Import News: The New MAF Container Control System

Import News from the Importers Institute of New Zealand
28 April 2004 - The New MAF Container Control System

(This article is based on an address delivered today to the 4th Annual Ports and Shipping Conference)

My friend Pam is still fuming. On arrival at Auckland airport, she was greeted by a $200 fine, because her shoes had some dirt - from one of Melbourne's better golf courses.

You see, Pam's golf shoes are a threat to our 'biosecurity'. She is not alone. Anyone who forgets to declare a kiwi fruit taken from the Koru lounge in Sydney will face the same penalty. Never mind that the fruit was most probably grown right here in New Zealand.

In the first year of the instant fine system, about 9,400 people were fined, one quarter of them New Zealanders. The total take was about $1.6 million.

Pam's golf shoes are about as dangerous to our 'biosecurity' as container loads of Australian steel beams, German chemicals, Scottish whiskey or American aircraft parts - that is, not at all. All these goods need to be declared to our quarantine bureaucracy, in addition to, and quite separately from, the usual Customs entry. If they are not, importers face higher costs and delays.

The need to declare the contents of containers with no biological risk material in them is quite new. It came into force on 1 January of this year. A declaration form (in English) needs to be signed by Mr Wong in Shanghai or Herr Schmidt in Bremen.

The importer (or his agent) then has to fill out yet another declaration form and fax them both to MAF (Ministry of Agriculture and Forestry). He can't email them, because MAF does not yet appear to have the necessary technology.

The information on the fax is keyed into a database by quarantine officials. A permit is then printed and faxed back to the importer. Meantime, the container is not allowed to move off the wharf.

In early January, there was some congestion on the wharves. MAF's fax machine couldn't cope. Importers were greeted with the announcement ''Sorry, this mailbox is full. Goodbye.'' They had to send a courier to go down and queue up at the counter in MAF's wharf office.

Congestion is not so bad now. MAF must have got a bigger fax machine. Importers have become used to the idea that it takes one or two days to jump through MAF's hoops. The average additional cost to comply with these new regulations is more than $20 per container.

Are we any safer from the introduction of pests? We can't tell; these programmes are not usually the subject of rigorous independent review - anecdotes are used instead.

There is, however, one thing that we know for sure. Most of the people receiving all those faxes, keying information into databases, printing permits and faxing them back to importers are trained in insect spotting. They aren't spotting any bugs, while dealing with the paper war.

This outburst of bureaucratic trade impediment is not limited to New Zealand. Just yesterday, I got an email from our associates in India. It quoted a new regulation: ''The Order may be called Plant Quarantine (Regulation of Import into India) Order 2003.

''All consignments being imported into India by air and sea require a phytosanitary certificate from country of origin if articles have been packed with [wood] packaging materials. This is mandatory.

''If the phytosanitary certificate does not accompany the shipment, penalty is to be paid to Customs.

''The procedure for obtaining permission and clearance from Customs / Local quarantine authorities is extremely expensive, cumbersome and lengthy.''

(Did you notice a hint of pride in that last bit?)

How did we in New Zealand get to go down this road? Public policy theory holds that the principal driver of bureaucracies is something called 'budget maximisation'. You may be familiar with this concept under its common name of 'empire building'.

The main limit on this constant pressure for expansion is the political process. Elected officials are supposed to be able to balance the self-interest of bureaucrats with the interests of other sectors of the voting public, particularly those of producers.

A problem can arise when elected officials stop listening to their constituents. In the case of New Zealand, we happen to have a government heavily influenced by people like the Greens and former trade union activists, for whom business is the enemy.

This will be corrected in due course and in the usual manner, but the damage inflicted on the New Zealand economy in the meantime is very real.

In fairness, the people who design these systems will tell you that they are merely responding to public demands. We seem to have created this fiction that we can wrap the whole country in a sterilised bubble.

Take the case of the moths. They were supposed to decimate our plantation forests, although they originate in countries that have extensive pine forests.

We have already spent more money trying to eradicate the moths than their estimated economic damage, with such an estimate being probably inflated. The depressing thing is that yet another species of 'catastrophic' pest will be found sooner or later and the whole expensive circus will start again.

We even tolerated being dumped on with tonnes of insecticide from a great height, pretending to believe official assurances that the chemicals are perfectly harmless (yeah, right).

We must also not ignore the impact of plain old protectionism, masquerading as 'biosecurity', can have on an economy. The experience of the Chilean grapes scare of 1989 is a cautionary tale. The following are extracts of a paper written by Eduardo Engel of Stanford University (http://cowles.econ.yale.edu/~engel/pubs/grapes.pdf).

''On Monday March 13th 1989, the FDA announced it had detected in the port of Philadelphia two Chilean grapes containing cyanide. Although the dose was not lethal, the FDA issued a national news release announcing its decision to quarantine all fruit from Chile headed for the US market, calling on stores to take it off their shelves and consumers to avoid consuming the fruit.''

''In Chile, the measure caused huge public outcry, because of the enormous losses it would cause. Share prices fell immediately, with shipping company stocks, whose prices dropped 10.7%, the most affected.''

''On November 16th 1989, the Wall Street Journal published an extensive report by journalist Bruce Ingersoll, presenting evidence that strongly suggested the fruit had been poisoned in the US and not in Chile. Chilean and US experts argued that the grapes couldn't have been poisoned in Chile, nor could cyanide have been injected. Some specialists cast doubt on the ''miraculous'' way in which the two contaminated grapes were found amidst a shipment of millions of bunches of grapes.''

One of the main objectives of the new MAF container control system is to train those people who unpack containers on how to spot risks and what to do if they find bugs. We fully support that objective.

MAF has agreed to dismantle the cumbersome new paper-based controls on 1 July 2004. After that date, it will rely on copies of the electronic declaration that importers already submit to Customs. We wish them every success.

-- Previous Import News items are published on our website http://www.importers.org.nz.

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