PNG Customs Service chief commissioner Ray Paul and Australian Border Force Commissioner Roman Quaedvlieg signed the MOU in Canberra this week.
The agreement enables the two agencies to conduct joint operational activities, such as joint maritime patrols in the Torres Strait, the deployment of detector dogs to PNG and increased information sharing arrangements.
The Australian government said the MOU would also enhance the capabilities of both agencies through partnership arrangements, where officers were embedded within the partner agency to assist in the development of specialist skills and expertise.
The annual meeting is the principal bilateral engagement between the Australian Department of Immigration and Border Protection and the Papua New Guinea Customs Service.
"Important discussions occurred on a broad range of matters of mutual interest, including cooperation on APEC 2018, trade facilitation, maritime security and transnational crime," the Australian government said.
The Ngunnawal People, the traditional owners of the land, were acknowledged and a traditional smoking ceremony, an ancient custom practised by Aboriginal and Torres Strait Islander people, was performed to welcome the PNG delegation.
Quaedvlieg presented Paul with an Aboriginal didgeridoo and clap sticks at the ceremony and said the relationship with the PNG Customs Service was one of the agency's most important regional relationships.
"This latest agreement covers a five-year period until 2021 and is further evidence of the long-term commitment to cooperation between the Australian Border Force and the PNG Customs Service," Quaedvlieg said.
"Australia has strong historical ties with Papua New Guinea on customs matters, dating back to 1888 when the colony of Queensland assisted in the establishment of customs posts in Port Moresby and on Samarai Island."