Navigating Risk: Legislative parameters for importing & exporting loans

With the increasing number of touring exhibitions that are completely or partially borrowed from international sources, Customs legislation effects the contractual arrangements between the museum.

Assessing the risks of importing and exporting loans is complex given the physical, security and legal implications of these transactions. Legislation can aid our ability to import and export items, particularly to facilitate the movement of items through airports without inspections.

Conversely, if the parameters and requirements of key legislation are not observed by museums and galleries, the risk to the material being imported or exported becomes very high.

This paper will examine three key pieces of legislation (Customs Act 1908, Quarantine Act 1908, and the Convention on International Trade of Endangered Species of Wild Fauna and Flora enacted in the Environment Protection and Biodiversity Act 1999), and using some recent examples, examine the process to comply with these legalities, highlighting some recent developments in these areas.

The Customs Act 1901 is the key piece of legislation that governs the import of material into Australia. In relation to loans it regulates our ability to bring loans into the country temporarily on a special permit, without paying tax or duty on the material being imported. This type of temporary import permit, called Event Status, is pivotal to our ability to borrow material. An application for Event Status is submitted to Customs through a specialist freight agent and/or customs broker. A single application can be made for an exhibition rather than individual applications for each shipment. The application form, covering letter and pro forma invoice that forms part of the application must detail the material being imported, details of any material that is subject to Quarantine restriction, its value, its movement within Australia (if it is touring), and the timeframe for departure. It must be submitted a minimum of 7 to 10 days before the shipment arrives so that clearance can be secured in advance of the shipment arriving, therefore mitigating any Customs inspection at the airport.

While the loans are in Australia they remain under the control of Customs. It is important that the material is identifiable on import and export; that it must be re-exported within a 12 month period; and that the material cannot be sold or further lent without the permission of Customs. The key to a successful and straightforward relationship with Customs is keeping the lines of communication open, and keeping them informed of everything well in advance. A common trap to be aware of in relation to Customs is museum/gallery staff bringing loan items into the country in their suitcases without notifying Customs and gaining pre-clearance. This is a risky practice, not only because of the obvious issues about the physical care of the material and possible inspection on arrival in the airport, but it also has financial implications if the material is shipped back to the country of origin. Customs in the country of origin will require tax and duty (as a percentage of the value) to be paid on re-entry of the material as they will have no record of the initial export.

With the increasing number of touring exhibitions that are completely or partially borrowed from international sources, Customs legislation effects the contractual arrangements between the museum/gallery which originally applies for the Event Status and the venue that disperses the exhibition/item back to its country of origin. If the holder of the Event Status is not involved in the re-export they need to set up a contract with the venue that is responsible to ensure that the Event Status is properly acquitted.

The key aspects of this type of contract should include:

  • The timeframe for re-export
  • The dispersing venue’s liability in relation to the terms of the temporary import permit; i.e. not to sell or further lend the items
  • Clearly defined responsibility for liability and costs relating to the acquittal of Event Status
  • Clear jurisdiction and conflict clauses.

Customs is not rocket science; it is a strictly administered process with clear guidelines that work as long as the communication with Customs officials is kept open. Usually issues are encountered when the exit of the material from the country is not properly considered before the material is imported. Many scenarios may effect planning the exit of the material – a tour venue may be added to an exhibition, or the museum/gallery may decide to acquire the work through gift or purchase. Customs will usually allow extensions to the Event Status as long as the request for an extension is made in advance of the Event Status expiring. If material brought in using Event Status is acquired, the GST and any other applicable duties must then be paid. It is important to note that the GST payable is based on the amount declared on the original temporary import permit. For example, if a work is brought into Australia using Event Status with a declared value of $10,000, and is subsequently purchased for $8,000, the GST will be based on the $10,000 declared at the time of import. It is also worth noting that if a work is gifted it still attracts GST.

The Quarantine Act 1908 is closely related to the Customs Act 1901, and aims to limit the introduction of undesirable plant and animal material into Australia. As part of the application for Event Status, material subject to quarantine is identified, so when the material physically arrives in the country, Customs automatically sends electronic notification to the Australian Quarantine Inspection Service (AQIS). The onus is then on the consignee to set up an AQIS inspection to have the material cleared for display at their museum or gallery (as long as they are a Quarantine Approved Premises). The material must be clearly labelled as quarantined, and held in isolation until AQIS staff inspect and release it, or order further treatment if infestation is discovered.

There have been several issues effecting the interaction between AQIS and museums/galleries in the last two years. The first issue was the introduction of the new wood regulations – International Standards for Phytosanitary Measures Publication no.15 (ISPM 15) – the guideline for regulating wooden packaging in international trade. This regulation means that all wooden packaging must be treated, and stamped as such, to ensure pests are not spread in wood. There has been much confusion about the application of this regulation amongst museum professionals and also within AQIS itself. For example, at the Art Gallery of New South Wales, we have had destruction orders from AQIS staff if they have not recognised the particular wood stamp. The reality of the application of the ISPM 15 regulation in Australia is that it is best to err on the side of caution and get wooden crates treated and stamped prior to import. If a wooden crate is not stamped, AQIS may still allow the crate to pass as long as it is free of infestation. It is important to note that even if an unstamped crate is passed by AQIS, it may be rejected when it re-enters its country of origin.

The second issue that has been a positive change, is the acceptance of low oxygenation (a combination of oxygenation and heat) by AQIS as an alternative fumigation treatment to methyl bromide and irradiation. This shift has been the result of careful negotiation and lobbying by a number of museum professionals, and successful low oxygenation treatments that have been observed by AQIS in museum/gallery environments. There is still a need to push further for changes to the legislation so that low oxygenation is formally recognised.

The final area of change relating to AQIS is their introduction of compulsory training for staff in Quarantine Approved Premises (QAP) in April 2006. It is now a requirement that in QAPs, quarantined material must be unpacked by, or in the presence of, staff trained in import Clearance Quarantine Awareness and Quarantine Approved Premises. The training in these two courses can be completed on-line, each taking less than a few hours. The training costs around $70 per person, and information (including the link to the training website) can be found here.

Another piece of legislation that is monitored and enforced by both Customs and AQIS is the Environment Protection and Biodiversity Conservation Act 1999 which formally enacts Australia’s commitment to the Convention on International Trade of Endangered Species of Wild Fauna and Flora (CITES). The aim of CITES is to make sure that trade does not threaten the plant or animal species of the 166 member countries. This legislation affects a wide range of material in museums, such as ivory, feathers, and animal specimens. The permits to move material affected by CITES for exhibition loans are made at the time of export, for example if a museum was borrowing ivory from England, it would make an application to Department of Environment, Food and Rural Affairs in England to export the ivory. When returning the loan the museum would make another application to Environment Australia to export the ivory from Australia. The full list of overseas CITES Authorities including contact details can be found at: www.cities.org/common/directy/e_directy.html. In Australia the application is called Permit to Export or Import Wildlife or Wildlife Products along with a supplementary application for Non-Commercial Exhibitions, and takes about two weeks to process.

Much of the material that museums/galleries are interested in exporting for loan is pre-CITES, that is the animal or plant material harvested prior to provision for that species in the Convention. Application for export is therefore made on the basis of a successful pre-CITES certificate. To gain this certificate, proof that the material was harvested prior to the Convention must be provided. This can be problematic for museums, as they usually have no evidence of the date of harvest. Many authorities, including Environment Australia, will be sympathetic to the problems of proving the source of very old material, or material from an indeterminate species of endangered animal (is the ivory from the Loxodonta Africana or Elephas maximus species?!). However, as our recent experience of exporting the Zen Mind, Zen Brush exhibition from the US proves, not all CITES authorities are approaching this issue with the same pragmatic approach.

Currently the US is extremely difficult to export CITES material from. For the Zen Mind, Zen Brush exhibition we were seeking to export Japanese scrolls with small ivory ends from a private collection. We had been warned that due to ongoing staff shortages in the US Fish and Wildlife Service we should put our application in well in advance of the export. The application was submitted around seven months prior to the export date, and was not processed because we were unable to provide the detailed level of information that the US Fish and Wildlife Service required. As the time for export approached we realised that the authority would not revise their decision so sent the scrolls to a conservator who replaced the ivory with wood – this was relatively easy for objects where the ivory is not integral, but would have been disastrous if the objects were made fully from a restricted plant or animal material. In discussing this issue with registrars and collection managers in US galleries, it is clear that this problem is widespread and severely limits loans of CITES restricted material from US collections.

In conclusion, while the three pieces of legislation discussed above are amongst the most fundamental to the ability of museums and galleries to import and export loans, there are many others that effect the movement of certain material. When planning any import or export find out which legislation effects your particular situation, and allow plenty of time for applications for any permits and licences. Carefully consider the best entry procedure for material, and pre-empt sale, tour, or further loan situations as much as possible before importing the material. Be aware that legislation in the country you are borrowing from or exporting to may also affect the processes that you need to carry out – a simple example is loans being returned to India are currently subject to search if there are no official customs seals present on each crate from the Customs Department in the country returning the loans. Legislation and processes relating to import and export change regularly, so sound out your particular project with fellow registrars that have had recent experience in the countries you are dealing with, and consult with freight agents and representatives from the relevant government departments to identify and mitigate the risks.

———–

By Charlotte Davy, Senior Exhibition Registrar at the Art Gallery of New South Wales

Charlotte Davy
Head of Art @ Museum Of New Zealand, Te Papa Tongarewa

© Copyright Australasian Registrars Committee 2020

WordPress website development by DMC Web.

Privacy policy