The Free Trade Agreement between Australia and China
will commence on 20 December bringing with it an immediate round of
tariff cuts and a further round of cuts on 1 January 2016. With
only 11 days' notice of commencement, importers and exporters
need to act quickly to prepare.
WHAT GOODS WILL QUALIFY?
The benefits of the FTA will not apply automatically. Importers
of goods need to claim the benefit of the FTA, and they can only do
so if the goods meet the rules of origin and the applicable
paperwork is held. For most importers this will be a certificate of
origin issued by an authorised body. If a ruling has been obtained
from the Customs Authority of the importing country, a
self-certified declaration of origin can be provided by the
exporter in place of a certificate of origin.
WHAT IF I DON'T HAVE A CERTIFICATE OF ORIGIN?
Certificates of origin will not be issued until after the FTA
commences. Further, there will be goods already on the water for
which no certificate of origin is held. If those goods arrive on or
after 20 December the goods can be entered and duty paid, with the
importer having 6 months to retrospectively obtain a certificate of
origin. Once the certificate is held, a refund can be claimed.
For goods that arrive prior to 20 December whether the FTA
potentially applies will depend on whether an import declaration
had already been lodged, whether the goods are warehoused until 20
December and whether the Customs Authority considers that
warehousing of goods prior to clearance means the goods are in the
process of being transported.
If the arrival of the goods will be close to 1 January,
importers should consider delaying the lodgement of an import
declaration and clearance of the goods until after 1 January.
Delaying clearance until after 1 January will mean that goods will
benefit from the second round of tariff reductions. Of course this
is only relevant if the duty rate wasn't reduced to zero on
20 DECEMBER IS LESS THAN 2 WEEKS AWAY – WHAT TO DO
If you haven't already done so, there are some preliminary
steps that need to be taken:
Assess how the FTA affects your goods – Are the duty
saving significant enough to invest time into ensuring the FTA is
utilised? Generally the savings on imports into Australia will be a
maximum of 5%. Imports into China may have duty savings in excess
If it makes commercial sense, determine whether your goods
qualify for the reduced rate. FTAs are underutilised because the
qualification rules are difficult. However, with a proactive
holistic approach, the challenges of FTAs can be overcome
Speak to your supplier (for importers) or customer (for
exporters) about the FTA. Will your suppliers be able to provide a
certificate of origin? Will your customers actually claim the FTA
if you go to the effort of obtaining a certificate of origin?
Appoint someone in your organise who will be responsible for
your organisation's use of FTAs. Utilisation of FTAs is much
higher for organisations where there is someone managing FTAs. Use
of FTAs requires input from accounting, legal and logistics. This
approach needs to be managed as high FTA use will not happen by
It is crucial that traders take FTA use seriously. Issues such
as tariff concessions are often seen as merely operational matters.
However, failure to properly manage FTA use can result in either a
loss of competitive advantage, or more alarmingly, customs
Hunt & Hunt is experienced at helping importers and
exporters manage the challenges of international trade, including
FTA use. Please contact us if you need assistance with how the
Australia China FTA affects your organisation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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