Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2002-2003-2004
(Circulated
by authority of the
Minister for Justice and Customs,
Senator
the Honourable Christopher Martin Ellison)
The purpose of the US Free Trade Agreement Implementation (Customs
Tariff) Bill 2004 is to amend the Customs Tariff Act 1995 (the Tariff) to
implement part of the Australia-United States Free Trade Agreement (AUSFTA)
by:
• providing duty-free access for certain goods and preferential
rates of customs duty for other goods that are US originating goods in
accordance with new Division 1C of Part VIII of the Customs Act 1901 (the
Customs Act). New Division 1C is proposed to be inserted in the Customs Act by
the US 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 5 to the Tariff to accommodate the
AUSFTA arrangements; and
• inserting a regulation making power in
the Tariff to prescribe certain footwear that will be subject to the phasing
rates of customs duty.
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 the AUSFTA will amount to $190 million in 2004-2005, $400
million in 2005-2006,
$420 million in 2006-2007 and $450 million in
2007-2008.
REGULATION IMPACT STATEMENT
A
Regulation Impact Statement covering the tariff amendments is contained in the
Explanatory Memorandum for the US Free Trade Agreement Implementation
Bill 2004.
Clause 1 – Short Title
This clause provides for the
Act, when enacted, to be cited as the “US Free Trade Agreement
Implementation (Customs Tariff) Act 2004”.
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 32 of Schedule 1
will commence on the later of:
(a) 1
January 2005; and
(b) the day on which the Australia-United States
Free Trade Agreement, done at Washington DC on 18 May 2004, comes into force for
Australia.
This item will not commence if the event mentioned in
paragraph (b) does not occur.
This item also provides that the Minister
for Trade must announce by notice in the Gazette the day on which the
AUSFTA comes into force for Australia.
Item 3 of the table provides that
item 33 of Schedule 1 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; and
(b) immediately after the commencement
of the provisions 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
4 of the table provides that item 34 of Schedule 1, which will insert new
Schedule 5 into the Tariff, will commence at the same time as the provisions
covered by table item 2.
Item 5 of the table provides that items 35 to 56
of Schedule 1 will commence on the later of:
(a) the start of the day on
which the Customs Tariff Amendment (Fuels) Act 2004 receives the Royal
Assent; and
(b) immediately after the commencement of the provisions
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 6 of the
table provides that item 57 of Schedule 1 commences at
the same time as the provisions covered by table item 2.
Clause 3
– Schedule(s)
This clause is the formal enabling provision
for the Schedule 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.
On entry into force of the AUSFTA, the US Free Trade Agreement
Implementation (Customs Tariff) Bill 2004 will amend the Tariff to provide
a rate of customs duty of Free for US originating goods, unless a rate of
customs duty is specified for those goods. Under the AUSFTA, rates of customs
duty for certain US originating goods will phase to Free over a number of years,
and certain alcohol, tobacco and petroleum products will continue to be subject
to rates of customs duty that are equivalent to the rates of excise duty on
those goods if they were locally manufactured. Second hand cars will also
continue to pay the additional duty of $12,000 per vehicle.
The phasing
rates and the rates of customs duty on alcohol, tobacco and petroleum products
will be set out in new Schedule 5 to the Tariff.
Amendments are being
made to the Tariff to include references to new Schedule 5 and US originating
goods, and to specify duty rates in Schedule 4 (Schedule of Concessional Rates)
to the Tariff, as required.
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 5 of the Tariff.
Item 2 amends subsection 9(1) by deleting the reference to Schedule 3 or
4 and replacing it with a reference to Schedule 3, 4 or 5.
Section 11 of the Tariff sets out the rules that apply to phasing rates
of customs duty.
Item 3 adds new paragraph (1)(ba) to include a
reference to a rate of duty set out in the third column of an item in the table
in new Schedule 5 to the Tariff that applies to the goods.
Item 4
After paragraph 11(1)(d)
Item 4 adds new paragraph (1)(e) to include
a reference to a specified date set out in the third column of the table in new
Schedule 5 to the Tariff that applies to the goods.
Item 5 After
paragraph 11(2)(b)
Item 5 adds new paragraph (2)(ba) to include a
reference to a rate of duty set out in the third column of the table in new
Schedule 5 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
13A into the Tariff so that for the purposes of the Tariff, goods are US
originating goods if, and only if, they are US originating goods under new
Division 1C of Part VIII of the Customs Act. Division 1C of Part VIII of the
Customs Act sets out the rules for determining whether goods are US originating
goods.
Item 7 At the end of subsection 14(1)
Subsection
14(1) of the Tariff applies customs duty to goods from particular countries or
places or classes of countries or places by reference to abbreviations for those
countries and classes of countries.
Item 7 adds a new paragraph (k) to
section 14 to specify that a rate of duty set out in the rate column in Schedule
4 applies in relation to the United States of America if “US” is
specified in relation to that rate.
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 8 replaces paragraph 16(a) to ensure that the general
rate of duty set out in Schedule 3 also does not apply to US originating
goods.
Item 9 inserts a new paragraph 16(k) into the Tariff that sets out how
customs duty is calculated for US originating goods. This paragraph provides
that duty payable on goods that are US 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 5. 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 5.
Item 9 also inserts a new subsection 16(2) into the Tariff that provides
that if column 2 of an item in the table in Schedule 5 includes
“(prescribed goods only)”, subparagraph (1)(k)(i) does not apply to
the goods unless the goods are also prescribed for the purposes of that item.
Items 921 to 927 include “(prescribed goods only)”. This is
explained in more detail in the notes on those items.
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 10 repeals and substitutes subsection 18(1)
to add a new paragraph (1)(b). 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 5 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 11 repeals and substitutes paragraph 18(2)(a)
to ensure that the general rate of duty set out in Schedule 4 also does not
apply to US originating goods.
Item 12 inserts a new paragraph 18(k) to set out how customs duty is
calculated for goods that are US originating goods and that are subject to a
concessional item in Schedule 4. This paragraph provides that duty for US
originating goods is the rate that applies in relation to the United States of
America set out in the third column of an item in Schedule 4, or, where no rate
of customs duty is specified, Free.
Item 13 Subsection 19(1)
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, tobacco and petroleum
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 13 amends subsection 19(1) to
add a reference to the rate column in new Schedule 5 of the Tariff to enable the
indexation provisions to apply to the rates of customs duty that apply to US
originating goods.
Item 14 Before section 21
Item 14
inserts a new section 20A that allows the making of regulations prescribing
matters in relation to the Tariff.
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 US originating goods, subject to a concessional item in
Schedule 4, is Free unless a rate for the US is specified, it is necessary to
specify a rate of customs duty for US originating goods in these circumstances
as Annex 2B of the AUSFTA only allows duty concessions for goods in Schedule 3
to the Tariff.
Items 15, 16, 18, 20, 21, 22, 24, 25, 26, 27, 28, 29, 30,
31 and 32 amend the existing rates of customs duty rates for relevant Schedule 4
items by adding an extra line that specifies the appropriate duty rate for US
originating goods.
Items 17 and 19 insert a reference to new Schedule 5
in the description of goods for concessional items 20A and 20B (goods returned
to Australia after repair overseas).
Item 23 amends the duty rate for
item 44 by including a reference to new Schedule 5. 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 US originating
goods.
Item 33 amends item 73 of Schedule 4. Item 73 is being inserted
by the Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005
Arrangements) Bill 2004. Item 73 will need to be amended to include a reference
to a rate of duty for US originating goods.
This item will not commence
unless the Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005
Arrangements) Act 2004 and the AUSFTA enter into force. If both of these
events occur, this amendment will commence on the later of these two
events.
Item 34 At the end of the Act
Item 34 inserts new Schedule 5 into the Tariff.
Items 1 to 120
and items 122 to 133 of the table in Schedule 5 impose customs duty on certain
alcohol, tobacco and petroleum products that are US 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 the AUSFTA.
Section
16 of the Tariff will provide that the rates of customs duty for US 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 5, 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 5 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 US
originating goods. These goods are not subject to the phasing regime set out in
Annex 2B of the AUSFTA.
Item 121 of the table in Schedule 5 imposes a
phasing rate of duty on US originating goods classified to tariff subheading
2918.90.00 in Schedule 3 of the Tariff. Under Annex 2B of the AUSFTA, rates of
customs duty for certain US originating goods are to be reduced to Free over a
period of time. Column 3 of the table in Schedule 5 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 US
originating goods at each step of that phasing.
Items 134 to 920 of the
table in Schedule 5 also impose phasing rates of customs duty on US originating
goods in accordance with Annex 2B of the Agreement.
Items 921 to 927 of
the table in Schedule 5 insert phasing rates of customs duty for certain
footwear in accordance with Annex 2B of the Agreement.
Under new
subparagraph 16(1)(k)(i) and new subsection 16(2), these phasing rates will
apply to a good (footwear) that is classified to a subheading in Schedule 3 to
the Tariff that is specified in column 2 of items 921 to 927 but only if the
good is prescribed for the purposes of that item.
There is a worldwide
classification system that has been adopted by all countries that are members of
the World Customs Organization, which is known as the Harmonized Commodity
Description and Coding System 2002 (the Harmonized System). In Australia, the
Harmonized System applies in the Tariff. Under the Harmonized System, the
chapter, heading, and subheading numbers for any good are identical in any
country using the Harmonized System. However, the final two digits of
subheadings are not harmonized and each importing country individually assigns
them.
The 8 digit subheadings for footwear in Australia and the United
States are different. Under the Agreement, footwear that is classified to
certain subheadings in the United States is to be subject to the phasing rates
of customs duty. Since the subheadings are not the same in Australia, the goods
that fall to the subheadings specified in items 921 to 927 that are subject to
the phased rates of customs duty will be prescribed. They will be prescribed by
reference to the subheading that they would be classified to, if they had been
imported into the United States.
Items 928 to 951 of the table in
Schedule 5 impose phasing rates of customs duty on US originating goods in
accordance with Annex 2B of the Agreement.
Items 35 to 56 Schedule
5
Items 35 to 56 contain amendments to certain items of the table in
Schedule 5 to the Tariff.
These amendments reflect amendments to the
Tariff as proposed in the Customs Tariff Amendment (Fuels) Bill 2004. These
amendments implement alterations to the Tariff relating to low sulphur diesel,
aviation fuel and biodiesel, and create new subheadings in Schedule 3. These
new subheadings and associated rates of customs duty will need to be
incorporated into Schedule 5.
Items 35 to 56 will not commence unless the
Customs Tariff Amendment (Fuels) Act 2004 commences and the AUSFTA enters
into force. If both of these events occur, these items will commence on the
later of these two events.
Item 57 User’s Guide
This
item repeals and substitutes the User’s Guide to the Tariff to include
appropriate references to new Schedule 5 to the Tariff.