House of Representatives

Customs Amendment Bill (No. 1) 2003

Second Reading Speech

Mr Williams (Attorney-General)

I move:

That this bill be now read a second time. The Customs Amendment Bill (No. 1) 2003 contains amendments to the Customs Act 1901. Those amendments provide the rules for determining whether goods originate in least developed countries, in East Timor or in Singapore. The amendments in schedule 1 to this bill relate to the government's decision to grant duty-free entry, from 1 July 2003, to goods that originate in a least developed country or in East Timor. The Prime Minister announced this decision on 25 October 2002 during the APEC leaders CEO summit in Los Cabos. This decision demonstrates Australia's commitment to the objectives of the Doha Round of World Trade Organisation negotiations to provide meaningful market access to the poorest countries and to help them trade their way out of poverty and integrate into the world economy. Goods will be considered to originate in a least developed country or in East Timor if they are its unmanufactured raw products or if they are manufactured in a least developed country or in East Timor. To be 'manufactured' in a least developed country or in East Timor, the last process of manufacture of the goods must be performed in that country, and the goods must have a local content of 50 per cent. Inputs from least developed countries, East Timor, forum island countries, other developing countries and Australia will count towards local content. To ensure the benefits of the government's initiative flow to least developed countries and to East Timor, rather than to other developing countries, inputs from the other developing countries may be included in the calculation of local content, but only up to a maximum of 25 per cent of the total factory cost. The amendments in schedule 2 to this bill will give effect to Australia's obligations under chapter 3 of the Singapore-Australia Free Trade Agreement. Chapter 3 provides the rules for determining whether goods originate in Australia or Singapore for the purposes of preferential, duty-free admission under the agreement. The Singapore-Australia Free Trade Agreement is expected to enter into force later this year. The free trade agreement is a comprehensive and wide-ranging agreement that provides Singapore and Australia with more liberal access to each other's goods, services and investments markets. The agreement re-affirms the close relationship between Australia and Singapore, and will contribute to greater growth, prosperity and security in the region. It is also consistent with our APEC commitments to broader trade and economic reform, and is a positive initiative to advance the Bogor goals of free and open trade and investment. Goods will be considered to originate in Singapore for the purposes of duty-free entry if they are wholly obtained or manufactured in Singapore or if they are partly manufactured in that country. For most goods that are partly manufactured in Singapore, a local content of 50 per cent will apply. For a limited range of electrical and electronic goods, as well as for goods subject to Australian tariff concession orders (that is, goods not manufactured in Australia), a local content of 30 per cent will apply. The rules of origin for Singapore include accumulation provisions for manufactured goods in recognition of Singapore's special offshore processing arrangements. The accumulation provisions will allow the value added in Singapore and in Australia before and after overseas processing to be included in the calculation of local content. These provisions will not apply to textiles, clothing or footwear, to passenger motor vehicle products, or to jewellery. The rules of origin for Singapore also include special consignment and origin certification provisions. Those provisions are aimed at ensuring that goods transported through Singapore cannot be claimed to originate in that country. The amendments also include some additional obligations on exporters of Australian goods to Singapore so that preferential duty-free entry into that country can be secured for those goods. These amendments will apply only to a limited range of exporters, as the only Australian goods that are currently dutiable on entry into Singapore are beer and stout. This bill is cognate with the Customs Tariff Amendment Bill (No. 1) 2003. I commend the bill to the House and present the explanatory memorandum. Debate (on motion by Mr Melham) adjourned.