Explanatory Memorandum
(Circulated by authority of the Assistant Minister for Customs, Community Safety and Multicultural Affairs, the Honourable Jason Wood MP)OUTLINE
The purpose of the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 (the Bill) is to amend the Customs Act 1901 (the Customs Act) to give effect to:
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- the Peru-Australia Free Trade Agreement;
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- the Indonesia-Australia Comprehensive Economic Partnership Agreement; and
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- the Free Trade Agreement between Australia and Hong Kong, China.
Peru-Australia Free Trade Agreement
On 12 February 2018 in Canberra, the Hon Steven Ciobo MP, then Minister for Trade, Tourism and Investment, and his Peruvian counterpart Mr Eduardo Ferreyros, signed the Peru-Australia Free Trade Agreement (PAFTA).
PAFTA is a comprehensive, high quality free trade agreement that will open new access to Peru's goods, services and investment markets for Australian businesses. It builds on the gains secured in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. It provides a gateway to Latin America, strengthening our economic relationships within the region and helping facilitate value chains between the Americas and Asia.
PAFTA will eliminate more than 99 per cent of tariffs on Australian exports within five years of entry into force. This outcome will provide Australian exporters with new market access opportunities in beef, sheepmeat, wine, pharmaceuticals, medical devices, paper products and machinery. PAFTA will also provide greater legal certainty for Australian service suppliers in Peru and will create new opportunities for Australian education providers to attract more Peruvian students to study in Australia.
Schedule 1 of the Bill amends the Customs Act to provide rules for determining whether goods are Peruvian originating goods and therefore entitled to be imported into Australia at preferential rates of customs duty. The amendments will also enable regulations to prescribe record keeping obligations on exporters and producers of goods exported to Peru for which a preferential rate of customs duty is claimed.
The Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 (Customs Tariff Amendment Bill) will make complementary amendments to the Customs Tariff Act 1995 to give effect to the preferential rates of customs duty in accordance with PAFTA. Schedule 6A of the Customs Tariff Act will set out the preferential customs duty rates for Peruvian originating goods.
Indonesia-Australia Comprehensive Economic Partnership Agreement
On 4 March 2019 in Jakarta, Senator the Hon Simon Birmingham, Minister for Trade, Tourism and Investment, and his counterpart the Indonesian Minister for Trade H.E Enggartiasto Lukita, signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).
IA-CEPA creates a framework for Australia and Indonesia to unlock the potential of our bilateral economic partnership. It builds on commitments under our existing free trade agreement, the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) across goods, services and investment. In addition to reducing non-tariff barriers to trade and simplifying paperwork, IA-CEPA will allow 99% of Australia's goods exports to enter Indonesia duty free or with significantly improved preferential arrangements. Australian services suppliers and investors will have greater certainty for entry and operation in the Indonesian market, creating more opportunities for Australians to meet Indonesia's growing needs in investment and world-class services.
Schedule 2 of the Bill amends the Customs Act to provide rules for determining whether goods are Indonesian originating goods and therefore entitled to be imported into Australia at preferential rates of customs duty. The amendments will also enable regulations to prescribe record keeping obligations on exporters of goods exported to Indonesia for which a preferential rate of customs duty is claimed.
The Customs Tariff Amendment Bill will make complementary amendments to the Customs Tariff Act to give effect to the preferential rates of customs duty in accordance with IA-CEPA. Schedule 9A of the Customs Tariff Act will set out the preferential customs duty rates for Indonesian originating goods.
Australia-Hong Kong Free Trade Agreement
On 26 March 2019 in Sydney, Senator the Hon Simon Birmingham, Minister for Trade, Tourism and Investment, and his counterpart the Hong Kong Secretary for Commerce and Economic Development Edward Yau, signed the Free Trade Agreement between Australia and Hong Kong, China (A-HKFTA).
The A-HKFTA, along with the associated Investment Agreement, will strengthen the economic relationship between Australia and Hong Kong, China. It provides business certainty by locking in zero tariff levels, improved access for services, updated international investment protection, and transparent policy settings. It also sets up a dynamic framework for future engagement.
Schedule 3 of the Bill amends the Customs Act to provide rules for determining whether goods are Hong Kong originating goods and therefore entitled to be imported into Australia at preferential rates of customs duty. The amendments also enable regulations to prescribe record keeping obligations on exporters and producers of goods exported to Hong Kong, China for which a preferential rate of customs duty is claimed.
The Customs Tariff Amendment Bill will make complementary amendments to the Customs Tariff Act to give effect to the preferential rates of customs duty in accordance with A-HKFTA. Schedule 13 of the Customs Tariff Act will set out the preferential customs duty rates for Hong Kong originating goods.
FINANCIAL IMPACT STATEMENT
The 2018-19 Budget estimated that implementing PAFTA would have a negligible cost to revenue over the forward estimates.
The 2019-20 Budget estimated that implementing IA-CEPA would have no impact on revenue over the forward estimates and implementing A-HKFTA would reduce revenue by $40 million over the forward estimates.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
A Statement of Compatibility with Human rights in respect of the amendments contained in the Bill is at Attachment A . The Statement assesses the amendments to be compatible with Australia's human rights obligations.
REGULATION IMPACT STATEMENT
A regulation impact statement in respect of all amendments to give effect to the new rules of origin requirements in accordance with the PAFTA and related preferential treatment of customs duty is at Attachment B .
A regulation impact statement in respect of all amendments to give effect to the new rules of origin requirements in accordance with the IA-CEPA and related preferential treatment of customs duty is at Attachment C .
A regulation impact statement in respect of all amendments to give effect to the new rules of origin requirements in accordance with the A-HKFTA and related preferential treatment of customs duty is at Attachment D .