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2019
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS TARIFF AMENDMENT (GROWING AUSTRALIAN EXPORT
OPPORTUNITIES ACROSS THE ASIA-PACIFIC) BILL 2019
EXPLANATORY MEMORANDUM
(Circulated by authority of the Assistant Minister for Customs, Community Safety and
Multicultural Affairs, the Honourable Jason Wood MP)
CUSTOMS TARIFF AMENDMENT (GROWING AUSTRALIAN EXPORT
OPPORTUNITIES ACROSS THE ASIA-PACIFIC) BILL 2019
OUTLINE
The purpose of the Customs Tariff Amendment (Growing Australian Export Opportunities
Across the Asia-Pacific) Bill 2019 (the Bill) is to amend the Customs Tariff Act 1995 (the
Customs Tariff Act) to give effect to:
the Peru-Australia Free Trade Agreement;
the Indonesia-Australia Comprehensive Economic Partnership Agreement; and
the Free Trade Agreement between Australia and Hong Kong, China.
Peru-Australia Free Trade Agreement
On 12 February 2018 in Canberra, the Honourable Steven Ciobo MP, then Minister for
Trade, Tourism and Investment, and his Peruvian counterpart Mr Eduardo Ferreyros, signed
the Peru-Australia Free Trade Agreement (PAFTA). Schedule 1 to the Bill sets out the
amendments to give effect to PAFTA.
Indonesia-Australia Comprehensive Economic Partnership Agreement
On 4 March 2019 in Jakarta, Senator the Hon Simon Birmingham, Minister for Trade,
Tourism and Investment, and his counterpart the Indonesian Minister for Trade
H.E Enggartiasto Lukita, signed the Indonesia-Australia Comprehensive Economic
Partnership Agreement (IA-CEPA). Schedule 2 to the Bill sets out the amendments to give
effect to IA-CEPA.
Free Trade Agreement between Australia and Hong Kong, China
On 26 March 2019 in Sydney, Senator the Hon Simon Birmingham, Minister for Trade,
Tourism and Investment, and his counterpart the Hong Kong Secretary for Commerce and
Economic Development Edward Yau, signed the Free Trade Agreement between Australia
and Hong Kong, China (A-HKFTA). Schedule 3 to the Bill sets out the amendments to give
effect to A-HKFTA.
For each Agreement, the Bill will insert a schedule of preferential rates of customs duty for
goods determined to be originating goods in accordance with the applicable Agreement. New
Schedules 6A, 9A and 13 to the Customs Tariff Act provide excise-equivalent rates of
customs duty for certain Peruvian originating goods, Indonesian originating goods and
Hong Kong originating goods respectively, namely, alcohol, tobacco, fuel and petroleum
products. These excise-equivalent duties ensure that these goods, and their domestically
produced equivalents, are treated consistently.
Schedule 6A, in accordance with PAFTA, also includes phasing rates of customs duty for
certain goods that incrementally reduce to 'Free' over time. A duty rate of 'Free' will apply
to goods classified to tariff subheadings not listed in Schedule 6A from the entry into force of
PAFTA.
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For IA-CEPA and A-HKFTA, the customs duty rate of "Free" will apply to goods classified
to tariff subheadings not listed in Schedules 9A and 13 respectively from the entry into force
of the relevant Agreement.
The Bill also amends certain concessional items in Schedule 4 to the Customs Tariff Act to
maintain customs duty rates in line with the applicable concessional item and in accordance
with the applicable Agreements.
The Customs Amendment (Growing Australian Export Opportunities Across the Asia-
Pacific) Bill 2019 (the Customs Amendment Bill) will make complementary amendments to
the Customs Act 1901 (the Customs Act) for each Agreement to introduce new rules of origin
for goods imported into Australia from the applicable Party to each Agreement. The new
rules will determine whether goods are originating goods and therefore eligible for
preferential treatment of customs duty in accordance with the applicable Agreement.
FINANCIAL IMPACT STATEMENT
The 2018-19 Budget estimated that implementing PAFTA would have a negligible cost to
revenue over the forward estimates.
The 2019-20 Budget estimated that implementing IA-CEPA would have no impact on
revenue over the forward estimates and implementing A-HKFTA would reduce revenue by
$40 million over the forward estimates.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
A Statement of Compatibility with Human Rights has been completed in relation to the
amendments in this Bill and assesses that the amendments are compatible with Australia's
human rights obligations. A copy of the Statement of Compatibility with Human Rights is at
Attachment A.
REGULATION IMPACT STATEMENT
A Regulation Impact Statement for each Agreement, covering the tariff amendments, is
contained in the Explanatory Memorandum for the Customs Amendment Bill.
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CUSTOMS TARIFF AMENDMENT (GROWING AUSTRALIAN EXPORT
OPPORTUNITIES ACROSS THE ASIA-PACIFIC) BILL 2019
NOTES ON CLAUSES
Clause 1 Short title
1. This clause provides for the Customs Tariff Amendment (Growing Australian Export
Opportunities Across the Asia-Pacific) Bill 2019 (the Bill), when enacted, to be cited as the
Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-
Pacific) Act 2019.
Clause 2 Commencement
2. This clause sets out, in a table, the date on which provisions of the Bill will commence.
3. Table item 1 provides for sections 1 to 3 and anything in the Bill not elsewhere covered by
the table to commence on the day the Bill receives the Royal Assent.
4. Table item 2 provides for Schedule 1 to the Bill to commence at the same time as Schedule 1
to the Customs Amendment (Growing Australian Export Opportunities Across the Asia-
Pacific) Act 2019 (the Customs Amendment Bill). The Minister must announce the day on
which Peru-Australia Free Trade Agreement (PAFTA) enters into force for Australia by
notifiable instrument, (in accordance with the Legislation Act 2003). However, the provisions
do not commence at all if PAFTA does not enter into force for Australia.
5. Table item 3 provides for Schedule 2 to the Bill to commence at the same time as Schedule 2
to the Customs Amendment Bill. The Minister must announce the day on which
Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) enters into
force for Australia by notifiable instrument, (in accordance with the Legislation Act 2003).
However, the provisions do not commence at all if IA-CEPA does not enter into force for
Australia.
6. Table item 4 provides for Schedule 3 to the Bill to commence at the same time as Schedule 3
to the Customs Amendment Bill. The Minister must announce the day on which Free Trade
Agreement between Australia and Hong Kong, China (A-HKFTA) enters into force for
Australia by notifiable instrument, (in accordance with the Legislation Act 2003). However,
the provisions do not commence at all if the A-HKFTA does not enter into force for
Australia.
Clause 3 Schedules
7. This clause enables the legislation specified in a Schedule to the Bill, when enacted, to amend
or repeal provisions of legislation specified in that Schedule in accordance with the
applicable items. In the context of the Bill, the Customs Tariff Act 1995 (the Customs Tariff
Act) is being amended.
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Schedule 1 - Peru
Customs Tariff Act 1995
Introductory Comments
8. On 12 February 2018, in Canberra, Australia, the Hon. Steven Ciobo MP, then Minister for
Trade, Tourism and Investment, and his Peruvian counterpart Mr Eduardo Ferreyros signed
PAFTA.
9. PAFTA, on entry into force, includes new rules of origin to determine whether goods are
Peruvian originating goods and for preferential customs duty rates that apply to such goods.
The rules will be inserted by the Customs Amendment Bill and will be in new Division 1EA
of Part VIII of the Customs Act 1901 (the Customs Act).
10. The Bill sets out customs duty rates for Peruvian originating goods in accordance with
PAFTA. For goods classified to the tariff subheadings listed in new Schedule 6A inserted by
the Bill, the customs duty rate would accord with Article 2.4 of Chapter 2 of PAFTA. For
goods classified to tariff subheadings not listed in new Schedule 6A, a preferential customs
duty rate of 'Free' will apply in accordance with Annex 2-B of PAFTA.
Item 1 Subsection 3(1) (after paragraph (d) of the definition of rate column)
11. This item amends the definition of 'rate column' in subsection 3(1) of the Customs Tariff Act
to include a reference to the third column of the table in new Schedule 6A. New Schedule 6A
will set out the rates of customs duty for Peruvian originating goods classified to tariff
subheadings listed in that Schedule.
Item 2 Subsection 9(1)
12. This item amends subsection 9(1) of the Customs Tariff Act to insert a reference to new
Schedule 6A.
13. This amendment allows ad valorem rates of custom duty that apply to Peruvian originating
goods to be specified in the "rate column" in new Schedule 6A of the Customs Tariff Act.
Items 3 to 5
14. Section 11 of the Customs Tariff Act sets out the rules for determining when a phasing rate of
customs duty has effect. The amendments made by these items provide for phasing rates of
customs duty for Peruvian originating goods.
15. Item 3 inserts new paragraph 11(1)(bba) into the Customs Tariff Act to include a reference to
a rate of customs duty set out in the third column of an item in the table in new Schedule 6A
of the Customs Tariff Act that applies to the goods.
16. Item 4 inserts new paragraph 11(1)(fa) into the Customs Tariff Act to include a reference to
the third column of an item in the table in new Schedule 6A that applies to Peruvian
originating goods.
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17. Item 5 inserts new paragraph 11(2)(bba) into the Customs Tariff Act to include a reference to
a rate of customs duty set out in the third column of an item in the table in new Schedule 6A
of the Customs Tariff Act that applies to Peruvian originating goods.
Item 6 After section 13C
18. This item inserts new section 13CA into the Customs Tariff Act which sets out when goods
are Peruvian originating goods for the purposes of the Customs Tariff Act. Goods are
Peruvian originating goods if, and only if they are Peruvian originating goods under new
Division 1EA of Part VIII of the Customs Act. New Division 1EA, inserted by the Customs
Amendment Bill, sets out the new rules of origin for determining whether goods are Peruvian
originating goods.
Item 7 After subparagraph 16(1)(a)(iv)
19. This item inserts new paragraph 16(1)(a)(iva) into the Customs Tariff Act.
20. Section 16 of the Customs Tariff Act sets out how customs duty is calculated for preference
purposes, including for goods that are originating goods of particular countries. Paragraph
16(1)(a) specifies that, where goods are not the produce or manufacture of a Preference
Country, or are not originating goods under a Free Trade Agreement (FTA), 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 to the Customs Tariff Act, under which the goods are classified.
21. The purpose of new subparagraph 16(1)(a)(iva) is to ensure that the general rate of customs
duty set out in Schedule 3 does not apply to Peruvian originating goods.
Item 8 After paragraph 16(1)(l)
22. This item inserts new paragraph 16(1)(la) into the Customs Tariff Act.
23. New paragraph 16(1)(la) provides that where Peruvian originating goods are classified to a
tariff subheading in Schedule 3 that is specified in column 2 of an item in the table in new
Schedule 6A, the rate of customs duty on the goods is to be calculated by reference to the rate
of duty set out in column 3 of the relevant item in Schedule 6A.
24. However, where Peruvian originating goods are not classified to a tariff subheading listed in
new Schedule 6A, new paragraph 16(1)(la) provides for such goods to be subject to a
customs duty rate of 'Free' in accordance with Article 2.4.2 of PAFTA and Article 3(a) of
Annex 2-B of PAFTA.
Item 9 After subsection 16(2)
25. This item inserts new subsections 16(2AA) and 16(2AB) in the Customs Tariff Act.
26. New subsection 16(2AA) provides that a reference to year 2, 3 or 4 in new Schedule 6A for
Peruvian originating goods, is a reference to the first, second or third calendar year,
respectively, after this subsection commences (that is, when PAFTA enters into force for
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Australia). This accords with Article 6 of Annex 2-B of PAFTA and is relevant to when
phasing rates for certain Peruvian originating goods come into effect. For example:
Peruvian originating goods
Column Column 2 Column 3
1 Heading or Rate
Item subheading in
Schedule 3
135 3808.52.90 3.7%
(prescribed goods From 1 January of year 2: 2.5%
only) From 1 January of year 3: 1.2%
From 1 January of year 4: Free
27. If PAFTA enters into force after 1 January 2019, the rate of duty will be 3.7 per cent from
entry into force and will decrease to 2.5 per cent on 1 January 2020 (as 2020 would be the
second calendar year after entry into force) and will reduce further to 1.2 per cent on
1 January 2021 and become 'Free' on 1 January 2022 (as 2022 will be the fourth calendar
year after entry into force).
28. New subsection 16(2AB) provides that if column 2 of an item in the table in new
Schedule 6A includes the words "(prescribed goods only)", subparagraph (1)(la)(i) will not
apply to those goods unless the goods are also prescribed for the purposes of that item. A note
after new subsection 16(2AB) explains that the effect of new subsection 16(2AB) is that
where the goods are not prescribed for the purposes of that item of the table, the rate of duty
in respect of the goods is 'Free'.
Items 10 to 12
29. Schedule 4 to the Customs Tariff Act lists items where a concessional rate of customs duty is
provided for particular goods and section 18 sets out how concessional rates of customs duty
are calculated. In particular, subsection 18(1) provides for a concessional rate of customs
duty to apply only where the rate is less than that which would otherwise apply under
Schedules 3and the Schedules that provide for preferential rates for originating goods under
an agreement to which Australia is a party.
30. Item 10 inserts new paragraph 18(1)(ca) into the Customs Tariff Act. This paragraph will
specify that a concessional item in Schedule 4 only applies to goods if the duty is lower than
the duty payable under new Schedule 6A. This provision is consistent with the similar
provision for other Schedules to the Customs Tariff Act for other FTAs.
31. Paragraph 18(2)(a) provides that, if the goods are not the produce or manufacture of a
preference country, or a country to which a FTA applies, the duty must be worked out by
reference to the general rate set out in the third column of an item in Schedule 4 that applies
to the goods.
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32. Item 11 inserts new subparagraph 18(2)(a)(iva), into the Customs Tariff Act which provides
that the general rate of customs duty set out in Schedule 4 will not apply to Peruvian
originating goods.
33. Item 12 inserts new paragraph 18(2)(la) into the Customs Tariff Act to set out how customs
duty is calculated for goods that are Peruvian originating goods and that are subject to a
concessional item in Schedule 4 of that Act. This new paragraph provides that, if the goods
are Peruvian originating goods and 'PE' (the country code for Peru) is specified in the third
column of an item in Schedule 4, the amount of duty is calculated by reference to that
customs duty rate. If there is no such rate specified, the rate of customs duty is 'Free'.
Item 13 Paragraph 19AAC(1)(b)
34. Section 19 of the Customs Tariff Act provides for the automatic indexation of certain
excise-equivalent customs duty rates in line with movements in the Consumer Price Index
(CPI) in February and August of each year. The goods to which automatic indexation applies
are certain alcohol and fuel products.
35. For this purpose, section 19AAC of the Customs Tariff Act includes a table that specifies the
fuel products subject to biannual indexation under section 19 of the Customs Tariff Act.
36. This item amends paragraph 19AAC(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 6A so that indexation under section 19 applies to the rates of excise-equivalent
customs duty for those fuel products that are Peruvian originating goods.
Item 14 Paragraph 19AA(b)
37. Section 19AA of the Customs Tariff Act includes a table, which sets out the alcohol products
subject to biannual indexation for the purposes of section 19 of the Customs Tariff Act.
38. This item amends paragraph 19AA(b) of the Customs Tariff Act to insert a reference to new
Schedule 6A so that the indexation provisions in section 19 of the Customs Tariff Act apply
to the rates of excise-equivalent customs duty for those alcohol products that are Peruvian
originating goods.
Item 15 Paragraph 19AC(b)
39. Section 19AB of the Customs Tariff Act provides for the automatic indexation of certain
excise-equivalent rates of duty in line with movements in the full-time adult average weekly
ordinary time earnings (AWOTE), in March and September of each year. The goods to which
this automatic indexation applies are tobacco products.
40. For this purpose, section 19AC of the Customs Tariff Act contains a table that sets out the
tobacco products subject to biannual indexation under section 19AB of the Customs Tariff
Act.
41. This item amends paragraph 19AC(b) of the Customs Tariff Act to insert a reference to new
Schedule 6A so that the indexation provisions in section 19AB apply to the rates of
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excise-equivalent customs duty for those tobacco products that are Peruvian originating
goods.
Item 16 Paragraph 19ACA(1)(b)
42. Section 19ACA of the Customs Tariff Act provides for a list of tobacco products that are not
covered by section 19AC of the Customs Tariff Act, specifically tobacco products where the
amount of customs duty is determined by the weight of the product or the weight of the
tobacco content in the product.
43. For goods classified to a subheading listed in section 19ACA, the rate of customs duty is
amended biannually on the same day as the tobacco products listed in section 19AC.
The applicable rate is determined with reference to the indexed rate associated with tariff
subheading 2402.20.20 adjusted by the relevant annual weight conversion factor provided for
in subsection 19ACA(2).
44. This item amends paragraph 19ACA(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 6A so that the indexation provisions in section 19AB of that Act apply to the
rates of excise-equivalent customs duty for those tobacco products that are Peruvian
originating goods.
Item 17 Schedule 4 table item 17A (column headed "Rate of duty")
45. Table item 17A of Schedule 4 to the Customs Tariff Act provides for a concessional rate of
customs duty for goods produced in Australia that have exported and returned to Australia in
an unaltered condition containing one or more components defined as 'tradex components',
'drawback components' or 'excise components' within the meaning of the table item on
which taxes or charges to the Commonwealth are owing.
46. For goods that satisfy these criteria, the rate of concessional customs duty is determined to be
the amount that would apply to each tradex component, drawback component and excise
component if imported separately. For excise components, duty that is determined by
reference to a percentage of the value of the good is to be disregarded.
47. This item amends the rate column of table item 17A of Schedule 4 to the Customs Tariff Act
to insert a reference to "PE" so that the concessional rate of customs duty applies to Peruvian
originating goods that satisfy the eligibility criteria.
Item 18 Schedule 4 table item 20 (column headed "Description of goods, paragraph
(d)")
48. Table item 20 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law being goods exported for repair or return that
are not new or upgraded versions of the exported goods, for which the duty on the good
applied under Schedule 6A is worked out by reference to a percentage of the value of the
goods.
49. For goods that satisfy these criteria, a concessional rate of customs duty of 'Free' applies to
the value of the good that was exported and the applicable percentage set out in Schedule 6A
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applies to the value of the repair or renovation.
50. This item amends paragraph (d) of the description column of table item 20 of Schedule 4 to
the Customs Tariff Act to insert a reference to Schedule "6A" so that the concessional rate of
customs duty applies to Peruvian originating goods that satisfy the eligibility criteria.
Item 19 Schedule 4 table item 20 (column headed "Rate of duty")
51. This item amends the rate column of table item 20 of Schedule 4 to the Customs Tariff Act to
insert a reference to "PE" so that the concessional rate of customs duty applies to Peruvian
originating goods that satisfy the eligibility criteria.
Item 20 Schedule 4 table item 22 (column headed "Rate of duty")
52. Table item 22 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law being containers used to import goods that will
be exported without being put to any other use.
53. For goods that satisfy these criteria, a concessional rate of customs duty of 'Free' applies.
Table item 22 further provides that the goods imported on or in such containers are subject to
the rate of customs duty that would apply to the goods if they had been imported separately.
54. This item amends the rate column of table item 22 of Schedule 4 to the Customs Tariff Act to
insert a reference to "PE" so that the concessional rate of customs duty applies to Peruvian
originating goods that satisfy the eligibility criteria.
Item 21 Schedule 4 table item 37 (column headed "Rate of duty")
55. Table item 37 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law, being used or second hand passenger motor
vehicles to which a special duty of $12,000 is applied under Schedule 3 or the Schedules that
provide for preferential rates for originating goods under an agreement to which Australia is a
party, plus an ad valorem where applicable.
56. For goods that satisfy these criteria, a concessional rate of customs duty applies.
57. This item amends the rate column of table item 37 of Schedule 4 to the Customs Tariff Act to
insert a reference to "PE:Free" so that the concessional rate of 'Free' applies to Peruvian
originating goods that satisfy the eligibility criteria.
Item 22 Schedule 4 table item 45 (column headed "Rate of duty")
58. Table item 45 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law, being original components of a completed
machine or equipment that would be classified to a single tariff classification in Chapters 84
to 87 inclusive, or Chapter 90, ordered and shipped from a single overseas supplier at the
same time that arrive in Australia on two or more vessels or aircraft.
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59. Table item 45 does not apply to goods to which table item 44 of Schedule 4 to the Customs
Tariff Act applies.
60. For goods that satisfy these criteria the rate of customs duty that would apply to the
completed machine or equipment applies.
61. This item amends the rate column of table item 45 of Schedule 4 to the Customs Tariff Act to
insert a reference to "PE" so that the concessional rate of customs duty applies to Peruvian
originating goods that satisfy the eligibility criteria.
Item 23 Schedule 4 table item 50 (column headed "Rate of duty")
62. Table item 50 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods that are subject to a Tariff Concession Order (TCO). A TCO made by
the Comptroller-General of Customs under Part XVA of the Customs Act grants a
concessional rate of customs duty for the goods meeting the description set out in the TCO.
63. For goods subject to a TCO the concessional rate of customs duty that applies is determined
by the tariff classification of the goods.
64. This item amends the rate column of table item 50 of Schedule 4 to the Customs Tariff Act to
insert a reference to "PE" so that the concessional rate of customs duty applies to Peruvian
originating goods that are described in a TCO.
Item 24 Schedule 4 table item 53 (column headed "Rate of duty")
65. Table item 53 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods of tariff subheading 3819.00.00 that are exempt from the Product
Stewardship Oil Levy.
66. Table item 53 does not apply to goods to which table item 50 of Schedule 4 to the Customs
Tariff Act applies.
67. For goods that satisfy this criteria the concessional rate of customs duty of 5 percent applies.
68. The item amends the rate column of table item 53 of Schedule 4 to the Customs Tariff Act to
insert a reference to "PE:5%" so that the concessional rate of customs duty applies to
Peruvian originating goods.
Item 25 After Schedule 6
69. This item inserts new Schedule 6A into the Customs Tariff Act to provide for excise-
equivalent rates of duty on certain alcohol, tobacco, fuel and petroleum products and for
phasing rates of customs duty in accordance with PAFTA.
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70. Section 16 of the Customs Tariff Act, as amended by items 7 and 8 of Schedule 1 to the Bill,
provides that the customs duty rate for Peruvian originating goods is 'Free' unless a customs
duty rate is specified for those goods in new Schedule 6A.
71. Article 2.4 of Chapter 2 of PAFTA provides in part that, unless otherwise provided in
PAFTA, neither Party shall increase any existing customs duty, or adopt any new customs
duty, on an originating good and each Party shall progressively eliminate its customs duties
on originating goods in accordance with each Party's Schedule to Annex 2-B. Annex 2-B of
PAFTA sets out the tariff commitments under PAFTA in relation to the reduction of tariffs in
stages.
72. Table items 1, 2, 124 to 126, 135 to 137 and 146 to 399 in new Schedule 6A operate to
reduce the ad valorem component of customs duty on Peruvian originating goods in
accordance with the staging categories specified in Annex 2-B of PAFTA. By 1 January of
the fourth calendar year after PAFTA enters into force, the ad valorem component of the
customs duties on all Peruvian originating goods in these table items will be eliminated.
73. Article 1.3 of Chapter 1 of PAFTA provides in part that customs duty does not include duties
that are equivalent to an internal tax imposed on the same goods when domestically
produced. Such goods are certain alcohol, tobacco, fuel and petroleum products that are
subject to customs duties at a rate that is equivalent to the excise duty imposed under the
Schedule to the Excise Tariff Act 1921 (the Excise Tariff Act), on those goods when
domestically produced.
74. Table items 3 to 123, 127 to 134 and 138 to 145 in new Schedule 6A impose customs duty on
certain alcohol, tobacco, fuel and petroleum products that are Peruvian originating goods at a
rate that is equivalent to the excise duty imposed under the Excise Tariff Act on the same
goods when domestically produced.
75. Section 18 of the Customs Tariff Act, as amended by items above, allows the calculation of
concessional duty to be the lower of, the concessional rate of customs duty in Schedule 4, or
new Schedule 6A, for those goods that are classified under the tariff subheadings contained in
new Schedule 6A.
76. For example, table item 147 of new Schedule 6A provides for an excise-equivalent rate of
customs duty for tariff subheading 3819.00.00, of $0.085 per litre. For goods classified to this
subheading and prescribed by by-law, the 5% rate provided in table item 53 of Schedule 4,
may be utilised when more favourable.
Items 26 and 27 User's Guide
77. The User's Guide is located in the preamble of the Customs Tariff Act and provides a general
overview of the operation and organisation of the Customs Tariff Act.
78. These items amend the text of the User's Guide as required, to insert references to new
Schedule 6A for Peruvian originating goods so that users can identify provisions relating to
Peruvian originating goods.
Item 28 Application provision
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79. This item provides that the amendments made by items 1 to 12 and 17 to 25 of Schedule 1 to
the Bill apply in relation to:
(a) goods imported into Australia on or after the commencement of Schedule 1 to the
Bill; and
(b) goods imported into Australia before the commencement of Schedule 1, where the
time for working out the rate of import duty on the goods had not occurred before the
commencement of this Schedule.
80. The amendments contained in Schedule 1 to the Bill will commence at the same time as
Schedule 1 to the Customs Amendment Bill.
Item 29 Transitional provisions--indexation
81. This item provides for transitional provisions for alcohol duty rates and fuel duty rates, and
tobacco duty rates subject to indexation under section 19 and section 19AB respectively.
82. Sections 19 and 19AA of the Customs Tariff Act provide that customs rates of duty for
certain alcohol products are adjusted automatically, twice yearly, in line with movements in
the CPI. These adjustments occur in February and August of each year. Sections 19AB and
19AC of the Customs Tariff Act provides that customs rates of duty for certain tobacco
products, are adjusted automatically twice yearly, in line with movements in the AWOTE.
The adjustments occur in March and September of each year.
83. The Bill has been drafted using rates of customs duty that include those indexed as part of the
CPI and AWOTE increases that occurred on 1 August 2019 and 1 September 2019
respectively, following the release of the June 2019 CPI and May 2019 AWOTE figure.
84. The transitional provisions, if required, will amend the alcohol, fuel and tobacco duty rates
currently on the face of the Bill such that upon commencement of Schedule 1, the customs
duty rates for relevant tariff subheadings in Schedule 6A will be increased by the indexation
amount or the sum of the indexation amounts in the case if multiple indexation events,
without the need for further legislative amendments.
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Schedule 2 - Indonesia
Customs Tariff Act 1995
Introductory Comments
85. On 4 March 2019 in Jakarta, Senator the Hon Simon Birmingham, Minister for Trade,
Tourism and Investment, and his counterpart the Indonesian Minister for Trade
H.E Enggartiasto Lukita, signed IA-CEPA.
86. IA-CEPA, in part, sets out a set of rules of origin used to determine Indonesian originating
goods and their applicable preferential rates of customs duty.
87. On entry into force of IA-CEPA, the Customs Amendment Bill will amend Part VIII of the
Customs Act to insert new Division 1HA. The new Division will set out the framework for
the new rules of origin for determining if goods are Indonesian originating goods and, as
such, are eligible for a preferential rate of customs duty.
88. To allow importers to claim preference under the rules of origin on entry into force of
IA-CEPA, the Bill will amend the Customs Tariff Act to insert new Schedule 9A. New
Schedule 9A will set out a list of tariff subheadings and the related rates of customs duty to
which those goods relate. Goods that are determined to be Indonesian originating goods in
accordance with new Division 1HA of Part VIII of the Customs Act, but that are not
classified to a tariff subheading listed in Schedule 9A, will have an applicable rate of customs
duty of "Free".
Item 1 Subsection 3(1) (after paragraph (g) of the definition rate column)
89. This item amends the definition of "rate column" in subsection 3(1) of the Customs Tariff
Act to include a reference to the third column of the table in new Schedule 9A. New
Schedule 9A will set out the rates of excise-equivalent customs duty for Indonesian
originating goods classified to tariff subheadings listed in that Schedule.
Item 2 After paragraph 11(1)(be)
90. Section 11 sets out the rules for determining when a phasing rate of customs duty takes
effect. This item inserts new paragraph 11(1)(bea) into the Customs Tariff Act to include a
reference to a rate of customs duty set out in the third column of an item in the table in new
Schedule 9A of the Customs Tariff Act that applies to the goods.
Item 3 After paragraph 11(1)(i)
91. This item inserts new paragraph 11(1)(ia) into the Customs Tariff Act to include a reference
to a specified date set out in the third column of an item in the table in new Schedule 9A that
applies to Indonesian originating goods.
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Item 4 After paragraph 11(2)(be)
92. This item inserts new paragraph 11(2)(bea) into the Customs Tariff Act to include a reference
to a rate of customs duty set out in the third column of an item in the table in the new
Schedule 9A of the Customs Tariff Act that applies to Indonesian originating goods.
Item 5 After section 13F
93. This item amends the Customs Tariff Act to insert new section 13FA. This new section
provides that, for the purposes of the Customs Tariff Act, goods are Indonesian originating
goods if, and only if they are Indonesian originating goods under new Division 1HA of
Part VIII of the Customs Act. New Division 1HA sets out the new rules of origin for
determining whether goods are Indonesian originating goods.
Item 6 After subparagraph 16(1)(a)(vii)
94. This item amends subsection 16(1) of the Customs Tariff Act to insert new
subparagraph 16(1)(a)(viia).
95. Section 16 of the Customs Tariff Act sets out how customs duty is calculated for preference
purposes, including for goods that are originating goods of particular countries.
Paragraph 16(1)(a), in part, sets out that, if goods are not the produce or manufacture of a
Preference Country, or originating goods, to which a FTA applies, 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.
96. New subparagraph 16(1)(a)(viia) ensures that the general rate of customs duty set out in
Schedule 3 does not apply to Indonesian originating goods.
Item 7 After paragraph 16(1)(o)
97. This item amends subsection 16(1) of the Customs Tariff Act to insert new
paragraph 16(1)(oa). This paragraph sets out that a 'Free' rate of customs duty is applied to
goods that are Indonesian originating goods unless the goods are classified to a tariff heading
or subheading in Schedule 3 that is specified in column 2 of an item in the table in new
Schedule 9A. 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 9A.
Item 8 After paragraph 18(1)(f)
98. Section 18 of the Customs Tariff Act sets out how customs duty is calculated in those
circumstances where a concessional rate of customs duty under an item in Schedule 4 of the
Customs Tariff Act is provided for certain goods. In particular, subsection 18(1) provides for
a concessional rate of customs duty to only be used where the rate of customs duty is less
than that which would otherwise be payable under Schedules 3 and the Schedules that
provide for preferential rates for originating goods under an agreement to which Australia is a
party.
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99. This item amends subsection 18(1) to insert new paragraph 18(1)(fa). This amendment will
add that a concessional item in Schedule 4 only applies to goods if the duty is lower than the
duty payable under new Schedule 9A.
Item 9 After subparagraph 18(2)(a)(vii)
100. This item amends the Customs Tariff Act to insert new subparagraph 18(2)(a)(viia).
101. Schedule 4 of the Customs Tariff Act lists items where a concessional rate of customs duty is
provided for particular goods. Section 18 of the Customs Tariff Act sets out how customs
duty is calculated for such goods, in particular for originating goods to which a FTA apply
for preference purposes. Paragraph 18(2)(a) provides that, if the goods are not the produce or
manufacture of a preference country or a country to which a FTA apply, the duty must be
worked out by reference to the general rate set out in the third column of an item in
Schedule 4 that apply to the goods.
102. New subparagraph 18(2)(a)(viia) ensures that the general rate of customs duty set out in
Schedule 4 does not apply to Indonesian originating goods.
Item 10 After paragraph 18(2)(o)
103. This item inserts new paragraph 18(2)(oa) into the Customs Tariff Act to set out how customs
duty is calculated for goods that are Indonesian originating goods and that are subject to a
concessional item in Schedule 4 of that Act. This paragraph provides that, if the goods are
Indonesian originating goods and "ID" is specified in the third column of an item in
Schedule 4, the amount of duty is calculated by reference to that rate of customs duty. If there
is no such rate, the rate of customs duty is "Free".
Item 11 Paragraph 19AAC(1)(b)
104. Section 19 of the Customs Tariff Act provides for the automatic indexation of certain
excise-equivalent rates of customs 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 fuel products.
105. For this purpose, section 19AAC of the Customs Tariff Act contains a table that sets out the
fuel products subject to biannual indexation under section 19 of that Act.
106. This item amends subsection 19AAC(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 9A so that the indexation provisions in section 19 of that Act apply to the rates
of excise-equivalent customs duty for those fuel products that are Indonesian originating
goods.
Item 12 Paragraph 19AA(b)
107. For section 19 of the Customs Tariff Act, section 19AA of that Act contains a table that sets
out the alcohol products subject to biannual indexation under section 19 that Act.
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108. This item amends subsection 19AA(b) of the Customs Tariff Act to insert a reference to new
Schedule 9A so that the indexation provisions in section 19 of that Act apply to the rates of
excise-equivalent customs duty for those alcohol products that are Indonesian originating
goods.
Item 13 Paragraph 19AC(b)
109. Section 19AB of the Customs Tariff Act provides for the automatic indexation of certain
excise-equivalent rates of duty in line with movements in the full-time adult average weekly
ordinary time earnings, in March and September of each year. The goods to which this
automatic indexation applies are tobacco products.
110. For this purpose, section 19AC of the Customs Tariff Act contains a table that sets out the
tobacco products subject to biannual indexation under section 19AB of that Act.
111. This item amends subsection 19AC(b) of the Customs Tariff Act to insert a reference to new
Schedule 9A so that the indexation provisions in section 19AB of that Act apply to the rates
of excise-equivalent customs duty for those tobacco products that are Indonesian originating
goods.
Item 14 Paragraph 19ACA(1)(b)
112. Section 19ACA of the Customs Tariff Act provides for a list of tobacco products that are not
covered by section 19AC of that Act, specifically tobacco products where the amount of
customs duty is determined by the weight of the product or the weight of the tobacco content
in the product.
113. For goods classified to a subheading listed in section 19ACA, the rate of customs duty is
amended biannually on the same day as the tobacco products listed in section 19AC. The
applicable rate is determined with reference to the indexed rate associated with tariff
subheading 2402.20.20 adjusted by the relevant annual weight conversion factor provided for
in subsection 19ACA(2).
114. This item amends paragraph 19ACA(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 9A so that the indexation provisions in section 19AB of that Act apply to the
rates of excise-equivalent customs duty for those tobacco products that are Indonesian
originating goods.
Item 15 Schedule 4 table item 17A (column headed "Rate of duty")
115. Table item 17A of Schedule 4 to the Customs Tariff Act provides for a concessional rate of
customs duty for goods produced in Australia that have exported and returned to Australia in
an unaltered condition containing one or more components defined as 'tradex components',
'drawback components' or 'excise components' within the meaning of the table item on
which taxes or charges to the Commonwealth are owing.
116. For goods that satisfy these criteria, the rate of concessional customs duty is determined to be
the amount that would apply to each tradex component, drawback component and excise
component if imported separately. For excise components duty that is determined by
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reference to a percentage of the value of the good is to be disregarded.
117. This item amends the rate column of table item 17A of Schedule 4 to the Customs Tariff Act
to insert a reference to "ID" so that the concessional rate of customs duty applies to
Indonesian originating goods that satisfy the eligibility criteria.
Item 16 Schedule 4 table item 22 (column headed "Rate of duty")
118. Table item 22 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law being containers used to import goods that will
be exported without being put to any other use.
119. For goods that satisfy these criteria, a concessional rate of customs duty of 'Free' applies.
Table item 22 further provides that the goods imported on or in such containers are subject to
the rate of customs duty that would apply to the goods if they had been imported separately.
120. This item amends the rate column of table item 22 of Schedule 4 to the Customs Tariff Act to
insert a reference to "ID" so that the concessional rate of customs duty applies to Indonesian
originating goods that satisfy the eligibility criteria.
Item 17 Schedule 4 table item 45 (column headed "Rate of duty")
121. Table item 45 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law being original components of a completed
machine or equipment that would be classified to a single tariff classification in Chapters 84
to 87 inclusive, or Chapter 90, ordered and shipped from a single overseas supplier at the
same time that arrive in Australia on two or more vessels or aircraft.
122. Table item 45 does not apply to goods to which table item 44 of Schedule 4 to the Customs
Tariff Act applies.
123. For goods that satisfy these criteria the rate of customs duty that would apply to the
completed machine or equipment applies.
124. This item amends the rate column of table item 45 of Schedule 4 to the Customs Tariff Act to
insert a reference to "ID" so that the concessional rate of customs duty applies to Indonesian
originating goods that satisfy the eligibility criteria.
Item 18 Schedule 4 table item 50 (column headed "Rate of duty")
125. Table item 50 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods that are subject to a Tariff Concession Order (TCO). A TCO made by
the Comptroller-General of Customs under Part XVA of the Customs Act grants a
concessional rate of customs duty for the goods meeting the description set out in the TCO.
126. For goods subject to a TCO the concessional rate of customs duty that applies is determined
by the tariff classification of the goods.
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127. This item amends the rate column of table item 50 of Schedule 4 to the Customs Tariff Act to
insert a reference to "ID" so that the concessional rate of customs duty applies to Indonesian
originating goods that are described in a TCO.
Item 19 Schedule 4 table item 53 (column headed "Rate of duty")
128. Table item 53 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods of tariff subheading 3819.00.00 that are exempt from the Product
Stewardship Oil Levy.
129. Table item 53 does not apply to goods to which table item 50 of Schedule 4 to the Customs
Tariff Act applies.
130. For goods that satisfy this criteria the concessional rate of customs duty of 5 percent applies.
131. The item amends the rate column of table item 53 of Schedule 4 to the Customs Tariff Act to
insert a reference to "ID:5%" so that the concessional rate of customs duty applies to
Indonesian originating goods.
Item 20 After Schedule 9
132. This item amends the Customs Tariff Act to insert new Schedule 9A. This Schedule sets out
excise-equivalent rates of customs duty for goods that are determined to be Indonesian
originating goods in accordance with new Division 1HA of Part VIII of the Customs Act,
inserted by the Customs Amendment Bill.
133. Article 2.2: Reduction or Elimination of Customs Duties, of Chapter 2 of IA-CEPA provides
that Australia shall eliminate ordinary customs duties on originating goods from the date of
entry into force.
134. Article 1.4: General Definitions, of Chapter 1 of IA-CEPA provides in part that customs duty
does not include a charge equivalent to an internal tax imposed consistently with paragraph 2
of Article III of the General Agreement on Tariffs and Trade 1994. Such goods are certain
alcohol, tobacco, fuel and petroleum products that are subject to customs duties at a rate that
is equivalent to the excise duty imposed under the Schedule to the Excise Tariff Act, on those
goods when domestically produced.
135. Section 16 of the Customs Tariff Act, as amended, provides that the rates of customs duty for
Indonesian originating goods are 'Free' unless a rate of customs duty is specified for those
goods in new Schedule 9A. Therefore, it is necessary to specify the relevant tariff
subheadings for the above alcohol, tobacco and petroleum products in Schedule 9A and the
appropriate rate of customs duty.
136. The table items in new Schedule 9A impose customs duty on the certain alcohol, fuel,
petroleum and tobacco products that are Indonesian originating goods, at a rate that is
equivalent to the excise duty imposed under the Excise Tariff Act, on the same goods when
domestically produced. These rates of duty may be subject to indexation in accordance with
sections 19 and 19AB of the Customs Tariff Act.
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137. Section 18 of the Customs Tariff Act, as amended by items above, allows the calculation of
concessional duty to be the lower of, the concessional rate of customs duty in Schedule 4, or
new Schedule 9A, for those goods that are classified under the tariff subheadings contained in
new Schedule 9A.
138. For example, table item 139 of new Schedule 9A provides for an excise-equivalent rate of
customs duty rate for tariff subheading 3819.00.00, of $0.085 per litre. For goods classified
to this subheading and prescribed by by-law, the 5% rate provided in table item 53 of
Schedule 4, may be utilised when more favourable.
Items 21 and 22 User's guide
139. These items amend the text in the User's Guide in the preamble of the Customs Tariff Act, as
required, to insert references to new Schedule 9A so that users can identify provisions
relating to Indonesian originating goods.
Item 23 Application provision
140. This item provides that the amendments made by items 1 to 10, and 15 to 20 set out in
Schedule 2 to the Bill will apply to goods imported into Australia on or after the
commencement of Schedule 2 to the Bill. This item also applies to goods that were imported
before that day but for which the time for working out the rate of import duty on those goods
had not occurred before that day.
141. The commencement provisions of the Bill provide that Schedule 2 to the Bill commences at
the same time as Schedule 2 to the Customs Amendment Bill; that is, the later of the day on
which that Act receives the Royal Assent and the day that IA-CEPA enters into force for
Australia.
Item 24 Transitional provision - indexation
142. This item provides for transitional provisions for alcohol duty rates and fuel duty rates, and
tobacco duty rates subject to indexation under section 19 and section 19AB respectively.
143. Sections 19 and 19AA of the Customs Tariff Act provide that customs rates of duty for
certain alcohol products are adjusted automatically, twice yearly, in line with movements in
the CPI. These adjustments occur in February and August of each year. Sections 19AB and
19AC of the Customs Tariff Act provides that customs rates of duty for certain tobacco
products, are adjusted automatically twice yearly, in line with movements in the AWOTE.
The adjustments occur in March and September of each year.
144. The Bill has been drafted using rates of customs duty that include those indexed as part of the
CPI and AWOTE increases that occurred on 1 August 2019 and 1 September 2019
respectively, following the release of the June 2019 CPI and May 2019 AWOTE figure.
145. The transitional provisions, if required, will amend the alcohol, fuel and tobacco duty rates
currently on the face of the Bill such that upon commencement of Schedule 2, the customs
duty rates for relevant tariff subheadings in Schedule 9A will be increased by the indexation
amount or the sum of the indexation amounts in the case if multiple indexation events,
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without the need for further legislative amendments.
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Schedule 3 - Hong Kong, China
Customs Tariff Act 1995
Introductory Comments
146. On 26 March 2019 in Sydney, Senator the Hon Simon Birmingham, Minister for Trade,
Tourism and Investment, and his counterpart the Hong Kong Secretary for Commerce and
Economic Development Edward Yau, signed A-HKFTA.
147. The Free Trade Agreement between Australia and Hong Kong, China (A-HKFTA), in part,
sets out a set of rules of origin used to determine Hong Kong originating goods and their
applicable preferential rates of customs duty.
148. On entry into force of A-HKFTA, the Customs Amendment Bill will amend Part VIII of the
Customs Act to insert new Division 1M. The new Division will set out the framework for the
new rules of origin for determining if goods are Hong Kong originating goods and, as such,
are eligible for a preferential rate of customs duty.
149. To allow importers to claim preference under the rules of origin on entry into force of
A-HKFTA, the Bill will amend the Customs Tariff Act to insert new Schedule 13. New
Schedule 13 will set out a list of tariff subheadings and the related preferential rates of
customs duty to which those goods relate. Goods that are determined to be Hong Kong
originating goods in accordance with new Division 1M of Part VIII of the Customs Act, but
that are not classified to a tariff subheading listed in Schedule 13 will have an applicable rate
of customs duty of "Free".
Item 1 Subsection 3(1) (at the end of the definition rate column)
150. This item amends the definition of "rate column" in subsection 3(1) of the Customs Tariff
Act to include a reference to the third column of new Schedule 13. New Schedule 13 will be
used to specify the rates of excise-equivalent customs duty for Hong Kong originating goods
classified to tariff subheadings in that Schedule.
Item 2 After paragraph 11(1)(bh)
151. Section 11 sets out the rules for determining when a phasing rate of customs duty takes effect
This item inserts new paragraph 11(1)(bi) into the Customs Tariff Act to include a reference
to a rate of customs duty set out in the third column of an item in the table in new
Schedule 13 of the Customs Tariff Act that applies to the goods.
Item 3 After paragraph 11(1)(l)
152. This item inserts new paragraph 11(1)(m) into the Customs Tariff Act to include a reference
to a specified date set out in the third column of an item in the table in new Schedule 13 that
applies to Hong Kong originating goods.
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Item 4 After paragraph 11(2)(bh)
153. This item inserts new paragraph 11(2)(bi) into the Customs Tariff Act to include a reference
to a rate of customs duty set out in the third column of an item in the table in the new
Schedule 13 to the Customs Tariff Act that applies to Hong Kong originating goods.
Item 5 After section 13J
154. This item amends the Customs Tariff Act to insert new section 13K. This new section
provides that, for the purposes of the Customs Tariff Act, goods are Hong Kong originating
goods if, and only if, they are Hong Kong originating goods under new Division 1M of
Part VIII of the Customs Act. New Division 1M sets out the new rules of origin for
determining whether goods are Hong Kong originating goods.
Item 6 After subparagraph 16(1)(a)(x)
155. This item amends subsection 16(1) of the Customs Tariff Act to insert new
subparagraph 16(1)(a)(xi).
156. Section 16 of the Customs Tariff Act sets out how customs duty is calculated for preference
purposes, including for goods that are originating goods of particular countries.
Paragraph 16(1)(a), in part, sets out that, if goods are not the produce or manufacture of a
Preference Country, or originating goods, to which a FTA applies, 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.
157. New subparagraph 16(1)(a)(xi) ensures that the general rate of customs duty set out in
Schedule 3 does not apply to Hong Kong originating goods.
Item 7 subparagraph 16(1)(r)(ii)
158. This item amends subparagraph 16(1)(r)(ii) to omit "Free." and substitute "Free;". This is a
minor technical amendment to enable new subsection 16(1)(s) to be inserted after paragraph
16(1)(r) of the Customs Tariff Act.
Item 8 At the end of subsection 16(1) (after the note)
159. This item amends subsection 16(1) of the Customs Tariff Act to insert new
paragraph 16(1)(s). This paragraph sets out that a 'Free' rate of customs duty is applied to
goods that are Hong Kong originating goods unless the goods are classified to a tariff heading
or subheading in Schedule 3 that is specified in column 2 of an item in the table in new
Schedule 13. 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 13.
Item 9 At the end of subsection 18(1)
160. Section 18 of the Customs Tariff Act 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
Customs Tariff Act is provided for certain goods. In particular, subsection 18(1) provides for
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a concessional rate of customs duty to only be used where the rate of customs duty is less
than that which would otherwise be payable under Schedules 3 and the Schedules that
provide for preferential rates for originating goods under an agreement to which Australia is a
party.
161. This item amends subsection 18(1) to insert new paragraph 18(1)(j). This amendment will
add that a concessional item in Schedule 4 only applies to goods if the duty is lower than the
duty payable under new Schedule 13. This provision is consistent with the same provision for
other Schedules to the Customs Tariff Act.
Item 10 After subparagraph 18(2)(a)(x)
162. This item amends the Customs Tariff Act to insert new subparagraph 18(2)(a)(xi).
163. Schedule 4 to the Customs Tariff Act lists items where a concessional rate of customs duty is
provided for particular goods. Section 18 of the Customs Tariff Act sets out how customs
duty is calculated for such goods, in particular for originating goods to which a FTA applies
for preference purposes. Paragraph 18(2)(a) provides that, if the goods are not the produce or
manufacture of a preference country or a country to which a FTA applies, the duty must be
worked out by reference to the general rate set out in the third column of an item in
Schedule 4 that apply to the goods.
164. New subparagraph 18(2)(a)(xi) ensures that the general rate of customs duty set out in
Schedule 4 does not apply to Hong Kong originating goods.
Item 11 At the end of subsection 18(2)
165. This item inserts new paragraph 18(2)(s) into the Customs Tariff Act to set out how customs
duty is calculated for goods that are Hong Kong originating goods and that are subject to a
concessional item in Schedule 4 to that Act.
166. New paragraph 18(2)(s) provides that, if the goods are Hong Kong originating goods and
"HK" is specified in the third column of an item in Schedule 4, the amount of duty is
calculated by reference to that rate of customs duty. If there is not such rate, the rate of
customs duty is "Free".
Item 12 Paragraph 19AAC(1)(b)
167. Section 19 of the Customs Tariff Act provides for the automatic indexation of certain
excise-equivalent rates of customs 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 fuel products.
168. For this purpose, section 19AAC of the Customs Tariff Act contains a table that sets out the
fuel products subject to biannual indexation under section 19 of that Act.
169. This item amends paragraph 19AAC(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 13 so that the indexation provisions in section 19 of that Act apply to the rates
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of excise-equivalent customs duty for those fuel products that are Hong Kong originating
goods.
Item 13 Paragraph 19AA(b)
170. For section 19 of the Customs Tariff Act, section 19AA of that Act contains a table that sets
out the alcohol products subject to biannual indexation under section 19 that Act.
171. This item amends paragraph 19AA(b) of the Customs Tariff Act to insert a reference to new
Schedule 13 so that the indexation provisions in section 19 of that Act apply to the rates of
excise-equivalent customs duty for those alcohol products that are Hong Kong originating
goods.
Item 14 Paragraph 19AC(b)
172. Section 19AB of the Customs Tariff Act provides for the automatic indexation of certain
excise-equivalent rates of duty in line with movements in the full-time adult average weekly
ordinary time earnings, in March and September of each year. The goods to which this
automatic indexation applies are tobacco products.
173. For this purpose, section 19AC of the Customs Tariff Act contains a table that sets out the
tobacco products subject to biannual indexation under section 19AB of that Act.
174. This item amends paragraph 19AC(b) of the Customs Tariff Act to insert a reference to new
Schedule 13 so that the indexation provisions in section 19AB of that Act apply to the rates
of excise-equivalent customs duty for those tobacco products that are Hong Kong originating
goods.
Item 15 Paragraph 19ACA(1)(b)
175. Section 19ACA of the Customs Tariff Act provides for a list of tobacco products that are not
covered by Section 19AC of that Act, specifically tobacco products where the amount of
customs duty is determined by the weight of the product or the weight of the tobacco content
in the product.
176. For goods classified to a subheading listed in section 19ACA, the rate of customs duty is
amended biannually on the same day as the tobacco products listed in section 19AC. The
applicable rate is determined with reference to the indexed rate associated with tariff
subheading 2402.20.20 adjusted by the relevant annual weight conversion factor provided for
in subsection 19ACA(2).
177. This item amends paragraph 19ACA(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 13 so that the indexation provisions in section 19AB of that Act apply to the
rates of excise-equivalent customs duty for those tobacco products that are Hong Kong
originating goods.
Item 16 Schedule 4 table item 17A (column headed "Rate of duty")
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178. Table item 17A of Schedule 4 to the Customs Tariff Act provides for a concessional rate of
customs duty for goods produced in Australia that have exported and returned to Australia in
an unaltered condition containing one or more of components defined as 'tradex
components', 'drawback components' or 'excise components' within the meaning of the table
item on which taxes or charges to the Commonwealth are owing.
179. For goods that satisfy these criteria, the rate of concessional customs duty is determined to be
the amount that would apply to each tradex component, drawback component and excise
component if imported separately. For excise components duty that is determined by
reference to a percentage of the value of the good is to be disregarded.
180. This item amends the rate column of table item 17A of Schedule 4 to the Customs Tariff Act
to insert a reference to "HK" so that the concessional rate of customs duty applies to Hong
Kong originating goods that satisfy the eligibility criteria.
Item 17 Schedule 4 table item 22 (column headed "Rate of duty")
181. Table item 22 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law being containers used to import goods that will
be exported without being put to any other use.
182. For goods that satisfy these criteria, a concessional rate of customs duty of 'Free' applies.
Table item 22 further provides that the goods imported on or in such containers are subject to
the rate of customs duty that would apply to the goods if they had been imported separately.
183. This item amends the rate column of table item 22 of Schedule 4 to the Customs Tariff Act to
insert a reference to "HK" so that the concessional rate of customs duty applies to Hong
Kong originating goods that satisfy the eligibility criteria.
Item 18 Schedule 4 table item 45 (column headed "Rate of duty")
184. Table item 45 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law being original components of a completed
machine or equipment that would be classified to a single tariff classification in Chapters 84
to 87 inclusive, or Chapter 90, ordered and shipped from a single overseas supplier at the
same time that arrive in Australia on two or more vessels or aircraft.
185. Table item 45 does not apply to goods to which table item 44 of Schedule 4 to the Customs
Tariff Act applies.
186. For goods that satisfy these criteria the rate of customs duty that would apply to the
completed machine or equipment applies.
187. This item amends the rate column of table item 45 of Schedule 4 to the Customs Tariff Act to
insert a reference to "HK" so that the concessional rate of customs duty applies to Hong
Kong originating goods that satisfy the eligibility criteria.
Item 19 Schedule 4 table item 50 (column headed "Rate of duty")
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188. Table item 50 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods that are subject to a Tariff Concession Order (TCO). A TCO made by
the Comptroller-General of Customs under Part XVA of the Customs Act grants a
concessional rate of customs duty for the goods meeting the description set out in the TCO.
189. For goods subject to a TCO the concessional rate of customs duty that applies is determined
by the tariff classification of the goods.
190. This item amends the rate column of table item 50 of Schedule 4 to the Customs Tariff Act to
insert a reference to "HK" so that the concessional rate of customs duty applies to Hong
Kong originating goods that are described in a TCO.
Item 20 Schedule 4 table item 53 (column headed "Rate of duty")
191. Table item 53 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods of tariff subheading 3819.00.00 that are exempt from the Product
Stewardship Oil Levy.
192. Table item 53 does not apply to goods to which table item 50 of Schedule 4 to the Customs
Tariff Act applies.
193. For goods that satisfy this criteria the concessional rate of customs duty of 5 percent applies.
194. This item amends the rate column of table item 53 of Schedule 4 to the Customs Tariff Act to
insert a reference to "HK:5%" so that the concessional rate of customs duty applies to Hong
Kong originating goods.
Item 21 At the end of the Act
195. This item amends the Customs Tariff Act to insert new Schedule 13. This Schedule sets out
excise-equivalent rates of customs duty for goods that are determined to be Hong Kong
originating goods in accordance with new Division 1M of Part VIII of the Customs Act,
inserted by the Customs Amendment Bill.
196. Article 2.4: Elimination of Customs Duties, of Chapter 2 of A-HKFTA provides that
Australia shall eliminate ordinary customs duties on originating goods from the date of entry
into force for this agreement.
197. Article 1.3: General Definitions, of Chapter 1 of A-HKFTA provides in part that customs
duty does not include duties that are equivalent to an internal tax imposed consistently with
Article III:2 of the General Agreement on Tariffs and Trade 1994. Such goods are certain
alcohol, tobacco, fuel and petroleum products that are subject to customs duties at a rate that
is equivalent to the excise duty imposed under the Schedule to the Excise Tariff Act on those
goods when domestically produced.
198. Section 16 of the Customs Tariff Act, as amendment, provides that the rates of customs duty
for Hong Kong originating goods are 'Free' unless a rate of customs duty is specified for
those goods in new Schedule 13. Therefore, it is necessary to specify the relevant tariff
subheadings for the above alcohol, tobacco and petroleum products in Schedule 13 and the
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appropriate rate of customs duty.
199. The table items in new Schedule 13 impose customs duty on the certain alcohol, fuel,
petroleum and tobacco products that are Hong Kong originating goods, at a rate that is
equivalent to the excise duty imposed under the Excise Tariff Act, on the same goods when
domestically produced. These rates of duty may be subject to indexation in accordance with
sections 19 and 19AB of the Customs Tariff Act.
200. Section 18 of the Customs Tariff Act, as amended by items above, allows the calculation of
concessional duty to be the lower of, the concessional rate of customs duty in Schedule 4, or
new Schedule 13, for those goods that are classified under the tariff subheadings contained in
new Schedule 13.
201. For example, while table item 139 of new Schedule 13 provides for the an excise-equivalent
customs duty rates for tariff subheading 3819.00.00, of $0.085 per litre, for the goods
classified to this subheading and prescribed by by-law in the 5% rate in table item 53 of
Schedule 4, may be more favourable and applied.
Items 22 to 24 User's guide
202. These items amend the text in the User's Guide in the preamble of the Customs Tariff Act, as
required, to insert references to new Schedule 13 so that users can identify provisions relating
to Hong Kong originating goods
Item 25 At the end of the User's guide
203. This item adds at the end of the User's guide that Schedule 13 sets out the rate of duty for
Hong Kong originating goods.
Item 26 Application provision
204. This item provides that the amendments made by items 1 to 11, and 16 to 21 set out in
Schedule 3 to the Bill will apply to goods imported into Australia on or after the
commencement of Schedule 3 to the Bill. This item also applies to goods that were imported
before that day but for which the time for working out the rate of import duty on those goods
had not occurred before that day.
205. The commencement provisions of the Bill provide that Schedule 3 to the Bill commences at
the same time as Schedule 3 to the Customs Amendment Bill; that is, the later of the day on
which that Act receives the Royal Assent and the day that A-HKFTA enters into force for
Australia.
Item 27 Transitional provision - indexation
206. This item provides for transitional provisions for alcohol duty rates and fuel duty rates, and
tobacco duty rates subject to indexation under section 19 and section 19AB respectively.
207. Sections 19 and 19AA of the Customs Tariff provide that customs rates of duty for certain
alcohol products are adjusted automatically, twice yearly, in line with movements in the CPI.
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These adjustments occur in February and August of each year. Section 19AB and 19AC of
the Customs Tariff provides that customs rates of duty for certain tobacco products, are
adjusted automatically twice yearly, in line with movements in the AWOTE. The adjustments
occur in March and September of each year.
208. The Bill has been drafted using rates of customs duty that include those indexed as part of the
CPI and AWOTE increases that occurred on 1 August 2019 and 1 September 2019
respectively, following the release of the June 2019 CPI and May 2019 AWOTE figure.
209. The transitional provisions, if required, will amend the alcohol, fuel and tobacco duty rates
currently on the face of the Bill such that upon commencement of Schedule 3, the customs
duty rates for relevant tariff subheadings in Schedule 13 will be increased by the indexation
amount or the sum of the indexation amounts in the case if multiple indexation events,
without the need for further legislative amendment.
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Attachment A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Customs Tariff Amendment (Growing Australian Export Opportunities Across the
Asia-Pacific) Bill 2019
The Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-
Pacific) Bill 2019 (the 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 purpose of the Bill is to amend the Customs Tariff Act 1995 (the Customs Tariff Act) to
give effect to:
the Peru-Australia Free Trade Agreement (PAFTA) signed on 12 February 2018;
the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA)
signed on 4 March 2019; and
the Free Trade Agreement between Australia and Hong Kong, China (A-HKFTA)
signed on 26 March 2019.
To give effect to the rules of origin requirements under PAFTA, IA-CEPA and A-HKFTA
the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific)
Bill 2019 (the Customs Amendment Bill), will amend the Customs Act 1901 (the Customs
Act) to implement the new rules and related matters.
The purpose of this Bill is to amend the Customs Tariff Act to:
provide preferential rates of customs duty for each Agreement, on entry into force of
the applicable Agreement, for all goods, excluding excise-equivalent goods, that are
originating goods determined in accordance with applicable new Division of
Part VIII of the Customs Act. The new Divisions IEA, IHA and IM will be inserted
into the Customs Act by the Customs Amendment Bill, and will provide rules for
determining originating goods under PAFTA, IA-CEPA and A-HKFTA respectively;
insert new Schedules 6A, 9A and 13 to provide for excise-equivalent rates of duty on
certain alcohol, tobacco, fuel and petroleum products, for PAFTA, IA-CEPA and
A-HKFTA respectively. Schedule 6A also includes phasing rates of customs duty for
certain goods, in accordance with PAFTA; and
amend certain concessional items in Schedule 4 to the Customs Tariff Act to maintain
customs duty rates in line with the applicable concessional item and in accordance
with the applicable Agreements.
The amendments contained in Schedule 1 to the Bill, give effect to commitments made under
PAFTA and when enacted, will commence at the same time as Schedule 1 to the Customs
Amendment Bill. That is, the later of the day on which this Act receives the Royal Assent and
Page 30 Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill
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the day on which PAFTA, signed in Canberra on 12 February 2018, enters into force for
Australia.
The amendments contained in Schedule 2 to the Bill, give effect to commitments made under
IA-CEPA and when enacted, will commence at the same time as Schedule 2 to the Customs
Amendment Bill. That is, the later of the day on which this Act receives the Royal Assent and
the day on which IA-CEPA, signed in Jakarta on 4 March 2019, enters into force for
Australia.
The amendments contained in Schedule 3 to the Bill, give effect to commitments made under
A-HKFTA and when enacted, will commence at the same time as Schedule 3 to the Customs
Amendment Bill. That is, the later of the day on which this Act receives the Royal Assent and
the day on which A-HKFTA, signed in Sydney on 26 March 2019, enters into force for
Australia.
Human rights implications
The Bill does not engage any of the applicable rights or freedoms, as it gives effect to the
rules of origin requirements under PAFTA, IA-CEPA and A-HKFTA. The Customs
Amendment Bill will amend the Customs Act to implement the new rules and related matters.
Conclusion
The Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in the definition of human rights in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
ASSISTANT MINISTER FOR CUSTOMS, COMMUNITY SAFETY AND
MULTICULTURAL AFFAIRS
THE HONOURABLE JASON WOOD MP
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