IMG_3671

0:02

S… Speaker 2 (IMG_3671)

thank you how are you guys good thank you you must be bill and i am camilla camilla hi camilla good to meet you yes same we're just just waiting for georgio and sal i do know they got the uh request so sorry what were you saying no i was just saying let's hope it ends up on a bright note

0:42

S… Speaker 1 (IMG_3671)

earlier in the day, the purpose of this meeting, we've literally just got the reports on the import data, so that's in our possession. This is really about understanding the background to the transactions, just the download of contextual information for us to view what the data says.

1:08

S… Speaker 1 (IMG_3671)

And from that point, we'll at some stage issue an information request and start examining the trade data in the context of commercial documents. So there's a couple of layers to this that when we bring them all together gives us a good robust picture of what's going on. Sure.

1:42

S… Speaker 1 (IMG_3671)

I'm enjoying what I understand from the Bureau of Meteorology as probably one of the last sunny days of the year for me in Melbourne for quite some time. So it's been quite a temptation to just stay out in the sunshine. It's quite balmy here, 25 degrees. Lucky you. I wish the same for here, although, mind you, it's not raining for a change. Excellent, excellent. Where are you stationed?

2:13

S… Speaker 2 (IMG_3671)

We're in a little, well, I'm at home in New River in the Northern Rivers area, not far from Byron and Mangalo. Excellent. Lovely part of the woods. Used to be a lot nicer 20 years ago. A lot of places were a lot nicer 20 years ago. That's right. Others have found out that it's pleasant and they use money to get there. Giorgio.

3:05

S… Speaker 1 (IMG_3671)

Yep. Excellent. Awesome. Good. I was explaining that the purpose of this call was mostly contextual. We've had the customs data reports arrive after, what is it, four and a half weeks now, Camilla? Yep. So, you know, good things come to the day who wait.

3:35

S… Speaker 1 (IMG_3671)

It never seeks to surprise me how slow an automated system in theory is with government. But anyway, we've got those. The purpose of the call is to understand the transaction arrangements and ideas and information that's ephemeral to the data. So that gives us a good starting point for viewing.

4:05

S… Speaker 1 (IMG_3671)

the input data information and it will help us form an information request in terms of looking at documents that support the imports and what needs to happen in terms of any potential amendments or hopefully other forms of concession that could cancel out a free trade agreement.

4:36

S… Speaker 1 (IMG_3671)

I like the concession part of it. That sounds good. Look, there's usually many ways of skinning a cat. Certain commodities are difficult, quite frankly, Miran. But, you know, we'll see what we do. Yep. So, ask away. All right. So, can you tell us about, if you wouldn't mind, the business?

5:00

S… Speaker 1 (IMG_3671)

And I'm interested to know ownership, design, fabrication, all of the things around producing the product in the first instance. Okay, so we're talking specifically in relation to Jagger, because that's the one that is under question at the moment. All right, good. As far as I'm aware.

5:28

S… Speaker 1 (IMG_3671)

Well, I haven't had a chance to to go through all the import declarations to see whether there are other Anything any other hands or anything like that? Subsumed in them if it is if it is purely Jagger, then that's what we'll commence with Okay, so Jagger is a USA based company the owners

6:03

S… Speaker 2 (IMG_3671)

They must be citizens of the USA now, but they come from Mongolia originally. Oh, okay. From our point of view, when we first started purchasing from them over five years ago, they wholly designed, made, produced and sold their fashion items to us.

6:32

S… Speaker 2 (IMG_3671)

We were never involved, I've never had any discussion with them at all about duties as to what's payable or not. From their point of view, they have always believed that they are wholly USA made, which they are, they're made, but in recent, well, the very last delivery that was sent to us, there was some question as to...

7:01

S… Speaker 2 (IMG_3671)

whether they were truly USA, wholly USA made. I sent a number of emails back and forth trying to establish, are you USA made or aren't you? From my perspective, you've always said that you are, and we've accepted goods invoiced to us on that basis, on the basis that you understood and knew that you were USA based.

7:31

S… Speaker 2 (IMG_3671)

After a number of emails, quite a few, trying to ascertain as to is it actually USA made? Yes, it is made in the USA, but the material that the products are made from, apparently some of that is sourced out of China. So the actual material that they buy, they actually buy it in the USA, so somebody else must import it into the USA.

8:00

S… Speaker 1 (IMG_3671)

and then they buy that material from that wholesaler to make their fashion items. Do you know, are you aware of what percentage of the garments are...

8:18

S… Speaker 1 (IMG_3671)

supported by that that source of fabric is it all of them or is it just collars and cuffs and buttons or you know it's a it's an intricate um industry of course the old the good old um tcf industry i i i'm not definitely not i wouldn't have a clue um but from a from their perspective they may be able to determine

8:45

S… Speaker 2 (IMG_3671)

what materials were used for a particular fashion season. It would not have been, as far as I'm aware, it would not have been based on, look, we sourced X amount to make cuffs and Y amount to make collars.

9:07

S… Speaker 2 (IMG_3671)

I doubt that they would be able to do that. At most, if at all possible, they may be able to determine where the whole garment, where the material for that whole garment came from. That's about the extent of it. Yep, correct. I'm not certain that they can or can't, but I'm sure they would have records. But then, I guess...

9:37

S… Speaker 1 (IMG_3671)

Unless that material was made in the USA, does that not become irrelevant? Well, the reason I'm curious about proportions is that the rules in the Australia-US FTA were driven mainly by...

10:00

S… Speaker 2 (IMG_3671)

the u.s and they they have um what's called a fiber forward um approach to origin in terms of clothing and that means you know you've got to make the thread and it's thread forward but i haven't addressed the idea of something that possibly is majority uh u.s fiber for forward but not completely

10:27

S… Speaker 2 (IMG_3671)

And I think I can't remember anything in the agreement that deals with that scenario. And so what I'm really exploring, Miran, is do we have an arguable position? And if the answer is everything comes from China and we assemble it and sew it together and whatever and put a label on it, then...

10:54

S… Speaker 2 (IMG_3671)

That's that's where I have to start looking at other options if it is the case that they have You know elements that are Chinese and as you say season driven Requirements for I don't know fine polyester versus the heavy cotton that comes out of

11:17

S… Speaker 2 (IMG_3671)

southern southern usa then once again we've got a situation where we're not looking at every everything that you've imported we're only looking at parts so those are the those are the kinds of considerations that i'm uh i'm going through at the moment what about the labels what do they say when you say labels what do you mean on the garments i'm pretty sure helen

11:49

S… Speaker 1 (IMG_3671)

Does the label on Jagger garments say made in the USA? That was my wife who's a partner in the business. She's also the buyer for these goods. It definitely used to say made in the USA. Can I ask at some stage over the weekend or maybe Monday if you could take a few shots of some garments? Yeah, that'd be great.

12:20

S… Speaker 1 (IMG_3671)

It does say made in the USA. It says made in the USA. Can I put it? Oh, yep. It's pretty straightforward. Yeah. The other thing I'll look at is, so like Australia, USA has rules and requirements around the statement made in the USA. So I'll just look up what that means, what we're talking about.

12:59

S… Speaker 1 (IMG_3671)

Well, we, like I said right at the start, we've always been under the very distinct impression that the goods from Jagger were made in the USA. Yeah. Who questioned this, by the way? Um, the customs, Australian Border Control? Yeah, yeah, it was, um, yeah, it would have been you guys, um, would have been you guys requesting it because of something. Excuse me.

13:31

S… Speaker 1 (IMG_3671)

on the origin of the actual garment, and then that's where this all sort of started. So... I think Camilla's just run off to find something. I think she has some information. So there's another aspect to this, of course. Your correspondence with your supplier is important because the US-Australia agreement doesn't have...

14:02

S… Speaker 2 (IMG_3671)

certificate of origin per se so in a lot of other free trade agreements to claim preference you need a certificate of origin under the US agreement you you need to have as an importer to claim preference you need to have knowledge and or assertions from the supplier that satisfy you that the goods are of US origin

14:27

S… Speaker 2 (IMG_3671)

What that does is that prevents, that takes away any kind of threat of penalties. So the first idea is, do I pay duty or do I not pay duty? The other is, do I have a reason for not paying duty or have I just done it? And by the sounds of it, you've got...

14:48

S… Speaker 2 (IMG_3671)

you've got supporting information that has caused you to advise that the goods satisfy the free trade agreement. That's important for us to...

15:00

S… Speaker 1 (IMG_3671)

collate for you because that um that reduces that that in theory removes the risk of any kind of penalties from customs okay well i'd certainly would prefer no no penalties that's for sure well it'd be you know if if it's if it's in a duty-free circumstance then of course yeah we've we've satisfied both both tests but um it would be good um to have some representative

15:28

S… Speaker 1 (IMG_3671)

material from you where you've said, you know, is this from the US? Is this made in the US? Those questions weren't asked until we were questioned ourselves because we weren't aware of it. Understood. But as soon as we were aware of it, there were a lot of questions to and thrown quite a few emails trying to establish, is this, are your goods USA made or not?

15:58

S… Speaker 1 (IMG_3671)

Yeah Sorry, they did satisfy the fact that yes Everything is cut and made and put together and designed and everything all of those aspects of it were definitely USA That would be that would be good to have something that speaks to those matters Mirren because some as I say

16:22

S… Speaker 2 (IMG_3671)

There's tears of trouble in these things and if we can remove the penalty one, that's pretty handy too. Because even on the commercial invoice of Jagger, it does say origin USA, USA, USA, USA, USA. Oh, that communication is very powerful.

17:00

S… Speaker 1 (IMG_3671)

So the label's made in USA. What do we need to know? So I saw an example then of something made of rayon. Do we have other fabrics? There's silk as well, which my wife is just saying that the silk items also have made in the USA. Anything else? Would there be any other material, Helen, besides silk and rayon? They do have velvet. They do have some velvet from time to time. Sorry, Helen.

17:46

S… Speaker 1 (IMG_3671)

In winter, yeah. Cotton velvet? Velvet, yeah. Any straight cotton, Helen? I don't think so. Oh, there are some cotton things, so cotton and velvet. I think the thing that they were questioning originally was the rayon, I think, that somebody in border control had some idea that there isn't any rayon, I think it's rayon, produced in the USA.

18:23

S… Speaker 2 (IMG_3671)

So for those items, how can you claim that it was USA? I think. Am I right, Georgia, or not? Yeah, they started questioning because of the COO. So it sort of just got redlined. And then the way on probably alarmed them. That would have been my first step. Before you said that, I was making a mental note too.

18:55

S… Speaker 1 (IMG_3671)

Check who produces this these fabrics in the US. All right, that's good Again, I apologize. I haven't had a chance to look at the data What kind of what kind of values are we looking at a year? Off the top of my head I probably should have put it together pity that I didn't have a list of things that I needed Good grief

19:30

S… Speaker 2 (IMG_3671)

Like the last commercial invoice, you had two of them median for Island Lux and Island Lux Tribe. Commercial invoice value US 30,000 and then the other one US 32. Going back over the four to five years, it's going to be in excess of...

20:02

S… Speaker 1 (IMG_3671)

you know certainly it's going to be closer to four hundred thousand dollars australian american okay oh that's worth that's worth doing something about for the for australian customs yeah yeah do a better estimate because i've sent all of the invoices for the last four years back to uh um back to salvatore as well so he'll have

20:39

S… Speaker 1 (IMG_3671)

I'm surprised that you don't have them already, to be quite honest. But I sent all of the invoices, which is why I requested that we check with customs as to any other transactions. I sent the last four years' worth of purchases to Salvatore, all the commercial invoices, et cetera. All right. Well, Giorgio, if you could put those through to Camilla and myself, because we'll be running the exercise, that'd be great.

21:10

S… Speaker 1 (IMG_3671)

um values and things because the uh the data reports will give us all of the exact information yeah um and mostly air freight or sea freight which uh generally almost almost all of us female clothes it's not men's helen in jagger yeah for a short time there was a little bit of men's but it's generally women's fashion yep fair enough and they do some linen material as well apparently

22:08

S… Speaker 1 (IMG_3671)

And part of the reason for asking for that report as well was that there were purchases, you know, replenishment, you know, maybe two or three items that were sent and I wasn't sure whether that went through customs or not or what and whether I needed to find the details on those. There'll be something called a SAC. It's a short form.

22:41

S… Speaker 1 (IMG_3671)

Short-form customs entry. And many of those? A dozen or more, at least. Yeah. I wouldn't consider those to be the main game at this point. It's the full entries that we'll deal with first, because those smaller shipments will be reflective of our findings. Yeah, OK. It's a good point, though. Camilla...

23:14

S… Speaker 2 (IMG_3671)

I suppose that's a cargo report query to customs, isn't it? They don't come out on the... No, no, they don't because technically there's no real FID lodged against them because it's a self-assessed clearance unless, of course, if there's any quarantine risks or prohibited materials, then you do have to lodge a FID. Yeah, how about those for the moment? Let's hope that Australian customs...

23:48

S… Speaker 1 (IMG_3671)

them either because they're a nuisance to try and find the at the time i didn't even realize that they were coming to staff would order it and then next minute it arrived and i wouldn't even know about it so just um just for completeness sake so you're on deferred gst is that correct sorry deferred do you pay gst when you clear when you clear your cargo or do you do it on a quarterly basis i heard another voice all of a sudden

24:28

S… Speaker 1 (IMG_3671)

We pay GST. That's fine. I just needed to know that. There is an approach where you can pay your GST as a long sum after a period of time. We pay the GST before it comes in, essentially. Before we get it.

25:00

S… Speaker 2 (IMG_3671)

Yeah. Yep. That makes sense. We first said that these people were of Mongolian origin, Miran, because many years ago I bought a shirt, a very thick cotton shirt, and it was made in Mongolia, and there were concessional arrangements for Mongolian produce, and I thought, you beauty, that's all we have to do. Painted us all from Mongolia. Camilla.

25:42

S… Speaker 4 (IMG_3671)

any questions no i've just been looking at the reports and listening um trying to to match up what's on those reports to what we've been discussing so hopefully that's a good start okay well um what i will do for you first thing monday morning is we'll put put together um any other information that we require um georgio you'll send us those uh invoices

26:12

S… Speaker 2 (IMG_3671)

I'm assuming we'll be able to tie the invoices up with the import lines that we've got. So we'll do that and hopefully not trouble you too much, Miriam, with too many information requests and we'll get stuck into it. I think we'll probably give an interim view on the information within about 10 days. I think there's a...

26:43

S… Speaker 1 (IMG_3671)

a little bit of research that we need to go through, but we'll be reasonably quick in turning it around for you. I'd like to know sooner rather than later whether customs are just going to hone in on the Jagger, which was the issue, or whether they're now going to look at other things as well. Not that there's an issue with other things, but I just want to prepare myself. I think it'll make a difference where we end up with this.

27:20

S… Speaker 2 (IMG_3671)

For instance, you know, we've spoken about penalties. Well, we can knock the idea of penalties on the head. If they're just chasing straight duty, it's quite likely that they won't. They'll just confine it to those shipments. If you're caught up in a broader operation, you said it went red line, that suggests to me that they're actually targeting fabric goods out of the US.

27:51

S… Speaker 1 (IMG_3671)

for just this reason. So that will often be, you know, a limited operation. It'll be confined to a particular question. So are you saying it'll be most likely, but not necessarily, but most likely confined to USA imports? I think so. Okay, because the only other one is Citizens of Humanity, which is a gene brand that we purchase straight out of California as well.

28:22

S… Speaker 3 (IMG_3671)

Yeah, I've just looked at the report, Bill, and most of this, there's not a lot of stuff out of the US. A lot of it's out of Europe, Singapore, Hong Kong, Italy, Netherlands. So there's not a hell of a lot out of the US. Yeah, so to reiterate, I don't think you'll get a bigger line to the US fabrics.

28:58

S… Speaker 1 (IMG_3671)

Okay, but it would be comfortable to know whether you feel that that's the way it'll go. So as soon as you are able to determine what's in the report itself, that would be nice to know. Yep, yep. And of course, if it's, look, and I don't expect...

29:20

S… Speaker 2 (IMG_3671)

I've been in other circumstances where it's a total disaster and it's not just about claiming US free trade agreement or not. It's the tariff classifications are wrong, the values are wrong, the whole kit and caboodles are wrong. That's a different set of questions. I think you'll only jag a brand out of the US.

29:48

S… Speaker 1 (IMG_3671)

for your information well your information just to clarify citizens of humanity comes duty paid our invoices all say duty paid

30:00

S… Speaker 1 (IMG_3671)

And they're at Australian dollars rather than... They do the conversion and charge us in Australian dollars. And as I say, the invoices say duty pay landed. That's interesting. That's interesting for 2CF goods. That's an international contract term that usually is heavy machinery or something like that would be delivered duty paid.

30:34

S… Speaker 1 (IMG_3671)

Well, that's good because citizens of humanity, if they're delivering a duty paid, you don't do the clearance then, true? No. It comes straight in without any clear... Well, we don't see anything from either...

30:55

S… Speaker 1 (IMG_3671)

in the old days from Savino or Cargo Motors, nor any of the other DHL. It normally comes FedEx, and we don't see anything from FedEx apart from what's coming, and this is what's coming.

31:08

S… Speaker 1 (IMG_3671)

Are they small quantity shipments or are they full boxes? They're generally small quantities, often one or two boxes. Occasionally you might get three boxes worth of stock, but it's not big quantities. They're all quite small. Okay, and they're paying duty. That's interesting. That's what they're saying. Yeah, that's the trouble with those kinds of contracts. It's a black box. So all the charges are back to origin?

31:39

S… Speaker 2 (IMG_3671)

Yep. And it's very difficult for us to do a reverse calculation. Anyway, in 2012, and there was an earlier Australian Customs Notice liability for the receiver of goods under those what are called DDP, Delivered Duty Paid Arrangements, but we won't worry about that for the moment. Oh, Jesus, did I jump another can of worms, did I?

32:24

S… Speaker 2 (IMG_3671)

Putting it to one side. Handfuls of spread over. I'm less worried about it. It's, you know, we just want to deal with the main tested. The border force position can be maintained, but that's, you know, how revenue authorities go. They try and take what they can get until you push back on it. So I'm not worried about it at the moment. It's just worthwhile understanding with those kinds of contracts that...

33:07

S… Speaker 2 (IMG_3671)

As much as it's attractive on paper, the fact is that you're the person in country, you're the guy with the bank account in Australia and the revenue authorities, you know, will always try and go for a local. This is all information, you know, that is almost certainly not going to trouble you too much, but it's worth keeping in mind. Yeah.

33:39

S… Speaker 1 (IMG_3671)

All right. As I say, though, can you maybe get back to me at your earliest to let me know to what extent we're searching? We shall do that. Okay. To meet you, I want to see you, Giorgio, and we look forward to the documents. Thank you. Have a great weekend, everybody. Yes, good long weekend. Bye-bye. Thank you. Bye for now. See you.

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