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%.

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.

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.

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".

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.

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."

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.

Mercantilism is not Free Trade

The Government decided to break a promise made under APEC to have free trade by 2010. Tariffs will remain frozen for another five years. This decision was made against advice from Treasury.

Why? In a word, Mercantilism. This is a discredited economic theory that holds that exports are good, imports bad. It is much beloved of bureaucrats who make a handsome living 'negotiating' with each other at plush venues all around the world. One such professional trade negotiator, Tim Groser, is now our Minister of Trade Negotiations.

The evidence that the current tariffs of 10% on clothing and shoes serve no useful purpose is compelling. There is not a single company that decided to manufacture in New Zealand because of those tariffs - they are just too low for that. All that they achieve is to make clothing and shoes, which are practically all imported, more expensive for consumers. And yes, they do keep a few bureaucrats employed, like Customs officials - and trade negotiators.

The Treasury had a look at the issue from a national interest perspective and recommended against the freeze. Customs, MAF, the Ministry of Economic Development and Foreign Affairs had a look at it from a self-interest perspective and recommended a freeze. Trade bureaucrat turned minister Tim Groser went with his former colleagues.

A survey on globalisation published in the Economist in 2003 (www.economist.com) said, "The multilateral approach to trade liberalisation [...] does have a horrible flaw. It espouses the idea that lowering trade barriers is a concession you make to your trading partners; a sacrifice for which you require compensation, or "reciprocity", in the jargon. This mercantilist view of trade - exports are good, imports are bad - is an economic fallacy. Politically - and this is to endorse a point made by sceptics - it serves to enthrone producer interests, neglecting all others. Trade agreements go forward when exporters on all sides tell their governments that they see something in it for them; the interests of importers (that is, workers and consumers at large) are implicitly regarded as politically insignificant."

Minister Groser decided to keep imposing tariffs on New Zealand consumers in the face of evidence that they serve no useful purpose, so he can use them as bargaining chips in future negotiations. As if other countries cared. China signed a free trade agreement with New Zealand for purely political reasons, not because it wants to push its market share of imported clothes beyond 100%.

This degree of economic myopia is excusable in bureaucrats, but very inexcusable in a Minister. After nine years of economic lunacy and empty promises (remember carbon neutrality in our time?), we expected much, much better from this government.

It was interesting to read the cabinet papers prepared by officials and published in www.med.govt.nz. Every passage that referred to the only possible reason for retaining tariffs - as bargaining chips in future trade negotiations - was carefully censored. Why the secrecy? The Economist had the answer in the same article: "Most governments insist that the grubby details of trade negotiations be kept secret; this is their idea, not the WTO's. At the end of any round of trade talks, a triumphant breakthrough backed by all sides can be announced. In the meantime, as you might expect, governments prefer to keep their negotiators' craven submission to corporate interests under wraps."

We need to eliminate our remaining tariffs, not because we want to do other countries any favours, but because that is in the national interest. This concept is not evident to economic simpletons, but we did not expect to have to spell it out to a Minister in a National government.

This is not an isolated instance. Prime Minister Key has said that an economy-destroying emissions trading scheme is necessary to prevent other countries from imposing trade barriers against us. The idea that we would face trade sanctions for failing to worship at the altar of Green religion is simple commercial naïveté. No country could impose sanctions, because no country (other than New Zealand) will actually inflict deliberate damage on its economy to appease the global warming Gods. They will just pretend to do so until the ideological assault from the Left abates in the face of science and the facts.

The Wall Street Journal got it in one when it said, "To the annals of global warming lunacy, add this gem from New Zealand: According to a parliamentary committee, Kiwis should accept lower standards of living to protect the national image abroad."

This is the sort of thing that can happen when bureaucrats become policy makers.

Recession and Imports

The current global recession started as an old-fashioned bank run in the US. Confidence in the liquidity of the finance sector was quickly restored by the injection of gargantuan sums of taxpayers' money, coupled with government guarantees.

The incipient run was stopped in its tracks and, other things being equal, the speculative housing and commodity bubbles that were built during the cheap credit boom would have burst, as all speculative bubbles invariably do.

Unfortunately, left-wing politicians in the US, Australia and the UK saw this as too good an opportunity to miss. Here was an excellent crisis proving that the intellectual bankruptcy of their collectivist worldview was not buried in the rubble of the Berlin Wall in 1989, after all. No, we cannot just allow the markets to do what they do and allow the speculative bubbles to burst. Instead, we will regulate, regulate and regulate even more and then we will borrow a few trillion dollars from our children and grandchildren to 'stimulate' the economy. Those who advocate strangulation by red tape, quickly followed by stimulation with other people's money, do so with a straight face.

In New Zealand, we are fortunate in that the politicians currently in power appear to be marginally saner. Besides, we just do not have trillions to waste. All we can do is to hunker down and wait until it all blows over. There was a glimmer of hope when the Swine Flu briefly replaced the Global Financial Crisis as the panic du jour, but that scare fizzled out. Soon, we may have to go back to global warming alarmism, unless some other apocalyptic certainty takes its place.

Importers are among the first to feel the effects of recessions. This one, however, is a little different from those that we have experienced in the last two or three decades. If you are importing goods that rely on discretionary spending, you are probably taking a big hit right now, but if you import everyday items that people need, you would hardly have felt a ripple.

Because the current recession is largely driven by media sensationalism aggravated by political opportunism, people react in different ways. They defer purchases that are easy to defer, for example instead of changing their cars at the end of three years, they keep them running for another year or two. That is why the car business in New Zealand is in meltdown, along with its support services, like shipping and ports. On the other hand, The Warehouse discount retail chain has just reported an increase of 1% on sales (Red Sheds, same store sales) for the most recent quarter, compared to last year.

Importers of everyday items, like non-luxury clothing, footwear and food are reporting unchanged sales or small drops at the worst. If your washing machine breaks down, you will probably buy a replacement, but that big plasma screen that you have been thinking about will probably have to wait a while longer, especially as you can no longer get a cheap loan on the rising value of your house.

Importers are reacting to the current climate with caution. An increasing number of them are moving their own warehousing and distribution functions to third-party logistics operators, who can usually provide a better level of service at a fraction of the cost, if done properly. They are also attempting to reduce their level of debt, to protect themselves against the outrageous behaviour of our bankers, who have simply failed to pass on interest rate reductions to their business clients while enjoying a government guarantee on their deposits.

Trans-Tasman Direct Flights?

The Prime Ministers of New Zealand and Australia announced an intention to turn trans-Tasman flights into domestic flights. This idea has been on the drawing board since 1992. We'll tell you why there has been no progress.

About five years ago, we published an item of Import News that read:

"My friend Pam is still fuming. On arrival at Auckland airport, she was greeted by a $200 fine, because her shoes had some dirt – from one of Melbourne's better golf courses. You see, Pam's golf shoes are a threat to our 'biosecurity'. She is not alone. Anyone who forgets to declare a kiwi fruit taken from the Koru lounge in Sydney will face the same penalty. Never mind that the fruit was most probably grown right here in New Zealand."
http://www.dsl.co.nz/Institute/Article.asp?Ref=160

The traces of Melbourne soil in Pam's golf shoes are not a 'biosecurity' risk. The bureaucrats who fined her are not protecting anything, other than their own jobs.

The Prime Ministers are right. The only way to progress the domestic trans-Tasman initiative is to take it away from MAF. We have put up with their self-interested nonsense for far too long. Customs in both countries should accept an export declaration in one country as a provisional clearance into the other. It is perfectly possible to run a country without passenger departure cards. And you can't overcome 150 passengers and hijack a plane with nail scissors or tubes of toothpaste.