Freight & Trade Alliance (FTA) incorporated extensive member feedback in a formal submission to the Department of Climate Change, Energy, the Environment and Water (DCCEW) in response to Australia's Carbon Leakage Review
Understanding Carbon Leakage and its Implications
Carbon leakage occurs when carbon-intensive industries shift operations to countries with weaker carbon regulations, undermining global emission reduction efforts and disadvantaging local industries.
Australia's Safeguard Mechanism addresses domestic emissions but risks leakage without measures like a Carbon Border Adjustment Mechanism (CBAM).
A CBAM would align carbon costs for imports and domestic goods, promoting fair competition and supporting net-zero goals.
Below is a summary of the FTA/APSA submission:
The Role of Licensed Customs Brokers
Licensed customs brokers are vital to integrating a Carbon Border Adjustment Mechanism (CBAM) into existing trade systems. Their expertise in classification, valuation, and compliance ensures effective management of border regulations.
Exploring Post-Border Alternatives
Post-border CBAM mechanisms, like the Australian Industrial Chemicals Introduction Scheme(AICIS), could reduce border processing burdens. Importers/exporters would handle carbon adjustments retrospectively through registration, maintaining trade flow while aligning with industry practices.
Key Recommendations
- Early Consultation: Collaborate with FTA and customs brokers before design phases.
- Industry-Government Collaboration: Co-design CBAM frameworks with formal engagement.
- Capacity Building: Train customs brokers for effective CBAM compliance.
- Balanced Approach: Support emissions reduction while maintaining trade competitiveness.
- Post-Border Models: Evaluate alternatives to streamline border operations.
Given the complexity and scope of a CBAM, customs brokers will be tasked with:.
· Identifying Goods Subject to CBAM: Determining which imports fall under CBAM coverage based on carbon intensity metrics and product classifications.
· Compliance and Reporting: Ensuring accurate declarations and adherence to CBAM-related documentation requirements.
· Advisory Support: Guiding importers and exporters on compliance strategies and cost implications.
Call for Early and Ongoing Engagement
FTA strongly advocates for early and comprehensive engagement with industry stakeholders, particularly licensed customs brokers, to ensure the practical viability of any CBAM design. As the front-line professionals handling border compliance, customs brokers possess the insights and operational expertise necessary to inform the design and implementation of a CBAM.
Exploring Post-Border Alternatives
Post-border CBAM mechanisms, inspired by schemes like AICIS and product stewardship models, could shift carbon adjustments to importers/exporters through a registration system. This approach reduces border administration, integrates with industry practices, and preserves efficient customs operations.
Key Recommendations
- Early Consultation: Engage FTA and customs brokers before drafting to address challenges and align processes.
- Industry-Government Collaboration: Co-design CBAM frameworks with input from brokers and agencies.
- Capacity Building: Train brokers to manage CBAM compliance effectively.
- Balanced Approach: Align carbon goals with trade competitiveness.
- Post-Border Models: Assess alternatives to minimise border disruptions while facilitating trade.