Dynamic Export E-magazine June/July 2016

Pages 10-15

Are you ready for new global container rules?

Free trade: does it really exist?

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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

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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

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JUNE/JULY 2016

Continued page 22

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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

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JUNE/JULY 2016

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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

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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. • • •

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JUNE/JULY 2016

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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

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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.

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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

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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

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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”

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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

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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

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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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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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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

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weeks in reconditioned French oak barrels to give it some character.” • • •

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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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events

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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

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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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