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Insights from APEC Self-Certification Workshop: Fonterra's Dairy Trade Practices

This document summarizes experiences shared at the APEC Self-Certification Workshop held in Kuala Lumpur on October 11-12, 2010, focusing on Fonterra's dairy export practices. With 10,700 shareholders and USD $13.5 billion in revenue, Fonterra plays a crucial role in New Zealand's dairy industry, exporting significantly to Asia. The workshop discussed certification methods, including government and self-issued certificates, and highlighted the impacts of these on trade efficiency. The need for transparent, robust verification processes and ongoing training was emphasized to support modern trade practices.

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Insights from APEC Self-Certification Workshop: Fonterra's Dairy Trade Practices

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  1. Certifying Preferential Origin - Experiences APEC Self Certification Workshop, Kuala Lumpur, 11/12 October, 2010

  2. Fonterra Today Fonterra at a Glance 10,700 shareholder co-operative 14b litres collected 2.6m MT sold USD$13.5b revenue 140 export markets 25% of NZ’s merchandise exports 25% sales globally sourced

  3. Fonterra – global dairy trader Trade Flows Europe & Central Asia Europe & Central Asia North America UK East Asia UK South Asia Middle East & North Africa Middle East & North Africa Pacific Sub-Saharan Africa Australia Latin America Sub-Saharan Africa New Zealand From Fonterra

  4. New Zealand dairy in Asia: 46% of NZ dairy exports APEC Members in Asia = 45% of NZ Dairy Exports Dairy exports to Asia of USD @3 billion Data provided by Statistics NZ Japan 13.6% Korea 4.28% China 30.35% Taiwan 6.42% Vietnam 3.92% Philippines Thailand 10% 5.71% Malaysia Singapore 9.64% 6.42% Indonesia 9.64% A high proportion of these goods are ingredients that are further processed in the region

  5. Fonterra & Trade Agreements CER New Zealand/Thailand Australia/Thailand Australia/US NAFTA ASEAN CEPT Greater Arab Free Trade Area (GAFTA) AANZFTA New Zealand/China Trans Pacific (P4) Chile/Mexico ALADI/MERCOSUR

  6. Expectations of Certification Procedures • Achieve outcomes support agreement objectives • Level of assurance (customs & business) • Cater for modern business practices (customs & business) • Reasonable / transparent / materiality • Best use of resources (customs & business) • Focus requirements & verification processes at importer

  7. Certification Methods used by Fonterra • Government/3rd Party issued COO - ASEAN, NZCFTA, AANZFTA • Self issued COO - NAFTA Both as exporter & importer • Invoice Declaration - NZTCEP • Customs import entry (docs as required) - AUSFTA, New Zealand imports

  8. Experiences (1) Govt/3rd Party Certification (COO) • Requires systems & process changes • Cost & resource implications • Incompatible with e-commerce, e-customs, risk management processes • Data often not verified/Certification has become an industry • Disclosure of commercially sensitive data to 3rd party • Increases document set/duplicates data • Data can cause problems, e.g. Value, HS code & authorised signatures • Added ‘hassle’ benefits buyer – seller disinclined to bother

  9. Experiences (2) Self Certification (COO) • Less cost/resource implications • Requires some system changes • Adds to the document set/duplicates data • Data security not an issue • Implementation dependant, but often not compatible with e-commerce & e-customs processes • Requires knowledge of ROO & product

  10. Experiences (3) Invoice Declaration • No changes to systems & part of existing export/import process • No additional documents/no duplication • Collates all key data on one document, i.e. Company officer & position, description/qty/value, origin of goods, origin criteria & shipping details • Requires knowledge of ROO & product - if 3rd party sale (sellers knowledge) • Part of existing audit trail for customs & tax agencies (export & import) • Caters for 3rd party/multiple transactions (text dependent) • Simplifies verification

  11. Experiences (4) Import Declaration • Standard process for all exports & imports • No additional documents / no changes to systems / no fiscal impact • Clearly links preference claim to specific entry • Part of existing audit trail • Supports ‘e-commerce’ / e-customs’ environment • Triggers customs risk management process requires good broker management

  12. Summary • Certification method must support the goals of the agreement • Officials need to understand the ‘whole’ trading environment - Systems & processes (customs & business) - Customs requirements/capabilities & resources - Supply chain/logistics limitations • Text/OCP requirements should be prescriptive - Creates clarity no doubts, no misunderstandings, no excuses - Transparent & consistent processes • Verification should be simple, robust & focus on the importer • Consult, consult, consult …… internally & externally • Ongoing training/awareness – post review changes, etc • Clearly identified contact points

  13. Thank you Contact: kit.hickey@fonterra.com

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