// 18
china
“At Uniqlo, even floor staff need to think like a business owner’
even bigger. “Our boss (CEO Tadashi
But having conquered Japan’s demanding
record online sales. “We are confident that by
According to Managing Director Salvatore Battaglia,
Yanai) is a dreamer, but
consumers, Uniqlo may
capitalising on the strong
small businesses can succeed
he never gives up until he
be showing Australian
global platforms available
in Japan by maintaining
achieves his target. He has
retailers how to succeed
such as OneDigital, Pulse
their values, instilling the
committed to us becoming
too, including cosmetics and
and GPS Driver Tracker that
right operating, training
number one in the world
restaurant chains.
we will continue to see great
and recruiting systems and
results from this market,” CEO
developing a team culture.
by 2020 – we are currently
Since expanding to Japan in
Don Meij said.
Australian restaurateurs have
ranked fourth behind Zara,
2013 by paying $235 million
H&M and Gap, but we are
for 75 per cent of Domino’s
trying to go beyond them,”
Pizza Japan, Brisbane-based
strong food innovation and
reception in Japan, including
including in Australia,
Domino’s Pizza Enterprises
transparent and engaging
Luke Mangan’s “Salt” and Bill
Miyasaka said.
has grown the Japanese
store designs that will
Granger’s “Bills,” while Global
franchise to become the
continue to play a big role
Sky’s Winetree has recently
Uniqlo’s key attributes as
nation’s second-largest
in the organic growth and
opened two “Terra Australis”
“quality, store construction,
pizza chain. After opening a
outlook of this market.”
restaurants in Tokyo with an
layout, customer service
record 48 new stores during
and functionality” as well
the first half of fiscal 2016,
market, family owned
as price point – “we have to
the company plans to open
cosmetics company Perfect
conquering the world,
be affordable, otherwise we
its 500th store in the world’s
Potion has grown from a
Australian retailers can
can’t reach as many people
third-biggest economy by the single store in Japan’s ancient certainly learn much from
as we wish.”
end of the year.
Miyasaka described
“This will also be aided by
At the other end of the
also found an enthusiastic
Australian theme. While Uniqlo is set on
capital of Kyoto to currently
their Japanese rival in
having 10 stores, including
carving out their own piece
EBITDA growth of nearly
the major cities of Tokyo,
of international business
55 per cent in the first half,
Osaka and Nagoya.
success. • • •
Uniqlo has joined other
The company reported
Japanese retail chains in expanding to Australia, including hamburger chain
helped by the record store
Mos Burger and apparel and
openings, new designs and
homewares retailer Muji.
product offerings, along with
//
Anthony Fensom is a senior business writer and communication consultant with more than a decade’s experience in the financial and media industries of Australia and Asia.
JUNE/JULY 2016
// 19
SPECIAL FEATURE
Is your business ready to take on the world? Tom Drake
For many entrepreneurs, it’s not enough to create a flourishing local business – they want to grow their businesses internationally. If going global interests you, are you willing to cope with the many challenges that come with doing business across the world? Here are seven questions to ask yourself to see if you’re ready to go global: 1. Will your product sell as well? High demand for your product in your country does not mean that your product has universal appeal.
experience. Even if you do hire a firm
between the business environments
You have to do some research to get
to do preliminary research for you,
and industries for your product to
the answer. It’s not about making an
you should still pay an actual visit.
be well-received. You also need to
educated guess, either. It’s about
Sometimes statistical information
consider practical issues like working
gathering enough information to be
is not that accurate as it may be
with different currencies to make or
able to predict with a high level of
based on a limited sample. Personal
collect payments, which might require
certainty that your product will do well
experience with the culture and
solutions like OFX, a trusted name for
elsewhere.
exposure to social norms will give
money transfer, to handle payment
you a good idea about whether your
processing. In short, find markets
product will sell well.
similar to your own rather than
How do you conduct this research? Start with academic research –
experiment with untested markets
reading books, checking out websites, and speaking to people who come from the country you’re interested in marketing to. Then, go visit the country in person. There is a huge difference between armchair research and actual
2. Do you understand the differences in marketplaces? A foreign market may not do
to see what might happen. The more compatible the market, the easier it will be to make a transition.
business in the way that you’re accustomed to. Make sure that there is a high enough level of compatibility
//
JUNE/JULY 2016
3. Will you err on the side of conservatism?
// 20
SPECIAL FEATURE
4. Do you have
6. Do you understand the culture
enough available
well enough to avoid embarrassing
resources?
mistakes?
Do you have
Even if you can overcome the
enough capital,
language barrier when starting
staff, and business
a business overseas and can
connections to
successfully get your marketing
expand your
messages across, you also have to
business? If you
navigate cultural values. What may
are doing well
appear to be insignificant to you may
locally but don’t
be significant to another culture.
have surplus
An example is the difference
resources, then
between working in northern Europe
you will overextend
and southern Europe. In northern
your resources
Europe, you will be respected if you
when building a
start a negotiation by cutting the small
business overseas.
talk and getting straight to the point; in
Not only will
southern Europe, you are considered
your overseas
brash and impatient if you start a
venture collapse,
meeting without small talk.
but you will also compromise your local business, which will have
7. Can you beat the local competition? Although you may consider the
too few resources
quality of your products superior to
to continue to
your competitors, the local people
function well.
may think otherwise. In many ways, you may have to alter your product
Sometimes we make decisions based on pessimism or optimism. If possible, look for more information
5. Can you overcome language
to suit their tastes. You will have to solve your sales challenges with some
barriers? The marketing that works so well in
creative thinking. • • •
before you make a final decision.
your country may fall flat in another
The reason to err on the side of
country. Your ads won’t translate. Your
conservatism is that it can be very
pitches will sound odd. Your effort to
Best Practices
expensive and time consuming setting
create humorous ads may be met with
If your business is going to be
up a business in another country.
total incomprehension. What’s more,
successful in another country, you
There is the famous joke about
you can’t send your best salespeople
need to understand the culture at a
Bata Shoes sending two salesmen
there either—because they won’t be
deep level. If you don’t, you won’t know
to a rural village in Africa. They both
able to speak a word. It’s not just the
how to negotiate and close contracts,
sent telegrams home. One salesman
denotation of words that matter, but
and you won’t have a clue about best
wrote, “No market here. The people
also their connotations.
practices.
don’t wear shoes” – the other one said:
Language barriers aren’t
“Great market here. The people don’t
insurmountable, but they can be
Tom Drake is the founder and writer
wear shoes.”
awkward if you don’t work with an
behind Canadian Finance Blog
excellent linguistic service.
www.canadianfinanceblog.com
//
JUNE/JULY 2016
// 21
COMMENT
news
Free Trade: What is it and how do we know it when we see it? David Gray From page 22
S
imilarly, other than cheap labour the rich
and over which the exporter has little
handed, are not always sinister per
or no control.
se. Some governments are under
Lastly, corruption which
intense local political pressure to
nation holds most or all
is frequently a standard
protect local industry or maybe the
other technical, social,
business procedure in many
nation is struggling with a severe
political and economic
developing economies whether
balance of payments problem and
advantages and may fall into the trap
it be “contributions” at the senior
lack foreign currency.
of lowering productivity of output to
government level or to lower level
chase the arbitrage of increasing ROI
operatives is similarly a restriction
a relative term. While examples of
purely through lower cost labour.
or impost on trade and thus restricts
across the board 100% free trade
freedom and creates economic
are very hard to find, so too are
distortions.
examples of 100% “un-free” trade.
Any form of government manipulation of exchange rates, subsidy or tax incentive or indirect
Corruption has a particularly
To all practical effect, free trade is
From an Australian export
assistance to an industry sector,
corrosive backwash effect as it saps
perspective, free trade is where
company or product is a deviation
the will and focus of the exporter to
an exporter can sell their products
from the principle and practice of
produce the best product with the
based purely on the merits of price-
free trade.
best service.
performance-quality.
Other restrictions to free trade are
Why bother to be the best or
When the customer places a
of an administrative-logistical nature
even commercially competent
procurement order the exporter
and do not involve tariffs or other
when clandestine palm greasing
can ship the goods, via a shipping
financial measures.
can produce outcomes that would
agent, to the overseas customer and
otherwise require commercial
then will receive the item(s) within
as an onerous import administrative
discipline along with sound
a few days through normal internal
requirement process that can
management practices to achieve.
processes.
Typically these involve ploys such
“red-tape” delay by many weeks
Moreover, free trade can often
Payments for the exports are
or even months the movement of
have a Jekyll and Hyde appearance.
made in a straightforward manner
imported goods from the ports and
Western business heading to a
through normal commercial banking
warehouses.
developing economy determined to
channels. Singapore would be a
spray cash in all directions will think
good Asia-Pacific example of a free
measures include requirements
trade is remarkably free. Exporters
trade nation state.
that all imported goods must pass
on the other hand will discover a
through a complex monopolised
more complicated and nuanced
local multi-layer distribution process
local interpretation of free trade.
Other similar anti-free trade
which has the effect of pricing the imported product out of the market
Attempts by some Governments to stymie free trade, discreet or heavy
//
JUNE/JULY 2016
David Gray is principal consultant at BizTechWrite, a leading supplier of language translation, technical documentation and export support services. Contact: biztechwrite@gmail.com
// 22
AUSTRALIAN MADE
Changes to food labelling laws to boost consumer confidence
T
he new financial year is fast approaching and with that
Businesses have a two-year period to transition to the new
comes changes to Australia’s food labelling laws. From July
labels, which become mandatory on July 1, 2018. AMCL will
1 this year, a new country of origin information panel will
continue to administer and promote the logo on all other types of
be introduced, which will be compulsory for most Australian food products.
products. AMCL Chief Executive, Ian Harrison, says a tighter system
The panel will feature the iconic green and gold Australian Made,
for food labelling, coupled with a better understanding of that
Australian Grown (AMAG) kangaroo logo for products made or
system by consumers, will give Aussie shoppers more confidence
grown in Australia.
in what they’re purchasing.
For 30 years the AMAG logo has been helping businesses
“The Australian Made, Australian Grown logo has been helping
show consumers that their products are genuinely Australian.
Australian farmers and manufacturers sell genuine Aussie
The logo, and its various descriptors, is one of the most powerful
products to consumers all around the world for three decades. It
nation brand symbols in the world. Locally it enjoys an almost 100
makes good sense to build on that,” Mr Harrison said.
percent recognition rate, with consumer trust at nearly 90 percent, according to Roy Morgan Research.
“We anticipate the widespread use of the AMAG logo on food products will have a 'halo effect' on other product categories,
As a result of the new mandatory food labelling, the Australian
lifting the profile of all other goods carrying the logo.” • • •
Made Campaign (AMCL) will, as of July 1 no longer be able to
For more information visit: www.business.gov.au/foodlabels
license new food products to use the logo.
//
JUNE/JULY 2016
// 23
FREIGHT
carriage? • Who will pay for carriage? • Who will bear risk of loss or damage to goods? • Who is to be responsible for what? i.e. Sharing of tasks, costs and risks The Incoterms® rules describe mainly the tasks, costs and risks involved in the delivery of the goods from sellers to buyers. Obligations dealt with include clearance for export and import, packing of goods, arranging and paying for carriage and insurance, delivering and taking delivery of the goods, packaging, loading and unloading. Incoterms are not law, they are rules. They do NOT deal with
Incoterms: It pays to learn what this means
transfer of ownership (title),
For companies new to import or export many of the terms and acronyms used in international freight can seem a bit like "double dutch."
comprehensive reference
F
Ian Smith
are a series of pre-
importers) and sellers
to or from Australia
defined commercial
(generally exporters)
one of the crucial
terms published by the
transfer throughout the
areas to understand
International Chamber of
shipping process.
Commerce (ICC).
to better understand Incoterms. • • • Give one of CargoHound’s freight experts a call on 1300 883 243 or email info@cargohound.com.
JUNE/JULY 2016
// 24
take on any undue risk or
define where ownership,
the seller and buyer need
get hit with hidden costs!
risk and the responsibilities
to decide:
//
Freight experts CargoHound offers a
• Who will arrange for
Incoterms® are used to
of buyers (generally
the like.
Ian Smith, CEO of CargoHound, Australia’s first online marketplace for international freight. www.cargohound.com
Incoterms – so you don't
Incoterms® 2010
exemptions from liability or
guide to assist exporters
or anyone shipping
(and many don't) is
breaches of contract,
Before goods are shipped,
freight
Understanding tariffs for import and export Before you can think about importing or exporting a product, you need to understand how it is classified for customs tariffs and duty in each market of interest. Kim Mauch
Commodity Classification (AHECC) is usually updated every January and July and up-to-date versions of the classifications can be found at the ABS Website. Warning: Failure to properly classify your product could lead to incorrect taxation on your exports and the potential loss of the product. Customs and Border Protection provides a formal AHECC Advisory Service. This service has been developed specifically for clients who require assistance with the classification of goods for export. Import Goods imported into Australia require classification under the Customs Tariff Act 1995. Importers need to selfassess the correct tariff classification of goods they import. Penalties may apply for incorrect or misleading information. Australian Border Force (formerly Australian Customs and Border Protection) has a range of information and resources that will assist you to classify goods including a free tariff
T
he Harmonised Commodity Description and Coding
advice service. Warning: Importers need to self-
world. The system is used by more than
assess the correct tariff classification
system is generally referred
200 countries as a basis for their
of goods they import. Penalties may
to as the “Harmonised
customs tariff and for the collection of
apply for incorrect or misleading
System” (HS). It is a multi-purpose
international trade statistics and duty
information. The penalty on imports
international product classification
revenue.
can be much higher than exports due
nomenclature developed by the World
Australia uses an eight-digit code to
Customs Organisation (WCO) and is
classify goods for export. The first six
used to classify traded products.
align with international classification
The Harmonised System comprises
standards, while the last two digits
approximately 5,000 commodity
are specific to Australian exports. The
groups, each identified by a six-digit
classifications are not static and are
code, arranged in a legal and logical
subject to change. It is very important
structure. It is supported by well-
to keep up-to-date with any changes
defined rules in an attempt to achieve
as they occur.
uniform classifications around the
The Australian Harmonized Export
//
JUNE/JULY 2016
to the duty component. • • • For more information on tariff classification call one of CargoHound’s freight experts on 1300 883 243 or email info@cargohound.com. Kim Mauch is Co-Founder of CargoHound, Australia’s first online freight marketplace. www.cargohound.com
// 25
freight
New global container rules in force soon: Is Australia ready? From July 1 this year, new weight rules will apply to any shipping container leaving from any port in the world.
E
ach container must be accompanied by a
However, Ports Australia, the trade group representing
shipping document signed either electronically
Australian ports and maritime authorities, has expressed
or in hard copy by the shipper on the bill of lading
concern that the Australian Maritime Safety Authority
listing the verified gross mass of a container
(AMSA) may not have the necessary resources to
before being loaded onto a ship.
adequately enforce the new rule.
The International Maritime Safety Committee (MSC), a
AMSA says it will follow International Maritime Organisation
global body responsible for shipping safety, approved the
(IMO) advice for a “practical and pragmatic approach” to
new rules in May 2014.
enforcing compliance with new container weight rules for
A subsequent amendment was then made to the Safety of Life at Sea (SOLAS) convention regarding mandatory
three months after they take effect on July 1. “AMSA will initially take an educative approach to achieve compliance with SOLAS container weight amendments
container weight verification. The move followed concerns that “mis-declared” weights contributed to major maritime casualties such as the breakup and subsequent beaching of the MSC Napoli on the southern UK coast in 2007 and the partial capsizing a feeder ship in the Spanish port of Algeciras in June, 2015. The new requirement making container weight verification a condition for vessel loading will become legally binding
from the July 1 implementation date,” the authority said in a statement. But Ports Australia CEO David Anderson recently told Joc. com that AMSA’s enforcement may not be sufficient. A more “deliberate” approach to enforcement may be needed, he says. “We believe that AMSA should make allowance for a reasonable transitional period to bed in compliance
on July 1.
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freight
and for shippers to continue to acquaint themselves
Any non-compliance and action taken “would likely impact
with the essentials of compliance,” he told Joc.com. “We
on how seriously industry is going to take the attempt by
are particularly concerned that this continuing level of
the IMO to introduce greater rigour to the regime.”
uncertainty not lead to disruptions.”
In a circular to members, Rod Naim, CEO of Shipping
Following meetings with AMSA Mr Anderson told Joc.
Australia, said the shipper’s obligation to provide a VGM of a
com he had the impression the agency did not have the
container on the shipping documentation has always been
resources for full enforcement.
a SOLAS requirement and the real problem has been a lack
Also, it did not seem as though AMSA was taking an aggressive posture toward compliance, he said.
of enforcement. Shipping Australia welcomed AMSA’S and IMO’s approach
“Auditing was mentioned, but the overall impression was that AMSA will be waiting for reports of non-compliance,
for the smooth introduction of the new VGM requirements. In a recent industry newsletter Mr Naim said Shipping
whether from the stevedores or from incidents at the
Australia stands by the advice already provided to shipping
terminals or on the ship. This approach may encourage
lines.
a business as usual approach from some elements of industry.”
“To ensure their cargo is carried to their destinations without delay, they should advise their global customers
Mr Anderson said AMSA should consider a sampling
that containers shipped before July 1, but arriving at a
approach to get a scope of the scale of the problem, and
discharge port for transhipment after July 1, 2016 should
indicate how the regulator would deal with non-compliance.
have a compliant VGM declaration.” • • •
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// 27
feature
Aussie bush gin set to take on world A small distillery on a remote island at the bottom of the world is preparing to take its award-winning gin to the world.
Andrew Spence
K
angaroo Island Spirits this week took
Lark have been distilling at Cygnet River for
out the Champion Gin Trophy at the
more than a decade.
Australian Distilled Spirits Awards for its Old Tom Gin.
The accolade, handed out by the Royal
Jon, whose brother Bill founded renowned Tasmanian whisky distillery Lark, said the second still would have the ability to
Agricultural Society of Victoria in Melbourne,
“significantly more than double” production,
comes as the remote distillery prepares to
which currently sits at about 7000-litres a year.
install a second still to give it the capacity to enter the export market. Kangaroo Island Spirits owners Jon and Sarah
“We’ve intentionally remained small over the years because we wanted to maintain control of our product but we’ve just been receiving
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JUNE/JULY 2016
// 28
feature
Distinctly Australian flavour … Jon and Sarah Lark founders of Kangaroo Island Spirits
so much interest, particularly in export, that we are about
every year with the
to install a 300-litre pot still and within 12-months we’ll
Italy, Germany and North
have that running off solar power and have the only solar
“We’ve been here 10 years and we’re going from strength to strength and this award is going to help us no end in
distillery in the country,” he said. Kangaroo Island Spirits has up to five gins using local botanicals and traditional processes in its range at any one
getting to that next stage,” Jon said. “Also, Kangaroo Island has developed a fairly significant food and wine industry and we’ve been a part of that.“
time. It also produces vodka and liqueurs. Jon said although the most significant sales were through
‘We’ve intentionally remained small to maintain control of our product’
majority coming from America.
the cellar door, wholesale was rapidly expanding with a great deal of interest from high-end bars, restaurants and independent bottle shops across Australia. He said the artisan distillery had received international inquiries from the United States, United Kingdom and from Asia. “I’d particularly like to go
into Spain because Spain consumes more gin than the UK but a lot of people don’t realize that and certainly Asia
Kangaroo Island Spirits took out the national award for its
‘I’d particularly like to go into Spain because Spain consumes more gin than the UK’
“Old Tom” gin, a traditional gin flavoured with native plants. It boasts a distinctly Australian flavour enhanced by the inclusion of foliage from the coastal Daisy bush (olearia axillaris), native Juniper (myoporum insulare) and locally grown Lemon Myrtle and Aniseed myrtle. Jon said “Old Tom” was a slightly sweetened gin, which took its name from an English gin tradition from the
makes a lot of sense from here as well,” Jon said Kangaroo Island, Australia’s third largest offshore island, is about 150km southwest of the South Australian capital
18th century. “We’ve made an Old Tom style of gin using that process but we’ve added local botanicals and we’ve aged it for six
Adelaide. Known for its natural beauty and wildlife, it is a tourism icon drawing more than 40,000 international visitors
//
weeks in reconditioned French oak barrels to give it some character.” • • •
JUNE/JULY 2016
// 29
middle east
New export opportunities with Iran The federal government will provide $5.3 million over the next four years for the re opening of its trade office in Iran.
T
enrolments each year. Water management is a critical resource issue for Iran and Australia is very well placed to provide policy and research advice in this regard. This industry sector is expected to be a major area of opportunity for Australian technology and service companies. Mr Ciobo met with Iranian Foreign Minister H.E. Dr Mohammad Javad Zarif and a delegation in Canberra earlier this year to discuss the reopening of the trade office. Austrade is now working, in
he office, which closed in
opportunities in agriculture, resources,
2010, will be located within
healthcare, education and water
conjunction with the Department of
the Australian Embassy in
management.
Foreign Affairs, to ensure Australian
Tehran and operated by
Austrade.
It will seek trade opportunities for
“The recent lifting of sanctions has created opportunities for Australian areas we
closer commercial and investment
excel: mining
ties.
equipment, technology
announced the re-opening earlier
and services
this year, says Iran has significant
sectors and
economic potential for Australian
the supply
exporters.
of our
“It is a large regional economy with
agricultural
a GDP of around US$400 billion,
commodities
a population of 80 million people
such as
and has some of the world’s largest
barley and
reserves of oil and gas,” he said.
wheat,” Mr
The government is now confident Iran’s nuclear industry is being
opening up of the Iranian economy.
business in
Australian businesses and foster
Trade Minister Steven Ciobo, who
businesses are well positioned for the
Ciobo said. “Austrade
developed for peaceful purposes and
has also
international sanctions were recently
identified opportunities for commercial
Austrade will provide support to
lifted.
co-operation in the health and medical
Australian businesses immediately
and education and skills training
from its office in Dubai, and will
sectors.”
establish a permanent presence within
Australia’s trade with Iran was about $350 million a year under sanctions, and this is expected to rise
Iranian universities are seeking
the Australian Embassy in Tehran from the second half of this year.
significantly following the signing of a
greater student mobility and
nuclear deal in January.
research collaboration with Australian
Austrade officials visited Iran in
universities. There are currently about
November last year after a visit by
will support Australian business to
3,500 Iranian students studying
Foreign Minister Julie Bishop, earlier in
capitalise on export and investment
in Australia, with about 1,000 new
the year. • • •
Mr Ciobo says the new trade office
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JUNE/JULY 2016
// 30
events
3
1
1
3
July 26-28
July 4-7
July 18-22
Food Tech QLD Brisbane Convention & Exhibition Centre Ph: 03 9261 4500 www.foodtechqld.com. au
Hong Kong Fashion Week (Spring/Summer) 2016 Hong Kong Convention & Exhibition Centre www.hktdc.com
Medical Science & Health Services Mission, Vietnam 2016 Hanoi & Ho Chi Minh City Contact: milena.bliss@ austrade.gov.au
June 17 Australian Trusted Trader Information Session, Melbourne Level 16, Crowe Horwath 181 William St, Melbourne www.eca.org.au/ events To register your interest contact: trustedtrader@ border.gov.au
2
4
2
4
June 29
July 23-24
July 16-19
July 20-22
Pitching for International Success Geelong Conference Centre, Geelong, VIC 8.30am-12.30pm www.eca.org.au/ events
GPCE General Practice Conference & Exhibition Perth Convention & Exhibition Centre Ph: 1800 814 611 www.gpce.com.au
IFT Food Expo McCormack Place, Chicago, Illinois, US www.am-fe.ift.org/
Children & Baby Maternity Expo 2016 Shanghai, China Contact: Damien. zumbo@austrade.gov. au
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JUNE/JULY 2016
// 31
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// 32
Published on Jun 16, 2016
Latest news for Australian exporters
Published on Jun 16, 2016
Latest news for Australian exporters