Customs (Australia-US Free Trade Agreement) Amendment Regulation 2012 (No. 1)

Administered by Attorney-General's Department

Legislation au F2012L00404 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

Select Legislative Instrument 2012 No. 8

 

Issued by the Authority of the Minister for Home Affairs

Customs Act 1901

 

Customs (Australia-US Free Trade Agreement) Amendment Regulation 2012 (No. 1)

 

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 Customs.

 

The amending Regulations amend the Customs (Australia-US Free Trade Agreement) Regulations 2004 (the Principal Regulations) to incorporate changes made to Annex 4‑A of the Australia-US Free Trade Agreement (AUSFTA Agreement) as a result of negotiations between Australia and the United States.

The AUSFTA Agreement entered into force on 1 January 2005 and is a bilateral trade agreement between Australia and the United States (US) designed to increase trade liberalisation and facilitate investment between Australia and the US.

Schedule 2 to the Principal Regulations incorporates the Product Specific Rules for textiles and apparel (PSRs) set out in Chapter 4 and Annex 4-A of the AUSTFA Agreement.  

Under the current PSRs for goods classified under tariff headings 5501-5511, yarn made from viscose rayon fibres is eligible for preferential tariff treatment as an originating good if the viscose rayon fibres used to produce the yarn are sourced from Australia or the US.  

However, viscose rayon fibres are no longer produced in either country. This means that yarn made from viscose rayon fibres is not able to achieve status as an originating good under the current PSRs. Consequently, Australia and the US cannot take advantage of the potential benefits of the AUSTFA Agreement.

 

Following negotiations between Australia and the US, Annex 4-A (Textile or Apparel Specific Rules of Origin) of the AUSTFA Agreement was amended through an Exchange of Letters, to address this shortcoming.

 

The amending Regulations replace the existing PSR for tariff headings 5501-5511 with three new PSRs for goods classified under these same tariff headings.

 

The PSR for goods classified under tariff heading 5510.90 enables both Australia and the US to provide preferential tariff treatment for yarns classified to this tariff heading regardless of the country of origin of the viscose rayon fibres used to produce that yarn. 

 

The PSRs for goods classified under tariff headings 5501.10 to 5510.30 and 5511 remain unchanged.

 

The amending Regulations implement domestically the agreed changes to Annex 4-A of the AUSTFA Agreement, by deleting the existing PSR for tariff headings 5501-5511 and replacing them with PSRs for goods classified under tariff headings 5501.10-5510.30, 5510.90 and 5511.

These amendments result in potential savings for manufacturers and reduced prices for consumers.

 

Consultation was undertaken with Industry in relation to the changes to Annex 4-A of the AUSFTA Agreement, resulting in the amendments to the Principal Regulations. Specifically, an Australian producer of goods classified under tariff heading 5510.90 requested the amendments to the AUSFTA Agreement to allow goods produced by them to achieve status as an originating good. 

The amending Regulations have no adverse impact on Industry as they implement Australia’s international obligations under the AUSFTA Agreement.

The amending Regulations do not raise any human rights issues. See the Statement of Compatibility at Attachment A.

The amending Regulations commence on the day the amendments to Annex 4-A to the AUSFTA Agreement, agreed to in 2010, enter into force.  This day will be notified in the Gazette.

 

 


ATTACHMENT A

 

Statement of Compatibility with Human Rights

 

(Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011)

 

Customs (Australia-US Free Trade Agreement) Amendment Regulation 2012 (No. 1)

 

This legislative instrument 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.

 

Overview of the Regulation

 

This legislative instrument makes technical amendments to the Customs (Australia-US Free Trade Agreement) Amendment Regulations 2004, to incorporate proposed amendments to Annex 4‑A of the Australia-US Free Trade Agreement (AUSFTA Agreement).

 

None of the amendments make any substantive changes to the law.

 

The Regulations commence on the day the amendments to Annex 4-A to the AUSFTA Agreement, agreed to in 2010, enter into force.  This day will be notified in the Gazette.

 

Human Rights implications

 

This legislative instrument does not engage, impact on or limit in any way, the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights at section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Conclusion

 

This legislative instrument does not raise any human rights issues.

 

 

 

 

 

 

Minister for Home Affairs

 

 

Overview

The Customs (Australia-US Free Trade Agreement) Amendment Regulation 2012 (No. 1) was enacted to address a gap in the existing preferential tariff treatment for yarns made from viscose rayon fibres under the Customs (Australia-US Free Trade Agreement) Regulations 2004. This gap arose because viscose rayon fibres were no longer produced in Australia or the United States, meaning that yarns made from these fibres could not achieve status as originating goods under the existing rules. This shortfall limited the ability of Australia and the US to fully benefit from the trade agreement. The Minister for Home Affairs issued the regulation under the authority of the Customs Act 1901, with the policy objective of implementing Australia’s international obligations under the AUSFTA Agreement and ensuring that manufacturers could take advantage of the preferential tariffs, thereby potentially reducing costs for consumers.

Scope and Application

The Customs (Australia-US Free Trade Agreement) Amendment Regulation 2012 (No. 1) amends the Customs (Australia-US Free Trade Agreement) Regulations 2004 to incorporate changes to Annex 4-A of the Australia-US Free Trade Agreement (AUSFTA Agreement), which addresses the rules of origin for textiles and apparel. This amendment is necessary due to the cessation of viscose rayon fibre production in both Australia and the United States, which previously prevented yarn made from these fibres from qualifying for preferential tariff treatment. The Regulation updates the Product Specific Rules for goods classified under tariff headings 5501-5511, allowing preferential tariff treatment for yarn classified under tariff heading 5510.90 regardless of the origin of the viscose rayon fibres used. The changes are aimed at facilitating trade and investment between Australia and the United States, ensuring that manufacturers can benefit from the trade agreement and potentially lowering prices for consumers. The Regulations apply to entities involved in the manufacture and trade of textiles and apparel between the two countries and come into effect on the day the amendments to Annex 4-A to the AUSFTA Agreement enter into force, which will be notified in the Gazette. The amending Regulations do not raise any human rights issues, as confirmed by the Statement of Compatibility with Human Rights attached to the instrument.

Key Provisions

The Customs (Australia-US Free Trade Agreement) Amendment Regulation 2012 (No. 1) amends the Customs (Australia-US Free Trade Agreement) Regulations 2004 to reflect changes made to Annex 4-A of the Australia-US Free Trade Agreement (AUSFTA Agreement) through negotiations between Australia and the United States. These changes specifically address the issue of viscose rayon fibres, which are no longer produced in either country, thereby impacting the ability of yarn made from these fibres to qualify for preferential tariff treatment under the existing Product Specific Rules (PSRs) for goods classified under tariff headings 5501-5511. The amending Regulations replace the existing PSR for these tariff headings with three new PSRs (sections 2-4). The PSR for goods classified under tariff heading 5510.90 allows for preferential tariff treatment regardless of the origin of the viscose rayon fibres, while the PSRs for goods classified under tariff headings 5501.10 to 5510.30 and 5511 remain unchanged. The Regulations impose obligations on parties and entities involved in the importation and exportation of goods covered by the amended PSRs. Importers, exporters, and customs brokers must ensure compliance with the new PSRs to qualify goods for preferential tariff treatment under the AUSFTA Agreement. This includes maintaining accurate records and documentation to demonstrate compliance with the rules of origin, such as sourcing and production details, and submitting these to customs authorities as required. By complying with the Regulations, businesses can benefit from reduced tariffs and increased trade opportunities between Australia and the United States. Failure to comply with the new PSRs may result in goods not qualifying for preferential tariff treatment, potentially leading to higher tariffs and additional costs. While the Regulations do not explicitly state specific offences, penalties, or consequences for non-compliance, breaches of customs laws generally attract civil or criminal penalties under the Customs Act 1901. For example, providing false or misleading information to customs authorities can result in fines and, in severe cases, imprisonment. Additionally, the Australian Border Force may impose financial penalties for non-compliance, which can include the payment of additional duties and interest on the unpaid amounts. These penalties are designed to enforce compliance and ensure the proper application of the AUSFTA Agreement.

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