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5368.0 - International Trade in Goods and Services, Australia, Aug 2004  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 29/09/2004   
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Feature Article - Implementation of New Customs Systems

Introduction

The Australian Customs Service (Customs) will cut over to its new Integrated Cargo System (ICS) for the lodgement of records relating to export transactions on 6 October 2004. This article outlines the changes and summarises the expected implications for ABS's merchandise export statistics, which are compiled using Customs information.


Customs Changes

Background of CMR project

Implementation of the ICS is one of the principal outcomes of the Customs Cargo Management Re-engineering (CMR) project. During the 1990s, Customs initiated a program of consultation with industry and government agencies, which concluded that a comprehensive re-engineering of Customs cargo management processes was necessary. The proposed business processes were designed to facilitate the flow of legitimate trade and allow industry maximum flexibility in reporting to Customs. Enabling legislation was passed in June 2001.


The ABS has been actively involved in the CMR project and related developments, because of their potential impact on international merchandise trade statistics. The objectives of the ABS have been to ensure that key trade statistical requirements continue to be met from the new systems, and that, wherever possible, the quality of data reported is maintained or improved.


More information on CMR is available from the Customs web site <www.customs.gov.au>.


Client registration

All intending users of the ICS are required to register with Customs in advance. If a business client has an Australian Business Number (ABN), this will be used as their unique identifier by Customs. Where a business or other client does not have an ABN, a unique Customs Client Identifier (CCID) will be created for their use.


Accredited clients

The Accredited Client Program (ACP) that is being introduced as an integral part of CMR provides much of the flexibility sought under this initiative. Under the ACP, eligible importers and exporters will report most of their trade to Customs on a periodic, rather than a transactional, basis. Most of the information required will be provided on a monthly periodic declaration, submitted by the seventh calendar day after the reference period. Only a small number of high volume traders are expected to be accredited initially. Under the current EXIT system, exporters are required to report on a shipment by shipment basis in advance.


To become an accredited client, a business will need to show a history of providing accurate and timely information to Customs and be able to demonstrate that their systems will ensure continued good compliance. The benefits for a business include simplified reporting requirements, less regular interaction with Customs systems, reduced government compliance auditing and reduced cost recovery charges.


Exports cutover

From 6 October 2004, Australia’s exporters will be required to create export records in ICS and they will no longer be able to use the current EXIT system. ICS will be available from 22 September for the creation of export records for goods departing Australia on or after 6 October. While amendments to records for goods departing before 6 October will still be required, they cannot be lodged electronically by the exporter after 6 October.


The reporting arrangements for the transitional period are summarised in the following diagram.

Diagram: Exports cutover



ABS preparation for Customs changes

Processes

The data elements the ABS receives from the ICS will, in many cases, be structurally different to those received from EXIT. In addition, the way some data elements are captured will change. For example, some elements will change from text descriptions to codes, some from reported to derived items, or reported by a different party (e.g. the carrier rather than the exporter).


The ABS has preserved the format of the data elements in the data disseminated to clients. Processing systems will concord the data elements back to their original structure, and the ABS will continue to provide statistical outputs at the same level of detail, and in the same format, as before the introduction of the ICS.


One particular issue that will arise is the treatment of export entries remaining in EXIT when update access is removed. Export entries relating to goods intended to be exported before 6 October, but not confirmed as having been exported by appearing on a manifest, will initially be treated as having been exported. The ABS will contact exporters with such remaining entries, for the larger value transactions, to ensure that there is no duplicate entry subsequently lodged in the ICS.


Customs will continue to update large value entries in EXIT, based on paper advices from exporters, for two months after EXIT is closed for external use. These updates will be sent to the ABS and the statistics revised accordingly. However, some confirming exporters will not have final value and quantity details by this time and the statistics will continue to reflect the entries at the time Customs stop updating EXIT.


Impacts on International Merchandise Trade Statistics

The ABS will closely monitor the changes and their impacts during the cutover period and will advise users of any significant issues affecting their interpretation or use of statistics compiled during this period. Implementation of the ICS and other CMR changes represents the most significant set of changes to Customs systems and procedures in the last twenty years. They require a large and diverse stakeholder population to make significant changes to their own systems and procedures. As a result, some misreporting or underreporting can be expected. There will be limited options available to the ABS to rectify these problems, particularly in the initial months to which they relate. Attention will mostly be focussed on ensuring that large value transactions are correct.


Broadly, there are two types of impact that might be observed. Firstly, there may be some changes in exporter behaviour around the cutover date e.g. the export of goods that would normally be shipped at that time are brought forward or delayed, to avoid any difficulties that might arise with the new system and procedures. As this is a ‘real world’ change in activity, it would be reflected in the published trade statistics on both merchandise trade and balance of payments bases.


Secondly, exporters may experience difficulty lodging records in the new system, resulting in delayed shipment of goods and / or lower quality data during the transition period. As export statistics are on a date of shipment basis, and Customs has advised that goods will not be able to be shipped without the required documentation, it appears unlikely, for exports, that there will be any major disparity between the export records lodged and the flow of goods actually exported. To the extent that the export of any goods is delayed, this will be appropriately reflected in the published statistics as a 'real world' event. Any short term deterioration in data quality for exports, during the cutover period, needs to be considered in the context of improvements in data quality expected by Customs in the longer term with the introduction of the new systems and procedures.


The later lodgement of exports information by accredited clients reduces the ABS's opportunity to quality assure these data prior to the initial release of exports statistics. However, accredited clients are required to provide accurate information so the risk of major errors should be low.


The ABS does not expect to make any adjustments to its merchandise trade statistics to overcome any problems that may arise with the exports cutover. However, the ABS will make adjustments to exports data on a balance of payments basis, if there is evidence that the records received from Customs do not match the actual export of goods. There may also be a larger number of revisions to exports statistics than normal for a few months after the cutover.


Conclusion

The ABS is delaying the release of the October 2004 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0) by eight days to 10 December 2004 to allow sufficient time to resolve any data transfer or quality problems that may arise with the exports cutover to the new ICS. While there may be some statistical impacts from changed exporter behaviour around the cutover date, and some data quality issues to be addressed, adequate preparation has been made for the cutover and the ABS's merchandise trade statistics should not be adversely affected.

More information on ABS preparations for the cutover to ICS can be obtained from Mr Stephen Wallace on telephone (02) 6252 6106 or by email <stephen.wallace@abs.gov.au>.



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