Dealing With Australia’s Digital Trade Dilemma – Analysis

By Bryan Clark

Trade is responsible for 45 per cent of Australia’s GDP and is directly responsible for one in five Australian jobs. The government’s Digital Trade Strategy envisions Australia becoming a top 10 digital economy by 2030, in part by better grasping trade opportunities and reducing red tape.

Australia is well-positioned to lead digital development, leading negotiations at the World Trade Organization and participating in regional and bilateral agreements with digital chapters. Australia has also adopted various, albeit limited, digital trade and blockchain exchanges with other countries. These efforts are a good start but need matching domestic reform efforts.

As Australian Border Force Commissioner Michael Outram outlined, Australia’s ‘trading across borders’ ranking by the World Bank declined over 80 places at the same time that it leads the world in negotiating trade liberalisation and digitisation. This decline exacerbates Australia’s slow recovery from the COVID-19 pandemic and associated global economic downturn. Increased time and costs related to border clearance processes reduce global competitiveness, increase inflation and diminish productivity.

It has been over 20 years since the 2001 International Trade Modernisation Act introduced Australia’s single trade window, the Integrated Cargo System for Customs, and other reforms. Notwithstanding a chaotic implementation, the system placed Australia as a world leader in trade modernisation. But the system is aging and is hardly world leading any longer. Australian government agencies have received millions of dollars to undertake reviews and studies, parliamentary inquiries have been held and industry has participated in numerous consultations, only to see other nations advance while Australia talks about what to do and visions turn to mirages.

Asia-Pacific Economic Cooperation (APEC) envisions developing single window systems that facilitate legitimate trade and enhance supply chain security in two stages. Stage 1 is within APEC economies and stage 2 establishes links that enable seamless data sharing between single window systems through the identification and use of recognised international instruments and standards.

In 2008, Australia chaired the APEC Single Window Working Group assisting the APEC Single Window pilot projectto deliver against the six recommendations of the 2007 Single Window Strategic Plan workshop and APEC Sub-committee on Customs Procedures. Later, Australia was a co-sponsor of the Trade Facilitation Agreement within the World Trade Organization which entered into force in 2017. Australians have also been deeply involved in the supporting work by other bodies such as the World Customs Organization and the United Nations on standards, data models and protocols to assist national implementation.

In 2013, then chief executive officer of the Australian Customs and Border Protection Service, Michael Pezzulo, launched the 5 year blueprint for reform to address the same challenges facing the Australian Border Force now. Pezzulo created a taskforce for reform, established a trusted trader program, worked on a ‘digital by default’ approach and alignment with big data and e-tax. Yet Australia’s ranking still declined.

Singapore first created its trade single window in 1989 but has been through a number of generations and is now evolving into the National Trade Platform. Similarly, China has been adopting global standards across its ‘digital silk road’. The United Kingdom recently adopted the UN Model Law of Electronically Transferrable Records, which Australia also supports but has yet to push forward domestically. The European Union has legislated a timeframe to adopt a trade single window and released details on its proposed customs reform.

Australia has fallen behind in trade modernisation.

In 2021, the Australian government created the Simplified Trade System Taskforce to consider whole-of-government reforms to create a simpler, more effective and more sustainable cross-border trade environment for Australia. Its recent summit and consultation papers indicate that while the issues outlined by others previously remain important, realising the leadership outcomes that Australia has negotiated globally remain elusive domestically.

An ongoing agenda of the Digital Transformation Agency has been Australia becoming a top-3 digital government by 2025 and a leading digital economy by 2030. But efforts in domestic trade modernisation need to match ambitions for the digital economy and Australia’s history of global leadership. Other nations share this ambition, meaning Australia cannot wait for more plans and visions — it’s time for dramatic culture change across the 30 agencies that manage the more than 200 pieces of legislation that control international trade in Australia.

The recent passage of the Customs Legislation Amendment (Controlled Trials and Other Measures) Bill opens the door for Australia to emulate efforts like the United Kingdom’s Ecosystem of Trust approach potentially offering massive savings for both government and industry from a data and digital approach to international trade.

It is time to finally undertake the domestic reforms needed to return to the leaders’ podium in digital trade systems as a driver of productivity and competitiveness to assist Australia to achieve its next 30 years of growth.

About the author: Bryan Clark is Director of The Australian Centre for International Trade and Investment (ACITI)

Source: This article was published by East Asia Forum