Commonwealth Numbered Regulations - Explanatory Statements

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CUSTOMS (PROHIBITED EXPORTS) AMENDMENT REGULATIONS 2011 (NO. 4) (SLI NO 231 OF 2011)

EXPLANATORY STATEMENT

Select Legislative Instrument 2011 No. 231

Issued by the Authority of the Minister for Home Affairs

Customs Act 1901

Customs (Prohibited Exports) Amendment Regulations 2011 (No. 4)

Subsection 270(1) of the Customs Act 1901 (the Act) provides, in part, that the        Governor-General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed.

Section 112 of the Act provides, in part, that the Governor-General may, by regulation, prohibit the exportation of goods from Australia.  This power may be exercised by prohibiting the exportation of goods absolutely or by prohibiting the exportation of goods unless specified conditions or restrictions are complied with.

The purpose of the amending Regulations is to amend the Customs (Prohibited Exports) Regulations 1958 (the PE Regulations) to introduce complementary export controls on goods that are the subject of the Autonomous Sanctions Act 2011 (Sanctions Act) and the Autonomous Sanctions Regulations 2011 (Sanctions Regulations.

The Sanctions Act received the Royal Assent on 26 May 2011 and will allow Australia to unilaterally implement punitive measures as a matter of foreign policy in situations of international concern.  These measures are to be distinguished from giving effect to Australia's international obligations under United Nations Security Council decisions.

Australia presently implements 'autonomous sanctions' under a range a separate instruments.  However, the intention of the Sanctions Act is to consolidate the powers under one Act and to widen the range of measures that can be taken to include, for example, investment bans.  This framework is designed to ensure that the autonomous actions that Australia takes match the scope and extent of measures implemented by other like-minded countries.

The detail of autonomous sanctions are specified in the Sanctions Regulations, made under section 10 of the Sanctions Act. 

The Sanctions Regulations provide, inter alia, the supply, sale or transfer of goods that are export sanctioned goods in relation to particular countries is a sanctioned supply (regulation 4).  Under regulation 12 of the Sanctions Regulations, there is a prohibition against making a sanctioned supply that is not an authorised supply. 

The Sanctions Regulations also allow the Minister for Foreign Affairs (the Foreign Minister) to designate a person or entity for a particular country as a designated person or entity (regulation 6).  Under regulations 14 and 15 of the Sanctions Regulations, there is a prohibition against making an asset available to, or for the benefit of, a designated person or entity, where the making available is not authorised.  Section 4 of the Autonomous Sanctions Act contains the definition of 'asset', which includes all tangible, movable property. 

The amending Regulations amend the PE Regulations to complement the controls on goods and assets (to the extent that assets include all tangible, movable property) under the Sanctions Regulations.  The amendments to the PE Regulations prohibit the exportation from Australia of:

(a)         export sanctioned goods covered by regulation 4 of the Sanctions Regulations; and

(b)        goods covered by a designation made under regulation 6 of the Sanctions Regulations.

Goods whose exportation is prohibited under the PE Regulations are prohibited exports.  This means the officers of Customs could seize such goods without a warrant when they are in a Customs place.  There are also offences in the Act that apply to the exportation of prohibited exports.

The amendments to the PE Regulations are set out in greater detail in the Attachment.

No consultation was undertaken in relation to the proposed Regulations.  However, extensive industry consultation has been undertaken in relation to the Sanctions Regulations.

The amending Regulations commence on the commencement of the Sanctions Regulations.

1121550A

Attachment

Details of the Customs (Prohibited Exports) Amendment Regulations 2011 (No. 4)

Regulation 1 - Name of Regulations

Regulation 1 provides that the amending Regulations are the Customs (Prohibited Exports) Amendment Regulations 2011 (No. 4).

Regulation 2 - Commencement

Regulation 2 provides that the amending Regulations commence on the commencement of the Autonomous Sanctions Regulations 2011. 

Regulation 3 - Amendment of Customs (Prohibited Exports) Regulations 1958

Regulation 3 provides that Schedule 1 amends the Customs (Prohibited Exports) Regulations 1956 (the PE Regulations).

Schedule 1 - Amendments

Item [1]        After Division 2

Item [1] of the Schedule inserts new Division 2A into the PE Regulations.  New Division 2A includes new regulations 11, 11A and 11B.

New regulation 11

New subregulation 11(2) provides that the exportation of export sanctioned goods is prohibited if:

(a)         the immediate or final destination of the goods is, or is intended to be, a relevant country for the goods; and

(b)        the exportation is not authorised in accordance with a permit granted under regulation 18 of the Autonomous Sanctions Regulations 2011 (the Sanctions Regulations).

New subregulation 11(1) provided that "export-sanctioned goods" means goods that:

(a)         are mentioned in an item of the table in subregulation 4(2) of the Sanctions Regulations; or

(b)        have been designated as export sanctioned goods under subregulation 4(3) of the Sanctions Regulations.

New subregulation 11(1) also provides that "controlled asset" has the same meaning as in the Sanctions Regulations.  A controlled asset is defined as an asset that is owned or controlled by a person or entity that has been designated as a designated person or entity in accordance with regulation 6 of those Regulations.

The Note to new subregulation 11(1) set outs the operation of regulation 4 of the Sanctions Regulations.  It states that the items of the table in subregulation 4(2) identify countries and the goods that are export sanctioned goods for those countries.  For example, item 1 of the table prescribed Burma as a country and arms and related material as export sanctioned goods for Burma.  Therefore, the effect of new subregulation 11(2) of the PE Regulations is that the exportation of arms and related materiel to Burma is prohibited unless the Foreign Minister has granted a permit under regulation 18 of the Sanctions Regulations.

Subregulation 4(3) of the Sanctions Regulations also allow the Minister for Foreign Affairs (the Foreign Minister) to designate goods as export sanctioned goods for a country mentioned in the designation.   This will be done by legislative instrument.  This power allows the Foreign Minister to be able to promptly implement any additional autonomous sanctions that might be required in relation to countries or goods not mentioned in the table in subregulation 4(2).  Therefore, under subparagraph 11(1)(b) of the PE Regulations, the exportation of such goods to such a country is automatically also prohibited unless the Foreign Minister has granted a permit under regulation 18 of the Sanctions Regulations.

New regulation 11A

New regulation 11A provides that the exportation of goods, other than a controlled asset, is prohibited if:

(a)         the goods are to be exported, directly or indirectly, either to, or for the benefit of a person or entity that has been designated under paragraph 6(1)(a) or 6(2)(a) of the Sanctions Regulations; and

(b)        the exportation is not authorised in accordance with a permit granted under regulation 18 of the Sanctions Regulations.

The exportation of "controlled assets" is dealt with under new regulation 11B (see below).

The Note to new regulation 11A states that the items of the table in subregulation 6(1) of the Sanctions Regulations identify countries and the persons and entities who may be designated as designated persons or entities for those countries.

Regulation 6 of the Sanctions Regulations operates differently from regulation 4 of those Regulations.  The table in regulation 6(1) specifies several countries (for example Burma, North Korea and Iran) and several persons or entities (either by their specific name or by a description) in relation to each country.  For example, for Burma the table specifies a former member of the State Peace and Development Council as a person.  However, before a person or entity for a country becomes operative, it must first be included in a designation made by the Foreign Minister in a legislative instrument under paragraph 6(1)(a).

However, once the Foreign Minister makes such a designation, under regulation 14 of the Sanctions Regulations there is a prohibition against making any asset (including any goods) available to, or for the benefit of, a designated person or entity that was not authorised under regulation 18 of those Regulations.  Therefore, unlike regulation 4 of the Sanctions Regulations which only applies in relation to goods mentioned in the table in subregulation 4(2), the prohibition in regulation 14 applies in relation to all goods.  Therefore, in relation to the above designation example, the making available of goods to, or for the benefit of, a former member of the State Peace and Development Council of Burma would contravene regulation 14 of the Sanctions Regulations if it was not authorised under regulation 18 of those Regulations.  A contravention of regulation 14 also constitutes an offence under section 16 of the Autonomous Sanctions Act 2011 (Sanctions Act).

Therefore, the effect of new regulation 11A of the PE Regulations is that the exportation of any goods to, or for the benefit, of a person or entity designated for a particular country under paragraph 6(1)(a) is prohibited unless the Foreign Minister has granted a permit under regulation 18 of the Sanctions Regulations.  However, the goods do not necessarily need to be exported to the country mentioned in a designation.  In relation to the above example, if a former member of the State Peace and Development Council of Burma no longer lived in Burma, the goods not necessarily need to be exported to Burma.  In addition, the goods would not necessarily need to be exported directly to the designated person or entity.  The goods could be exported to another person as long as the exportation to that person was for the benefit of the designated person or entity.

Paragraph 6(2)(a) of the Sanctions Regulations grants the Foreign Minister an additional designation power which applies to any person or entity ie it is not limited by countries, persons and entities listed in the table in subregulation 6(1).  Under this power the Foreign Minister may designate a person or entity if satisfied that the person or entity is contributing to the proliferation of weapons of mass destruction.  Similar to paragraph 6(1)(a), the making available of goods to, or for the benefit of, a person or entity included in a designation under paragraph 6(2)(a) also contravenes regulation 14 of the Sanctions Regulations if it was not authorised under regulation 18 of those Regulations.  As above, a contravention of regulation 14 also constitutes an offence under section 16 of the Sanctions Act.

The effect of new regulation 11A of the PE Regulations is also that the exportation of any goods to, or for the benefit, of a person or entity designated under paragraph 6(2)(a) is prohibited unless the Foreign Minister has granted a permit under regulation 18 of the Sanctions Regulations.

New regulation 11B

New regulation 11B provides that the exportation of a controlled asset is prohibited if the exportation is not authorised in accordance with a permit granted under regulation 18 of the Sanctions Regulations.

The term "controlled asset" is defined in subregulation 3(1) of the Sanctions Regulations as an asset that is owned or controlled by a designated person or entity ie a person or entity to whom a designation relates under paragraph 6(1)(a) or (2)(a) of the Sanctions Regulations.  Due to the nature of a controlled asset, the limitations of their use are much stricter than the limitations on assets generally.  Under regulation 15 of the Sanctions Regulations, there is a prohibition on the any use or dealing with a controlled asset that is not authorised under regulation 18 of those Regulations.  A contravention of regulation 15 also constitutes an offence under section 16 of the Sanctions Act.

The effect of new regulation 11B of the PE Regulations is that the exportation of a controlled asset is prohibited unless the Foreign Minister has granted a permit under regulation 18 of the Sanctions Regulations.  This prohibition is not dependent on where, or to whom, the goods are being exported and is, therefore, wider than the export prohibitions under new regulations 11 and 11A of the PE Regulations.  This wider prohibition complements the wider restriction on the use and dealing with controlled assets under regulation 15 of the Sanctions Regulations.

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