EXPLANATORY STATEMENT
CUSTOMS ACT 1901
SUBSECTION 153L(4)
SPECIFIED PERCENTAGE OF TOTAL FACTORY COSTS
DETERMINATION 1 OF 2016
Background
The South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) provides preferential tariff treatment to goods manufactured in member countries that are parties to the Agreement. The rules of origin in Division 1A of Part VIII of the Customs Act 1901 (the Act) determine when goods are considered to be the produce or manufacture of a particular country.
Under SPARTECA, goods are normally the manufacture of a member country if not less than 50% of the total factory costs (labour, overheads and materials) are incurred in that member country and the last process of manufacture is performed in that member country. However, SPARTECA enables the Australian Government to lower the 50% local area content requirement in special circumstances. These terms are reflected in subsections 153L(2) and (4) of the Act.
Subsection 153L(4) of the Act allows the Comptroller-General of Customs to determine that, in respect of goods of a kind, a lesser percentage than 50% is the specified percentage of total factory costs.
The Government of Samoa has sought an extension of the reduction in the specified percentage of total factory costs of ten percentage points for wiring harnesses manufactured in Samoa and classified to subheading 8544.30.00 of Schedule 3 to the Customs Tariff Act 1995. The original tariff reduction commenced on
11 October 2001 and was most recently extended on 1 January 2014, for a period of three years. The current Determination will extend the reduction for another 12 months, until 31 December 2017. The sole commercial producer of wire harnesses for passenger motor vehicles in Samoa will close operations by the end of 2017.
Instrument
Specified Percentage of Total Factory Costs Determination No. 1 of 2016 (the Determination) determines that the specified percentage of the total factory cost of wiring harnesses claimed to be the manufacture of Samoa is 40% where the wiring harnesses:
(a) are classified to tariff subheading 8544.30.00 of Schedule 3 to the Customs Tariff Act 1995; and
(b) are of a kind used in, and are for use in, passenger motor vehicles, as defined in Chapter 87 of the Customs Tariff Act 1995 for the purposes of tariff heading 8703.
The continuation of this lesser percentage will commence on 1 January 2017 and continue in force until 31 December 2017.
Consultation
Consultations were held with stakeholders in the Australian automotive industry, who raised no objections to the continuation of the derogation.
Human Rights Implications
This determination 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 in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Commencement
Specified Percentage of Total Factory Costs Determination No. 1 of 2016 commences on 1 January 2017 and ceases to have effect on 31 December 2017.
Roman Quaedvlieg, Comptroller-General of Customs,
Department of Immigration and Border Protection