Significant Issues
Trans-national Organised Criminal Activity
Customs continued to be a key contributor to the fight against trans-national criminal syndicates during 2005/06, with significant contributions at both policy and operational levels.
At a policy level, Customs was a major contributor to the revision of the National Drug Policy (NDP) as a member of the Interagency Committee on Drugs NDP Review Steering Group. The revised version of the NDP is expected to be available for consideration by Government in late 2006. Customs has also supported a Police led project to develop an illicit drugs monitoring system. This includes work with the Police on development of proposals for specific research into the use and impact of illicit drugs in New Zealand, and research on harm indexation of controlled drugs, their economic and social impact and the value of effective enforcement. In addition, Customs’ own drug enforcement strategy was revised in 2005/06, and implementation of the key action points commenced.
| Significant Drug Seizures |
Significant Drug Seizures in 2005/06 included:
In January 2006, Customs detected 8.1 kilograms of crystal methamphetamine (commonly known as “ice” or “P”) worth more than $8 million, concealed in factory wrapped water filters from China. At the time, this was the largest pure methamphetamine seizure in New Zealand. This investigation resulted in two arrests.
Also in January, Customs seized 200 litres of Gamma Butyrolactone, commonly referred to as GBL. GBL is popular in the nightclub scene and body building |
scene and it has also been implicated in drug-assisted rapes. This investigation resulted in six arrests.
In May 2006, Customs and the New Zealand Police seized separate shipments of crystal methamphetamine and pseudoephedrine with a combined potential total street value of $135 million. This was the largest and most significant illicit drug seizure of these types of drugs in New Zealand’s history. The drugs were concealed amongst other goods in shipping containers that originated from China. This investigation resulted in seven arrests. |
Operationally, the volume of precursors and crystal methamphetamine seized by Customs in 2005/06 increased significantly and signals a situation that is of continuing concern in relation to the illicit drug scene in New Zealand. A rise in violent crime linked to methamphetamine abuse shows that it has been a catalyst for offending.
Terrorism
Terrorism continued to be a major threat to safety and security globally, as evidenced by the bombings in London in mid-2005, and continues to require a concerted international response. Customs’ contribution to the fight against global terrorism increased during the year, particularly in response to New Zealand’s increased commitment to international initiatives to fight the trade in weapons of mass destruction (WMD), and the enhancement of New Zealand’s counter-terrorism arrangements.
Since becoming a signatory in 2004, New Zealand has been steadily increasing its level of engagement in the Proliferation Security Initiative (PSI), a voluntary international initiative designed to stop any international trade in WMD and dual use items. This was reflected in a significant increase in Customs’ involvement this year in international meetings and exercises relating to the initiative. Customs is a member of the Operational Experts Working Group and there is a commitment for New Zealand to host an operational experts working group meeting in 2007. It is probable that New Zealand will also host a PSI based exercise in 2008.
The interagency counter-terrorism arrangements that evolved following the 11 September 2001 attacks in the United States were enhanced during 2005/06, and Customs’ internal counter-terrorism capabilities were further developed. This has resulted in improved integration, both within Customs and across government, and improved responsiveness to terrorist risk. Customs continued to play a major role in managing the risks associated with terrorism during the year.
Intellectual Property Rights (IPR)
Globally the trade in counterfeit goods is rapidly expanding with the result that more and more New Zealand rights holders are choosing to use the Customs Notice system to protect their legitimate business interests. As a consequence, the IPR caseload and the number of IPR interceptions from intervention has significantly increased over the last five years**.
** - From 2005/06 Customs has measured the number of IPR cases opened over a financial year, as opposed to a calendar year, to ensure consistency with other reporting. Previous year’s figures have been adjusted to reflect this.
A review by Customs of border management of IPR, and a parallel review by the Ministry of Economic Development (MED) on policing of IPR, are being undertaken in order to identify policy and operational responses to this increasing workload.
International Engagement
Customs’ international engagement increased in significance during 2005/06, reflecting the key contribution Customs is able to make to New Zealand’s trade and security relationships at bilateral, regional and multi-lateral levels. Customs continued work to strengthen its relationships with other customs administrations and overseas law enforcement agencies to support the achievement of its outcomes.
Customs remained a key contributor to the World Customs Organisation (WCO) through membership of the Finance Committee and regional steering committee, and attendance at the Regional Heads of Customs meeting and various technical committees. New Zealand was successful with its nomination for a place on the WCO Policy Commission and will take up that role from July 2006.
In June 2005, the WCO established standards for Customs administrations for secure trade (The Framework of Standards to Secure and Facilitate Global Trade). The standards provide guidance to Customs administrations on trade security programmes, including principles for customs-to-business programmes similar to New Zealand’s Secure-Exports-Scheme. The New Zealand example was an important one in the development of the WCO’s standards.
The importance of New Zealand’s close ties and trading relationship with Australia was reinforced in 2005/06 by the establishment, following trans-Tasman Ministerial talks, of a high-level steering group to address trans-Tasman border issues. A key achievement of the group in 2005/06 was the creation of a single immigration and customs queue for inbound Australian and New Zealand passport holders at major Australian airports. There was also agreement to create a joint Automated Passenger Processing Strategy by mid-2007. In relation to trans-Tasman trade, the Service is responsible for establishing a working group to address processing improvements for cargo travelling across the Tasman. This work will be advanced in 2006/07.
New Zealand’s unique trade security relationship with the United States was reflected in a significant increase in activity supporting the bilateral relationship. A series of high-level meetings with the United States Customs and Border Protection Agency culminated in the signing of a Declaration of Principles, a written commitment to cooperate on supply chain security, including working towards mutual recognition of our respective supply chain security schemes. The importance of this relationship was recognised by the establishment of a new Customs post in Washington DC, in August 2005.
The emergence of China as a major trading partner for New Zealand was reflected in the establishment of a new Customs post in Beijing, in November 2005. This post is supporting the development and consequent implementation of the Free Trade Agreement (FTA ) between New Zealand and China, and will also provide a basis for improved cooperation and sharing of operational information on enforcement issues.
Establishment of the Beijing and Washington posts complements Customs’ established international presence. The Service now has posts in Sydney, Bangkok, Brussels, Beijing and Washington, fulfilling a range of policy, enforcement, and trade roles.
The increasing emphasis on ensuring a secure and prosperous South Pacific resulted in an increase in Customs’ activity in the Pacific region during 2005/06. Together with other countries and organisations, Customs is working to enhance border security and the facilitation of travel and trade throughout the Pacific, in order to increase security and economic sustainability in the region. Key areas of engagement in 2005/06 included ongoing support for the Oceania Customs Organisation (OCO), including seconding a staff member as Head of the OCO Secretariat, and assisting in building the capacity of the Tonga Customs Service, in conjunction with the Australian Customs Service, by seconding a New Zealand Customs officer as Deputy Head of the Tonga Customs Service for 12 months. Customs also established a Pacific Liaison Officer position for a 12-month pilot, to strengthen relationships between the New Zealand Customs Service and the Pacific Islands Customs administrations and regional organisations, and is assisting in the promotion and development of a regional secure enforcement reporting system and information/ intelligence database through membership of the Customs Asia Pacific Enforcement Reporting System (CAPERS ) Steering Committee.
Trade Rules
Customs plays a key role in supporting the Government’s trade negotiations policy (led by the Ministry of Foreign Affairs and Trade) and, through its membership of the World Customs Organisation, in ensuring global standards for customs and international trade are robust and meet New Zealand’s needs.
New Zealand maintained an active programme of bilateral trade negotiations during 2005/06, to mitigate the risk that the WTO Doha Development Round may not make substantive progress in the short-term. Customs played a key role in supporting the Ministry of Foreign Affairs and Trade and the Ministry of Economic Development in progressing a range of negotiations:
CER Rules of Origin (RoO) Review
The CER RoO review was completed and the agreed final negotiated package of RoO reforms was announced during 2005/06. This provides for a new change-oftariff- classification (CTC) framework for the rules of origin governing preferential trade between New Zealand and Australia. The new rules are proposed to come into effect on 1 January 2007.
The Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Act
This Act was passed late in the third quarter of 2005/06. The Trans- Pacific Strategic Economic Partnership Agreement (TPSEPA) entered into force between New Zealand and Singapore on 1 May 2006. Chile and Brunei are expected to implement at a later date.
Free Trade Negotiations
New Zealand also further progressed Free Trade Negotiations with Malaysia and China, including discussions on Customs co-operation.
New Zealand Thailand Closer Economic Partnership (CEP)
The 2005/06 year also saw the implementation of the CEP between New Zealand and Thailand.
In addition, work began on preparations for the next periodic update of the WCO Harmonised Commodity Description and Coding System. This is a substantial piece of work that will require an update of New Zealand’s domestic tariff, New Zealand’s schedule of World Trade Organisation (WTO) market access commitments and, possibly, an update of recent trade agreements. The update of the Harmonised Commodity Description and Coding System is due to be implemented on 1 January 2007.
Travel Security and Facilitation
The security and facilitation of international travel through New Zealand airports were significantly enhanced in 2005/06.
The benefits of the increased processing capacity, which was funded by Government through the 2004/05 and 2005/06 budget rounds, are now being realised.
As can be seen in the graph below, passenger processing performance has improved with 96 percent of all arriving international passengers being processed through Customs in 45 minutes. This has been accompanied by a reduction in complaints from passengers relating to processing delays. Intervention rates have increased from 1.5 percent in 2004/05 to 3.2 percent in 2005/06.
These gains have been achieved with a lower than anticipated growth in passenger volumes in 2005/06, and out-year projections suggest a return to a higher rate of growth in the medium-term. Further work is being undertaken on the development of new passenger processing standards (Standard Processing Times), and identification of their resourcing implications, and Customs is working with airport companies to ensure that adequate facilities will be available for the expected increase in passenger volumes over the medium term.
Improved targeting of risk was facilitated by access to advance passenger and passenger name record information provided for in amendments to the Customs and Excise Act in 2004. Advance passenger information is now being received from all airlines. Access to passenger name record information was progressed during 2005/06, and by February 2006, Customs and the Department of Labour were successfully connected to nine airlines, representing approximately 70 percent of all passenger movements in to and out of New Zealand.
Passenger processing performance has improved with 96 percent of all arriving international passengers being processed through Customs in 45 minutes.