EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 77
Issued by the Authority of the Minister for Justice and Customs
Customs Act 1901
Customs Amendment Regulations 2005 (No. 2)
Subsection 270(1) of the Customs Act 1901 (the Act) provides in part that the Governor-General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to the Act or for the conduct of any business relating to the Customs.
On 24 October 2003, Australia and the People’s Republic of China (China) signed the Trade and Economic Framework between Australia and China (the Framework). The Framework provides, in part, that a joint decision by the two Parties to negotiate a Free Trade Agreement will only follow Australia's formal recognition of China’s full market economy status.
The Governments of Australia and China have now reached a joint decision to negotiate a Free Trade Agreement.
The main purpose of the amending Regulations is to add China to the list of countries that are not subject to the additional anti-dumping provisions that apply to countries that have an economy in transition. This amendment gives effect to Australia’s decision to recognise China’s full market economy status.
Under Part XVB of the Act, anti-dumping measures may be taken in respect of goods whose exportation to Australia involves a dumping of those goods that injures, or threatens to injure, Australian industry. Goods are taken to have been dumped if the export price of those goods is less than the normal value of those goods.
Section 269TAC of the Act sets out how the normal value of goods exported to Australia is to be calculated. Where the country of export has an economy in transition, that is, a formerly centrally-planned economy moving towards a market economy, subsection 269TAC(5D) sets out a different basis for determining the normal value of goods.
Subsection 269TAC(5J) provides that the regulations may disapply subsection (5D) to a country.
Schedule 1B to the Customs Regulations 1926 (the Principal Regulations) lists those countries that are recognised as full market economies.
Item 3 of Schedule 1 to the amending Regulations adds China to Schedule 1B to the Principal Regulations to ensure that the ‘economies in transition’ provisions in subsection 269TAC(5D) of the Act do not apply to China.
The following groups were consulted about this amendment: the Australian Industry Group, the Anti-Dumping Task Force, the Minerals Council, the Services Roundtable, the Plastics and Chemical Industries of Australia, the National Farmers Federation, the Australia Steel Association, the Australian Chamber of Commerce and Industry and the Business Council of Australia.
The amending Regulations also removes references to a subsection of the Act that has been repealed, but which is still referred to in the Principal Regulations.
Subsection 269TAC(5D) was repealed and replaced, and subsection 269TAC(5G) was repealed, on 19 December 2003, by the Customs Legislation Amendment Act (No. 1) 2003.
Items 1 and 2 of Schedule 1 to the amending Regulations repeal and substitute regulation 182 and the title to Schedule 1B to reflect these amendments to the Act.
No consultation was undertaken in relation to items 1 and 2 as they are of a minor or machinery nature and do not substantially alter existing arrangements.
The amending Regulations commences on the day after they are registered.
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Overview
The Customs Amendment Regulations 2005 (No. 2) were enacted to address the need for updating the Customs Act 1901 in light of Australia's recognition of China as a full market economy. This legislative change was necessitated by the formal decision of the Australian and Chinese governments to negotiate a Free Trade Agreement, contingent upon Australia acknowledging China's full market economy status. The primary objective of these regulations is to align the Customs Act with this recognition by removing China from the list of countries subject to additional anti-dumping provisions applicable to economies in transition. This alignment ensures that the anti-dumping measures under the Act are consistent with the current economic status of China, thereby facilitating smoother trade relations between the two nations. The regulations were issued under the authority of the Minister for Justice and Customs and were developed in consultation with various industry groups to ensure comprehensive stakeholder engagement.
Scope and Application
The Customs Amendment Regulations 2005 (No. 2) apply to entities and persons involved in the importation of goods from China into Australia, and to the customs processes and transactions associated with such imports. These Regulations amend the Customs Regulations 1926 to reflect Australia's recognition of China's full market economy status, which is a result of the joint decision to negotiate a Free Trade Agreement between Australia and China. Specifically, the Regulations ensure that the additional anti-dumping provisions that apply to countries with economies in transition do not apply to China. This change is geographically and jurisdictionally applicable across Australia, encompassing federal customs processes. The Regulations also update references in the Principal Regulations to align with recent legislative changes, such as the repeal of subsection 269TAC(5D) of the Customs Act 1901. These amendments ensure the continued effectiveness and relevance of the regulatory framework governing customs operations and anti-dumping measures in Australia.
Key Provisions
The Customs Amendment Regulations 2005 (No. 2) (F2005L01006) amend the Customs Regulations 1926 to reflect Australia’s recognition of China’s full market economy status. This change is primarily embodied in Item 3 of Schedule 1 to the amending Regulations, which adds China to Schedule 1B, ensuring that the provisions for countries with economies in transition do not apply to China (section 269TAC(5D) of the Customs Act 1901). This amendment aligns with the Trade and Economic Framework between Australia and China, which was signed on 24 October 2003. By incorporating China into the list of full market economies, the Regulations facilitate the negotiation of a Free Trade Agreement between the two countries.
The Regulations impose specific obligations on the parties and entities involved in international trade with China. Importers, exporters, and other stakeholders must now comply with the standard anti-dumping provisions outlined in the Customs Act 1901, rather than the transitional economy provisions. This change necessitates adjustments in how the normal value of goods is calculated and reported, ensuring that trade practices conform to the new regulatory framework. The addition of China to Schedule 1B also streamlines administrative processes and reduces potential barriers to trade, fostering a more predictable and consistent trading environment.
Breaches of the Customs Act 1901 or the amended Customs Regulations 1926 can lead to serious consequences. Under the Customs Act, individuals and entities found guilty of anti-dumping violations may face substantial penalties. For example, Section 270A of the Act provides for fines up to 10,000 penalty units or imprisonment for up to five years, or both, for offences related to false or misleading statements. Additionally, Section 270B imposes penalties for non-compliance with anti-dumping duties, including fines and imprisonment. The maximum penalties are significant, reflecting the importance of adhering to the regulatory framework designed to protect Australian industries from unfair trade practices.
In summary, the Customs Amendment Regulations 2005 (No. 2) reflect Australia’s formal recognition of China’s full market economy status, thereby aligning with international trade agreements and facilitating a more robust trading relationship. These Regulations mandate compliance with standard anti-dumping provisions and impose stringent penalties for non-compliance, underscoring the significance of adhering to the established legal framework.