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2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS)
BILL 2018
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Law Enforcement and Cyber Security,
the Hon Angus Taylor MP)
CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS)
BILL 2018
OUTLINE
The purpose of the Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
(the Bill) is to make amendments to the Customs Tariff Act 1995 (the Customs Tariff Act)
consistent with Customs Tariff Proposal (No.1) 2018 and Customs Tariff Proposal
(No. 2) 2018. The Bill also makes a technical amendment to Schedule 12 to the
Customs Tariff Act.
Customs Tariff Proposal (No. 1) 2018
Customs Tariff Proposal (No. 1) 2018 (the First Proposal) was tabled in Parliament on
7 February 2018. The First Proposal implemented an early outcome of the Indonesia-Australia
Closer Economic Partnership Agreement (IA-CEPA). As part of this early outcome, Australia,
agreed to remove customs duties on imports of rodenticides, fungicides, anti-sprouting products
and plant growth regulators and disinfectants containing a specific range of active substances;
and all insecticides and herbicides imported from Indonesia. In return Indonesia agreed to
reduce customs duties on Australian sugar exports.
Schedule 8 to the Customs Tariff Act provides preferential customs duty rates for
ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) originating goods.
As Indonesia is a signatory to AANZFTA, the decision was taken to implement the early
outcome by amending Schedule 8.
Article 2.3 of Chapter 2 of AANZFTA allows a signatory to unilaterally accelerate the
reduction and/or elimination of customs duties on originating goods of the other signatories.
Australia has invoked this provision to bring forward the elimination of duties for the
specified goods, mentioned above, from 1 January 2020 to 20 September 2017.
The amendments made by the First Proposal to Schedule 8 benefit all AANZFTA signatories.
All AANZFTA signatories, other than Indonesia, that export a significant volume of these
goods to Australia already have access to a 'Free' rate of customs duty for these products as
part of other free trade agreements.
These amendments commenced on 20 September 2017, the date on which the Notice of
Intention to Propose Customs Tariff Alterations (No. 1) 2017 commenced.
Part 1 of Schedule 1 to the Bill provides amendments to the Customs Tariff Act to reflect the
First Proposal.
Customs Tariff Proposal (No. 2) 2018
Customs Tariff Proposal (No. 2) 2018 (the Second Proposal) was tabled in Parliament on
31 May 2018. The Second Proposal implemented a 2018-19 Budget measure to provide a
'Free' rate of customs duty for placebos imported for use in clinical trials and clinical trial
kits containing either or both medicaments and placebos.
Page 2 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
The Budget measure was implemented through the creation of a new concessional item,
Item 56, in Schedule 4 to the Customs Tariff Act. Under item 56, goods that are kits
containing either or both medicaments and placebos, that do not indicate whether their
contents are medicaments or placebos, that are imported for use in a clinical trial in Australia
and which satisfy requirements prescribed by the relevant by-law; or placebos imported for
use in a clinical trial in Australia, are given a customs duty rate of 'Free'.
Currently, placebos and medicaments are classified to separate parts of the Customs Tariff
Act and must be separately identified and quantified under reporting requirements. These
requirements result in the 'unblinding' of blinded clinical trials.
Under item 56, importers will not be required to separately report the contents of each kit.
This simplifies the import reporting requirements for medicaments and placebos imported for
use in clinical trials as well as providing a 'Free' rate of customs duty for placebos used in
clinical trials.
The Budget measure complements the Governments' National Health and Medical Industry
Growth Plan which, amongst other measures, aims to promote Australia as a destination for
international clinical trials.
The tabling of the Second Proposal allows this measure to commence on 1 July 2018.
Part 2 of Schedule 1 to the Bill provides amendments to the Customs Tariff Act to reflect the
Second Proposal.
Repeal of item 135 of Schedule 12 to the Customs Tariff Act
The repeal of item 135 of Schedule 12 to the Customs Tariff Act is a technical amendment
that removes a redundant item from the table of preferential customs duty rates for the
China-Australia Free Trade Agreement (ChAFTA). Schedule 12 lists originating goods for
which there is or was a customs duty, other than 'Free', at the time that CHAFTA entered in
force. The removal of the item aligns Schedule 12 with changes made to the main tariff
schedule, Schedule 3 to the Customs Tariff Act, in 2017.
The repeal of table item 135 does not change the preferential customs duties applied to any
eligible goods imported under CHAFTA.
FINANCIAL IMPACT STATEMENT
Implementing the early outcome of IA-CEPA to remove customs duties from certain
herbicides and pesticides is estimated to reduce customs duties by $3 million over the
forward estimates.
The new concessional item to simplify the importation of clinical trial kits and placebos for
use in a clinical trial will have negligible impact on revenue over the forward estimates.
Page 3 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
The technical amendment to Schedule 12 has no financial impact.
Revenue ($m) 2017-18 2018-19 2019-20 2020-21 2021-22
Removing customs duties
from herbicides and -1.2 -1.2 -0.6 - -
pesticides - Schedule 8
Removing of customs
duty on placebos - - .. .. .. ..
Schedule 4
.. Not zero, but rounded to zero.
Page 4 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS)
BILL 2018
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Customs Tariff Amendment (Incorporation of Proposals) Bill 2018 amends the Customs
Tariff Act 1995 (the Customs Tariff Act) to:
repeal items 123-125 of Schedule 8, bringing forward the planned removal of customs
duties for certain herbicides and pesticides, consistent with Customs Tariff Proposal
(No. 1) 2018;
create a new Schedule 4 item that provides for a 'Free' rate of customs duty for
clinical trial kits and placebos imported for use in clinical trials, consistent with
Customs Tariff Proposal (No. 2) 2018; and
repeal table item 135 of Schedule 12.
Human rights implication
The Bill does not have any human rights implications.
Conclusion
The Bill is compatible with human rights.
MINISTER FOR LAW ENFORCEMMENT AND CYBER SECURITY,
THE HON ANGUS TAYLOR MP
Page 5 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS) BILL
2018
NOTES ON CLAUSES
Clause 1 - Short title
1. This clause provides for the Bill, when enacted, to be cited as the Customs Tariff
Amendment (Incorporation of Proposals) Act 2018.
Clause 2 - Commencement
2. Subclause (1) provides that each provision of this Act specified in column 1 of the table
in that subclause commences, or is taken to have commenced, on the day or at the time
specified in column 2 of the table. This subclause also provides that any other statement
in column 2 of the table has effect according to its terms.
3. Item 1 of the table provides that sections 1 to 3 and anything in this Bill, when enacted,
and not elsewhere covered by the table will commence on the day on which the Act
receives the Royal Assent.
4. Item 2 of the table provides that Schedule 1, Part 1 will be taken to have commenced on
20 September 2017.
5. Item 3 of the table provides that Schedule 1, Part 2 will be taken to have commenced on
1 July 2018.
6. Item 4 of the table provides that Schedule 1, Part 3 will commence on the day the Act
receives the Royal Assent.
Clause 3 - Schedules
7. This clause is the formal enabling provision for the Schedule to the Bill, providing that
each Act specified in a Schedule is amended in accordance with the applicable items of
the Schedule. In this Bill, the Customs Tariff Act 1995 (the Customs Tariff Act) is
being amended.
8. The clause also provides that the other items of the Schedule have effect according to
their terms. This is a standard enabling clause for transitional, savings and application
items in amending legislation.
Page 6 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
SCHEDULE 1 - AMENDMENTS
Part 1--Amendments commencing 20 September 2017
Customs Tariff Act 1995
Item 1 - Schedule 8 (table items 123 to 125)
9. Schedule 8 to the Customs Tariff Act provides for the preferential rates of customs duty
for AANZFTA originating goods. The Schedule lists originating goods for which there is
or was a customs duty, other than 'Free', at the time that AANZFTA entered into force.
10. Item 1 repeals table items 123 - 125 of Schedule 8 to the Customs Tariff Act.
Table Item Tariff Subheading Table Item Tariff Subheading
123 3808.52.90 123D 3808.69.90
(prescribed goods only)
123A 3808.59.90 124 3808.91.90
(prescribed goods only)
123B 3808.61.90 125 3808.93.00
123C 3808.62.90
11. Table items 123 - 125 cover rodenticides, fungicides, anti-sprouting products and plant
growth regulators and disinfectants containing a specific range of active substances;
and all insecticides and herbicides.
12. Table items 123 and 123A provide preferential rates of customs duty for prescribed
goods only. Prescribed goods are a defined subset of goods classified to a tariff
subheading and are specified in the Customs Tariff Regulations 2004. The remaining
goods classified to the subheading, those which are not prescribed in regulation, have a
'Free' rate of customs duty since AANZFTA entered into force.
13. Goods not specified in Schedule 8 are eligible for a for a 'Free' rate of customs duty for
AANZFTA originating goods. The repeal of Items 123-125 removes the duty on these
items for AANZFTA originating goods.
14. The repeal of Schedule 8 item 123 - 125 concludes the process of implementing an
early outcome of IA-CEPA.
Item 2 - Application provision
15. The IA-CEPA early outcome was implemented by Australia and Indonesia shortly after
being announced by the respective Trade Ministers. In order to effect this quickly, the
repeal of Items 123 - 125 of Schedule 8 was first implemented through the Notice of
Intention to Propose Customs Tariff Alterations (No. 1) 2017 which came into effect on
20 September 2017. This Notice was confirmed by the tabling of the Customs Tariff
Proposal (No. 1) 2018 on 7 February 2018.
Page 7 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
16. Item 2 provides that the amendments made by Part 1 of Schedule 1 of the Bill will
apply in relation to:
a. goods imported into Australia on or after 20 September 2017; and
b. goods imported into Australia before 20 September 2017, where the time for
working out the rate of import duty on the goods had not occurred before
20 September 2017.
17. The commencement date for these amendments, 20 September 2017, is consistent with
the commencement of Customs Tariff Proposal (No. 1) 2018.
Page 8 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
Part 2--Amendments commencing 1 July 2018
Customs Tariff Act 1995
Item 3 - Schedule 4 (at the end of Schedule 4)
18. Schedule 4 to the Customs Tariff Act lists a series of items that provide for a specified
concessional rate of duty if an import meets the criteria specified for that item. Items in
Schedule 4 are often, though not always, accompanied by a by-law that sets out further
criteria that must be met to qualify for the specified concession rate of duty.
19. Item 3 inserts Item 56, at the end of Schedule 4 to the Customs Tariff Act with the
following text:
Item Description of goods Rate of duty
56 Goods in respect of which the following apply: Free
(a) either:
(i) the goods are kits containing either or both
medicaments and placebos, the kits do not indicate
whether their contents are medicaments or placebos,
the kits are imported for use in a clinical trial in
Australia and the kits satisfy the requirements
prescribed by by-law; or
(ii) the goods are placebos imported for use in a clinical
trial in Australia;
(b) all requirements imposed by the laws of the Commonwealth,
relating to the importation of the goods, have been complied
with
20. Item 56 allows for blinded clinical trial kits, to be imported into Australia without
having to separately classify the placebo and the medicament.
21. The requirement to specify the classification of the goods and the exact quantities of
placebos or medicaments being entered stems from the general requirements in
Division 4 of Part XIII of the Customs Act 1901 that importers must provide accurate
information for all imports. The provision of this information effectively unblinds
blinded clinical trials, potentially invalidating or compromising the results of the trial.
22. The classification of clinical trial kits to item 56 is conditional upon the kits satisfying
requirements prescibed by by-law.
23. Item 56 also provides for a concessional customs rate of duty of 'Free' for placebos
imported separately for use in a clinical trial, that is those placebos imported not as part
of a clinical trial kit. This is to ensure that placebos for use in clinical trials have
consistent duty treatment notwithstanding the way they are imported.
Page 9 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
Item 4 - Application provision
24. Item 4 provides that the amendments made by Part 2 of Schedule 1 to the Customs
Tariff Act will apply in relation to:
a. goods imported into Australia on or after 1 July 2018; and
b. goods imported into Australia before 1 July 2018, where the time for working out
the rate of import duty on the goods had not occurred before 1 July 2018.
25. The commencement date, 1 July 2018, is consistent with the Budget measure and with
the commencement of Customs Tariff Proposal (No. 2) 2018.
Page 10 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018
Part 3--Technical amendments
Customs Tariff Act 1995
Item 5 - Schedule 12 (table item 135)
26. Item 5 repeals table item 135 from Schedule 12 to the Customs Tariff Act, removing
reference to previously repealed tariff subheading 3808.93.00.
27. Schedule 12 to the Customs Tariff Act provides for preferential rates of customs duty
for Chinese originating goods. This amendment realigns Schedule 12 with Schedule 3
to the Customs Tariff Act and has no duty implications.
28. Schedule 3 is based on the World Customs Organization's Harmonized Commodity
Description and Coding System which allows for the classification of all internationally
traded goods. Schedule 3 also specifies general and special rates of duty for each
classification.
29. As of 1 January 2017, Chinese originating goods classified to tariff subheading
3808.93.00 were eligible for a preferential customs rate of duty of 'Free'.
30. On 13 September 2017, the Customs Tariff Amendment (Proposal Incorporation and
Other Measures) Act 2017 repealed tariff subheading 30808.93.00 from Schedule 3,
and inserted the following:
-- Herbicides, anti-sprouting products and plant-growth
3808.93
regulators:
--- Paraquat dichloride with added emetic but not further Free
3808.93.10
prepared
3808.93.90 --- Other 5%
31. For consistency table item 135 of Schedule 12 should have also been repealed by the
Customs Tariff Amendment (Proposal Incorporation and Other Measures) Act 2017.
32. Chinese originating goods which are not specified in Schedule 12 are eligible for a
'Free' rate of customs duty. As Chinese originating goods classified to newly created
tariff subheadings 3808.93.10 and 3808.93.90 would be subject to a 'Free' rate of
customs duty, no new table items will be added.
33. This amendment will commence on the day that the Bill receives the Royal Assent.
Page 11 Customs Tariff Amendment (Incorporation of Proposals) Bill 2018