How does a country like Australia, with already very high levels of trade facilitation convince importers to voluntarily commit to higher levels of trade compliance in return for what most see as further minor trade facilitation improvement?
The answer might be that you don't try to sell an importer something they already have, but rather you offer the ability to protect the status quo in a challenging and uncertain international trade landscape.
For decades many countries have been breaking down barriers to trade. Globally, duty rates have generally fallen and goods are cleared through the border more quickly than ever. While the failed Doha roundof negotiations suggested that the WTO had already achieved its most significant trade outcomes, it was generally accepted that trade conditions would not worsen as a result. Instead of global outcomes, we have seen incremental improvements via free trade agreements and unilateral steps taken by individual countries.
But now the architects of modern global supply chains face the very real prospect that life could get much harder. Trump might not become President, but his thinking that free trade is 'stupid trade' has resonated with much of the US. The Brexit vote shows the political currency of rebuilding walls that have been torn down for so long that many had forgotten they once existed. The WTO and the OECD recently confirmed that the G20 countries have imposed more protectionist measures since late 2015 than in any previous period since the global credit crisis.
Throw in a Russian Government that is acting without care of consequence from the West alongside the global reaction to cheap Chinese steel, and the seeds for a global trade war seem to have been planted. This creates no certainty that trade in the future will be harder than it is now, or that Australia will engage in similar behaviour to the most protectionist countries. However, it does create uncertainty and risk.
In this environment, the very real benefit of the Trusted Trader Programme might be that it offers traders the best chance to secure their current trade environment. New protectionist measures might be first applied to those traders outside of the Trusted Trader Programme. Priority clearance services, currently an underwhelming benefit of the Trusted Trader Programme (given most goods are already cleared pre-arrival), might become highly sought after.
Supply chain managers need to ask themselves, 'What does my world look like if countries begin to engage in protectionist policies, with each trying to outdo the other?' We cannot know the global trade future, but you can use the Trusted Trader Programme as a way to limit the risks of a significant change. As an insurance premium it is great value. Even if the worst does not eventuate, the cost of participation in the program can still be justified by known benefits such as duty deferral and streamlined reporting.
The Trusted Trader Programme is your best way of maintaining the currently enjoyed trading conditions in a more isolated trade world. Importers can expect the accreditation queues to become more lengthy as trade conditions deteriorate and the benefits become more sought after.
To discuss the process and the pros and cons of becoming an accredited Trusted Trader please contact a member of our Customs and Global Trade team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
