Welcome to our September Newsletter! As we step into September, we reflect on the many important events and observances this month brings. From wishing a Happy Father's Day on September 1st to celebrating US Labour Day on September 2nd, we honour the traditions and holidays that connect us across the globe. We also recognise Vietnam’s Independence Day on September 2nd, Brazil’s Independence Day on September 7th, Mexico’s Independence Day on September 16th, and the Mid-Autumn Festival celebrated in China and Taiwan from September 15th to 17th. September is also a month of awareness and action. STEPtember challenges us to take 10,000 steps daily to support research and care for those affected by cerebral palsy. On World Suicide Prevention Day on September 10th, we are reminded of the importance of staying connected and reaching out to those around us—particularly as R U OK? Day on September 12th encourages us to have regular and meaningful conversations. By doing so, we can all play a part in building a supportive environment where people feel safe to share their struggles. In this edition, we cover a range of topics, from the significance of mental health awareness and managing psychosocial hazards in the workplace to the economic insights shaping the global landscape this month. We also delve into the latest developments in Australia’s trade relations with the UAE, and provide updates on key economic indicators and market trends. Join us as we explore these issues and more, keeping you informed and connected in today’s fast-paced world. As always, for more personalised solutions, please feel free to reach out to us at info@completeglobal.com.au

SEPTEMBER FREIGHT MARKET

As we move into September, the freight market is experiencing several dynamic shifts that will affect shipping rates and logistics planning for the months ahead.

Key Changes in Ocean Freight Rates

MSC has revised its General Rate Increase (GRI) for September 1st, doubling the rate from US$500 per TEU to US$1,000 per TEU for all cargo originating from China and Southeast Asia (SEA) to Australia and New Zealand. This significant adjustment reflects the continued efforts by carriers to maintain rate levels amid tight space conditions leading up to the Chinese National Holidays.

It’s important to note that GRIs announced by various carriers are expected to range between US$500 to US$1,000 per TEU from early September, and while capacity looks to be more stable compared to August, these figures could fluctuate due to the imminent holidays. The Mid-Autumn Festival (15th-17th September) and the Golden Week (1st-7th October) are fast approaching, and space is already becoming scarce, particularly with trucking services. Suppliers may close earlier than expected or return well after the holidays, so early planning is essential for those looking to ship cargo in this period.

Non-Operating Reefers as an Economic Option

For those looking to optimize costs, non-operating reefers remain an economic option, particularly for cargo that can accommodate slightly reduced volumes per 40-foot container. However, it is crucial to remember that these units are available only for ‘clean’ cargo. This may provide a viable alternative for shippers looking to balance cost and volume constraints in the lead-up to the holiday season.

Congestion and Capacity Concerns

The ongoing port congestion in Shanghai, exacerbated by the upcoming national holidays, may further impact rates and capacity. Carriers are expected to keep space tight to maintain current rates, and any delays could lead to a spike in demand for alternative routes. In light of these ocean freight delays, global airfreight demand remains high, with many shippers opting for air freight to mitigate the impact of ocean freight disruptions.

 

Market Stability and Labour Actions

In the broader market, Asia-to-Europe rates are beginning to stabilise, but several factors could still impact global shipping dynamics. Although Indian worker port strikes have been called off, uncertainty remains on the horizon with potential East Coast USA strike action. Unless a new agreement is reached in September, strike action at these ports could begin as early as October 1st. Meanwhile, the on-again-off-again Canadian rail strike appears to have been averted for now.

Planning Ahead for Key Australian Sales Dates

With the possibility of further rate increases and potential disruptions on the horizon, shippers should closely monitor their stock levels in preparation for the key Australian sales dates towards the end of the year. Planning ahead and securing space early will be crucial to navigating the complex freight environment in the coming months.

bmsb season 2024/2025

The 2024-2025 Brown Marmorated Stink Bug (BMSB) season is upon us, running from September 1st, 2024, to April 30th, 2025. The aim is to prevent these pests from entering Australia and causing significant agricultural damage. Importers must be aware that target high-risk goods imported during this period from high-risk countries, based on the “shipped on board” date, will be subject to BMSB seasonal measures. Knowing the categories of goods and the specific risk levels is crucial to avoid costly delays and unexpected charges.

The Department of Agriculture, Fisheries and Forestry has excellent resources for importers –  https://www.agriculture.gov.au/biosecurity-trade/import/before/brown-marmorated-stink-bugs

Understanding the Target Risk Goods for BMSB Season

Goods that fall under specific tariff classifications have been identified as target high-risk goods. These goods require mandatory treatment to mitigate BMSB risk before they can enter Australia. The following are categorized as target high-risk goods:

  • Tariff Classifications for Target High-Risk Goods:
    • 44 – Wood and articles of wood; wood charcoal
    • 45 – Cork and articles of cork
    • 57 – Carpets and other textile floor coverings
    • 68 – Articles of stone, plaster, cement, asbestos, mica, or similar materials
    • 69 – Ceramic products (including sub-chapters I and II)
    • 70 – Glass and glassware
    • 72 – Iron and steel (including sub-chapters I, II, III, IV)
    • 73 – Articles of iron or steel
    • 74 – Copper and articles thereof
    • 75 – Nickel and articles thereof
    • 76 – Aluminium and articles thereof
    • 78 – Lead and articles thereof
    • 79 – Zinc and articles thereof
    • 80 – Tin and articles thereof
    • 81 – Other base metals; cermets; articles thereof
    • 82 – Tools, implements, cutlery, spoons and forks of base metal; parts thereof of base metal
    • 83 – Miscellaneous articles of base metals
    • 84 – Nuclear reactors, boilers, machinery, and mechanical appliances; parts thereof
    • 85 – Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles
    • 86 – Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds
    • 87 – Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof
    • 88 – Aircraft, spacecraft, and parts thereof
    • 89 – Ships, boats, and floating structures

Goods that fall under these categories will require mandatory treatment to prevent BMSB contamination. It is essential for importers to comply with these requirements to avoid delays and extra charges.

Target Risk Goods and Onshore Intervention

Goods classified as target risk goods are not required to undergo mandatory treatment but are subject to increased onshore intervention through random inspections. The following tariff classifications fall into the target risk goods category:

  • Tariff Classifications for Target Risk Goods:
    • 27 – Mineral fuels, mineral oils, and products of their distillation; bituminous substances; mineral waxes
    • 28 – Inorganic chemicals; organic or inorganic compounds of precious metals, rare-earth metals, radioactive elements, or isotopes (including sub-chapters I, II, III, IV, and V)
    • 29 – Organic chemicals (including sub-chapters I, II, III, IV, V, VI, VII, VIII, IX, X, XII, and XIII)
    • 38 – Miscellaneous chemical products
    • 39 – Plastics and articles thereof (including sub-chapters I and II)
    • 40 – Rubber and articles thereof
    • 48 – Paper and paperboard; articles of paper pulp, of paper, or of paperboard
    • 49 – Printed books, newspapers, pictures, and other products of the printing industry; manuscripts, typescripts, and plans
    • 56 – Wadding, felt, and nonwovens; special yarns; twine, cordage, ropes, and cables and articles thereof

While these goods do not require mandatory treatment, they are subject to random inspections, especially if they originate from emerging risk countries like China and the United Kingdom.

Emerging Risk Countries and Inspection Guidelines

This year, China and the United Kingdom remain categorized as emerging risk countries. Goods from these locations will be subjected to random inspections:

  • China: Random inspections will apply to goods shipped between September 1 and December 31, 2024.
  • United Kingdom: Random inspections will apply to goods shipped between December 1, 2024, and April 30, 2025.

In addition, goods from chapters 39, 94, and 95 imported from emerging risk countries may also face random checks.

Avoiding Common Pitfalls and Ensuring Compliance

While experienced shippers of target risk goods may be familiar with the processes, there are still many lesser-known items that can cause delays. Commonly overlooked goods such as hand tools, spare parts, glassware, crockery, and some promotional items have resulted in additional charges and delays in the past. It’s also important to remember that goods shipped from non-risk countries may still be subject to inspections if they originate from a high-risk location.

Key Points to Remember:

  • Check Every Item: Always verify the materials and the country of origin for all goods being shipped.
  • Understand the Regulations: Be aware of the specific requirements for target high-risk and target risk goods to avoid unexpected inspections or treatments.
  • Monitor Shipping Periods: Ensure that your shipments comply with the designated periods to avoid random inspections.
  • Stay Updated: Regularly check for updates from the Department of Agriculture, Fisheries and Forestry to stay informed about any changes or additional countries added to the risk list.  https://www.agriculture.gov.au/biosecurity-trade/import/before/brown-marmorated-stink-bugs

SEPTEMBER economic data for the aud

The AUD/USD exchange rate experienced a significant rise of 30% to 0.6810 by the end of August. This appreciation was supported by robust commodity prices and Australian inflation data, which appeared insufficient to trigger any further rate cuts by the Reserve Bank of Australia (RBA) when they meet later this month. Current data suggests that the RBA is unlikely to increase rates either, reflecting a period of relative stability in monetary policy amid global economic uncertainties.  As always, please consult your accountant or bank for economic data most relevant to your organisation.

Key Economic Events in September

Several key economic events in September are expected to influence market sentiment and the AUD/USD exchange rate:

  • September 4th: Australia’s GDP growth figures and the Balance of Trade data will be closely watched. The GDP figures will provide insights into the overall economic performance, while the Balance of Trade data will reflect Australia’s trade position amid fluctuating commodity prices and global demand dynamics.

  • September 5th: The release of the US Nonfarm Payrolls data will be crucial in assessing the strength of the US job market. Any signs of weakness could increase expectations of a more dovish approach by the US Federal Reserve, potentially impacting the USD.

  • September 9th: China’s Consumer Price Index (CPI) data will provide a clearer picture of inflationary pressures in one of Australia’s largest trading partners. This data is key for understanding consumer demand trends in China, which directly affect Australian exports, particularly in the mining sector.

  • September 11th: The US Presidential address and the release of US CPI data will be significant in shaping market expectations around future US monetary policy. High inflation figures could lead to a more aggressive stance from the Federal Reserve, impacting global markets, including the AUD/USD exchange rate.

  • September 14th: China’s industrial production data will be another critical metric. As a leading indicator of economic health, this data will show how China’s manufacturing sector is faring amid ongoing global supply chain challenges and geopolitical tensions.

  • September 18th: The US Federal Reserve’s interest rate decision and accompanying monetary policy statement will be key. Market watchers are speculating about a potential rate cut, which, if realized, could weaken the USD and provide further support for the AUD.

  • September 19th: Australia’s unemployment figures will provide insights into the domestic labor market’s health. Strong employment data could bolster confidence in the Australian economy, potentially influencing the RBA’s upcoming interest rate decision.

  • September 24th: The RBA interest rate decision will be a major focus for investors. While recent inflation data may not warrant an immediate rate cut, the RBA’s tone and guidance will be carefully scrutinized for future policy direction.

  • September 30th: China’s manufacturing data will serve as a leading indicator for gauging business activity. Given China’s role as a key market for Australian exports, any signs of weakening demand could negatively impact the AUD.

Broader Economic Trends Affecting the AUD/USD

Several broader economic trends are also affecting the AUD/USD exchange rate. In Australia, non-mining business spending has recorded its first quarterly decline in three years. This contraction highlights underlying economic challenges outside the resource sector and may weigh on overall economic growth if the trend continues.

Moreover, Australian iron ore exports slumped by more than one-third, reflecting softening global demand, particularly from China, amid efforts to reduce carbon emissions and a slowdown in construction activities. As iron ore remains a significant contributor to Australia’s export revenues, this decline has added pressure on the Australian economy, potentially impacting the AUD.

Looking ahead, these key events and economic indicators will be crucial in determining the direction of the AUD/USD exchange rate. With central bank meetings, key economic data releases, and geopolitical events all on the horizon, businesses and investors should stay attuned to these developments to navigate the complex market landscape effectively.

FOCUS UNITED ARAB EMIRATES

The economic relationship between Australia and the Gulf Cooperation Council (GCC) countries—including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—is robust and multifaceted, covering trade, investment, and collaboration across a wide array of goods and services. Among these nations, the UAE stands out as Australia’s largest trade and investment partner in the Middle East, with two-way trade in goods and services totaling AUD 9.94 billion in 2023.

Key Trade and Investment Dynamics

The UAE is a significant market for Australian exports, particularly in sectors like alumina, meat, oil seeds, and higher education. Australian alumina—a key material for the aluminum industry—remains a top export to the UAE, reflecting the Emirates’ strong industrial base. Meat exports also feature prominently, driven by the UAE’s large expatriate population and diverse culinary market. The UAE’s investments in education and its aspiration to become a global knowledge hub have further bolstered the demand for Australian higher education services.

On the import side, the UAE supplies Australia with copper wire, nitrogenous fertilizers, and crude petroleum, underscoring its role as a critical supplier of raw materials and energy products. As the UAE continues its economic diversification agenda, it is also becoming an increasingly important partner for Australia in energy transition sectors. This is evident in the growing collaboration around renewable energy projects, green hydrogen, and carbon capture technologies.

In December 2023, Australia and the UAE commenced negotiations for a Comprehensive Economic Partnership Agreement (CEPA). This landmark agreement aims to strengthen bilateral ties by increasing two-way investment, expanding trade in goods and services, facilitating digital trade, and promoting shared values around inclusive and sustainable trade. If finalized in 2024 as planned, the CEPA could unlock new opportunities for businesses in both countries, making it easier for Australian companies to expand their footprint in the dynamic UAE market.

A Hub for Australian Businesses

The UAE is home to more than 300 Australian businesses across a variety of sectors, including construction, finance, education, and healthcare. Australian firms benefit from the UAE’s strategic position as a gateway to the Middle East, Africa, and South Asia, leveraging its world-class infrastructure, business-friendly environment, and strategic free trade zones. The UAE’s commitment to innovation and economic diversification aligns well with Australia’s expertise in areas like technology, renewable energy, and education.

The UAE’s Evolving Economic Landscape

While the UAE is known for its position as a leading global exporter of crude oil, its economy is rapidly diversifying. Key emerging industries include renewable energy, technology, healthcare, logistics, and tourism. The UAE has set ambitious targets to achieve net-zero carbon emissions by 2050, which has created a burgeoning market for green energy solutions. Australia’s expertise in wind and solar energy positions it as a valuable partner in the UAE’s green economy transition.

The UAE’s economy is also one of the most diversified in the region, with a GDP of around USD 503 billion in 2023. Its economic strategy includes substantial investments in infrastructure, technology, and sustainable development, making it a dynamic market for international businesses. The UAE has strong trading relationships with major global markets, including the United States, China, India, the European Union, and other GCC countries. It serves as a critical re-export hub, particularly for goods destined for the Middle East and Africa.

Opportunities in the Green Economy and Beyond

With its commitment to a green economy, the UAE is increasingly looking to countries like Australia for their expertise in renewable energy. There is a growing demand for knowledge transfer and investment in sustainable technologies such as solar and wind power, battery storage systems, and water desalination technologies. The UAE’s focus on innovation and sustainability is also driving growth in smart cities, artificial intelligence, biotechnology, and fintech.

In addition, the Australia UAE Business Council has announced an upcoming business delegation to Abu Dhabi from 4th to 9th December 2024, offering Australian companies a valuable opportunity to explore key sectors within the UAE’s vibrant economy. This initiative aims to strengthen business connections and identify new areas for collaboration, particularly in fields like infrastructure, healthcare, education, and clean energy.

Outlook for the Future

With the CEPA negotiations underway, both countries are optimistic about further deepening their economic ties. The agreement is expected to facilitate more open trade and investment, reduce barriers, and create new opportunities for businesses. As the UAE continues its journey towards a diversified and sustainable economy, Australian companies are well-positioned to play a significant role, leveraging their expertise and capabilities to meet the UAE’s evolving needs.

To learn more about the economic relationship between Australia and the UAE, visit the Department of Foreign Affairs and Trade.

MENTAL HEALTH IN THE WORKPLACE

Mental health awareness is increasingly recognized as a critical aspect of workplace wellbeing. Australian businesses are becoming more attuned to the importance of creating environments where employees feel supported both mentally and physically. The economic impact of failing to address mental health is significant, with Australian businesses losing over $6.5 billion annually due to insufficient early intervention and treatment for employees with mental health conditions. It is essential for workplaces to foster a supportive culture that prioritizes mental health alongside physical safety.

Understanding Psychosocial Hazards in the Workplace

Under the model Work Health and Safety (WHS) laws, a person conducting a business or undertaking (PCBU) must manage the risk of psychosocial hazards in the workplace. A psychosocial hazard is anything in the design or management of work that could cause psychological harm, such as stress, anxiety, or depression. Common psychosocial hazards at work include:

  • Job demands: Excessive workload, tight deadlines, or long hours can contribute to stress.
  • Low job control: Lack of control over one’s work tasks or decision-making can lead to frustration and anxiety.
  • Poor support: Insufficient support from supervisors or colleagues can increase feelings of isolation.
  • Lack of role clarity: Unclear job roles and responsibilities can create confusion and stress.
  • Poor organizational change management: Changes in the workplace that are not communicated well can lead to uncertainty and anxiety.
  • Inadequate reward and recognition: A lack of acknowledgment or appreciation for work done can negatively impact morale.
  • Poor organizational justice: Perceived unfair treatment or decision-making processes can contribute to stress.
  • Traumatic events or materials: Exposure to traumatic content or events can cause psychological distress.
  • Remote or isolated work: Working in isolation can increase the risk of stress and loneliness.
  • Poor physical environment: Unsafe or unpleasant working conditions can affect mental health.
  • Violence and aggression: Exposure to violent or aggressive behavior in the workplace can cause trauma.
  • Bullying and harassment: Including sexual and gender-based harassment, which can cause severe emotional and psychological harm.
  • Conflict or poor workplace relationships and interactions: Negative interpersonal relationships can lead to a toxic work environment.

These psychosocial hazards can create prolonged stress, leading to psychological or physical harm. Psychological harm may manifest as anxiety, depression, post-traumatic stress disorder (PTSD), or sleep disorders. Physical harm can include musculoskeletal injuries, chronic disease, or fatigue-related injuries.

The Importance of Addressing Mental Health in the Workplace

Workplaces play a pivotal role in supporting their employees’ mental health and wellbeing. Given that one in five Australians will experience a mental illness in their lifetime, businesses must understand the critical importance of mental health awareness. Failure to address mental health in the workplace not only affects the individual but also impacts organizational productivity and culture. Mental health conditions cost Australian workplaces approximately $10.9 billion per year, a figure driven by absenteeism, presenteeism (where employees are present but not fully productive), and compensation claims.

Leaders and managers must prioritize creating a psychologically safe workplace. This includes understanding the causes and consequences of psychosocial hazards and taking steps to mitigate them. Promoting mental health awareness can reduce stigma, encourage open conversations, and foster a supportive environment where employees feel comfortable seeking help.

Promoting Positive Mental Health at Work

To create a mentally healthy workplace, it is crucial to take a proactive approach:

  1. Normalize Mental Health Conversations: Encourage an open culture where mental health is openly discussed at all levels of the organization. This can help reduce the stigma often associated with mental health issues and promote early intervention.

  2. Provide Training for Management: Equip managers with the skills to handle mental health issues effectively. Resources like Mental Health First Aid (MHFA) training are invaluable, providing managers and employees with the knowledge and confidence to recognize and respond to mental health challenges.

  3. Ensure Confidentiality: Confidentiality is crucial in mental health support. Employees should feel safe and confident that their privacy will be protected when they seek help.

  4. Provide Mental Health Resources: Make mental health resources, tools, and support readily available to all staff. This could include access to counseling services, self-help tools, and wellness programs.

  5. Encourage Work-Life Balance: Foster a culture that respects work-life balance. Flexible work arrangements, reasonable workloads, and time-off policies can help reduce stress and burnout.

  6. Create a Supportive Culture: Promote a culture of support and understanding where employees feel valued and respected. Recognition programs and positive reinforcement can enhance employee morale and job satisfaction.

  7. Engage an Employee Assistance Program (EAP): Regularly communicate information about the EAP, not just at induction but at key times, such as during global events (e.g., pandemics) or after critical incidents (e.g., natural disasters). Make EAP details easily accessible in high-traffic areas, such as kitchens and photocopy machines, and through digital channels.

  8. Manage Psychosocial Hazards: Actively identify and manage psychosocial hazards to prevent harm. This could involve regular risk assessments, training, and implementing policies to address identified hazards.

Understanding the Role of Mental Health First Aid (MHFA)

The Standard Mental Health First Aid course equips adults with the knowledge, skills, and confidence to recognize, understand, and respond to a mental health problem or crisis in others. Participants learn to identify the signs and symptoms of common mental health issues, approach someone they are concerned about, offer initial support, and encourage them to seek professional help. Those who complete the course become Mental Health First Aiders (MHFAiders), ready to provide timely support when it matters most.

The course is delivered in blended formats, combining eLearning and face-to-face sessions tailored to workplace or community settings. By training employees in MHFA, businesses can create a network of support, ensuring that someone is always available to help when a mental health issue arises.

Supporting Carers of Those with Mental Illness

It is also important to acknowledge and support employees who are carers for individuals with mental illness. These carers often provide daily assistance, which can be physically and emotionally demanding. The workplace can play a crucial role in supporting these carers by offering flexibility, understanding, and resources that help them balance their responsibilities.

Creating a mentally healthy workplace is not only a legal obligation but also a moral and economic imperative.  Its also the responsibility of everyone.   By managing psychosocial hazards, promoting mental health awareness, and supporting employees through programs like MHFA and EAP, businesses can reduce costs associated with mental health issues, improve employee wellbeing, and foster a more positive, productive workplace culture.

For more resources and support on mental health, visit Lifeline or contact them at 13 11 14 for 24-hour telephone support.

Beyond Blue  Free telephone and online counselling service is open 24/7 for everyone in Australia.

No matter who you are, or how you’re feeling, reach out to their free counselling services for support – they can point you in the right direction so you can get the help you need. 

CARBON BORDER ADJUSTMENT MECHANISM (cbam)

While a CBAM sounds like something out of a Batman comic, it is a Government policy that aims to correct “carbon leakage” or the shifting of production of carbon-intensive products from one country with stringent carbon policies, to another with less demanding standards.  As Governments around the world move towards meeting climate goals committed under the Paris Agreement there are concerns that a decrease in emissions in one country may trigger a rise in another, posing a particular concern for domestic producers.  How is this ‘leakage’ combatted?  With a tax applied at the border would ensure that both domestic and foreign production bear an equivalent carbon cost.  The higher price of domestic goods produced using low-carbon methods is equalised against the lower price of imported goods by imposing a tariff on selected carbon-intensive goods who are unable to provide evidence of similar decarbonisation actions.  By putting a price on carbon-intensive imports, a CBAM aims to reduce global carbon emissions by encoraging a shift towards more sustainable production methods.  

The EU is the first globally to adopt a CBAM as part of its “Fit for 55 Package”  and its movement towards net-zero 2050.   The EU CBAM will target high-emission industries such as iron and steel, cement, fertilisers, aluminium and hydrogen.  The tax applies to downstream products, not just the raw and unfinished materials.  Under the new rules that are to be transitioned in from October 1st 2024 through to 31st December 2025, importers will be required to report the total verified GHG emissions embedded in goods imported in a given calendar year.  Carbon paid for at origin can be deducted from the payable CBAM charge, providing evidence can be provided.  Importantly, as of January 1st 2026, only registered declarants will be allowed to import CBAM goods with customs authorities obliged to monitor the movement of the goods and deny import of CBAM goods by non-registered declarants. One of the most significant challenges is being seen to be accurately determining the carbon content of imported goods, particularly by smaller organisations without access to the necessary technology and skills.  

Stemming from the new EU regulations, the UK has been making plans for its own green levy on high-carbon imports to the UK by 2027.   Canada, USA and Japan are also considering a CBAM.

Australia is reviewing a CBAM through DCCEEW. There is leakage provision under the Safeguard Mechanism in Australia in an effort to offer protection to what is considered EITE – Emission-intensive Trade-exposed industries.  Again, iron and steel, cement, aluminium, fertilisers are such examples.   But in line with the Future Made in Australia policy released by the Labour Government as part of the 2024-25 Federal Budget, there are calls to extend it out further to some of the critical minerals that are needed for Australia’s push for the renewable energy transition.  Imported goods, particularly those from countries with less stringent environmental regulations, could become more expensive.  

Is this a reasonable idea?  Support Australian industry’s decarbonisation efforts, while applying a charge to carbon emitted during the production of imported carbon-intensive goods.  Then use the revenue generated from the taxes to help Australia’s further decarbonisation efforts.  Apart from a lot of calculating, complex data management and tricky reporting methodology, the concept seems reasonable?

However, concerns have been raised to the WTO as to whether the global introduction of these “Green Tariffs” constitute a form of protectionism and will cause considerable financial harm for developing nations, particularly to address a climate crisis that they didn’t cause.   India for example, while currently in bilateral discussions over the CBAM with EU policymakers, raised concerns that the tariff forced an emissions reduction path on the EU’s trading partners, imposing technical barriers to trade, chiefly if the revenue generated from the CBAM was kept in-country to support the EU’s own development.  It also questioned how smaller manufacturers could comply with the technical and data heavy requirements of the CBAM, thereby rendering them less competitive. In a recent interview with Carbon-Pulse, Wei-nee Chen, head of carbon markets at Bursa Malaysia indicated that the EU and other historical polluters should commit part of the proceeds to help developing export countries decarbonise.

So will the CBAM support the decarbonisation, or will it just result in mirror taxes being applied globally, so they can ensure that funds are kept within the local government?  And how will non-OECD countries, regions that may struggle to access reliable and consistent data, be able to compete in the global marketplace, potentially lessening their ability to improve their own economic growth?

Many of Australia’s peak industry bodies and those manufacturers deemed to be most affected by carbon leakage are in favour of a border tax being applied.  In reading many of the submissions made to the DCCEEW back in 2023, many seem to be consistent in the belief that  a price on carbon emissions has the potential to commercially incentivise a shift to green iron, green aluminium and critical minerals providing opportunities for Australia to compete in a net-zero global trading world. However, any CBAM that we adopt will need to consider key economic development agreements that have been made with countries like India and Vietnam.  And as we tout its application as a global push to force change in carbon-intensive sectors, any developed nation applying the tax must use some of the revenue generated to not just support their own manufacturers but help the less developed nations decarbonise also.  It is not unfeasible that as the world moves towards greener trade practices, CBAM is likely to become a standard feature in international trade agreements.  Companies need to understand their Scope 1 and 2 GHG emissions.  They need to assess their exposure to potential CBAM impacts, including identifying affected goods and sectors, estimate financial implications and explore strategies for carbon reduction.  

At the time of writing, the second-round consultation paper reviewing Australia’s plan to address carbon leakage was in the internal approval stage, with the DCCEEW Carbon Leakage team advising further comment within August 2024. 

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