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2002-2003-2004
(Circulated
by authority of the
Minister for Justice and Customs,
Senator
the Honourable Christopher Martin Ellison)
The purpose of the Customs Tariff Amendment (Thailand-Australia Free
Trade Agreement Implementation) Bill 2004 is to amend the Customs Tariff
Act 1995 (the Tariff) to implement part of the Thailand-Australia Free Trade
Agreement (TAFTA) by:
• providing duty-free access for certain
goods and preferential rates of customs duty for other goods that are Thailand
originating goods in accordance with new Division 1D of Part VIII of the
Customs Act 1901 (the Customs Act). New Division 1D is proposed to be
inserted in the Customs Act by the Customs Amendment (Thailand-Australia Free
Trade Agreement Implementation) Bill 2004;
• phasing the above
preferential rates of customs duty for certain goods to Free by 2015;
• creating a new Schedule 6 to the Tariff to accommodate those
phasing rates of duty; and
• providing the mechanism to initiate
safeguard measures on sensitive products including canned tuna, processed
pineapple and pineapple juice, if necessary.
FINANCIAL IMPACT
STATEMENT
|
The estimated cost to the Government in revenue forgone as a result of the
proposed tariff reductions is set out
|
It is estimated that the customs duty forgone as a result of the
implementation of TAFTA will amount to $45 million in 2004-2005, $90
million in 2005-2006, $100 million in 2006-2007 and $110 million in
2007-2008.
REGULATION IMPACT STATEMENT
A
Regulation Impact Statement covering the tariff amendments is contained in the
Explanatory Memorandum for the Customs Amendment (Thailand-Australia Free Trade
Agreement Implementation) Bill 2004.
Clause 1 – Short Title
Clause 2 – Commencement
Item 1 of the table in this
clause provides that sections 1 to 3 and anything in the Act not covered
elsewhere in the table will commence on the day on which the Act receives the
Royal Assent.
Item 2 of the table provides that items
1 to 37 of Schedule 1 will commence on the later
of:
(a) 1 January 2005;
and
(b) the day on which the Thailand-Australia Free Trade
Agreement (TAFTA), done at Canberra on 5 July 2004, comes into force for
Australia.
Items 1 to 37 of Schedule 1 to the Bill contain amendments to
the Tariff that will operate if the Australia-United States Free Trade Agreement
(AUSFTA) commences on or before TAFTA. The US Free Trade Agreement
Implementation (Customs Tariff) Act 2004 (the AUSFTA Tariff Act) contains
the amendments to the Tariff to implement the AUSFTA.
Item 2 of the table
will not commence unless TAFTA comes into force and item 1 of Schedule 1 to the
AUSFTA Tariff Act commences before, or on the same day as, TAFTA.
The
item also provides that if item 1 of Schedule 1 to the AUSFTA Tariff Act
commences on the same day as TAFTA, then the amendments relating to TAFTA
commence immediately after item 1 of Schedule 1 to the AUSFTA Tariff
Act.
This item also provides that the Minister for Justice and Customs
must announce by notice in the Gazette the day on which TAFTA comes into
force for Australia.
Item 3 of the table provides that
item 38 will commence on the later
of:
(a) immediately after the commencement of Schedule 1 to the
Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005
Arrangements) Act 2004 (the TCF Act);
and
(b) immediately after the commencement of the provision(s)
covered by table item 2.
This item will not commence if both of the events mentioned in paragraphs
(a) and (b) do not occur.
Item 38 of Schedule 1 to the Bill contains an
amendment to item 73 of Schedule 4 to the Tariff which is proposed to be
inserted by the TCF Act. The AUSFTA Tariff Act also proposes to amend item 73.
Item 4 of the table provides that items 39 and 40 of Schedule 1, which
will insert new Schedule 6 into the Tariff and replace the User’s Guide,
will commence at the same time as the provision(s) covered by table item
2.
Item 5 of the table provides that items 1 to 35 of Schedule 2 will
commence on the later of the following days:
(a) 1 January 2005;
and
(b) the day on which TAFTA comes into force for Australia.
Items 1
to 35 of Schedule 2 contain amendments to the Tariff that will operate if the
AUSFTA commences after TAFTA. If the AUSFTA commences on or before TAFTA, these
amendments will not be required.
Items 1 to 35 of Schedule 2 will not
commence if:
(a) TAFTA does not come into force for Australia;
or
(b) item 1 of Schedule 1 to the AUSFTA Tariff Act commences before, or on
the same day as, TAFTA.
This item also provides that the Minister for
Justice and Customs must announce by notice in the Gazette the day on
which TAFTA comes into force for Australia.
Item 6 of the table provides
that item 36 of Schedule 2 commences on the later of:
(a) immediately
after the commencement of the TCF Act; and
(b) immediately after the
commencement of the provision(s) covered by table item 5.
However, item
36 of Schedule 2 will not commence if the TCF Act does not commence or items 1
to 35 of Schedule 2 do not commence.
Item 36 of Schedule 2 amends item 73
of Schedule 4 to the Tariff which is proposed to be inserted by the TCF Act.
The AUSFTA Tariff Act also proposes to amend item 73. Item 36 of Schedule 2
will operate if item 1 of Schedule 1 to the AUSFTA Tariff Act has not commenced
on or before the date TAFTA commences.
Item 7 of the table provides that
items 37 and 38 of Schedule 2 commence at the same time as the provisions
covered by table item 5.
Item 8 of the table provides that Part 2 of
Schedule 2 commences immediately before the commencement of item 1 of Schedule 1
to the AUSFTA Tariff Act.
However, Part 2 will not commence at all unless items 1 to 35 of Schedule
2 commence.
Part 2 contains amendments to the AUSFTA Tariff Act that
will be needed if TAFTA comes into force before the AUSFTA comes into
force.
Clause 3 – Schedule(s)
This
clause is the formal enabling provision for the Schedules to the Bill, providing
that each Act specified in a Schedule to this Act is amended or repealed as set
out in the applicable items of that Schedule. The clause also provides that any
other item in a Schedule to this Act has effect according to its
terms.
The phasing rates and the rates of customs duty on alcohol, tobacco and
petroleum products will be set out in new Schedule 6 to the
Tariff.
Amendments are being made to the Tariff to include references to
new Schedule 6 and Thai originating goods, and to specify duty rates in Schedule
4 (Schedule of Concessional Rates) to the Tariff, as required.
The AUSFTA
Tariff Act will contain amendments to many of the same provisions being amended
by Schedule 1. The amendments in Schedule 1 assume that the AUSFTA has entered
into force at the same time as or before TAFTA. If they enter into force at the
same time, the amendments in Schedule 1 will commence immediately after the
amendments in the AUSFTA Tariff Act.
Item 1 amends the definition of rate column in subsection
3(1) of the Tariff to include a reference to the third column of the table in
new Schedule 6 of the Tariff.
Item 2 amends subsection 9(1) by deleting the reference to Schedule 3, 4
or 5 and replacing it with a reference to Schedule 3, 4, 5 or 6.
Section 11 of the Tariff sets out the rules that apply to phasing rates
of customs duty.
Item 3 adds new paragraph (1)(bb) to include a
reference to a rate of duty set out in the third column of an item in the table
in new Schedule 6 to the Tariff that applies to the goods.
Item 4
After paragraph 11(1)(e)
Item 4 adds new paragraph (1)(f) to include
a reference to a specified date set out in the third column of an item in the
table in new Schedule 6 to the Tariff that applies to the goods.
Item 5 After paragraph 11(2)(ba)
Item 5 adds new paragraph
(2)(bb) to include a reference to a rate of duty set out in the third column of
an item in the table in new Schedule 6 to the Tariff that applies to the
goods.
Section 13 of the Tariff provides that goods are the produce or
manufacture of a country or place for the purposes of the Tariff only if they
are the produce or manufacture of that country or place under Division 1A or
Division 1B of Part VIII of the Customs Act.
Item 6 inserts new section
13B into the Tariff so that for the purposes of the Tariff, goods are Thai
originating goods if, and only if, they are Thai originating goods under new
Division 1D of Part VIII of the Customs Act. Division 1D of Part VIII of the
Customs Act sets out the rules for determining whether goods are Thai
originating goods.
Section 16 of the Tariff sets out how customs duty is calculated, in
particular for goods the produce or manufacture of particular countries and
classes of countries for preference purposes. Paragraph 16(a) provides that if
the goods are not the produce or manufacture of a Preference Country, the duty
must be worked out by reference to the general rate set out in the third column
of the tariff classification in Schedule 3 under which the goods are
classified.
Item 7 inserts a new subparagraph 16(1)(a)(iii) to ensure
that the general rate of duty set out in Schedule 3 does not apply to Thai
originating goods.
Item 8 inserts an explanatory note, after paragraph 16(1)(g) that refers
to subsection 16(3). Paragraph 16(1)(g) sets out the method of calculating duty
for goods from Developing Countries, subject to DCS rates of duty. As this
calculation for Thailand is conditioned by new subsection 16(3), a cross
reference is made to alert users to the provisions contained in this
subsection.
Item 9 Subparagraph 16(1)(k)(ii)
Item 9 makes a
technical amendment to replace a full stop with a semi colon to permit the
insertion of new paragraph 16(1)(l).
Item 10 At the end of subsection 16(1)
Item 10 inserts a new
paragraph 16(l)(ii) into the Tariff that sets out how customs duty is calculated
for Thai originating goods. This paragraph provides that duty payable on goods
that are Thai originating goods is Free unless the goods are classified to a
heading or subheading in Schedule 3 that is specified in column 2 of an item in
the table in new Schedule 6. If the goods are so classified, the duty on those
goods will be worked out by reference to the rate of duty set out in column
3 of the relevant item in Schedule 6.
Item 11 makes a technical amendment to subsection 16(2) to delete the
words “However, if” and to replace them with “If,” and
to insert a heading for this subsection.
Thailand will continue to be listed as a Developing Country under Part 4
of Schedule 1 to the Tariff subject to DCS rates of duty. Item 12 inserts a new
subsection 16(3) to provide that goods that are imported from Thailand that are
eligible for both the DCS rate of duty and the rate of duty applicable to Thai
originating goods under TAFTA are to pay the rate of duty applicable to Thai
originating goods.
Chapter 5 of TAFTA allows special safeguard action to be applied to
sensitive products. Australia has claimed special safeguards for four tariff
items covering certain tuna (including canned tuna) and pineapple products and
pineapple juice for the period from entry into force until 31 December 2008.
The special safeguard action can be taken without demonstrating damage to local
industry if a specified volume of imports is exceeded in a given calendar year.
If this occurs, customs duty on imports of those goods from Thailand will be
levied at the current general tariff rate for the balance of the calendar year.
The Department of Agriculture, Fisheries and
Forestry will advise Customs when a determination has been made to apply
the special safeguard action.
Item 13 inserts a new section 16A which
sets out the special safeguards for Thai originating goods.
New
subsection 16A(1) provides that if the Agricultural Minister is satisfied that
the quantity of safeguard goods imported into Australia during a calendar year
specified in column 3 of an item of the table in subsection (1)
exceeds:
(a) the quantity specified in that column for that year in
relation to the goods; or
(b) if the regulations specify another quantity
for that year in relation to the goods - the other quantity
the
Agricultural Minister may publish a notice in the Gazette in relation to
the goods.
Safeguard goods are defined, in subsection (7), as Thai
originating goods that:
(a) are classified to a subheading in Schedule 3
that is specified in column 2 of item 1 or 3 of the table in this section (i.e.
new section 16A); or
(b) are classified to a subheading in Schedule 3 that is
specified in column 2 of item 2 of the table in this section and are canned;
or
(c) are classified to a subheading in Schedule 3 that is specified in
column 2 of item 2 of the table in this section and are not
canned.
Therefore, before the special safeguard provisions apply, the
goods must first be Thai originating goods. Also, for goods classified to
subheading 2008.20.00 (item 2 of the table), there are two classes of safeguard
goods - canned and not canned.
The table specifies a quantity for each of
the goods that may be subject to the special safeguards for each of the calendar
years 2005, 2006, 2007 and 2008. For example, for the processed pineapple
products, the table specifies a quantity in litres for canned pineapple and a
quantity in kilograms for pineapple that is not canned, for each of the calendar
years.
New subsection 16A(2) provides that in applying subsection (1) to
item 3 of the table, the quantity applicable for a calendar year applies to the
sum of the quantities of the following goods imported in that year:
(a)
Thai originating goods classified to subheading 2009.41.00;
(b) Thai
originating goods classified to subheading 2009.49.00.
The effect of this
provision is that the quantity of imports of both of the goods referred to in
paragraphs (a) and (b) will count towards the quantity specified in column 3 of
item 3 of the table in section 16A. The example set out under this subsection
illustrates the application of this provision.
New subsection 16A(3)
provides that the notice must specify:
(a) the safeguard goods;
and
(b) that the quantity of the goods imported into Australia during the
applicable calendar
year exceeds the quantity applicable for that
year.
The notice may also contain any other information that the
Agricultural Minister considers appropriate.
New subsection 16A(4)
provides that a notice under this section may specify one or more safeguard
goods. This will provide the facility for the Agricultural Minister to include
more than one safeguard good in the one notice should the quantities be exceeded
for more than one safeguard good at the same time.
New subsection 16A(5) provides that if:
(a) the Agricultural
Minister publishes a notice under this section; and
(b) any safeguard goods
specified in the notice are imported into Australia during the period beginning
on the day after the publication day and ending on 31 December of the
calendar year concerned;
then the duty in respect of those goods must be
worked out by reference to the general rate of duty set out in the third column
of the tariff classification under which the goods are classified (and not under
paragraph 16(1)(l)). Therefore, despite the safeguard goods the subject of the
notice being Thai originating goods, they shall have to pay the general rate of
customs duty, and are no longer eligible for a “Free” rate of
duty.
New subsection 16A(6) sets out an exception to subsection 16A(5)
and provides that subsection (5) does not apply to goods exported from Thailand
on or before the publication day under a contract entered into on or before the
publication day. Therefore, two conditions must be satisfied before subsection
(5) does not apply.
However, the quantity of the goods to which
subsection (5) does not apply that are imported in the remainder of the calendar
year after the publication day must be counted towards the quantity applicable
to the same kind of goods for the next calendar year.
Subsection 16A(7)
also defines Agricultural Minister as the Minister administering
the Primary Industries (Excise) Levies Act 1999.
Section 18 of the Tariff sets out how customs duty is calculated in those
circumstances where a concessional rate of customs duty under an item in
Schedule 4 to the Tariff is provided for particular goods. In particular,
subsection 18(1) provides that a concessional rate of customs duty can be used
only where the rate of customs duty is less than that which would otherwise be
payable in Schedule 3.
Item 14 amends subsection 18(1) to add a new
paragraph (1)(c). This ensures that if an item in Schedule 4 applies to goods,
that item applies only if the duty in respect of those goods under that item is
less than the duty that, but for this section, would be payable under an item in
the table in Schedule 6 that applies to the goods.
Schedule 4 to the Tariff lists approximately 100 items where a
concessional rate of customs duty is provided for particular goods. Section 18
of the Tariff sets out how customs duty is calculated for goods to which a
concessional item applies, in particular for goods the produce or manufacture of
particular countries and classes of countries for preference purposes.
Paragraph 18(2)(a) provides that if the goods are not the produce or
manufacture of a Preference Country, the duty must be worked out by reference to
the general rate set out in the third column of the item in Schedule 4 which
applies to the goods.
Item 15 adds a new subparagraph 18(2)(a)(iii) to ensure that the general
rate of duty set out in Schedule 4 also does not apply to Thai originating
goods.
Item 16 inserts an explanatory note, after paragraph 18(2)(g) that refers
to subsections 18(3) and 18(4). Paragraph18(2)(g) sets out the method of
calculating duty for goods from Developing Countries, subject to DCS rates of
duty, if an item in Schedule 4 of the Customs Tariff applies to those goods. As
this calculation for Thailand is conditioned by new subsections 18(3) and 18(4),
a cross reference is made to alert users to the provisions contained in these
subsections.
Item 17 inserts a new paragraph 18(2)(l) into the Tariff to set out how
customs duty is calculated for goods that are Thai originating goods and that
are subject to a concessional item in Schedule 4. This paragraph provides that
if the goods are Thai originating goods and a rate of duty that applies in
relation to Thailand is set out in the third column of an item in Schedule 4,
the amount of duty is calculated by reference to that rate of duty. If there is
no such rate, the rate is Free.
Item 18 At the end of section
18
Item 18 inserts a new subsection 18(3). This subsection provides
that if goods are the produce or manufacture of Thailand under Division 1A of
Part VIII of the Customs Act (and hence eligible for a concessional rate of duty
as a DCS country) and are Thai originating goods under Division 1D of Part VIII
of the Customs Act, the amount of duty will be that payable on Thai originating
goods.
Item 19 After paragraph 19(1)(b)
Section 6A of the
Excise Tariff Act 1921 provides for the automatic indexation of certain
excise rates of duty in line with movements in the Consumer Price Index in
February and August of each year. The goods to which automatic indexation
applies are certain alcohol and tobacco products.
Section 19 of the
Tariff provides for the same indexation to be made to customs rates of duty for
equivalent imported goods. For this purpose, section 19 contains a table that
pairs customs tariff subheadings with the corresponding excise tariff
items.
Item 19 amends subsection 19(1) by adding, in new subparagraph
(c), a reference to the rate column in new Schedule 6 of the Tariff to enable
the indexation provisions to apply to the rates of customs duty for those
alcohol and tobacco products that are Thai originating goods.
Schedule 4 to the Tariff lists approximately 100 items where a
concessional rate of customs duty is provided for particular goods. In most
cases, the concessional rate of customs duty for such goods is Free. However,
in some circumstances, a lower rate of customs duty than the general rate is
payable.
As subsection 18(2) of the Tariff provides that the rate of
customs duty for Thai originating goods, subject to a concessional item in
Schedule 4, is Free unless a rate for Thailand is specified, it is necessary to
specify a rate of customs duty for Thai originating goods in these
circumstances, as Annex 2B of TAFTA only allows duty concessions for goods in
Schedule 3 to the Tariff.
Items 20, 21, 23, 25, 26, 27, 29, 30, 31, 32,
33, 34, 35, 36 and 37 amend the existing rates of customs duty for relevant
Schedule 4 items by adding an extra line that specifies the appropriate duty
rate for Thai originating goods.
Items 22 and 24 insert a reference to
new Schedule 6 in the description of goods for concessional items 20A and 20B
(goods returned to Australia after repair overseas).
Item 28 amends the
duty rate for item 44 by including a rate for Thai originating goods that refers
to the duty set out in the third column of an item in the table in new Schedule
6. Item 44 grants concessional entry to particular imported goods that are for
use in the manufacture of excisable goods in terms of section 24 of the
Excise Act 1901. This amendment ensures that this concession will apply
to Thai originating goods.
Item 38 amends item 73 of Schedule 4 to the
Tariff. Item 73 is being inserted by the Customs Tariff Amendment (Textile,
Clothing and Footwear Post-2005 Arrangements) Bill 2004.
This item
will not commence unless the Customs Tariff Amendment (Textile, Clothing and
Footwear Post-2005 Arrangements) Act 2004 and TAFTA enter into force. If
both of these events occur, this amendment will commence on the later of these
two events.
Item 39 At the end of the Act
Item 39 inserts new Schedule 6 into the Tariff.
Items 1, 2, 4 to
141 and 159 to 172 of the table in Schedule 6 impose customs duty on certain
alcohol, tobacco and petroleum products that are Thai originating goods at a
rate that is equivalent to the excise duty imposed, under the Excise Tariff
Act 1921, on the same goods when domestically produced, in accordance with
Article 1.2 (General Definitions) paragraph 4(a) of TAFTA.
Section 16 of the Tariff will provide that the rates of customs duty for
Thai originating goods are Free unless the goods are classified to a heading or
subheading in Schedule 3 that is specified in column 2 of an item in
the table in Schedule 6, whereby the rate of customs duty set out in column
3 of that item will apply. Therefore, it is necessary to include the relevant
headings and subheadings of Schedule 3 for certain alcohol, tobacco and
petroleum products in Schedule 6 and to specify a rate of customs duty for these
goods in order to ensure that customs duty continues to apply to these goods as
Thai originating goods. These goods are not subject to the phasing regime set
out in Annex 2B of TAFTA.
Item 3, items 142 to 158 and items 173 to 1179
of the table in Schedule 6 impose phasing rates of duty on Thai originating
goods listed in Annex 2B of TAFTA. TAFTA provides that rates of customs duty
for certain Thai originating goods are to be reduced to Free over a period of
time. Column 3 of the table in Schedule 6 opposite the relevant headings and
subheadings of Schedule 3 to the Tariff sets out the timing of those phasing
rates and also the rates of customs duty that will apply to Thai originating
goods at each step of that phasing.
Item 40 User’s
Guide
This item repeals and substitutes the User’s Guide to the
Tariff to include appropriate references to new Schedule 6 to the
Tariff.
Schedule 2 – Amendments commencing before the US Free
Trade Agreement legislation commences
Part 1 –Customs Tariff
amendments
Part 1 (except item 17) contains substantially the same
amendments as items 1 to 40 of Schedule 1 to the Bill. However, these
amendments will operate if the AUSFTA is not in force for Australia on or before
TAFTA enters into force for Australia.
The differences are required as
the descriptions of where the amendments need to be made will be different than
as set out in Schedule 1. Additionally some amendments will be
combined.
Item 17 inserts section 20A into the Tariff, which will provide
that the Governor-General may make regulations prescribing
matters:
(a) required or permitted by the Tariff to be prescribed;
or
(b) necessary or convenient to be prescribed for carrying out or giving
effect to the Tariff.
This same amendment is contained in the AUSFTA
Tariff Act.
Regulations may be made under new section 16A of the Tariff
(see item 10 of Schedule 2 to the Bill) and hence this provision which confers
on the Governor-General the power to make regulations is needed when new section
16A commences. If TAFTA enters into force before the AUSFTA, item 14 of the
AUSFTA Tariff Act which also inserts the same section 20A into the Tariff, will
be repealed (see item 40 of Schedule 2 to the Bill).
Part 2
– US Free Trade Agreement legislation amendments
Part 2
amends the US Free Trade Agreement Implementation (Customs Tariff) Act
2004. These amendments are necessary if TAFTA enters into force for
Australia before the AUSFTA enters into force for Australia. If this occurs,
Part 1 of Schedule 2 will amend the Tariff.
Part 2 makes the necessary
amendments to the AUSFTA Tariff Act to take into account the amendments that
will have already been made to the Tariff by Part 1 of Schedule 2. Part 2 will
commence immediately before the commencement of item 1 of Schedule 1 to the
AUSFTA Tariff Act and does not change the substance of the amendments in that
Act.