09 December 2010

China Free Trade Mess

New Zealand signed a trade agreement with China. From 1 January 2011, some duty rates will be marginally lower for goods of Chinese origin, when imported direct from China. The implementation, sadly, is a mess.

The reductions are not as simple as "10% becomes 8.1%". Officials decided instead to create separate tariffs for different items. For example, men's cotton shirts not exceeding 81 cm chest measurement will pay 8.1%, but other sizes will pay 10%, unless they are not made of cotton or man-made fibres, in which case they will pay 8.1%.

Confused? You should be. This appears to us to be a make-work scheme for Customs officials. It is not clear what will happen to goods from Southern China coming out of Hong Kong. There is even talk of going back to the archaic system of obtaining hard-copy certificates of origin for Hong Kong goods, a bureaucratic nightmare that we discarded years ago.

This means that we will need to know, for each garment imported, the following four items:

1. Garment type: shirts, blouses, etc. (but not general descriptions, such as "tops")
2. Gender: men's / women's / unisex
3. Predominant fibre: cotton / wool / man-made fibres / other
4. Method of construction: woven / knitted / other

Importers wanting to find out what duty rate will apply to their products, will need to go and inquire individually for each tariff item, using this website: http://www.chinafta.govt.nz/2-For-businesses/2-Tools-and-resources/3-Tariff-finder/index.php.

To try to make it a little easier for apparel importers, we have put together a spreadsheet, which lists the duty reduction calendar for all tariff items in Chapters 61 and 62 of the tariff. Please contact our Customs brokers if you require assistance with finding what tariffs will apply to your goods from 1 January.

24 October 2010

Forwarding Rip-offs

Six international forwarders have agreed to plead guilty in the US of conspiring to fix prices for international air freight shipments. Collectively, they have agreed to pay fines of over USD 50 million.

We reported earlier that the New Zealand Commerce Commission filed proceedings in the High Court in Auckland against a number of prominent local forwarders, alleging price collusion. The forwarders involved are Schenkers, BAX Group, Kuehne & Nagel, Panalpina, EGL and Geologistics. These are the same companies that have agreed to plead guilty in the US.

The Importers Institute continues to receive evidence from importers ripped off by the forwarders' China scam. This is how it works: an importer buys goods from China at a price that includes freight; the freight costs are set by shipping companies and are much the same for all forwarders. The actual freight cost is, say, $5,000 and the exporter adds that to his price. He then finds a local forwarder that charges him $4,000.

When the goods arrive, the importer gets a bill from the local agent of the Chinese forwarder inflated by $2,000 with fees like 'China surcharge', 'security fees' and wildly inflated 'port service charges'. The local agent remits $1,500 to the forwarder in China, who thus recovers his 'loss' of $1,000 on the lower quote that got him the job. The exporter pockets $1,000 and the scam forwarders get $500 each to line their pockets.

The importer loses by paying $2,000 more than the going rate. The other big losers are the forwarders who missed out by quoting an honest freight rate. You would expect that the local forwarders association, an outfit called CBAFF, would be keen to denounce this scam, since it affects its honest members and brings the name of their trade into serious disrepute. But, no: their stock reply is that they never comment on what their members charge.

We asked importers to send us copies of invoices with dubious destination charges. In addition to the earlier example from POTA Global Management (a division of P&O Australia) we have now received copies of invoices from Abba Logistics that include imaginary charges such as 'port security fees', 'carrier security fee', 'handling fee' and others, on top of inflated 'port service charges'. Do keep those invoice copies coming, and we will expose the forwarders involved.

21 September 2010

Forwarding and Honesty

The Importers Institute receives a regular stream of complaints about freight forwarders. Sadly, they are often justified. Some forwarders' charges are outrageous.

Take the case of POTA Global Management NZ Ltd, a division of P&O Trans Australia. We have earlier reported a scam operated by POTA's agents in China, where freight ends up being collected at both ends. When threatened with Court action, POTA promptly refunded an importer for a fictitious "China Surcharge" but continues to charge it to other importers.

That is not the end of it. A recent invoice from POTA included a "bio-security fee" of $18, a "compliance fee" of $36 and a "port security fee" of $36. These fees all have something in common: they are a figment of POTA's imagination. They don’t exist. They are made up. They are devices to extract money from importers under false pretences.

Those fees apply in addition to delivery order and administration fees of $50 and "port service charges" of $70 per m3.

Another forwarder, Agility, recently agreed to pay a fine of US$600 million to the U.S. government for overcharging the military on supply contracts in the Middle East. The Arab-owned company (with a subsidiary in New Zealand) was black-listed from future US government contracts.

The Commerce Commission has filed proceedings in the High Court in Auckland against a number of prominent local forwarders, alleging price collusion. The forwarders involved are Schenkers, BAX Group, Kuehne & Nagel, Panalpina, EGL and Geologistics. The Commission said, "Agreements between competitors to fix, control or maintain prices distort the normal forces of competition and keep prices artificially high".

Our advice to importers is that they should always seek a full quote from forwarders, including destination charges. If you have been ripped off by a forwarder, we suggest that you take the matter to the Disputes Tribunal and forward copies of the invoices to the Importers Institute (in confidence). We will continue to expose dubious practises to the disinfectant of sunlight.

21 June 2010

Customs and MAF Increase Fees

From 1 July, the New Zealand Customs Service will start collecting a new 'Biosecurity Levy' of $12.50 per shipment on behalf of MAF.

This will be added to their own CIT - Customs Import Transaction Fee. The Service said, "these import transaction fees are applied to cover the time and costs associated with processing imports and are used to fund border risk management activities." They used to be funded from general taxation.

The new fees will also apply to some private imports and shipments of personal effects which were previously exempted.

The Customs Service advises that the GST increase from 12.5% to 15% on 1 October will apply based on the actual date of arrival of the goods -- not the date when they are cleared through Customs. If goods are cleared in September, but arrive in October, the rate will be 15%. Conversely, if goods arrive in September but are cleared in October, the rate will be 12.5%.

28 May 2010

Importers Call for World-wide Boycott of Maersk

Maersk, one of the world's largest shipping companies, announced that it will no longer carry frozen orange roughy fish on its ships.

The shipping line's New Zealand manager, Julian Bevis, said the decision had been made in line with the company's sustainability policy.

Owen Symmans, chief executive of the Seafood Industry Council, said Maersk had turned its back on New Zealand's fifth-largest exporter.

The New Zealand office of Greenpeace described the decision as "earth shattering" and demanded an end to the trade in bluefin tuna.

Greenpeace New Zealand is campaigning against what it describes as "Fonterra's climate crimes". Fonterra is New Zealand's largest exporter of milk products and, at this stage, it is not clear if it too will be affected by Maersk's sustainability policy.

Orange roughy exports were worth $51 million last year. Gavin Lockwood, deputy chief executive of the Fisheries Ministry, said New Zealand fish stocks were sustainably managed.

Daniel Silva, secretary of the New Zealand Importers Institute, called today for a world-wide boycott of Maersk. "Maersk are not right to destroy a legitimate trade just to make their Danish owners feel morally superior. What comes next, a ban on carrying Palmolive soap to save the orang-utan, or an exit from New Zealand to punish our dairy farmers for their 'climate crimes'?", he asked.

Silva said that importers and exporters need to make it very clear to companies like Maersk that their livelihoods are not to be traded for cheap publicity stunts like this. He urged all Importers Institute members and their suppliers and clients throughout the world to boycott Maersk, until the company reverses this decision and apologises.

Update: Maersk have reversed their decision, but are yet to aplogise.

03 May 2010

The China Surcharge

One of our members imported a couple of shipments from Xingang in China. The freight was prepaid by the supplier in China, but the New Zealand forwarder billed the importer $1,400 for a "China surcharge" and $1,800 for "overseas shipping".

The importer queried these charges, but the local forwarder (a P&O subsidiary) dismissed the inquiry saying that the charges were their standard tariff prices. The importer went back and asked just what exactly is a "China surcharge" and why was he being charged for "overseas shipping" when the freight had already been paid in China.

The forwarder replied by saying that they were just billing what their Chinese principal had asked them to collect. Delivery was refused until the bill was paid in full. The importer paid the charges and then referred the matter to the Disputes Tribunal. As soon as a hearing date was set, the forwarder decided to refund the disputed charges, in full.

Creative invoicing by some forwarders is nothing new and that is why we always advise our members to nominate their own forwarders - regardless of where the freight is paid. Importers should get written quotes for all charges, including "Port Service Charges", these days a significant revenue item for forwarders that has little to do with actual port costs.

28 April 2010

MAF Abandons 12-hour Rule

MAF decided not to enforce a rule designed to punish importers who fail to make a declaration twelve hours before the ship arrives in port.

The Importers Institute criticised the planned rule as case of bureaucratic over-reach - and a money grab. Other trade associations were also opposed. MAF has now decided to leave the 12 hour rule "as a voluntary requirement in the short term".

26 February 2010

MAF's Latest Trade-Impeding Money Grab

MAF Biosecurity has issued a new 'law' (under delegated authority) to start detaining thousands of low risk containers, physically inspect all six sides of each box, while charging importers $100 per hour plus fees.

Under the current system, importers send their declarations to Customs, who in turn pass a copy on to MAF. If the quarantine inspectors decide that they need more information about a container, based on the declared contents, exporter, importer, origin, etc., they place a 'hold' on the container and the importer needs to apply for a permit. If the container is deemed to pose a biosecurity risk, an inspection may follow. The vast majority of containers pose no risk and are released immediately.

The new system, called "the 12 hour rule", will work in the same way, except that if the importer fails to lodge his Customs clearance twelve hours before the ship's arrival in port, then the containers will be placed on hold, even if they are not flagged as being of interest. To get possession of their goods, importers will have to pay for an inspection at the rate of $100 per hour, plus fees. The obvious purpose of this is punitive, since the containers at issue are not considered to pose a biosecurity risk.

The reality is that MAF has nowhere near the capacity to inspect thousands of low risk containers. That is why it is proposing to give itself another month to "work with industry [...] to help them comply". We predict that several things will happen: [1] there will be an increase in risk, with many officers being diverted from biosecurity work to punitive inspections of no-risk containers; [2] containers will clog up hub ports, such as Tauranga and Napier; [3] there will be an outcry from importers who will have to pay hefty fees to MAF coffers and incur demurrage and container detention costs; and [4] the whole thing will collapse under its own weight and become yet another example of an over-reach blunder by MAF.

Over the last ten years, the number of people employed by MAF (along with the salaries paid to their managers) has ballooned. Are you feeling bio-secure yet? Elected politicians are the only effective check on the onslaught of bureaucrats in empire-building mode. The last lot (Labour) were ideologically inimical to business and allowed the bureaucracy to expand by one-third. We had higher hopes for this government.

31 January 2010

Climate Change and Eugenics

Eugenics is the study and practice of selective breeding applied to humans, with the aim of improving the species (Wikipedia). At its pre-war height, the movement often pursued pseudoscientific notions of racial supremacy and purity. It was practiced around the world and was promoted by governments, and influential individuals and institutions.

The second largest known eugenics program was created by social democrats in Sweden and continued until 1975. The pseudo-science was considered as 'settled' by progressive bien pensants in Europe and the US in the early decades of the 20th century. Then, the second World War came along. Several million dead bodies somewhat discredited the 'science'. Suddenly, no one believed in it any longer but, even more remarkably, no one had ever believed in it, apparently.

Which is pretty much where we are now with Global Warming. I predict that, not before long, no one will believe in this proto fascist construct - and you will be hard-pressed to find anyone willing to admit that they ever did. But, like eugenics, not before untold damage has been inflicted on millions. The stupidity of converting crops to biofuels has consequences. Eco-entrepreneurs make millions, millions die.

The wheels are falling off the climate change bandwagon. The corruption of science evidenced by Climategate is simply too blatant to ignore. The IPCC turned out to be as corrupt as you would expect a United Nations body to be. Politicians everywhere who went along with this charade are finding out all about the Turnbull effect.

You read it here first. About three years ago, we commented on these matters in an address given to a group then celebrating the 50th anniversary of the Treaty of Rome. Some extracts from that address:

"The Importers Institute is pleased to be associated with the celebration of the 50th anniversary of the Treaty of Rome. That is because we believe that international trade is good. It is certainly preferable to war. That, we must not forget, was the main reason why the founding fathers of the European project sat down in Rome 50 years ago and decided to free up trade among European countries.

"Let us celebrate the success of that project, but let us not forget that it is under constant attack. Many Europeans seem to have forgotten the lessons of history and are again flirting with a form of fascism. This time, it is eco-fascism and is dressed up as a wish to "save the planet".

"These people are opposed to free trade. They fret about "food miles" (but, strangely, not about clothing miles or pharmaceuticals miles) and say that the only way we can save the planet is by de-industrialising, reducing food production and restraining the mobility of people.

"In fairness, this disease of the mind is not exclusive to Europe. You will be familiar with Al Gore's alarmist documentary, the one that seems to say that we must all panic now, before it is too late. Mr Gore relied heavily on a graph showing a very close correlation between past temperature changes and concentrations of CO2 in the atmosphere. What he conveniently omitted to tell us was that the levels of CO2 changed 800 years after the temperature went up. There is a correlation all right, it is just that it goes the other way. How inconvenient.

"All that happened about 10,000 years ago, long before humans invented SUVs, hospitals or air-conditioning. The medieval warm period was another inconvenient truth. So inconvenient, in fact, that the IPCC relied heavily on a graph showing that it never existed. The now infamous hockey stick graph showed a flat temperature line stretching back one thousand years, rising steeply from the beginning of the industrial revolution. Unfortunately for the alarmists, the graph was proven to be not just scientifically wrong - it was an outright fraud.

"The more that people begin to realise the actual impact on their daily lives of the eco-fascist agenda, the more they are likely to question the pseudo-scientific hype used to justify it. The eco-fascists reply against this inevitable backlash seems to be to shout that the "science is settled" with increasing shrillness. Settled science: now there's an oxymoron if ever there was one.

"But, is such talk really inconsequential? People bent on 'saving the planet', with their talk of food miles and taxes on air travel, have the potential to destroy the very basis of our economy. Instead of countering their fallacious arguments with science, we seem to be saying that yes, you are right, but please go easy on us because we are quite green ourselves. What a strategy!

We want to keep access to Northern hemisphere markets and would like their tourists to continue to fly twenty four hours to spend their money here, while agreeing that air travel is bad for the environment. Then, we spend a few million dollars on a ‘buy local’ campaign. If madness is defined as the ability to simultaneously hold contradictory beliefs, the inescapable conclusion is that we are being governed by the insane.

"Let us celebrate the real success of the Treaty of Rome and that was the opening of borders and the increase in prosperity that only trade can deliver. Jean Monnet and Robert Schuman did not set out to create an isolationist Europe, inimical to trade and wedded to romantic notions of economic self-sufficiency. We should celebrate their legacy by refuting those notions."

01 January 2010

Green Confetti

The Greens and the last Labour government decided to fund a "Buy Kiwi Campaign". They spent $10.2 million from our taxes, most of it ($8.4m) with an advertising agency.

The Ministry of Economic Development has now commissioned a review from consultants MartinJenkins and Associates. The report is available from the Ministry's website.

The report concluded "there was no convincing evidence of overall impact on consumer spending", "there was a lack of conventional policy analysis" and "there was no assessment of the likely impact or of the costs and benefits". In other words, Green and Labour politicians spent our money like confetti, spraying it against the Wellington wind - and achieved nothing of any use.

We could have told them all of that before they spent a single cent of our money. The only beneficiaries were some residents of Grey Lynn, who lined their pockets with the advertising extravaganza.

Fort another example of Greens wasting your money as if there was no tomorrow, have a look at this page from the Customs website. People who were trained as a Customs officers spent an enormous amount of time calculating that Customs spent 110.7016779 tonnes of CO2 equivalent on diesel for their boats in 2006.

No doubt, this was to be measured against emissions in later years, on the road to a "carbon neutral" future. Fortunately, this whole nonsense seems to have been dropped, as there are no subsequent reports. Customs officers will not have to paddle kayaks when boarding ships.