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Partnerships For Barrier-Free Trade

Hon Phillida Bunkle Speech Notes

Opening address to the Tri-Nations Conference
Customs Brokers and Freight Fowarders Federation, New Zealand
Customs Brokers Council of Australia
Fiji Institute of Freight Forwarders and Customs House Agents


Partnerships For Barrier-Free Trade


Thank you for the opportunity to speak to you this morning.

Barrier-free trade is an important issue for this government and for me as Minister of Customs so I am delighted to be here today. While I am aware that most of you would probably prefer a world without a Customs and Excise regime, I'm sorry to inform you that my influence within this government doesn't extend that far!

In any case, I do commend your willingness to discuss ways of moving this barrier-free trade issue forward.

Today I wish to discuss this government's role and our key goals, our vision for an e-government and e-commerce, border management, and finally I will address the need for partnership to facilitate barrier-free trade.

As some of you may know, along with my Customs portfolio I am also Minister of Consumer Affairs, and Associate Minister of Economic Development, Conservation and the Environment. Collectively these portfolios offer an interesting yet wide range of responsibilities that that can be linked to trade, consumers, and to community protection.

[Role of Government, and Key Goals]
I have given a fair amount of thought to the role of government, the Customs Service, and the service's contribution to a strategic view of border management.

I would like to quickly outline five of this government's key goals:
1. strengthen national identity and uphold the principles of the Treaty of Waitangi
2. grow an inclusive, innovative economy
3. provide strong social services, work in partnerships with communities, and build safe communities
4. close the gaps for Maori and Pacific people, including through better co-ordination of strategies across sectors; and
5. protect and enhance the environment - to treasure and nurture our environment with protection for eco-systems so that we maintain and protect our environment.

Underpinning all these goals is the government's desire to achieve these things in a sustainable manner. We believe the opportunities exist for government and industry to take a leading role in this.

[Border Management]
Border management is another area that has a key role and today I will focus on the Customs Service’s role.

What we are talking about, I think, is a collegiate, cross-agency approach to border management in the future. This will involve drawing together
 stakeholder interests;
 service delivery capability; and
 technology.

In the 1970s the government focused on international trade as a corner stone for New Zealand’s economic development. Border control was a major contributor to compliance costs for traders yet Customs' manual systems were not geared to process the expected import and export volumes.
Imports, for example, would take up to two weeks to be cleared. Processing large volumes of information meant border clearance was time consuming and costly.

Customs’ involvement with e-commerce began with the introduction of electronic data interchange (EDI) in 1989. The interactive system – driven by business needs allowed import transactions, vetting checks and delivery orders to be electronically processed in a quicker, more cost effective manner.

When CusMod was introduced in 1997, this was seen by many as a world leading advantage. It provided an integrated electronic system to manage goods and passengers; it provided improved intelligence capabilities to successfully implement risk management strategies.

Today, policy outcomes for a number of government agencies benefit from CusMod. Agencies engage in various levels of interaction with the systems ranging from full policy enforcement by Customs on their behalf, through to direct on-line access to the system enabling them to undertake their own follow-up action.

[The Current Business Environment]
New Zealand is now in a period of economic growth in which international trade and travel are key contributors. Each year the volumes of goods and passengers crossing our borders are increasing.

The ability to process these volumes largely depends on our ability to keep up with changes to international business practices and our ability to be flexible so as to harness efficiencies from a balance of risk management, staff resources and the physical limitations of developing technology.

Would you agree that we would all like to see Customs better facilitate legitimate trade and travel in a seamless manner while effectively managing regulatory controls at the “border”?

One of the challenges we face is the changing nature of the border. It is no longer solely a physical or geographical boundary. Advanced technology has widened the perimeter of our border to include the electronic border. This is where it has become critical for the nature of our border management to change.

From a risk management and risk minimisation perspective, intervention is increasingly being bundled up with pre and post border assurance strategies such as client education, audits of importers and exporters, and strategic partnerships with major players in the industries.

Society has entered a new age of business – the ‘knowledge economy’ is unconstrained by traditional borders. Technological developments are driving a transformation of the market place in knowledge, access, speed and business rules. Consumers now have the ability to broker directly with the service or goods provider.

Let's take a look at your expectations of Customs. I know that business expects Customs to operate efficient e-systems that are user-friendly. You probably also expect Customs to work closely with you so you have every opportunity to meet your legal obligations cost effectively.

From government's viewpoint, we expect Customs to be conversant with changes in international trading systems, processes and trends; to manage government’s wider policy goals while working with other government agencies.

[E-Commerce and E-Government]
Let’s take a look at e-commerce and e-government, which I believe, will be discussing as part of your conference deliberations.

You may be aware of the Government’s E-Commerce Summit on 1 November, which will see our e-commerce strategy launched and herald the start of an ongoing dialogue and process on e-commerce.

What is e-government?
There is no doubt that we have experienced a revolution in information and communication technologies. Technology, the Internet, even the mobile phone have fundamentally changed the way we work, learn and interact.

E-government provides for these new technologies to make it easier to access government information and services, to improve the quality of services and to give the public better opportunities for a voice at government level.

Helping grow an inclusive, innovative economy for the benefit of all.
The e-government vision is about inclusion – making it easier for people to take part in our economy. It links e-government, e-business and e-commerce, all of which play an important role in the development of an economy.

Restoring trust in government and providing strong social services.
We want increased collaboration between government organisations; a strengthened relationship between people and the state; the opportunity for public services to be improved while, at the same time, reducing the cost of delivery. E government will help us move towards these interactive goals.

E-commerce and technological capability of business is central to our sustainable ability to compete in the ever-increasing globalised marketplace.

[E-Commerce Strategy]
Some of you will be familiar with the e-commerce strategy announced by the Minister for Trade Negotiations, Hon Jim Sutton in May. This was a major e-commerce initiative to help small and medium exporters gain much-needed access to the new global economy and increase overall export earnings through trading online.

This two-year project is the single biggest initiative Trade New Zealand has undertaken in recent years and aims to lead and facilitate New Zealand exporters’ in e-commerce by:
 promoting and educating exporters about e-commerce opportunities
 improving delivery of Trade New Zealand services to exporters by adding online services to a multiple-channel approach; and
 enabling exporters to expand traditional business practices to include effective competition online.

The new strategy addresses an increasing market demand among exporters and their customers for e-commerce, particularly business-to-business e-commerce. Growth in global terms is expected to rocket, from US$109 billion in 1999, to US$1331 billion by 2003.

At the time Jim Sutton said “New Zealand needs to deliver in the new knowledge economy ... To do so, we have to be innovative and take advantage of every opportunity. By reducing the barriers of time, distance, language and currency, Internet-led technologies offer very efficient ways to reduce these traditional constraints.”

So e-commerce is certainly a key element in the “barrier free” trading world.

So that's what we can do for you. Let's talk about what you can do for us.

[“Partnership” and Collaboration for Outcomes]
Working in partnership is, I believe, the way to dismantle many of the barriers that obstruct efficient and effective trade.

“Partnership” often risks becoming an over-used turn of phrase, but the term aptly applies to border management.

We need to look at partnership and collaboration across:
 government agencies
 between government agencies and the private sector
 between government agencies and the public sector
 and between administrations that cross international borders.
I have some examples of how a broader perspective can work significantly towards sustainable economic success, social and community protection.

The first example stemmed from the annual conference of the Association of Pacific Ports, held here in Auckland two weeks ago. The conference noted that efficient ports was a key ingredient in the economic success of the region as a whole and for each country.

After all, don't you think it would be pretty pointless removing the trade barriers, say for example, through tariff and trade policy, if we still end up with logistical nightmares when the goods arrive on the wharf?

As a staunch advocate of environmental issues, I was heartened to note that the environmental for ports were discussed. There are enormous risks to environment posed by marine pests arriving through ballast water and pests arriving on hulls, marine spills and disposed ships’ waste.
It really worries me that this danger is often too easily neglected. We need only look at recent examples harm to our shellfish life to see how our marine environment is exposed to danger.

So it was pleasing to see the South Pacific Regional Environment Programme urging ports to include environmental issues in their future planning by conducting environmental impact assessments and allowing for the construction of suitable facilities for the collection of waste, to name two ideas.

Here's another example where Customs plays a role in international peace and security.

The United Nations imposes sanctions ranging from the importation of diamonds from Sierra Leone; to the exportation of arms and related material to Eritrea and Ethiopia; and to the importation and exportation of goods to and from Iraq.

As a UN member, New Zealand must implement these sanctions. These sanctions are enforced by Customs on behalf of the Ministry of Foreign Affairs and Trade.

There are many other examples of Customs’ contribution to consumer protection, health and safety outcomes such as unsafe or harmful items including non-child resistant cigarette lighters, motor cycle helmets and child restraints, chewing tobacco and goods likely to convey anthrax. Customs even has a role in policing imported and exported toothfish catches.to ensure catches have the appropriate documentation as part of bid to squeeze out the illegal trade in toothfish and to protect the endangered species.

All of this has to be balanced carefully with the benefits that consumers seek from a barrier-free, hassle-free and facilitation-oriented process. The benefits they want, include faster processing, speedy delivery, less red-tape across agencies.

[Business Partnerships - A Look into the Future]
In delivering these benefits to the consumer, business partnerships with industry will increasingly be relied upon to ensure data reliability and shared risk. And, perhaps most importantly, that bureaucratic intervention and compliance costs are minimised.

Developing processes in isolation won't help us achieve these requirements. Again, government and business must work together more often to find solutions that add real value across the spectrum of international trade.

There are of course existing examples of strategic partnerships such as the one allowing Customs electronic access to the Ports of Auckland container database to help in risk management.

These sorts of relationships should continue extend beyond mere bilateral arrangements. Customs, for example, is also working with Ports of Auckland and the MAF Quarantine Service to provide an electronic coordinated container delivery mechanism.

For the future there will need to be more reliance placed on:
 industry working as one
 establishing memoranda of understanding
 information (data) pooling on an international scale
 having shared risk mitigation strategies
 developing intelligent processes to minimise impacts on legitimate trade and travel while maintaining border security expectations
 ensuring timely and accurate information for pre-arrival processing
 and high quality data for assurance over government revenue and economic forecasting.

Work is now under way in a number of these areas to enhance New Zealand’s global competitiveness.

[Integrity]
Integrity is absolutely key to enhancing trade facilitation and confidence in the international trading process. At the broader level there are economic benefits to national economies — a better perception of integrity can improve an economy’s stability and growth by encouraging investment and lending and by increasing levels of trade and international resource allocation.

In recent times governments have given increasing scrutiny to issues around integrity. This is the same for organisations such as the International Chamber of Commerce, the OECD, the UN, the World Bank, the IMF, the World Customs Organisation, APEC and the Oceania Customs Organisation. It's fairly obvious, that integrity is an international focus in border management.

[Changing Role of Regulatory Authorities]
You might ask the question, what about the changing role of regulatory authorities in trade facilitation? Actually, I don’t think Customs’ regulatory role has changed.
I think fundamentally Customs remains the prime protector of society, and as the collector of some $6 billion each year in revenue, it's also important that Customs is seen to play fair.

What has changed is the way Customs undertakes that role. This government expects change and as the nature and role of government itself changes, so too do the expectations of stakeholders. The nature and demands of relationships change. The global environment changes. The risks to be managed change. So you see, it's important that regulatory authorities remain strategically alert, adaptable and responsive. People, technology, processes and alliances need to be developed with longer-term capability as a central focus.

[Close]
In closing, I would like to think that the role of Customs as a regulatory agency will always be the essential arm of government to protect the community. One of the things that this government is looking for by way of change is more effective participation from industry. What we are aiming to do is to facilitate better participation from your industries.

Let me remind you of the critical need for the partnerships I spoke of earlier. You need to take up the challenge to be an active player in facilitating barrier-free, hassle-free trade.

I believe that regulatory authorities will always have to some kind of role in trade facilitation. But how and where and when they go about that role will certainly change. I certainly encourage you to grow with us as an industry.

Thank you again for the invitation to be here, and I sincerely wish you well for your conference.


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