House of Representatives

Customs Amendment (Singapore-Australia Free Trade Agreement Amendment Implementation) Bill 2017

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Immigration and Border Protection, the Honourable Alex Hawke MP)

ATTACHMENT A: REGULATORY BURDEN AND COST OFFSET ESTIMATE

Attachment A to Regulation Impact Statement

The Third SAFTA Review is expected to result in a small reduction in ongoing business compliance costs for Australian exporters to Singapore. These reductions arise from businesses which previously sought and obtained preferential certificates of origin (COOS) and which may now be able to self-certify the origin of their goods when claiming preferential treatment under SAFTA.

There is a significant level of uncertainty regarding the number and composition of COOS issued in respect of Australian exports into Singapore. Accordingly, the estimates of the compliance costs under the status quo - as well as the likely incremental changes - are largely assumption-driven and should be interpreted as such. Based on the available data, however, it is possible to gain an appreciation of the order of magnitude of these changes.

Certificates of Origin

COOS are issued by industry groups such as the Australian Chamber of Commerce and Industry and the Australian Industry Group. Preferential certificates account for around 10 per cent of all certificates issued. Preferential certificates are currently required to claim preference under SAFTA as the agreement does not allow for self-declaration.

Singapore is Australia's 6th largest goods export destination and represents 3.1 per cent of Australia's total goods exports. Only a small portion of Australia's exports to Singapore are subject to customs duties - beer is the only Australian export on which Singapore levies customs duties (Australia exports around $2 million of beer to Singapore). The majority of Australian exports to Singapore therefore enter duty free, without needing to claim preference under SAFTA; the regulatory savings from exporters being able to self-certify is small.

Direct Costs

Where businesses seek third-party certification from industry groups, the cost of each certificate varies from $20 - $70, with an average of $33. The cost of a certificate depends on a range of factors, such as whether an applicant is a member of the issuing body and the level of complexity.

Administrative Costs

The ongoing administrative costs incurred by a business in preparing the documentation to obtain a COO are likely to be relatively low. While new businesses may expend considerable time applying for certification for their initial consignment, as a matter of practice, this information is re-submitted for subsequent certifications. In addition, much of the information required would be collected for other purposes. The administrative burden for each application is therefore estimated to be modest.

Similarly, the records related to a COO are required to be kept for five years by most foreign customs agencies. Businesses are required under Australian Tax Law to retain these records for seven years. The incremental compliance burden associated with record keeping for COOS is therefore assessed as nil.

Incremental reduction in number of certificates under the Third SAFTA Review

As businesses will now be able to self-certify to claim preferential treatment under SAFTA, it is possible that the total number of Australian COOS currently issued in respect of exports to Singapore may decrease as a result of the SAFTA Review. Businesses will have to consider for themselves, as a commercial decision, whether the benefits of obtaining a COO are outweighed by the costs (administrative or otherwise).

It is therefore assumed that there will be a modest reduction in the number of COOS issued in respect of Australian exports to Singapore as a result of the Agreement. To the extent that this reduction occurs, those businesses will save the direct costs of certification by industry bodies; together with the administrative costs.

Regulatory Burden and Cost Offset (RBCO) Estimate Table

Average Annual Compliance Costs (from business as usual)
Costs ($) Business Community Organisations Individuals Total Cost
Total by Sector ($3,828.41) $ $ ($3,828.41 )
Cost offset ($) Business Community Organisations Individuals Total by Source
Agency $ $ $ $
Within portfolio $ $ $ $
Outside portfolio $ $ $ $
Total by Sector $ $ $ $
Proposal is cost neutral?   ¨   yes   [ ]   no
Proposal is deregulatory?   [ ]   yes   ¨   no
Balance of cost offsets -$3,828.41


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