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Business to contribute to new trade security costs

5 November 2003 Media Statement
Business to contribute to new trade security costs

Customs Minister Rick Barker said today that New Zealand was facing extra costs on its export and import trade because of much higher security standards being required by the United States.

Mr Barker said that in the wake of the 11 September 2001 terrorist attacks the United States was insisting that traders had security systems in place to prove that goods crossing its borders had not been interfered with.

European Union and other nations that New Zealand traded with would also implement the tougher standards.

New Zealand Customs would need about 130 extra staff and new x-ray and other technologies to ensure that high risk cargo could be checked and cleared without
delay.

“The cost of establishing and maintaining these trade security measures in New Zealand exceeds Customs’ ongoing budget and core responsibility of protecting New Zealanders,” Mr Barker said.

“So the government has decided that those who benefit from New Zealand’s reputation as a safe and secure trading partner should contribute toward the cost of meeting these new requirements.

“It is proposed that a new security fee be introduced from July 2004 to recover approximately $8 million from the export sector, $4 million from importers and $8 million for security screening of goods trans-shipped through New Zealand.

“The new standards would mean that trading partners could be confident that cargo sealed with a New Zealand Customs-approved seal is secure and therefore did not need to be checked on arrival at their wharves.

“If we do not comply, our vital exports could sit on foreign wharves for days awaiting Customs clearance, while competitors with security agreements get their cargo across the border without delay.”

Mr Barker said he had met with the Joint Industry Consulting Group (JICG), an organisation of Customs’ stakeholders representing those involved in the supply chain, to discuss how the fee structure would be designed.

“I am inviting business representatives to work with Customs to ensure that the proposed new security compliance fee is collected in an efficient and effective manner,” Mr Barker said.


ENDS

COST RECOVERY FOR GOODS CLEARANCE


Background information


1. Why is the Government increasing trade security?

In our post-September 11 world the Government must not only protect its citizens but also respond to new international security expectations to protect the country’s reputation as a safe trading partner.

Unless New Zealand meets new and increasing international security expectations our goods and vessels will face increased difficulty entering foreign ports and airports.

By maintaining our reputation as safe and secure New Zealand business is delivered a competitive edge in today’s troubled world.

There is a cost to increased security but this is an international reality shared by traders around the world.


2. Why is the Government passing the cost of security onto exporters and importers?

The Government is continuing to fund Customs from general taxation. It is asking businesses to contribute to new costs arising from new security requirements.

The Government’s investment in new technology and extra staff for Customs is specifically focused on securing trade. The biggest single cost to increasing security will be the operating costs of cargo X-rays, which are designed to provide security assurance over export cargo in timeframes and a manner which is least disruptive to transport logistics and costs.

Export and import businesses benefit from efficient and effective security screening of their goods. It is with this in mind that the Government is passing the cost of this additional security on to the businesses that directly benefit from it.

For the June 2003 year the total value of New Zealand’s trade is approximately $62.1 billion. Traders are being asked to contribute $20 million to security specifically designed for them. This amounts to less than 0.03 percent of the country’s total trade.


3. Why is the Government proposing to charge transport operators rather than exporters or those trans-shipping goods directly?

The Government is acutely aware that it wants at all times to minimise compliance and administration costs. There would be additional costs associated with charging exporters or those trans-shipping goods directly because billing and collection systems would need to be established. Such systems already exist with transport operators. However, because the Government is concerned to ensure the most efficient and cost effective collection mechanism is put in place it wants to consult with supply chain participants before final decisions are made.


4. Why not simply introduce an Export Transaction Fee, as there is an Import Transaction Fee?

The Import Transaction Fee already exists and there is a mechanism in place to collect that fee. This is not the case for exporters and those trans-shipping goods. The cost of creating a similar system for this group of traders would add substantial compliance costs. It is the Government’s objective to minimise costs and use existing collection mechanisms to do so.

5. How will the charging work?

The Government has at this stage developed a proposal to charge those exporting and transhipping goods by imposing a flat fee of between $450 and $650 for the processing of the outward cargo report that must be lodged for every departing ship or aircraft.

It will be up to the transport or shipping company as to how the charge is passed on.

The Government is yet to determine the exact fee because it will be linked to the ongoing costs of operating x-ray technology, and those won’t be known until the tender process for that technology is complete.

The tender process is due to be completed within the next three months.


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