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2010-2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS AMENDMENT (MILITARY END-USE) BILL 2011
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Home Affairs,
the Honourable Brendan O'Connor MP)
CUSTOMS AMENDMENT (MILITARY END-USE) BILL 2011
OUTLINE
The purpose of this Bill is to amend the Customs Act 1901 (the Customs Act) to
include a power to prohibit the export of "non-regulated" goods that may contribute
to a military end-use that may prejudice Australia's security, defence or international
relations. This power may only be exercised in relation to goods that are not
prohibited exports under section 112 of the Customs Act.
The power, to be included in new section 112BA of the Customs Act, will enable the
Minister for Defence to prohibit the export of specified non-regulated goods to a
particular place or person. In exercising this power, the Minister for Defence must
suspect that the goods would or may be used for a military end-use that may
prejudice Australia's security, defence or international relations. Where the Minister
forms such a suspicion, the Minister may issue a prohibition notice preventing the
export.
Under new subsection 112E(13), goods are or may be for a `military end-use' if the
goods are or may be for use in operations, exercises or other activities conducted by
an armed force or an armed group, whether or not the armed force or armed group
forms part of the armed forces of the government of a foreign country
These provisions are being included in the Customs Act to reinforce Australia's
export controls, by providing authority for intervention at the border of goods not
otherwise regulated, but nonetheless potentially being exported for a military end-
use contrary to Australia's national interest.
This new power is just one in a suite of powers that are designed to strengthen
Australia's Defence Export controls. The other powers, including controls on the
provision of technology and services, and the brokering of goods, technology and
services, are included in the Defence Trade Controls Bill 2011. That Bill will also
implement the Treaty Between the Government of Australia and the Government of
the United States of America Concerning Defense Trade Cooperation which was
concluded in September 2007.
FINANCIAL IMPACT STATEMENT
The Bill has no financial impact.
Page 2 Customs Amendment (Military End-Use) Bill 2011
CUSTOMS AMENDMENT (MILITARY END-USE) BILL 2011
NOTES ON CLAUSES
Clause 1 - Short title
This clause provides for the Bill, when enacted, to be cited as the Customs
Amendment (Military End-Use) Act 2011.
Clause 2 - Commencement
Clause 2 provides that this Act will commence on the day after the Act receives the
Royal Assent.
Clause 3 - Schedule(s)
This clause is the formal enabling provision for the Schedule to the Bill, providing
that each Act specified in a Schedule is amended in accordance with the applicable
items of the Schedule. In this Bill, the Customs Act is being amended.
The clause also provides that the other items of the Schedules have effect
according to their terms. This is a standard enabling clause for transitional, savings
and application items in amending legislation.
Customs Amendment (Military End-Use) Bill 2011 Page 3
SCHEDULE 1 - AMENDMENTS
Customs Act 1901
Background
Item 1 - After Division 1 of Part VI
This item amends the Customs Act by inserting new Division 1AA into Part VI. This
new Division in entitled "Export of goods for a military end use". This new Division is
comprised of new sections 112BA and 112BB.
New section 112BA - Notice prohibiting export
New subsection 112BA(1) provides that if:
(a) the Defence Minister suspects that, if a person (the first person) were to
export particular goods to a particular place or to a particular person, the goods
would or may be for a military end-use that would prejudice the security,
defence or international relations of Australia; and
(b) the goods are not prohibited exports under section 112 of the Customs Act;
the Defence Minister may give the first person a notice prohibiting the first person
from exporting the goods to the particular place or particular person.
The Defence Minister may issue a prohibition notice if he or she suspects that the
export would be contrary to Australia's security, defence or international relations.
The Minister may consider factors, including but not limited to, whether the export:
(a) is destined for countries to which the United Nations Security Council has
imposed sanctions restricting the sale, supply or transfer of defence or dual-use
goods;
(b) is destined for countries where the goods might be used in a manner contrary to
Australia's international obligations or commitments;
(c) poses a clearly identifiable risk that the goods would be used to commit or
facilitate serious human rights abuses;
(d) might contribute to instability in the region or aggravate a threat to international
and regional peace and security or aggravate the situation in a region which
becomes a cause of serious concern;
(e) might be used in internal or external conflict, or that could further militarise the
situation, in the destination country;
(f) might compromise Australia's wider security interests, its obligations to its allies
and friends and its broader international responsibilities;
(g) is destined for countries with policies or interests which are inimical to the
strategic interests of Australia or its friends and allies;
Page 4 Customs Amendment (Military End-Use) Bill 2011
(h) might adversely affect Australia's military capability or substantially compromise
its operational capabilities or enhance the power projection capabilities of our
potential adversaries;
(i) is destined for countries developing (or suspected of developing) weapons of
mass destruction or the means for their delivery, or supporting terrorism, or
whose behaviour or foreign policies risk major disruption to global or regional
stability;
(j) might cause adverse reactions by third countries important to Australia, which
may affect Australia's interests, in particular, our regional relations; and
(k) might be used for mercenary, terrorist or other criminal activities.
These factors are consistent with the factors that the Defence Minister considers for
an application for the export of tangible Defence and Strategic Goods List goods or
technology under the Customs (Prohibited Export) Regulations 1956.
The Minister's decision to issue a prohibition notice will not be subject to merits
review. This decision making power is personally vested in the Minister due to its
highly sensitive nature and the fact that they involve issues of the highest
consequence to government. Such decisions are of high political content and
concern Australia's national interest, security and defence and may affect Australia's
relationships with other countries. The approach of excluding this decision from
merits review is consistent with the provisions of the Weapons of Mass Destruction
(Prevention of Proliferation) Act 1995 where the authority for decisions under that
remains solely with the Minister for Defence and is not subject to merits review.
Reasons for notice
New subsection 112BA(2) provides the prohibition notice must include the Minister's
reasons for giving the prohibition notice. However, if the Minister believes that the
disclosure of the reasons would prejudice the security or defence or international
relations of Australia, new subsection 112E(3) provides that the reasons must not be
disclosed. Where this occurs, the prohibition notice must state that the reasons are
not disclosed in the notice.
Period notice in force
New subsection 112BA(5) provides that a prohibition notice comes into force at the
time that the notice is received by the person. Under new subsection 112BA(6) ,the
prohibition notice remains in force for the period specified in, or worked out in
accordance with, the notice unless it is revoked earlier. The notice cannot remain in
force for more than 12 months.
Later notice
Under new subsection 112BA(7), a further prohibition notice may be given while the
current notice is in force and before the current prohibition notice expires. This later
Customs Amendment (Military End-Use) Bill 2011 Page 5
prohibition notice may be expressed to take effect from the date the current
prohibition notice expires. New subsection 112BA(8) makes it clear that subsection
(7) does not prevent a notice being given under subsection 112BA(1) after an earlier
notice ceases to be in force.
Notice not a legislative instrument
New subsection 112BA(9) provides that a notice under subsection 112BA (1) is not
a legislative instrument within the meaning of section 5 of the Legislative Instrument
Act 2003. This subsection is merely declaratory of the law and does not operate as
an actual exemption from that Act.
Revoking a notice
New subsection 112BA(1) provides that the Defence Minister may, by writing,
revoke a prohibition notice given to a person under subsection 112BA(1). The
Minister must notify the holder of the notice that is has been revoked, and the
revocation takes effect at the time that the revocation notice is received by the
person.
New section 112BB sets out a new head of power for supporting Regulations that
would prescribe methods by which a notice under new section 112BA can be given
and would also prescribe when the prohibition notice or a revocation notice is taken
to be received.
Offence
Under new subsection 112BA(12), a person commits an offence if a person exports
goods to a particular place or person and the export contravenes a notice in force
under subsection 112E(1), and the person knows of the contravention.
This offence will attract a maximum penalty of 2500 penalty units or 10 years
imprisonment or both. This is a significant penalty as the Government considers
that this is a serious offence and should attract a commensurate deterrent. These
penalties are similar to those that apply under the Customs Act in relation to the
exportation of UN-sanctioned goods, and goods on the Defence and Strategic
Goods List, from Australia. UN-sanctioned goods are goods that are the subject of
a United Nations Security Council resolution.
Definition - military end-use
Under new subsection 112BA(13), goods are or may be for a `military end-use' if the
goods are or may be for use in operations, exercises or other activities conducted by
an armed force or an armed group, whether or not the armed force or armed group
forms part of the armed forces of the government of a foreign country.
New section 112BB - How notices are to be given
New subsection 112BB(1) provides that a notice given to a person under section
112BA must be given by one of the methods prescribed by the regulations.
Supporting regulations will be made which would set out the different methods for
the purposes of this subsection.
Page 6 Customs Amendment (Military End-Use) Bill 2011
Under new subsection 112BB(2), if a notice is given to a person under
section 112BA by one of those prescribed methods, then, for the purposes of the
Customs Act, the person is taken to have received the notice at the time prescribed
by, or worked out in accordance with, the regulations. Again, supporting regulations
will be made which would set out the times or methods at which a notice is taken to
be received.
New subsection 112BB(3) provides that this section has effect despite any provision
in the Electronic Transactions Act 1999.
Item 2 - Subsection 183UA(1)(definition of special forfeited goods)
Item 3- After paragraph 229(1)(n)
Subsection 229(1) of the Customs Act sets out those goods that are forfeited to the
Crown for the purposes of the Customs Act.
Under Part XII of the Customs Act, a warrant can be granted for the seizure of
forfeited goods. However, under subsection 183UA(1) of the Customs Act, certain
forfeited goods are defined as `special forfeited goods', including all prohibited
imports and prohibited exports. If goods are special forfeited goods, they can be
seized in a Customs place without a warrant. "Customs place' includes all
appointed wharves, ports or airports, and all Customs licensed depots and
warehouses.
Item 3 of Schedule 1 to the Bill will add a new class of forfeited goods to subsection
229(1) as new paragraph (na) in the following terms:
"(na) All goods that are the subject of a notice under subsection 112BA(1) and are
put on any ship or aircraft for export or are brought to any wharf or place for the
purpose of export."
Therefore, if a notice is in place before the goods are brought to a place of export for
the purpose of export, the goods will become forfeited goods. Also, if goods are at a
place of export and the notice is given while the goods are at that place, the goods
will become forfeited goods if they are then put on any ship or aircraft for export.
Item 2 of Schedule 1 to the Bill will add a new category of goods to the definition of
`special forfeited goods, being the forfeited goods referred to in new paragraph
229(1)(na). As above, this means that these goods will be able to be seized without
a warrant in a Customs place.
Customs Amendment (Military End-Use) Bill 2011 Page 7