Export/import controls on medical equipment for COVID-19

Export/import controls on medical equipment for COVID-19 During the COVID-19 pandemic, the focus of many has been on the manufacture of medical equipment required for the treatment of the virus, and its urgent movement through the international supply chain. That movement has required the management of new and existing export and import controls, as well as steps to facilitate the movement of those items by air freight. By Andrew Hudson of Rigby Cooke Lawyers.

Support from the Federal Government for Australian exporters has included the following initiatives: • Additional funding for the Export

Market Development Grant (EMDG) program. The EMDG is an

Australian program providing limited reimbursement for approved exporters for their export development activities. • Air cargo funding assistance through the International Freight Assistance

Mechanism to assist exporters of seafood and other primary produce with the return flights bringing personal protective equipment (PPE) and other medical equipment. This has provided funding for limited replacements for air cargo space lost with the cessation of international passenger aviation. • The establishment of the new Export

Capital Facility, administered by Export

Finance Australia. • The provision of grants to Export Hubs assisting small to medium enterprises (SMEs). Again, this is intended to provide financial assistance to SME export hubs developing local, regional and Indigenous brands. The hubs will work with Growth Centres in each sector to take advantage of export opportunities. • The adoption of new export controls on

PPE and related medical equipment.

Many countries have adopted export controls, but in the Australian context, the controls have been aimed at stopping opportunistic exporters by allowing exports by “legitimate” and existing exporters already involved in the manufacture and export of the items.

The regime has been different to the regime in other countries such as China, where the items have needed quality certification of items before export. There have been significant controls on the export of medical equipment required for the treatment of COVID-19 conditions. Rigby Cooke has been involved in the review of these controls within Australia and overseas. Among these actions is a new Chinese regime for the quality certification of equipment intended to be exported by the National Medical Products Association as a response to complaints on the quality of Chinese equipment. Other nations (including Australia) have introduced other controls on the export of such equipment made in their jurisdiction.

Another important development has been the agreement to defer customs duty and GST (or VAT) on the import of such equipment in certain countries. In related developments, several nations have further established temporary exemptions from customs duty otherwise payable on the imports of medical equipment. Those exemptions are only intended to operate on a temporary basis during the period of the pandemic and, importantly, do not create exemptions from any dumping and countervailing duty. In our region, New Zealand moved some time ago on the exemption from duty issue by creating specific exemptions from duty and confirming that certain equipment would otherwise be included under existing tariff concession items. There had been industry requests for similar action in Australia, and at a meeting of the National Committee on Trade Facilitation (NCTF) held on 29 April the industry was given notice that the Australian Border Force (ABF) was proposing to take action to create temporary exemptions from customs duty on a number of categories of medical equipment required in the treatment of COVID-19. As promised in the NCTF meeting, the ABF has subsequently provided details of the arrangements in ACN 2020/20 discussed in more detail below. It is in the best interest of all producers, importers and their licensed customs brokers to be aware of the details of these changes so that the exemptions can be implemented for future imports and for customs duty refunds to be secured from the effective date of 1 February 2020. The exemption is only temporary for so long as the relevant Biosecurity Determination regarding the pandemic is in place. It is being effected by way of a new Item 57 to Schedule 4 of the Customs Tariff Act (1995) to give effect to new By-law number 2019608. That By-law identifies the types of goods to be covered by the new arrangements. Importantly, it only provides for use if no other concessional arrangements apply, whether in Schedule 4 or a TCO. Moreover, the By–law does NOT apply to hand sanitiser, taking into account significant local production of that item. More details on the arrangements for claiming the By–law for imports and refunds are found in ACN 2020/20. The Notice includes some indicative classifications of goods affected but they are only indicative and those seeking to use them need to properly classify the goods, determine whether they meet the By-law and then use that By-law correctly. No doubt, many within the industry will be busy with these issues now and into the future.

Andrew Hudson is a Partner – Customs & Trade at Rigby Cooke Lawyers. www.rigbycooke.com.au