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2002-2003-2004
(Circulated
by authority of the
Minister for Justice and Customs,
Senator
the Honourable Christopher Martin Ellison)
CUSTOMS TARIFF AMENDMENT (TEXTILE, CLOTHING AND
The purpose of the Customs Tariff Amendment (Textile, Clothing and
Footwear Post-2005 Arrangements) Bill 2004 (the Bill) is to amend the Customs
Tariff Act 1995 (the Tariff) to:
• reduce the general rate of
customs duty applicable to a range of textile yarns, fabrics, certain finished
textile goods and footwear parts which will be dutiable at 7.5% from 1 January
2005 to 5% from 1 January 2010;
• reduce the general rate of
customs duty applicable to a range of footwear, cotton sheeting and woven and
knitted fabrics of various textile materials which will be dutiable at 10% from
1 January 2005 to 5% from 1 January 2010;
• reduce the general rate
of customs duty applicable to most articles of apparel and certain finished
textiles which will be dutiable at 17.5% from 1 January 2005 to 10% from 1
January 2010 and to 5% from 1 January 2015; and
• create a new
concessional item in Schedule 4 to the Tariff to enable the operation of a
Product Diversification Scheme for certain clothing and finished
textiles.
These amendments are complementary to the amendments contained
in the Textile, Clothing and Footwear Strategic Investment Program Amendment
(Post-2005 scheme) Bill 2004. Together, these Bills extend the provisions of
the Textile, Clothing and Footwear Strategic Investment Program for another ten
years.
This regime of tariff reductions will mean that the general rate
of customs duty applicable to all textile, clothing and footwear (TCF) goods
will be 5% from 1 January 2015.
The enactment of the post-2010 and
post-2015 rates of duty for TCF goods, at this time, will provide transparency
and certainty for TCF manufacturers, enabling sufficient time for planning prior
to the scheduled reductions in 2010 and
2015.
FINANCIAL
IMPACT STATEMENT
The estimated cost to the Government in revenue
forgone as a result of the proposed tariff reductions is set out in the Table
below:
|
Period
|
Revenue Forgone
$ millions |
|
2004-05
|
0.0
|
|
2005-06
|
0.0
|
|
2006-07
|
0.0
|
|
2007-08
|
0.0
|
|
2008-09
|
0.0
|
|
2009-10
|
300
|
|
2010-11
|
600
|
|
2011-12
|
600
|
|
2012-13
|
700
|
|
2013-14
|
700
|
|
2014-15
|
900
|
|
2015-16
|
1,200
|
|
2016-17
|
1,300
|
The tariff reductions, which commence on 1 January 2010, are estimated to
result in revenue forgone of $6.3 billion over the period 2009-10 to
2016-17.
The Product Diversification Scheme, to operate through the new
concessional item of the Tariff, is estimated to result in revenue forgone of up
to $50 million over the life of the Scheme.
REGULATION IMPACT
STATEMENT (RIS)
A Regulation Impact Statement covering the tariff
amendments has been tabled in the Explanatory Memorandum for the cognate
Textile, Clothing and Footwear Strategic Investment Program Amendment (Post-2005
scheme) Bill 2004.
CUSTOMS TARIFF AMENDMENT (TEXTILE,
CLOTHING AND
Clause 1 – Short Title
This clause provides for the
Act, when enacted, to be cited as the “Customs Tariff Amendment
(Textile, Clothing and Footwear Post-2005 Arrangements) Act
2004”.
Clause 2 – Commencement
This clause
specifies that this Act will commence on the day on which it receives the Royal
Assent.
Clause 3 – Schedule(s)
This clause is
the formal enabling provision for the Schedule to the Bill, providing that each
Act specified in the Schedule is amended in accordance with the applicable items
of that Schedule. The clause also provides that other items of the Schedules
have effect according to their own terms.
Schedule 1 –
Amendment of the Customs Tariff Act 1995
Schedule 1 of this Bill inserts post-2010 and post-2015 duty rates for
certain textile, clothing and footwear goods.
The amendments contained in items 1 to 137 in Part 1 of Schedule 1 to the
Bill reduce the general rate of duty, for those headings and subheadings
specified, to 5%, from 1 January 2010.
The headings and subheadings
specified apply to a range of textile yarns, fabrics, certain finished textile
goods and footwear parts (Part 1 goods). The general rate of duty for Part 1
goods is currently 10%. The Customs Tariff Amendment Act (No. 1) 1999
will reduce the general rate of duty for those goods to 7.5%, from 1 January
2005.
Some Part 1 goods are subject to lower rates of duty than the
general rate of duty if produced or manufactured in certain Developing
Countries, Forum Island Countries, Canada, New Zealand and Papua New Guinea (the
preference countries). This difference in rates is the margin of tariff
preference and is at least 5 percentage points.
Items 7, 18, 49, 50, 56,
57, 110, 111, 112, 117 and 122 apply to subheadings for which the rate of duty
for Canadian goods is currently Free or is Free on 1 January 2005. Under
paragraph 16(d) of the Tariff, if no rate is specified for Canadian goods, the
general rate applies. Hence these items specify the Canadian rate to be Free to
ensure that the rate of duty for those goods remains Free from 1 January 2010.
The margin of tariff preference for Part 1 goods produced or
manufactured in the other preference countries is being maintained from 1
January 2010. Since that margin is 5 percentage points or greater for Part
1 goods produced or manufactured in those countries, the rate of duty for them
will become Free. Section 16 of the Tariff provides that if no rate is
specified for those countries, the rate of duty is Free and hence no rates have
been specified for those countries from 1 January 2010.
Generally when
general duty rates are reduced, the duty rates for DCT and DCS countries are
maintained at their existing levels until the general rate reduces to those
levels, and thereafter the general rate of duty applies to those countries. The
DCT countries are Taiwan, Republic of Korea, Hong Kong and Singapore. DCS
countries are listed in Part 4 of Schedule 1 to the Tariff and include a number
of more advanced Developing Countries such as Malaysia and Indonesia. From 1
January 2010, the general rate of duty for Part 1 goods is the same or lower
than the duty rate for DCT and DCS countries and hence the general rate will
apply to Part 1 goods produced or manufactured in those
countries.
Part 2 – Schedule 3 headings and subheadings that
have a rate of duty of 10% from 1 January 2005
The amendments contained in items 138 to 432 in Part 2 of Schedule 1 to
the Bill reduce the general rate of duty, for those headings and subheadings
specified, to 5%, from 1 January 2010.
The headings and subheadings
specified apply to a range of footwear, cotton sheeting and woven and knitted
fabrics of various textile materials (Part 2 goods). The general rate of duty
for Part 2 goods is currently 15%. The Customs Tariff Amendment Act
(No. 1) 1999 will reduce the general rate of duty for these goods to
10%, from 1 January 2005.
The amendments in Part 2 of the Schedule
do not interfere with margins of tariff preference and duty-free entry for
preference countries.
Item 351 applies to subheading 5705.00.90 for
which the margin of tariff preference presently accorded Canada is 10 percentage
points. From 1 January 2005 the rate for Canada will be Free. Item
351 ensures that this Free rate continues after 1 January 2010.
Since the margin of tariff preference for the other preference countries
is 5 percentage points or greater, Part 2 goods produced or manufactured in
those preference countries will remain or become subject to a Free rate of duty
from 1 January 2010.
The DCT and DCS countries will already be subject to
the general rate of duty prior to 1 January 2010 and will continue to be
subject to the general rate from that date.
The amendments contained in items 433 to 671 in Part 1 of Schedule 1 to
the Bill reduce the general rate of duty, for those headings and subheadings
specified, to 10%, from 1 January 2010 and to 5% from 1 January
2015.
The headings and subheadings specified apply to most articles of
apparel and certain finished textiles (Part 3 goods). The general rate of duty
for Part 3 goods is currently 25%. The Customs Tariff Amendment Act (No. 1)
1999 will reduce the general rate of duty for these goods to 17.5%, from 1
January 2005.
The amendments in Part 3 of the Schedule do not interfere
with margins of tariff preference and duty-free entry for preference countries.
For example item 433 amends the rate for subheading 3926.20.29. From 1 January
2005 the general rate for that subheading will be 17.5% and for Developing
Countries it will be 12.5% that is the margin of tariff preference is 5
percentage points. Item 433 will amend the rates so that from 1 January 2010
the general rate will be 10% and the Developing Country rate will be 5%, hence
maintaining the margin of tariff preference. From 1 January 2015 the general
rate will be 5%. There is no rate specified for Developing Countries, as they
will be subject to a Free rate of duty in accordance with section 16 of the
Tariff.
Item 541 applies to subheading 6115.11.10 for which the margin of
tariff preference presently accorded Canada is 10 percentage points. The item
reduces the rate of duty for Canada for this subheading to Free from 1 January
2010 when the general rate is reduced to 10%. From 1 January 2015 the general
rate will be reduced to 5% and the rate for goods produced or manufactured in
Canada will remain Free.
The DCT and DCS countries will already be
subject to the general rate of duty prior to 1 January 2010 and will
continue to be subject to the general rate from that date.
This item creates a new concessional item 73 in the Tariff to enable the
operation of a Product Diversification Scheme for certain clothing and
finished textiles. New item 73 will apply to goods entered for home
consumption between 1 July 2006 and 30 June 2017 (inclusive). The
item will enable eligible clothing and textile manufacturers to apply duty
credits owned under that Scheme against imports of finished clothing and certain
finished textile products (these will be prescribed in by-laws). The amount of
duty payable on these goods will be reduced by the amount of duty credits
applied to the importation. It is proposed that no new credits will be issued
during the last year (2016-2017) of operation of the Scheme but holders of
credits will be able to utilise them during that period.