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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS AMENDMENT (ASEAN-AUSTRALIA-NEW ZEALAND FREE
TRADE AGREEMENT IMPLEMENTATION) BILL 2009
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Home Affairs,
the Honourable Brendan O'Connor MP)
CUSTOMS AMENDMENT (ASEAN-AUSTRALIA-NEW ZEALAND FREE
TRADE AGREEMENT IMPLEMENTATION) BILL 2009
OUTLINE
The purpose of this Bill is to amend the Customs Act 1901 (the Customs Act)
to introduce new rules of origin for goods that are imported into Australia
from a Party to the Agreement Establishing the ASEAN-Australia-New Zealand
Free Trade Area (the Agreement). The Customs Act amendments will enable
goods that satisfy the rules of origin to enter Australia at preferential
rates of customs duty.
Complementary amendments will also be made to the Customs Tariff Act 1995
(the Customs Tariff Act) by the Customs Tariff Amendment (ASEAN-Australia-
New Zealand Free Trade Agreement Implementation) Bill 2009.
Formal talks between the Governments of the ten Association of South East
Asian Nations (ASEAN) Member States, New Zealand and Australia to establish
a Free Trade Agreement commenced in March 2005, culminating in the signing
of the Agreement in February 2009.
The Agreement is the first free trade agreement Australia has signed since
the onset of the global financial crisis and demonstrates the Government's
commitment to providing a solid platform to support growth in Australia's
trade and investment with the region.
As a group, ASEAN and New Zealand constitute a larger trading partner for
Australia than any single country. Two-way trade was valued at $103
billion in 2007-08, accounting for 21% of Australia's total trade.
Australia's two-way trade with ASEAN has grown by an annual average of 10
per cent over the past decade - faster than Australia's trade with any of
its top 10 commercial partners, except China.
The Agreement is the most comprehensive free trade agreement that ASEAN has
concluded. It covers goods, services, investment, intellectual property,
e-commerce, temporary movement of business people, and economic
cooperation. The Agreement also binds ASEAN tariffs and contains
substantial tariff elimination commitments, which will strengthen
Australia's commercial ties with the region. It also contains commitments
that will expand and deepen over time in line with development of the ASEAN
Economic Community.
To give effect to the preferential entry of goods under the Agreement, the
amendments contained in this Bill provide rules for determining whether
goods are AANZ originating goods. The amendments to the Customs Tariff Act
will provide for the preferential entry of goods that meet those rules.
The amendments contained in this Bill will be operative from the later of
the day the Bill receives the Royal Assent or the day the Agreement enters
into force for Australia.
FINANCIAL IMPACT STATEMENT
It is estimated that the customs duty forgone as a result of the
implementation of the Agreement could be approximately $971 million for the
period up to the end of the 2012/13 financial year. This figure will be
affected by a range of factors, including the degree of utilisation of the
Agreement's tariff commitments, changes in trade flows, fluctuations in
exchange rates and GDP growth.
REGULATION IMPACT STATEMENT
The following regulation impact statement was tabled in the Joint Standing
Committee on Treaties on 12 March 2009:
REGULATION IMPACT STATEMENT
ASEAN-AUSTRALIA-NEW ZEALAND FREE TRADE AREA
1. This Regulation Impact Statement relates to the Agreement Establishing
the ASEAN (Association of Southeast Asian Nations )[1] - Australia - New
Zealand Free Trade Area (AANZFTA).
A. Problem Identification
2. The AANZFTA negotiations originated from efforts begun in the early
1990s to develop linkages between the ASEAN Free Trade Area (AFTA) and the
Australia-New Zealand Closer Economic Relations (CER) Trade Agreement. A
High Level Task Force report in 2000, entitled 'The Angkor Agenda', argued
in favour of the formation of a free trade area between AFTA and CER. The
report concluded that establishing an AFTA-CER free trade area was not only
feasible but also advisable if both ASEAN and CER were to keep pace with
global developments. Economic modelling by the Centre for International
Economics at that time indicated gains of US$48.1 billion of GDP (US$19.1
billion for Australia). The report was produced against the background of:
the 1997-98 East Asian Financial Crisis; the increasing competitive
challenge from rapidly emerging economies such as China and India; and the
global spread of free trade agreements (FTAs) that accelerated following
the failure of the 1999 Seattle World Trade Organization (WTO) Ministerial
meeting to launch a new WTO Round.
3. Australia's trading relationship with ASEAN and New Zealand is valued
at $103 billion, representing 21 per cent of Australia's total trade in
goods and services (2007-08 figures). ASEAN, as a group, is a larger
trading partner for Australia than any single country, accounting for 17
per cent ($81 billion) of Australia's trade in goods and services in 2007-
08 (China 13 per cent, Japan 12 per cent, and the United States 10 per
cent). In 2007-08, ASEAN member countries purchased 11 per cent of
Australia's merchandise exports ($20.5 billion) and 16 per cent of our
services exports ($8.4 billion).
4. There is a significant difference between two-way trade, and investment
flows, between Australia and ASEAN. Whereas Australia's trade with ASEAN
accounts for around 17 per cent of total merchandise and services trade,
only 5 per cent of Australia's direct investment abroad (i.e. direct
physical investment in other countries) is held in ASEAN economies.
Australian direct investment in ASEAN was around $16.4 billion at the end
of 2007, having grown strongly by 26 per cent between 2005-06 and 67 per
cent between 2006-07, as a result of strong growth in investment to
Singapore and Malaysia. ASEAN investment in Australia represents around 4
per cent of the total stock of foreign direct investment in Australia:
ASEAN direct investment stocks in Australia were around $14.8 billion at
the end of 2007.
5. ASEAN member countries have committed to establishing an ASEAN Economic
Community by 2015. This is aimed at bringing down barriers to goods,
services, skilled labour and capital, to create a single market in a region
with more than 570 million people and a combined GDP of more than US$1
trillion. This could help ASEAN to establish itself as a higher growth
area in Asia.
6. While achieving a substantial outcome from the WTO Doha Round remains
Australia's highest trade policy priority, FTAs are also an important plank
of Australia's trade policy. Australia is pursuing FTAs with a number of
countries, as is ASEAN. While Australia has a significant trading
relationship with ASEAN, many goods and services exports continue to face
substantial barriers to trade. The future growth prospects of ASEAN and its
significance to Australia's trade and investment interests suggested
substantial economic gains, including for Australia's manufacturing
industry, from a comprehensive FTA with ASEAN and New Zealand.
7. The formal decision to launch the AANZFTA negotiations was taken by
leaders at the ASEAN-Australia-New Zealand Commemorative Summit in November
2004. Leaders agreed to a comprehensive set of "Guiding Principles" for
the negotiations and that the negotiations would commence in early 2005 and
be completed within two years. The Guiding Principles committed countries
to negotiate an agreement that covered goods, services and investment; the
progressive elimination of all forms of barriers to trade and investment;
and full implementation within ten years. The negotiations concluded at
the ASEAN Economic Ministers-CER Trade Ministers meeting in August 2008,
although it was also agreed that Australia would continue negotiating
bilaterally with Indonesia and Malaysia with a view to improving automotive
tariff commitments from those countries. These bilateral negotiations were
subsequently finalised and AANZFTA was signed in Thailand on 27 February
2009. Although the negotiations were conducted between Australia, New
Zealand and ASEAN as an entity, the completed FTA has resulted in separate
market access commitments for Australia, New Zealand and each of the ten
ASEAN member countries.
8. Australia's negotiating approach to the AANZFTA was aimed at reaching
an outcome that would be WTO-consistent, support the multilateral trading
system, preserve the benefits contained in Australia's existing bilateral
FTAs and offer new opportunities for Australian exporters and investors.
9. Improved access and certainty in ASEAN markets resulting from the
AANZFTA would be commercially significant for Australian industry,
particularly in the Indonesian, Malaysian, Philippines and Vietnamese
markets, where we do not have bilateral FTAs. In Vietnam's case, the
AANZFTA provides an opportunity to build on the 2006 bilateral settlement
agreed with Vietnam as part of its WTO accession. Australia's trade with
Brunei and ASEAN's three Least Developed Countries (Burma, Cambodia and
Laos) is modest, although Australian industry has growing interests in the
Cambodian and Lao markets, especially investment in the mining and resource
sectors.
10. The AANZFTA has the potential to generate broader benefits than a
series of bilateral FTAs, by creating opportunities for Australian products
to tap into regional supply chains. For example, Australian automotive
component manufacturers could be expected to benefit from regional rules of
origin (ROO) that would allow their products to be more readily integrated
into regional production chains.
11. While many tariffs in ASEAN member countries are low, there are many
sectors where tariffs are often high or at prohibitive levels. Barriers to
Australian exports are significant in manufactures (e.g. automotive
products and steel), processed foods and agricultural products. Tariffs,
however, are only part of the problem. There are also significant non-
tariff barriers, including non-automatic import licensing, differential
excise duties, onerous labelling requirements and local content rules.
Several ASEAN member countries impose import quotas on a number of
agricultural products. Access to the services sector in most ASEAN member
countries is limited with domestic regulations restricting market access
for Australian service providers. Regulations and restrictions limit
Australian investment in the region.
12. In contrast, ASEAN member countries face low barriers in the Australian
market. Australia has a low overall average applied tariff of 3.6 per cent
with over 86 per cent of Australian tariff rates ranging between zero and 5
per cent. Where tariff rates exceed 5 per cent - in Australia's textiles,
clothing and footwear (TCF) and passenger motor vehicles (PMV) sectors -
these tariffs are scheduled to be reduced through future unilateral tariff
reductions. PMV tariffs will fall to 5 per cent in 2010 and TCF tariffs
will fall to 5 per cent in 2015.
Trade Barriers by Sector:
Manufacturing
13. ASEAN member countries tariffs in some areas of manufacturing are
extremely high, often effectively locking Australian exports out of the
market, for example:
- tariffs on passenger motor vehicles are generally in the 30 to 80 per
cent range;
- tariffs on automotive parts are generally in the 15 to 30 per cent range;
- aluminium tariffs are also generally in the 20 per cent (Indonesia) to 40
per cent range (Vietnam); and
- iron and steel tariffs are generally high and range up to 50 per cent
(Malaysia).
14. Non-automatic import licensing, including for steel and PMVs and
differential excise taxes, particularly for PMVs, restricts trade or
creates uncertainty. Industry has identified local content requirements as
an impediment to trade. Customs administration, including delays and lack
of transparency, negatively impact trade.
Agriculture
15. There are significant tariffs on some agricultural products (e.g.
horticulture products attract tariffs of up to 40 per cent) and the use of
specific or mixed tariffs (tariffs generally based on volume, rather than
value) increases the real duty paid for efficient, low-cost producers like
Australia. Several ASEAN member countries impose tariff rate quotas on
certain agricultural products which limit opportunities for Australian
exporters. There are also non-tariff barriers which can be major
impediments to trade. For example, discretionary import licensing applies
to a large number of products in some countries. Sole importer status is
granted to particular firms for imports of agricultural commodities such as
wheat and sugar.
Services
16. Services sectors in ASEAN member countries generally contain
significant barriers to foreign participation. Regulation is often
fragmented (and poorly coordinated) across a number of government agencies
and entry to the market may be either prohibited, constrained by limits on
foreign equity participation or joint venture requirements, or depend
heavily on the exercise of discretionary powers by Ministers or officials.
Decision making is often characterised by a lack of both transparency and
predictability.
Investment
17. There are impediments to investing in most ASEAN member countries which
may have contributed to the fact that ASEAN accounts for a relatively small
share of the total stock of Australian overseas investment. Australian
investors confront a variety of impediments or other factors in the
business environment which discourage investment. These include foreign
equity restrictions, performance requirements (local content or export
requirements), and a lack of legislative and regulatory transparency.
B. Objectives
18. Australia's overall negotiating objectives for the AANZFTA were to:
- Achieve a comprehensive and genuinely liberalising FTA that is supportive
of the multilateral trading system;
- Deliver improved market access for Australian exporters of goods and
services and investors to the ASEAN market [2] that provides commercial
benefits and a platform for securing continuing trade and investment
liberalisation in the future;
- Preserve the benefits of Australia's bilateral FTAs with individual ASEAN
member countries and pursue opportunities to enhance them;
- Seek more transparent and predictable conditions for Australian traders,
service suppliers and investors in ASEAN; and
- Position Australia to strengthen our strategic engagement with ASEAN.
19. Australia's detailed negotiating objectives can be found at Annex A.
C. Options
20. Australia has a number of options for addressing the market access
problems identified in Section A above - through multilateral, bilateral
and regional negotiations.
Multilateral
21. The Government's highest trade priority remains achieving a successful
conclusion to the WTO.[3] Doha Round of multilateral trade negotiations.
This is because the WTO negotiations offer the greatest opportunity to
reduce barriers to trade and for Australia to increase access to overseas
markets across agriculture, industrial products and services. Further
liberalisation of trade through the conclusion of the Round will be key to
stimulating growth in the global economy. Since it was launched in 2001
the Round has made important progress, particularly at the WTO Ministerial
Meeting in July 2008.
Bilateral
22. The global spread of FTAs gained pace in the mid-1990s and accelerated
following the failure of the Seattle WTO Ministerial Meeting in 1999.
Australia was part of this trend in seeking to conclude FTAs where these
offered the prospect of delivering significant benefits more quickly than
might be possible through a WTO round. Since 2003, Australia has concluded
bilateral FTAs with Singapore, Thailand, the United States, and Chile.
Australia also has FTA negotiations underway with China, the Gulf
Cooperation Council, Japan, Korea and Malaysia. In addition, a joint FTA
feasibility study has been finalised with Indonesia and a study is underway
with India. ASEAN member countries too have substantial FTA negotiating
agendas, with Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand
and Vietnam, all having completed bilateral FTAs.
Regional
23. Australia has continued to promote trade liberalisation at the regional
level through the AANZFTA and the Asia-Pacific Economic Cooperation
(APEC)[4]. In November 2008, the Minister for Trade, the Hon Simon Crean,
MP, announced that Australia would participate in negotiations for a Trans-
Pacific Partnership Agreement (TPP), expanding on the existing Trans-
Pacific Strategic Economic Partnership Agreement (between Brunei, Chile,
New Zealand and Singapore). Initial parties to the TPP negotiations are
likely to comprise Brunei, Chile, New Zealand, Singapore, Australia, the
United States, Peru and Vietnam.
24. The AANZFTA is the first time Australia has negotiated a plurilateral
FTA, a key objective of which was to ensure that Australia maintains access
to ASEAN markets at least as good as that provided to ASEAN's other FTA
partners.
25. ASEAN has concluded FTAs with China (goods and services), Japan
(goods), the Republic of Korea (goods and services) and is close to signing
a goods agreement with India. ASEAN launched FTA negotiations with the
European Union in May 2007. ASEAN's pursuit of region-wide FTAs is driven
by wanting to attract more foreign investment and by its ambition to
consolidate its position in the evolving regional economic architecture.
The negotiation of bilateral FTAs by individual ASEAN member countries,
notably Singapore and Thailand, was also an important factor motivating
other ASEAN member countries to support ASEAN-wide FTA negotiations.
26. ASEAN-wide FTAs have been viewed by some ASEAN member countries as
vehicles for driving internal ASEAN reforms. They have also provided the
framework for developing ASEAN's economic linkages and ongoing engagement
with key trading partners. However, the 'ASEAN first' policy has also
meant that ASEAN has not been prepared to make commitments in ASEAN-wide
FTAs that go beyond its own internally agreed commitments - which are
modest in the non-goods areas. This is despite the fact that some ASEAN
member countries have made more ambitious commitments in their bilateral
FTAs with non-ASEAN trading partners.
27. The ASEAN region is marked by countries at different stages of
development with varying capacities to negotiate across the full range of
trade-related issues. The AANZFTA Guiding Principles recognise these
differences and the need for them to be reflected appropriately in the FTA.
In the main, the aim was to achieve such differentiation through different
timeframes for implementing commitments: Australia and New Zealand having
the shortest timeframes, followed by ASEAN's six more developed members
(Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand),
with Vietnam having additional time, and the three Least Developed Country
members (Burma, Cambodia and Laos) the longest timeframes.
28. The Government remains committed to the achievement of the APEC Bogor
Goals of free trade and investment in the Asia-Pacific region by 2010/2020.
APEC has done useful work in support of the multilateral trading system and
has made the successful conclusion of the WTO Doha Round its highest
priority. APEC has also pursued the promotion of high-quality FTAs through
best practices and model measures. It is now examining the feasibility of a
Free Trade Area of the Asia-Pacific.
29. The East Asia Summit (EAS)[5]. participants are also pursuing work on
free trade agreements. This includes Japan's proposed Comprehensive
Economic Partnership for East Asia initiative, which is essentially a
proposal for an FTA involving EAS countries.
The AANZFTA
30. The comprehensiveness of the AANZFTA agreement, covering all sectors,
can be expected to encourage further trade liberalisation in the WTO or
bilateral contexts individually within ASEAN. Australia's approach is
aimed at utilising complementary supportive approaches to maximise
Australia's trade, investment, commercial linkages and competitiveness
across the ASEAN region and to provide new commercial opportunities for
Australian industry and investors.
31. By its nature as a regional FTA, the AANZFTA has potential for broader
benefits than a series of bilateral FTAs, including through the use of
regional rules of origin to simplify the trade environment and expand trade
opportunities. The AANZFTA establishes a framework for region-wide
economic integration which should have long-term advantages in supporting
the development of regional production chains and more efficient region-
wide trading networks.
32. However, given the diversity of countries in ASEAN, and the differences
in their level of development, there are limits to what the AANZFTA can
achieve in the short to medium term. Therefore, there is scope for
bilateral FTAs with ASEAN member countries to add value by focusing more
intensively on particular market access (and other) priorities than has
been possible in the AANZFTA, and by seeking to deliver some earlier or
more far-reaching liberalisation in priority areas.
33. There are also strategic reasons for entering into the AANZFTA. ASEAN,
as a group, has either signed or recently finalised FTAs with China, Japan,
the Republic of Korea and India (i.e. all of its East Asian dialogue
partners except Australia and New Zealand). Failure to secure improved
access to ASEAN markets for Australian exporters through an FTA would not
only risk seeing Australian industry's competitiveness erode over time as
regional competitors negotiate better access through FTAs, but would also
risk Australia's exclusion from participation in the emerging regional
economic architecture.
D. Impact Analysis
34. A wide range of stakeholders identified an interest in the AANZFTA
during a call for public submissions prior to the launch of negotiations.
These stakeholders included groups and individuals from the agricultural
sector, the manufacturing sector, the services sector, trade unions,
employer organisations, state governments and public interest groups.
35. The AANZFTA, once implemented, could be expected to have impacts on a
number of these stakeholders. There is considerable potential for the
AANZFTA to create new trading opportunities and contribute to boosting
Australia's modest investment relationship with ASEAN. As noted above,
Australia's trade with ASEAN is substantial, with ASEAN accounting for 17
per cent ($81 billion) of Australia's total two-way trade in goods and
services.
36. Negotiated over sixteen rounds and several intersessional meetings, the
final AANZFTA package consists of:
i) the FTA text, containing commitments on goods, services, investment,
temporary movement of natural persons, electronic commerce,
intellectual property, economic cooperation and competition policy (see
Annex B for summary of key obligations);
ii) schedules of tariff commitments, containing tariff reduction and
elimination commitments (paras 37-42 and Annex C), and the associated
rules of origin (paras 55-59);
iii) schedules of specific services commitments (paras 62-67 and Annex D);
iv) schedules of temporary movement of natural persons commitments (paras
68-70 and Annex E);
v) an 'implementing arrangement' containing an agreed work program of
economic cooperation projects (Annex F);
vi) a letter from Australia's Minister for Trade to Vietnam's Minister of
Industry and Trade, according recognition of Vietnam's Market Economy
Status (para 54); and
vii) a Memorandum of Understanding on Article 1 (Reduction and/or
Elimination of Customs Duties) of the Chapter on Trade in Goods (Annex
G).
Separately, Australia and New Zealand exchanged letters outlining how the
AANZFTA is to apply between Australia and New Zealand (Annex H).
Broad-based gains
37. The AANZFTA provides for the progressive reduction or elimination of
tariffs facing Australian goods exports to ASEAN over a transition period,
and the elimination of all Australian tariffs on imports from the AANZFTA
Parties. Tariffs will be eliminated on a high percentage of tariff lines,
with phasing commencing early in the transition period, using as a starting
point applied most-favoured-nation (MFN) tariffs in the 2005 base period.
Many tariffs currently at possibly prohibitive levels will be reduced to
levels that should allow trade to flow within a few years. Exclusions from
tariff commitments have been kept to a minimum, and generally do not exceed
1% of a country's national tariff lines. For those tariff lines where
tariffs are not eliminated, but which are not in the exclusion category,
tariffs will either be bound at the base period rate, or will be subject to
tariff reductions ranging between 20% and 80%. The tariff commitments in
the Agreement apply to those goods which meet the rules of origin (ROO).
38. The tariff outcomes provide for longer transition periods, and lower
tariff elimination outcomes, for Vietnam and the three Least Developed
Countries (Burma, Cambodia and Laos), in recognition of their status as
newer ASEAN member countries with less developed economies.
39. A snapshot of the tariff elimination outcomes is provided by Table 1,
which shows, for each Party, the number of tariff lines with tariff-free
treatment in the base year of 2005, in 2010, in 2013, and at the end of the
transition period for each country. The Table demonstrates the high levels
of tariff elimination that will be achieved by the AANZFTA, and the fact
that high levels of tariff-free treatment - generally around 90% - will be
achieved as early as 2013 for the more developed ASEAN markets.
Table 1
Percentage of Tariff Lines with Tariff-Free Treatment
|Country |2005 Base|2010 (%) |2013 (%) |Final |Year |
| |Tariffs | | |Tariff |Achieved |
| |(%) | | |Elimination| |
| | | | |(%) | |
|Australia |47.6 |96.4 |96.5 |100 |2020 |
|Brunei |68 |75.7 |90 |98.9 |2020 |
|Burma |3.7 |3.6 |3.6 |85.2 |2024 |
|Cambodia |4.7 |4.7 |4.7 |88 |2024 |
|Indonesia |21.2 |58 |85 |93.2 |2025 |
|Laos |0 |0 |0 |88 |2023 |
|Malaysia |57.7 |67.7 |90.9 |96.3 |2020 |
|New Zealand|58.6 |84.7 |90.3 |100 |2020 |
|Philippines|3.9 |60.3 |91 |94.6 |2020 |
|Singapore |99.9 |100 |100 |100 |2009 |
|Thailand |7.1 |73 |87.2 |99 |2020 |
|Vietnam |29.3 |29 |29 |89.8 |2020 |
40. An additional perspective on the significance of the AANZFTA's tariff
commitments is provided by Table 2 which shows the percentage of each
country's tariff lines in the 0-5% range (i.e. tariffs that are zero or at
such a low level they should not restrict trade) in the 2005 base period,
in 2011, 2013, 2017, 2020 and 2025. The Table demonstrates that, within 2
years of the AANZFTA's entry into force, the tariff commitments should
deliver some significant improvements in access to ASEAN markets for
Australian exporters.
Table 2
Percentage of Tariff Lines with Tariffs in the 0-5% Range
|Country |2005 Base|2011(%) |2013(%) |2017(%) |2020(%) |2025(%)|
| |Tariffs(%| | | | | |
| |) | | | | | |
|Australia |86.2 |96.7 |96.8 |97.6 |100 |100 |
|Brunei |76.2 |77 |93.2 |95.8 |99 |99 |
|Burma |68.6 |68.1 |68.1 |89 |89.1 |96.9 |
|Cambodia |4.7 |4.7 |4.7 |35.4 |71.4 |95 |
|Indonesia |59.4 |85 |92.4 |95.6 |96.2 |96.7 |
|Laos |49.6 |49.4 |49.4 |84.8 |88.3 |95.8 |
|Malaysia |66.2 |83.8 |91 |97 |97.2 |97.2 |
|New |65.4 |91.3 |94.6 |98.3 |100 |100 |
|Zealand | | | | | | |
|Philippine|57.2 |91.3 |94.5 |95.7 |96.5 |96.5 |
|s | | | | | | |
|Singapore |99.9 |100 |100 |100 |100 |100 |
|Thailand |56.5 |76.8 |91.4 |92.3 |99 |99 |
|Vietnam |46.7 |46.3 |55 |90.8 |90.8 |95 |
41. Table 3 provides information on the percentage of base period (2005)
imports from Australia with tariff-free treatment in 2005 (in relation to
MFN tariffs), 2010, 2013, and at the final year of tariff elimination for
each of the more developed ASEAN 6 countries and Vietnam. This table
demonstrates the high level of current trade flows covered by tariff
elimination commitments.
Table 3
Percentage of Base Period (2005) Imports from Australia with
Tariff-Free Treatment
|Country |2005 (%) |2010 (%) |2013 (%) |Final Tariff |
| | | | |Elimination |
| | | | |(%) |
|Brunei |93.2 |93.8 |96 |99.7 |
|Indonesia |67 |81.3 |85.4 |93.4 |
|Malaysia |87.8 |90.9 |96 |96.9 |
|Philippines |4.3 |65.9 |75.8 |92 |
|Singapore |99.9 |100 |100 |100 |
|Thailand |50 |87.2 |88.4 |98.5 |
|Vietnam |19.8 |19.8 |19.8 |96.8 |
42. Annex C provides a summary of the tariff outcomes for individual
product sectors in relation to the four largest ASEAN markets with which
Australia does not currently have an FTA, i.e. Indonesia, Malaysia, the
Philippines and Vietnam.
43. Negotiations also recognised the wide range of non-tariff measures
applied by ASEAN member countries which impact on Australia's trade in
goods and that they can be a serious barrier to commercially meaningful
market access. These include import licensing, differential excise duties
and quantitative restrictions that may be applied in a way that favours
domestic products over imports. These measures are a major concern for
Australian exporters of manufactures, especially automotive and steel
products, and have an impact on export conditions for a range of products
of interest to Australia.
44. The AANZFTA incorporates WTO disciplines applying to non-tariff
measures. However, it was not possible to negotiate any additional
disciplines on such non-tariff measures as part of the AANZFTA outcome.
Ensuring that such measures are effectively addressed will be a factor in
determining the long-term success of the AANZFTA in facilitating
Australia's trade with ASEAN member countries, however, and the Trade in
Goods text includes a provision establishing a work program which aims to
identify additional means of addressing such measures.
45. The FTA also delivers greater certainty and transparency for
Australia's services exporters and investors, including through WTO-plus
services market access commitments across a range of sectors and countries.
These include key sectors of export interest, such as professional
services, higher education, financial and telecommunication services.
Impacts on Specific Sectors and Stakeholders:
Agricultural Sector
46. ASEAN is an important market for Australian agriculture. ASEAN member
countries have been among Australia's principal export market for sugar and
among Australia's top ten markets for live animals, dairy, horticulture and
wheat. Australia's agriculture exports to ASEAN were valued at around $3.9
billion in 2007-08.
47. The agriculture industry identified the following specific issues they
sought to be addressed in the AANZFTA negotiations:
- reduction/elimination of specific and mixed tariffs (i.e. tariffs based
on volume);
- immediate reduction of tariffs to ASEAN Common Effective Preferential
Tariff (CEPT) rates, if tariffs are not eliminated immediately;
- elimination of tariffs on horticulture, especially in priority markets -
Indonesia, Malaysia, the Philippines, Thailand and Vietnam- as a fall
back, tariffs at the level provided to China under the ASEAN-China FTA;
- removal of tariff rate quotas on meat, including on goat products in the
Philippines;
- removal of restrictive elements in SPS (i.e. quarantine) certification
requirements of food products such as chicken, liquid milk and eggs;
- increased transparency of ASEAN food standards and labelling regimes for
example the Philippines require pre-registration of labelling;
- disciplines to ensure wine labelling requirements are not used to
restrict trade;
- reduction in burdensome customs procedures in some ASEAN member
countries;
- reduction in the range of import licences on agricultural products whose
conditions vary by product and are often limited to only a few domestic
companies these include rice and rice products, sugar, milk and cereal
flours (including wheat) livestock imports are subject to import
licensing in addition to a requirement for veterinary certificates and
pre-export quarantine periods (particularly in Indonesia and the
Philippines).
48. The AANZFTA can be expected to facilitate an increase in Australia's
exports of dairy products, some processed meat products, other processed
foods and beverages. Exporters of a wide range of agricultural products
would also benefit from the greater certainty resulting from the binding of
current duty free entry, and elimination of some tariff quotas. The
significance of the tariff outcomes for the agriculture sector is
demonstrated in Annex C.
49. As a consequence of the AANZFTA, ASEAN member countries could be
expected to increase their exports of some food products to Australia.
However, as almost all Australian agricultural tariffs are currently
applied at rates from zero to 5 per cent, tariff elimination under the
AANZFTA would be unlikely to have a significant impact on the Australian
agriculture industry. Nor would the AANZFTA commitments affect Australia's
quarantine regime, as the FTA's provisions reaffirm the primacy of the WTO
Agreement on Sanitary and Phytosanitary Measures.
Manufacturing and Resource Sector
50. High tariffs and tariff escalation (i.e. tariff levels rising in line
with the degree of processing) were identified by Australian industry as
barriers to increasing trade with ASEAN member countries. Non-tariff
measures affect a number of industries. The lack of transparency in
customs procedures adds substantially to the cost of doing business in
ASEAN member countries. The manufacturing sector highlighted the following
specific issues they sought to be addressed in the AANZFTA:
- significantly high tariffs in the automotive, steel, chemical and
plastics and processed food sectors;
- rules of origin that allow for further integration with the ASEAN
automotive supply chain;
- initial reduction of ASEAN textile, clothing and footwear tariffs to at
least ASEAN Common Effective Preferential Tariff (CEPT) rates removal of
non-tariff measures, such as restrictions on distribution, and domestic
subsidies;
- elimination of differential excise taxes for cars which affect Australian
exports of larger vehicles;
- removal of non-automatic import licensing (including for steel and
passenger motor vehicles);
- improvements in transparency of customs administration; and
- enhanced standards and conformance cooperation to facilitate engagement.
51. In line with reducing and eliminating ASEAN tariffs, the FTA could be
expected to result in increases in Australia's exports of manufactured
items such as motor vehicles and components, transport equipment, ferrous
metals, metal products, chemical, rubber and plastic products, textiles and
paper products. The significance of the tariff commitments for the
manufacturing and resource sectors is demonstrated in Annex C.
52. The set of rules of origin negotiated under the AANZFTA could also be
expected to provide Australian exporters with better opportunities to link
into regional supply chains. Products produced primarily from inputs
sourced from the AANZFTA countries would receive preferential tariff rates
when exported to the AANZFTA parties. This would provide a greater
potential for Australian exports to, and imports from, ASEAN of
intermediate products such as automotive parts and provide further
investment opportunities in the region.
53. Reductions in Australian tariffs may result in ASEAN member countries
increasing their exports to Australia of electronic equipment, machinery
and equipment, motor vehicles and parts, metal products, wood products,
chemicals, rubber and plastics and textiles and clothing. However, given
Australia's already low tariffs (averaging 3.6 per cent), the overall
impact on the Australian manufacturing industry is likely to be modest.
54. Vietnam is accorded WTO Market Economy Status as part of the AANZFTA
package. This change puts Vietnam on the same footing as other WTO Members
in relation to dumping, and subsidy and countervailing, investigations, as
Australia agrees to not have recourse to special procedures allowed under
Vietnam's terms of accession to the WTO. Industry representatives have
noted that anti-dumping has not been a significant issue in relation to
Vietnam, and highlighted Vietnam's level of market access opening in the
AANZFTA as the key issue in developing a balanced package.
Compliance costs
55. The main area of additional costs for exporters associated with the
AANZFTA would be in relation to complying with the rules of origin
provisions required to claim preferential tariff treatment, including
obtaining certificates of origin. These costs would be most relevant to
the Australian manufacturing sector, due to its use of imported components
and parts, but should not be significant.
56. For the majority of goods, there would be two options available to
Australian exporters under the AANZFTA to comply with the rules of origin
(ROO) provisions (i.e. there would be "co-equal" ROO). Exporters could
utilise Australia's preferred Change of Tariff Classification (CTC)
methodology - the same approach used in Australia's FTAs with the United
States, Thailand and New Zealand, as it offers a simpler method of testing
exports for their origin compliance - or exporters could also utilise
ASEAN's preferred 'value-added' approach.
57. Consultations by the Department of Foreign Affairs and Trade (DFAT),
the former Department of Industry, Tourism and Resources (DITR), the
Department of Agriculture, Fisheries and Forestry (DAFF) and the Australian
Customs Service (Customs) confirmed that industry generally supports a CTC-
based approach on ROO as being less administratively burdensome than the
alternatives. Under the AANZFTA co-equal ROO, for most products exporters
will be able to choose whether to use CTC or value-added rules.
58. As with Australia's existing FTAs with Singapore and Thailand, origin
status and consequent eligibility for preferential tariff treatment, would
be based on certificates of origin which, in Australia's case, are expected
to be issued by endorsed industry bodies such as the Australian Chamber of
Commerce and Industry or the Australian Industry Group. The issue of these
certificates would generally require a small fee-for-service payment by
exporters.
59. We would not anticipate additional compliance costs for Customs in
administering the AANZFTA's approach to ROO. While it is expected that
most ASEAN exporters will use the 'value added' approach in the early years
of the FTA, this choice will not provide a major additional burden for
customs which has a strong familiarity with both the CTC and 'value added'
approaches. Customs would not be directly involved in the issue of
certificates of origin in Australia.
Services Sector
60. Two-way trade in services between Australia and ASEAN is worth around
$18 billion and there is considerable potential for Australia's services
exports (worth $8.4 billion) to increase. Services account for over 29 per
cent of Australia's total exports to ASEAN. Both exports to and imports
from ASEAN are dominated by travel and transportation services, with more
than half of Australia's travel exports to ASEAN being education-related.
Communication services, construction, and financial services and insurance,
each accounted for less than 2 per cent of total services exports to ASEAN.
61. Most ASEAN member countries control foreign participation in their
services sectors very tightly and maintain significant regulatory
restrictions. These include foreign equity limits, joint venture
requirements, geographic restrictions on the location of foreign firms;
numerical or other limits on the temporary entry and stay of foreign
personnel; and in the case of professional services, nationality
restrictions on the right to practise. Some of these restrictions may be
relaxed by regulatory authorities on a discretionary case-by-case basis, or
on a unilateral basis (either indefinitely or for defined periods of time).
Consequently, there can be significant gaps between applied levels of
market openness and the levels that are "bound" in the WTO or other trade
treaties, which creates uncertainty for foreign service suppliers.
62. The AANZFTA negotiations provided an important opportunity for
Australia to enhance certainty and transparency for Australian services
suppliers in sectors of priority trade interest, such as education,
financial, professional and telecommunications services, including by
closing the gap between applied and WTO-bound levels of market openness,
strengthening regulatory disciplines and creating a platform for ongoing
economic engagement on services trade issues.
63. Under the AANZFTA, ASEAN member countries have made market access and
regulatory commitments that will enhance certainty and transparency for
services suppliers in the region.
64. Some examples include 'WTO-plus' market access improvements in (see
Annex D for more details of 'WTO-plus' gains in sectors of Australian
priority trade interest):
- professional services from Malaysia (accounting, architecture and
engineering), Philippines (accounting , engineering) and Vietnam and
Indonesia (legal);
- higher education services from Malaysia, the Philippines, Indonesia and
Vietnam (including an MFN commitment from Vietnam in relation to future
ASEAN-wide FTAs on the cross-border supply of higher education services);
- telecommunications - all ASEAN member countries have agreed, subject to
transitional arrangements in some cases, to pro-competitive regulatory
disciplines to ensure that foreign suppliers can operate on a level-
playing field with monopoly or former monopoly incumbent operators, which
may own or control essential network facilities and infrastructure;
- financial services from the Philippines (banking), Indonesia (insurance
and banking) and Malaysia (other financial services);
- construction services from Indonesia, Malaysia and Brunei;
- mining and energy related services from the Philippines and Thailand;
- temporary entry of business persons from Indonesia (intra-corporate
transferees), Malaysia and Thailand (particularly in the education
sector) and the Philippines (particularly in some professional services).
65. There is a built-in agenda to review market access commitments in
services three years after entry into force of the Agreement, and
periodically thereafter as determined by the FTA Joint Committee. The aim
of these reviews is for Parties to further improve specific commitments so
as to progressively liberalise trade in services.
66. Australia also has the right to request that an ASEAN member country
extend to Australia any more favourable treatment (than provided for in the
AANZFTA) which is afforded to a third country as part of a future ASEAN-
wide FTA. This kind of "MFN on request" approach is consistent with the
approach in Australia's bilateral FTAs with Singapore and Thailand.
67. Some examples of enhanced 'WTO-plus' regulatory disciplines in the
AANZFTA which will benefit Australian services exporters in the region
include requirements on Parties to:
- encourage competent bodies to enter into negotiations for recognition of
professional qualifications, licensing and registration requirements and
procedures;
- ensure that the use of business names under which service suppliers
normally trade in their respective home country markets is not unduly
restricted;
- publish measures of general application affecting trade in services on
the Internet, to the extent possible;
- endeavour to provide interested persons of other Parties with a
reasonable opportunity for comment prior to adoption of new measures;
- provide license applicants with an opportunity to remedy incomplete
applications, status reports on the progress of applications on request,
and reasons for the denial or termination of applications;
- publish information on temporary entry requirements, process completed
applications for temporary entry and stay promptly and to notify
applicants, on request, about the status or outcome of the application;
- observe minimum standards of procedural transparency, such as reasonable
notice of administrative processes (e.g. licensing and rule-making in
specific cases) and opportunities to present facts and arguments before
final administrative action;
- afford services suppliers with a commercial presence certain post-
establishment investment protections, as set out in the Investment
chapter, including investor-state dispute settlement.
Movement of Natural Persons
68. The ability of investors, goods sellers and service suppliers from one
country to enter and stay temporarily in another country to explore
business opportunities, negotiate and enter into contracts and transact
business (supply services) is a key hallmark of deeper economic
integration. Business stakeholders in Australia have raised issues
concerning delays in obtaining entry visas or other permits in some ASEAN
member countries, difficulties in obtaining relevant forms and
documentation and a lack of transparency in decision-making. The AANZFTA
aims to provide a platform for addressing these concerns through a movement
of natural persons (MNP) chapter.
69. The AANZFTA MNP chapter provides a framework for Parties to make
commitments on temporary movement of service suppliers, investors and goods
sellers and other persons engaged in regional trade and investment. The
chapter contains obligations which require Parties to publish information
on temporary entry requirements, process completed applications for
temporary entry and stay promptly and to notify applicants, on request,
about the status or outcome of the application. Any fees imposed in
relation to the processing of immigration formalities are required to be
reasonable and in accordance with domestic law.
70. From entry into force of the AANZFTA, the commitments of most ASEAN
member countries under the MNP chapter will relate only to service
suppliers, consistent with the WTO GATS framework. However, most ASEAN
member countries have improved their WTO commitments in this area,
including Indonesia, Malaysia, Singapore, the Philippines and Thailand
(e.g. length of stay for intra-corporate transferees); Malaysia and
Thailand (education services suppliers) and the Philippines (professional
services) - see Annex E for details of 'WTO plus' gains. The MNP chapter
provides a platform for countries to broaden and deepen their commitments
in future and thereby facilitate freer movement of skilled labour within
the region across all sectors of the economy.
Investment
71. There is a significant difference between two-way trade, and investment
flows, between Australia and ASEAN. Whereas Australia's trade with ASEAN
accounts for around 17 per cent of total merchandise and services trade,
only 5 per cent of Australian's direct investment abroad (i.e. direct
physical investment in other countries) is held in ASEAN economies. ASEAN
investment in Australia also represents only around 4 per cent of the total
stock of foreign direct investment in Australia. ASEAN direct investment
stocks in Australia were around $14.8 billion at the end of 2007.
Singapore accounts for about 51 per cent of total ASEAN investment. ASEAN
direct investment in Australia declined sharply between 2001 and 2002, from
$16.3 billion to $7 billion, but has increased steadily since 2003.
72. Australian direct investment in ASEAN was around $16.4 billion at the
end of 2007. Direct investment grew only modestly between 2001 and 2005,
but rose strongly by 26 per cent between 2005-06 and 67 per cent between
2006-07, driven by strong growth in investment to Singapore and Malaysia.
Investments in the region vary widely. In Singapore, for example, the main
investments are in information technology, financial services and
investment holdings for regional operations. In Vietnam, there are
important investments in manufacturing, food and beverages, financial
services and education. Australian investors in Malaysia include prominent
companies in industrial and infrastructure development as well as
education, while in Indonesia, Australian companies have invested
principally in mining, beverages and financial services.
73. The majority of Australian investment in ASEAN takes the form of
portfolio investment (e.g. shares) and other investment rather than direct
investment. The same is true of ASEAN investment in Australia. Total
Australian investment in ASEAN was around $31.4 billion at the end of 2007.
Total ASEAN investment in Australia at the end of 2007 was $52.8 billion.
Australian investment in ASEAN is also highly concentrated, with Singapore
having been the recipient of more than half of Australia's total investment
in ASEAN over recent years.
74. Against this background, there is clearly scope to deepen the economic
relationship between Australia and ASEAN through an expansion of direct
investment and to broaden Australian investment across ASEAN. The AANZFTA
cannot address all the factors and economic fundamentals that affect
investor perceptions and decisions. However, to the extent that improved
market access and legal safeguards can be realised in the AANZFTA, the FTA
can contribute to improved investor confidence by providing a more certain,
liberal and transparent environment for Australian investors.
75. With regard to market access in non-services sectors (agriculture,
mining, forestry, fishing and manufacturing), Australian investors confront
a variety of impediments. These include foreign equity restrictions,
restrictions on organisational form, and a lack of legislative and
regulatory transparency. While these issues may also adversely impact upon
investor confidence, additional post-establishment factors such as the
potential for expropriation, restrictions on profit repatriation and
transfers, and the absence of adequate legal protection in some ASEAN
member countries erode investor confidence and limit the potential to
increase investment across ASEAN.
76. The AANZTA contains a significant regime of legal protections that will
enhance certainty and transparency for investors during the post-
establishment stages of investment. These obligations are comparable to
Australia's existing bilateral Investment Promotion and Protection
Agreements (IPPAs) with four ASEAN member countries. These include
requirements on Parties to:
- apply fair and equitable treatment and full protection and security (the
minimum standard of treatment at customary international law) to
investments;
- ensure non-discriminatory treatment in relation to measures for investors
that have suffered losses due to armed conflict, civil strife or states
of emergency;
- allow funds of an investor relating to an investment to be transferred
freely and without delay, subject to specified exceptions;
- ensure that any expropriation or nationalisation of an investment is only
for a public purpose, applied in a non-discriminatory manner, is in
accordance with due process of law and is accompanied by payment of
prompt, adequate and effective compensation (the chapter includes an
annex which elaborates on the nature and scope of "indirect"
expropriation).
77. There are detailed provisions on investor-state dispute settlement
(ISDS) which provide that where an investor alleges that a Party has
breached specific obligations (including those mentioned in the previous
paragraph) in such a way as to cause loss or damage, and it has not been
possible to resolve the dispute by consultations, the dispute may be
referred to international arbitration. Investor-state dispute settlement
will not apply to investment screening or admission processes.
78. On market access restrictions (pre-establishment issues), Parties made
the assessment that there was insufficient time to complete market access
schedules to an appropriate standard within the timeframe of the
negotiations. Therefore, the AANZFTA provides for a work program to
develop market access schedules, covering pre-establishment issues such as
foreign equity limits, within five years of entry into force of the
Agreement, subject to agreement of the Parties. The assessment was based,
in part, on the novelty of the agreed two-annex "negative listing" approach
to scheduling for many ASEAN member countries. The work program notes,
inter alia, that further discussions between the Parties will take place on
the application of MFN treatment and procedures for the modification of
schedules.
Intellectual Property (IP)
79. There are significant variations in intellectual property law and
practice both within ASEAN and between some ASEAN member countries and
Australia. This variation introduces complexity and uncertainty that
impedes IP-related exports to the ASEAN region and adds to the transaction
costs of those businesses which do seek to protect their intellectual
property in ASEAN markets. Australian industry expressed concern regarding
inadequate protection and enforcement of intellectual property in most
ASEAN member countries. These concerns further undermine the confidence of
IP-related exporters and raise apprehension regarding a flow of counterfeit
and pirated goods from ASEAN into Australia. Australia's priority was to
seek commitments and mechanisms for cooperation to enhance harmonisation of
ASEAN's intellectual property systems with international standards, with a
view to delivering efficiency gains to Australia's IP exporters and
advancing the protection and enforcement of the rights of Australian
intellectual property holders.
80. The outcome on IP under the AANZFTA reinforces the Parties' existing
rights and obligations under the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS), including reiterating national
treatment obligations, and builds on those rights and obligations in a
number of areas. The Agreement contains specific obligations on protection
of trade marks and geographical indications, copyright, government use of
software and transparency. It provides for cooperation in many areas,
including to promote the efficiency and transparency of intellectual
property administration and registration systems, cooperation on border
measures with a view to eliminating trade which infringes intellectual
property and cooperation regarding accession to a number of international
standard setting treaties which would facilitate further harmonisation of
intellectual property systems in the region. Importantly, the Agreement
also includes a Committee on Intellectual Property to drive implementation
of the IP Chapter, providing a high level vehicle to enable closer
cooperation with New Zealand and ASEAN for the benefit of IP owners and
users in the region.
Trade Unions
81. One of the main concerns of trade unions, as highlighted in the public
submission process, was the potential adjustment costs associated with the
AANZFTA on the Australian manufacturing industry. The analysis for the
manufacturing sector above has highlighted the opportunities for Australian
industry from ASEAN tariff reductions, while also noting a reduction in
Australian tariffs, including the higher tariffs in the textile, clothing
and footwear (TCF) and passenger motor vehicle (PMV) sectors. The main
adjustment costs for Australian industry are likely to be in these areas.
82. However, the overall adjustment costs from the FTA on the TCF and PMV
tariff reductions are likely to be modest. Any increase in imports of
motor vehicles from ASEAN member countries needs to be seen in the broader
context of the potential benefits for the Australian manufacturing sector,
including the automotive industry, from increased export opportunities and
access to regional supply chains under the FTA. Similarly, trade in TCF
with ASEAN is not large - imports from ASEAN are just under 6 per cent of
total TCF imports. Adjustment costs from any increase in TCF imports from
ASEAN are therefore unlikely to have major ramifications for employment in
Australian TCF sectors.
Industry Groups
83. Industry groups were broadly in favour of negotiating the AANZFTA,
provided the agreement was comprehensive in nature and delivered clear
benefits to Australian industries. As discussed in the analysis above,
liberalisation will occur across a broad range of tariff lines in all
sectors - including agriculture and manufacturing - and will create
substantial new market access opportunities for Australian exporters of
goods and services.
State governments
84. Australia's state governments identified themselves as stakeholders in
the negotiation of the AANZFTA. The nature of the issues raised by state
governments related to the interests of the industries residing in their
states, their regulatory responsibilities and administrative implications
of AANZFTA commitments. There are no additional impacts on state
governments beyond those discussed in other sections of this impact
analysis.
Public interest groups
85. The AANZFTA is likely to have a positive impact on Australian
consumers. There should be increased benefit for consumers as falling
Australian tariffs provide greater choice across many product lines,
including in TCF and PMV. The AANZFTA's new provisions on services should
also see increased choice in service providers.
Small business
86. The overall impact of the AANZFTA on small business is likely to be
positive. Many of the sectors which are expected to benefit from the FTA
contain a significant number of small businesses. These include the dairy
sector, beverages, construction, and a range of services industries where
barriers to entry are high. No industry sectors are expected to experience
a significant decline in activity as a result of the FTA. As noted above,
the system of rules of origin should benefit access for business, including
small business, into regional supply chains, at minimal administrative
cost.
87. In addition, provisions designed to ensure transparency, consistency,
and predictability, in the application of customs laws and regulations
would increase certainty and also reduce costs for small businesses.
Provisions which would assist in harmonisation of ASEAN intellectual
property systems with international standards should also reduce the
complexity and uncertainty that can impede IP-related exports to the ASEAN
region and reduce transaction costs, particularly benefiting smaller
businesses which seek to protect their intellectual property in ASEAN
markets.
Federal Government
88. The main impact of AANZFTA on the Federal Government will be the loss
of tariff revenue. The Treasury has estimated that the loss of tariff
revenue to the Australian Government resulting from AANZFTA over the 2009-
10 Budget forward estimates (four years from 2009-10 to 2012-13) will be
$971 million. This estimate is based on an analysis of existing trade
levels (as at November 2008) and does not take into account variations in
the level of trade that will result from the FTA, either in terms of
imports form ASEAN increasing faster than imports from other non-FTA
countries or the positive impact on economic growth of the treaty. The
estimates will be affected by revisions to forecasts and projections for
the level of imports.
Broader strategic considerations
89. Continued engagement with Asia is a key element of Australia's foreign
and trade policies. In part, this reflects the trade and economic
importance of the region to Australia. Australia also has strong security
and defence interests in the region. An FTA has the potential to:
- deliver significant benefits to the overall relationship between
Australia and ASEAN member countries;
- complement the broader economic/political institutional frameworks of
APEC, the ASEAN-Australia Forum and our various bilateral arrangements;
- encourage ASEAN to adopt a high standard and WTO-consistent approach to
FTAs;
- assist ASEAN's own economic integration efforts; and
- help to position ASEAN as a positive influence in evolving regional
economic architecture.
E. Consultations
90. Public submissions were sought prior to the commencement of the AANZFTA
negotiations and around 50 written submissions were received, including
from the South Australian, Victorian and Western Australian governments.
Submissions from these governments recognised the potential benefits of an
FTA between Australia and ASEAN, and agreed on the need to negotiate a
comprehensive, high quality agreement.
91. During the negotiation of the AANZFTA, DFAT officials held regular
consultations with relevant Commonwealth agencies, state and territory
governments and other stakeholders, including industry, unions and public
interest groups, to ensure that their views informed development of the
Government's negotiating strategy. In addition to a large number of one-to-
one and smaller group meetings, there were five large roundtable meetings
between December 2006 and December 2008 with peak organisations
representing industry, trade unions, professional bodies and other
interested groups.
92. Commonwealth agencies were consulted via regular inter-departmental
committee meetings and participation of relevant agencies in the Australian
delegation to negotiating sessions. DFAT's web site was updated after each
AANZFTA negotiating session, providing for wider dissemination of
information to stakeholders.
93. State and territory governments were consulted through regular senior
State and Territory Trade Officials Group (STOG) and Commonwealth-States
Standing Committee on Treaties (SCOT) meetings, teleconferences and regular
visits by the AANZFTA negotiators to state and territory capitals. The
Minister for Trade also consulted state Premiers and territory Chief
Ministers on Australia's services and movement of natural persons schedules
and briefed his state and territory counterparts at the COAG Ministerial
Council on International Trade.
94. Consultations with industry have been particularly substantial with
DFAT attending more than 100 meetings and industry roundtables. These
consultations helped identify commercially significant impediments to
increasing Australia's exports to, and investment in, ASEAN markets. At
the negotiating rounds in Perth in July 2007 and Brisbane in April 2008,
business representatives participated in seminars with senior ASEAN and New
Zealand negotiators.
95. Industry groups were broadly supportive throughout the AANZFTA
negotiations, with most seeking improved market access to ASEAN member
countries. The automotive industry was strongly supportive of the FTA and
sees benefits in gaining market access to ASEAN's growing passenger motor
vehicle market. The sector also sees benefits in attaining better access
to regional supply chains for automotive parts, which is expected to be
facilitated by the more liberal regional rules of origin negotiated under
the AANZFTA.
96. The textile, clothing and footwear (TCF) industry saw both pluses and
minuses in a potential FTA. For example, the Council of Textile and
Fashion Industries of Australia indicated a preparedness to consider a
reduction and elimination of tariffs on individual tariff lines of interest
to ASEAN, but only on a reciprocal basis and only if these reductions were
not used as a precedent in other FTAs. Similarly, the Australian footwear
industry had both offensive and defensive interests. It was prepared to
accept a lowering of footwear tariffs in Australia to zero, but only on the
basis of reciprocity from ASEAN.
97. There were regular briefings of agricultural organisations, including
through the Technical Working Group facilitated by the National Farmers'
Federation. Australia's agriculture sector is broadly supportive of the
AANZFTA and sought market access gains in a range of priority sectors such
as dairy, red meat, pork, wheat and grains, and wine. In some cases (e.g.
horticulture) high tariffs were the main concern, but most indicated the
use of non-tariff measures as a priority for negotiation. A number of
industries warned of the dangers of any weakening of Australia's quarantine
regime.
98. Services industries generally supported an FTA with ASEAN, reflecting
the potential for significant growth in exports due to high barriers to
entry. Services stakeholders, including the Australian Services
Roundtable, Certified Practising Accountants, Engineers Australia,
Institute of Chartered Accountants of Australia, Insurance Council of
Australia, Law Council of Australia, TAFE Directors Australia, Australian
Nursing and Midwifery Council and the Australian Nursing Federation, were
consulted closely on the emerging services outcomes, including market
access.
99. Australia's financial services providers were particularly supportive
of a comprehensive FTA. ASEAN regulations prevent foreign banks from
offering full domestic banking services, and limit their ability to compete
in the regional market. Equity limitations were a concern for some
services providers. Members of the media and entertainment industries
sought a positive list approach to services market access commitments in
the FTA, either with no listing of cultural industries or a general
cultural exception that would allow the Government to introduce protective
legislation in the future.
100. Public interest groups and unions indicated concerns over
environment, human rights abuses (especially the ACTU and Australian
Manufacturing Workers Union (AMWU) in relation to Burma), and trade and
labour standards. The ACTU and AMWU also expressed a preference for
pursuing multilateral trade agreements over bilateral or regional FTAs.
Some submissions raised concerns with Australia negotiating with a regional
grouping that includes Burma. The AANZFTA does not change Australia's
relationship with Burma. Negotiating an FTA with a country or, in the case
of the AANZFTA, a group of countries, did not constrain or alter the
approach Australia takes bilaterally, plurilaterally or multilaterally on
human rights-related matters. Australia expects to continue its ongoing
bilateral dialogue and engagement on these issues, as well as through all
relevant international and regional mechanisms. At the August 2007 ASEAN
Economic Ministers-CER Consultations it was agreed that government
procurement and labour and environment provisions would not be included in
the AANZFTA itself. Australia and New Zealand pursued their government
procurement objectives as part of the AANZFTA package, but it was not
possible to achieve any outcomes in this area. New Zealand pursued its
labour and environment agenda with some individual ASEAN member countries
in the context of the AANZFTA negotiations, and agreed a bilateral outcome
with the Philippines which supplements instruments already secured
separately with other ASEAN member countries.
F. Recommended Option
101. On balance, it is in Australia's interests to enter into the
AANZFTA, given the Agreement will:
- deliver significant market access commitments that provide benefits to
Australian producers, exporters, consumers and investors and a platform
for securing continuing trade and investment liberalisation in the
future;
- support greater economic integration in the region, including through
greater use of supply chains, especially due to its use of regional rules
of origin to determine eligibility for the AANZFTA tariff commitments;
- deliver these market access gains in a faster timeframe than appears
possible through the WTO Doha Round;
- achieve sufficiently comprehensive and reform-oriented WTO-plus
commitments to ensure that the AANZFTA is supportive of the multilateral
trading system;
- preserve and build on the benefits in Australia's existing bilateral FTAs
with New Zealand, Singapore and Thailand;
- strengthen Australia's strategic engagement with ASEAN and with the
evolving regional economic architecture;
- impose small adjustment costs that would be outweighed by the overall
economic gains to the Australian economy; and
- not detract from our ability to continue to negotiate trade
liberalisation in other fora - WTO, regional or bilateral.
G. Implementation and Review
102. Once signed, the AANZFTA will enter into force when Australia, New
Zealand and at least four ASEAN member countries complete their domestic
implementation processes. In view of the time required for a number of the
AANZFTA Parties to conclude their domestic processes, it is expected that
the AANZFTA will enter into force in the second half of 2009 and, in any
event, no later than 1 January 2010.
103. The AANZFTA contains a series of mandated reviews on aspects of the
Agreement following entry into force (EIF):
- the FTA Joint Committee will meet within one year of EIF to review the
implementation and operation of the FTA;
- the Committee on Investment will meet within one year of EIF and oversee
discussions on investment market access and application of MFN, to be
concluded within five years of EIF;
- the Sub-Committee on Rules of Origin will review the cumulative rules of
origin provision between 12 and 18 months from EIF;
- a report on non-tariff measures in relation to trade in goods will be
submitted by the Committee on Trade in Goods to the FTA Joint Committee
within two years of EIF;
- a new round of services negotiations will commence within three years of
EIF; and
- a general review of the AANZFTA will take place in 2016 and every five
years thereafter, unless otherwise agreed by the Parties.
ANNEX A
ASEAN-Australia-New Zealand Free Trade Area (AANZFTA):
Negotiating Objectives
Trade in Goods
- Ensure an outcome that is WTO-consistent, by seeking to eliminate and
bind tariffs and other barriers to trade between Australia and ASEAN on
the broadest possible basis; and
- Provide a basis for reducing over time the restrictive impact of non-
tariff barriers.
Rules of Origin
- Agree on a set of rules of origin that ensures that the benefits of
preferential tariff treatment under the FTA apply only to goods from
Australia, New Zealand and ASEAN while avoiding unnecessary obstacles to
trade, which reflects the principle of substantial transformation and is
not unnecessarily burdensome to administer.
Customs Cooperation
- Ensure that the customs procedures of the parties are transparent,
efficient and consistent, and that they facilitate trade; and
- Strengthen cooperation and exchange of information to assist in the
detection, investigation and prevention of infringements of customs laws.
Quarantine/Sanitary and Phytosanitary (SPS) Measures
- Seek to reinforce mutual commitment to the development and application of
science based quarantine measures, consistent with the WTO Agreement on
the Application of Sanitary and Phytosanitary Measures (SPS Agreement);
- Seek to strengthen cooperation between Australian, New Zealand and ASEAN
quarantine authorities; and
- Seek to strengthen cooperation in implementing the WTO SPS Agreement.
Standards, Technical Regulations and Conformity Assessment Procedures
- Seek to enhance cooperation on the development and application of
standards, technical regulations and conformity assessment procedures,
consistent with the WTO Agreement on Technical Barriers to Trade; and
- Seek to enhance arrangements for information exchange on regulatory
regimes.
Trade in Services
- Obtain improved opportunities for, and minimise discriminatory treatment
of, Australian service suppliers through the more developed ASEAN 6
members (Brunei, Indonesia, Malaysia, the Philippines, Singapore and
Thailand) substantially improving on their WTO market access commitments
in priority sectors;
- Seek an appropriate Most Favoured Nation (MFN) clause, with exclusions
for all visa-related requirements;
- Seek to include WTO-plus disciplines on regulatory practice, notably for
financial services, telecommunications and to facilitate the temporary
movement of business people in the ASEAN region;
- Ensure the outcome of the negotiations takes account of Australia's
cultural and social policy objectives, and the need for appropriate
regulation and support measures to achieve these objectives; and
- Ensure the outcome of the negotiations does not limit the ability of
Government to provide public services, such as health, education, law
enforcement and social services.
Investment
- Seek to promote greater transparency of investment rules and ensure that
investors have access to appropriate legal protection;
- Ensure that the negotiations take account of Australia's foreign
investment policy;
- Seek to reduce foreign equity participation limits in ASEAN and provide
greater certainty for Australia investors in relation to ASEAN pre-
establishment investment screening regimes and related approval
processes; and
- Seek an appropriate MFN clause, with exclusions for all visa-related
requirements.
Intellectual Property Rights
- To further harmonise intellectual property systems in the region with
international frameworks in order to deliver efficiency gains to business
and to enhance the protection and enforcement of the rights of
intellectual property holders.
Electronic Commerce
- Seek to enhance the growth of electronic commerce in goods and services
in ways that promote the use of electronic commerce globally.
- Reaffirm the current practice of not imposing customs duties on
electronic transmissions between Australia, New Zealand and ASEAN
members.
Competition Policy
- Seek the development, implementation and enforcement of policies in ASEAN
that promote a pro-competitive environment.
- Foster cooperation on competition policy.
Economic Cooperation
- Seek agreement on a work program of specific economic cooperation
projects to enhance ASEAN's capacity to implement the AANZFTA
commitments.
Dispute Settlement
- Encourage the early identification and settlement of disputes through
consultation.
- Establish fair, transparent, timely, and effective procedures to settle
disputes arising under the Agreement.
Government Procurement
- Seek a basis for the initiation of market access negotiations on
government procurement, including by Australia being treated comparably
with any countries with which ASEAN agrees to begin negotiations on
access to ASEAN government procurement markets.
ANNEX B
ASEAN-Australia-New Zealand Free Trade Area (AANZFTA):
Summary of Key Obligations
Preamble and Chapter 1: Establishment of the Free Trade Area, Objectives
and General Definitions
1. The Preamble recites the historical basis, regional context and broad
aims for the AANZFTA. Importantly, the AANZFTA is cited as an "important
building block towards regional economic integration" in recognition of the
free trade agreement's (FTA's) role in contributing to the development of
regional economic architecture. Chapter 1 sets out the objectives of the
FTA, establishes the ASEAN-Australia-New Zealand Free Trade Area
(consistent with World Trade Organization (WTO) rules) and defines terms
that are used in more than one chapter of the FTA.
Chapter 2: Trade in Goods
2. The Trade in Goods Chapter obliges Parties to progressively reduce
and/or eliminate tariffs in accordance with each Party's applicable
schedule contained in the Schedule of Tariff Commitments. It establishes
the framework of rules for trade in goods among the Parties. The Chapter
affirms a number of WTO provisions that already govern trade in goods among
the Parties and, in some cases, provides for more specific commitments as
well as enhanced transparency. This includes provisions covering: national
treatment, fees and charges connected with importation and exportation,
publication and administration of trade regulations, and import licensing.
The Chapter contains a commitment that, consistent with WTO rights and
obligations, each Party will eliminate all forms of export subsidies for
agricultural goods exported to other Parties. There is also a commitment
for the Committee on Trade in Goods (established pursuant to Article 11) to
review non-tariff measures and to report to the FTA Joint Committee within
two years of entry into force of the Agreement with a view to considering
the scope for additional means to increase trade between the Parties.
3. The Chapter provides for the establishment of contact points to
facilitate information exchange. The Chapter also provides for
consultations on request as well as for the Committee on Trade in Goods to
consider matters arising under this Chapter or under other goods-related
chapters (Chapters 3, 4, 5, 6 and 7).
4. With regard to tariffs, the tariff schedules in Annex 1 to the
Agreement provide for the reduction and elimination of tariffs over a
transition period. Tariffs will be eliminated on a high percentage of
tariff lines in all AANZFTA Parties. The tariff elimination commitments
will be phased-in from early in the transition period, and many tariffs
currently at possibly prohibitive levels will be reduced to levels that
should allow trade to flow within a few years. Exclusions from tariff
commitments have been kept to a minimum, and generally do not exceed one
per cent of a country's national tariff lines. For those tariff lines
where tariffs are not eliminated, but which are not in the exclusion
category, tariffs will either be bound at the base (i.e. 2005) tariff rate
or subject to tariff reductions.
5. The tariff outcomes provide for longer transition periods and lower
tariff elimination outcomes for Vietnam and the three least developed
countries (Burma, Cambodia and Laos), in recognition of their status as
newer ASEAN member countries with less developed economies.
6. For further information, see Annex C: Summary of AANZFTA Tariff
Commitments.
Chapter 3: Rules of Origin
7. The Rules of Origin (ROO) Chapter and associated Operational
Certification Procedures (OCP) and Schedule of Product Specific Rules
(PSRs) establish the criteria for determining whether goods will qualify
for preferential tariff treatment under the AANZFTA (whether a good
"originates" in Australia, New Zealand or an ASEAN member country). The
chapter also sets out the procedures and documentation for demonstrating
that a good qualifies for preferential treatment and, if necessary,
verifying that this is the case.
8. The AANZFTA establishes a ROO based on "co-equal" access to rules based
on either the 'change in tariff classification' (CTC) model or a regional
value content (RVC) test. For most goods under AANZFTA, exporters have the
choice of testing their products under a CTC-based rule or an equivalent
RVC-based rule. For some goods, only a single option applies. Exporters
wishing to access the tariff arrangements agreed under AANZFTA will need to
support their claim with a certificate of origin issued by a relevant
industry body.
9. The key benefit of the "co-equal" approach is that it marries the
objectivity of Australia's preferred CTC approach - there is a single,
clear rule for each tariff line - with ASEAN's greater familiarity and
comfort with the RVC-based approach. The agreement to adopt alternative
approaches to ROO also provides additional flexibility for Australian
exporters who may, for whatever reason, choose to export their goods under
the RVC-based test.
10. The rules in this Chapter provide for regional cumulation - that is,
where a good which complies with the origin requirements is exported by a
Party for use as an input in the production of a good in another Party, the
good will be treated as if it originated in the Party where the working or
processing of the finished good has taken place. This recognises the
increasing trend to global production chains in the region.
11. The Chapter includes provisions relating to a comprehensive set of
issues relating to the determination of origin, including: methodology for
calculating regional value content; minimal operations and processes which
do not affect originating status; treatment of accessories, parts and
tools; treatment of goods where only a small proportion of inputs fail to
meet the relevant ROO (the so-called de minimus principle); treatment of
packing materials and containers, and transport of goods through AANZFTA
Parties and through third countries.
12. The Chapter also sets out procedures and requirements relating to the
issuance of certificates of origin, including data requirements for
applications and for the content of certificates. It also contains
provisions relating to review and appeal of determinations of eligibility
for preferential tariff treatment.
13. There are provisions for ongoing consultations aimed at ensuring
effective administration of the provisions on ROO, and providing
opportunity for review and amendment of the Chapter. The Chapter also
provides for the establishment of a Sub-Committee, which, among other
things, is required to commence a Review of Article 6 of the Chapter (which
defines the operation of the cumulation principle) and the application of
"chemical reaction" and other process-based rules between 12 and 18 months
from entry into force of the Agreement.
14. The Annexes to the Chapter include the Schedule of Product Specific
Rules in Annex 2 to the Agreement and an additional Annex and two
Appendices relating to procedures and requirements for the issuance of
Certificates of Origin.
15. For further information, see AANZFTA Fact Sheet - Rules of Origin.
Chapter 4: Customs Procedures
16. The Chapter on Customs Procedures establishes arrangements for
expeditious, predictable, transparent and simplified customs administration
aimed at facilitating trade among the Parties. In particular, the Chapter
encourages procedures that facilitate the clearance of low-risk goods and
the use of automated, electronic customs transactions.
17. The Chapter affirms that the customs value of goods is to be determined
in accordance with the WTO Agreement on Implementation of Article VII of
the General Agreement on Tariffs and Trade 1994 (GATT) (Agreement on
Customs Valuation). In addition the Chapter provides that, wherever
possible, authorities will provide advance rulings to enable exporters to
verify tariff classification, and seek rulings about the valuation and the
origin of goods in advance of export. The Chapter also contains provisions
relating to the assurance of protection of confidentiality of information
provided by exporters.
18. The Chapter provides for the establishment of inquiry points and
publication of all statutory, regulatory and administrative requirements,
either on the internet or in print. There is also a requirement for
Parties to ensure importers have access to administrative review within
customs administrations or, where applicable, access to further
administrative or judicial review of determinations.
Chapter 5: Sanitary and Phytosanitary Measures
19. The Chapter on Sanitary and Phytosanitary Measures affirms that such
measures will continue to be applied in accordance with the Parties' rights
and obligations under the WTO Agreement on the Application of Sanitary and
Phytosanitary Measures. The Chapter contains provisions on arrangements
aimed at strengthening information exchange, cooperation and consultation
among the Parties. It also provides for the establishment of contact
points and a Sub-Committee on Sanitary and Phytosanitary Measures to review
progress in the implementation of the Chapter.
20. The dispute settlement provisions of the AANZFTA are not applicable to
any matter arising under this Chapter.
Chapter 6: Standards, Technical Regulations and Conformity Assessment
Procedures
21. The Chapter on Standards, Technical Regulations and Conformity
Assessment Procedures affirms the Parties' rights and obligations under the
WTO Agreement on Technical Barriers to Trade and provides for the
establishment of arrangements for enhanced information exchange,
cooperation and consultation among the Parties. The Chapter identifies a
range of possible vehicles for giving effect to enhanced cooperation.
22. The Chapter also recognises the scope for Parties to enter into
agreements or arrangements on regulatory matters as a means of facilitating
trade, and encourages consideration of extending such arrangement to
interested Parties. The Chapter provides for the establishment of contact
points and a Sub-Committee on Standards, Technical Regulations and
Conformity Assessment Procedures to monitor implementation of the Chapter,
and to consider issues that may be raised by the Parties.
Chapter 7: Safeguard Measures
23. The Chapter on Safeguard Measures establishes arrangements for
safeguard measures which may be applied during the transitional period,
i.e. while tariffs are being reduced and/or eliminated. Safeguard measures
may only be applied to the extent and for such time as may be necessary to
prevent or remedy serious injury and to facilitate adjustment during the
transitional period. The transitional period is defined as the period from
entry into force of the Agreement until three years after the customs duty
on a particular good is eliminated or reduced to its final commitment, in
accordance with a Party's schedule of tariff commitments. There are limits
on the length of time for which a safeguard measure may be applied (two
years, with a possible extension for one year), and limits in respect of
any repeat application of a safeguard measure. In addition, the Chapter
sets out procedures and conditions for compensation or the suspension of
substantially equivalent concessions by Parties affected by the application
of transitional safeguard measures.
24. The Chapter also contains provisions relating to the level of tariffs
that may be applied as safeguard measures, and minimum thresholds for the
application of safeguard measures to imports from ASEAN Parties.
25. Provisions setting out procedures for notification, investigation,
application of provisional safeguard measures, and review of measures
mirror relevant provisions of the GATT Article XIX and the WTO Agreement on
Safeguards. The Chapter also affirms the Parties' rights and obligations
in relation to global safeguard measures applied in accordance with the WTO
Agreement.
Chapter 8: Trade in Services
26. The Chapter on Trade in Services includes the substantive obligations
relating to trade in services and each Party's Schedule of Specific
Services Commitments in Annex 3 to the Agreement, including market access
and national treatment; provisions on most-favoured-nation treatment and
safeguards; and various regulatory disciplines and other obligations that
will enhance certainty and transparency for Australian services exporters.
The Chapter also contains two annexes which set out sector-specific
obligations for financial and telecommunications services respectively.
27. The Chapter provides for a "positive list" approach to scheduling
market access and national treatment commitments, where each Party
identifies in its own schedule the services for which market access and
national treatment apply, including the specification of any limitations to
such access or national treatment. This approach, including the definition
of "trade in services" with its four modes of services supply, is identical
to the approach provided for under the WTO General Agreement on Trade in
Services (GATS), with one exception. The exception is that a Party's
commitments in relation to the movement of natural persons (mode 4) are set
out in a separate schedule to the Movement of Natural Persons Chapter (mode
4 commitments) (see chapter 9 below). Each Party's Schedule of Specific
Services Commitments therefore contain commitments only in relation to
cross-border supply (mode 1); consumption abroad (mode 2); and commercial
presence (mode 3).
28. Consistent with the GATS, the market access obligation requires a Party
to specify in its Schedule any limitations on market access where it has
undertaken commitments in a sector (e.g. limitations on foreign equity,
restrictions on the organisational form of commercial presence, number of
service suppliers or total value of services transactions or assets). The
national treatment obligation requires that, in sectors where commitments
have been undertaken, each Party shall accord to services and service
suppliers of another Party treatment no less favourable than it accords to
its own like services and service suppliers, subject to any specified
conditions and qualifications. Like the GATS, there is also provision for
a Party to make additional commitments relating to qualifications,
standards or licensing matters. A Party may modify its specific
commitments, subject to compliance with formal procedures for notification
of, and consultation with, other Parties and, if necessary, compensatory
adjustments.
29. Under the provision for consultations on most-favoured-nation (MFN)
treatment, Australia has the right to request an ASEAN member country to
extend to Australian services and to service suppliers any more favourable
treatment that it accords to a third country in a future ASEAN-wide
agreement. ASEAN member countries have the same right in relation to
future bilateral and plurilateral FTAs to which Australia is a Party,
except bilateral and plurilateral agreements involving Australia or New
Zealand and one or more ASEAN member countries. The requested Party is
obliged to enter into consultations, although whether it accedes to the
request is a matter for negotiation. (Vietnam has also included in its
Schedule of Specific Services Commitments an MFN commitment on the cross-
border supply of higher education services, undertaking to extend any
commitments that go beyond the AANZFTA made to a third country as part of
future ASEAN-wide FTAs.)
30. The Chapter also provides that, pending the conclusion of multilateral
negotiations under GATS on emergency safeguard measures, a Party may
request consultations with another Party if it considers that
implementation of the AANZFTA commitments has caused substantial adverse
impact to a service sector. Any measure adopted as a result of these
consultations must be mutually agreed between the Parties concerned. The
operation of this provision will be reviewed upon conclusion of
multilateral negotiations under GATS on emergency safeguard measures.
31. The Chapter provides for a review of commitments by Parties three years
after entry into force of the Agreement, and periodically thereafter as
determined by the FTA Joint Committee. The aim of these reviews is for
Parties to further improve specific services commitments so as to
progressively liberalise trade in services. The Chapter establishes a
Committee on Trade in Services which is required, inter alia, to carry out
these reviews of commitments, enter into discussions on the application of
MFN, and to review the implementation of the Chapter.
32. The Chapter sets out a range of obligations on Parties that will
enhance regulatory certainty and transparency for Australian services
exporters. These are based upon equivalent GATS obligations, including in
relation to domestic regulation (licensing and qualification requirements
and procedures and technical standards) and transparency, although they go
beyond the GATS in several areas. Key 'GATS-plus' regulatory obligations
include requirements on Parties to:
- encourage competent bodies to enter into negotiations for recognition of
professional qualifications, licensing and registration requirements and
procedures;
- ensure that the use of business names under which service suppliers
normally trade in their respective home country markets is not unduly
restricted;
- publish measures of general application affecting trade in services on
the Internet, to the extent possible;
- endeavour to provide interested persons of other Parties with a
reasonable opportunity for comment prior to adoption of new measures;
- provide license applicants with an opportunity to remedy incomplete
applications, status reports on the progress of applications on request,
and reasons for the denial or termination of applications;
- observe minimum standards of procedural transparency, such as reasonable
notice of administrative processes (e.g. licensing and rule-making in
specific cases) and opportunities to present facts and arguments before
final administrative action;
- afford services suppliers with a commercial presence certain post-
establishment investment protections, as set out in the Chapter on
Investment, including investor-state dispute settlement.
33. The Chapter contains two sector-specific annexes, covering financial
services and telecommunications.
34. For further information, see Annex D: AANZFTA Services: Key 'WTO Plus'
Gains.
Annex on Financial Services
35. In line with the GATS Annex on Financial Services, the AANZFTA Annex on
Financial Services sets out certain rights and obligations on Parties that
reflect the distinctive characteristics and systemic importance of
financial sector regulation. These include exceptions for a Party in
relation to measures taken for prudential reasons, to ensure the integrity
and stability of the financial system, to ensure the stability of the
exchange rate or to prevent deceptive and fraudulent practices. However,
the AANZFTA Annex also contains obligations that go beyond the GATS Annex
in relation to transparency, timely processing of licensing applications,
and transfers and processing of information by financial service suppliers
in the ordinary course of business.
Annex on Telecommunications
36. The Annex on Telecommunications builds on WTO rules (the WTO
Telecommunications Reference Paper) in relation to major suppliers of
telecommunications services that control essential facilities or have a
dominant position in the market. Parties are required to prevent anti-
competitive conduct and ensure that major suppliers provide
interconnection, leased circuit services and co-location of equipment on
reasonable, non-discriminatory terms and conditions.
37. The Annex also contains provisions on transparency, including in
relation to licensing, and review of regulatory decisions. Regulators must
be independent and impartial and must provide written explanation of
regulatory decisions on request. Recognising that some ASEAN countries are
still developing their telecommunications regulatory regime, Parties are
permitted to delay the application of some obligations, according to a
specified timetable (set out in an Appendix to the Annex).
38. For further information, see Annex D: AANZFTA Services: Key 'WTO Plus'
Gains.
Chapter 9: Movement of Natural Persons
39. The Chapter on Movement of Natural Persons (MNP) provides a framework
for commitments on the temporary movement of services suppliers, investors,
goods sellers and other business persons engaged in regional trade and
investment. Each Party has a Schedule of MNP Commitments in Annex 4 to the
AANZFTA, setting out commitments on specific categories of natural persons,
in accordance with its temporary entry regime. Commitments in relation to
the movement of natural persons who are services suppliers (mode 4) are set
out in each Party's MNP Schedule (mode 4 commitments), rather than in their
respective Specific Services Commitments Schedule.
40. The Chapter contains obligations which require Parties to publish
information on temporary entry requirements, process completed applications
for temporary entry and stay promptly and to notify applicants, on request,
about the status or outcome of the application. The Chapter preserves each
Party's right to protect the integrity of its borders and to ensure the
orderly movement of persons across them.
41. The Parties are obliged to endeavour to settle any differences arising
out of implementation of the Chapter through consultations. Dispute
settlement under AANZFTA is available where there has been a refusal to
grant temporary entry, but only when: (a) the matter involves a pattern of
practice and (b) the natural persons affected have exhausted the available
domestic remedies regarding the particular matter.
42. For further information, see Annex E: AANZFTA Temporary Movement of
Natural Persons (MNP): Key 'WTO Plus' Gains.
Chapter 10: Electronic Commerce
43. The Chapter on Electronic Commerce establishes a framework for regional
cooperation and coordination on electronic commerce. Parties are obliged
to maintain, or adopt as soon as practicable, domestic regulatory
frameworks for electronic commerce that are based on relevant international
standards, including in relation to electronic authentication of documents
and transactions. Parties are obliged to publish regulatory measures
relating to electronic commerce and respond to requests for information
about such measures promptly.
44. The Chapter involves provisions on online consumer protection, online
data protection and paperless trading. The Parties are to encourage
cooperation in research and training activities that will enhance the
development of e-commerce. Recognising that some ASEAN countries are still
developing their regulatory regimes in this area, Parties are permitted to
delay the application of some obligations, pending implementation of
relevant domestic legislation. The Chapter is not subject to the AANZFTA's
dispute settlement provisions (Chapter 17).
Chapter 11: Investment
45. The Chapter on Investment includes a range of obligations on Parties
aimed at enhancing legal protection and certainty in relation to
investment. The Chapter uses a broad, non-exhaustive, "asset-based"
definition of investment covering every kind of asset owned or controlled
by an investor, including, inter alia, shares, property, and business
concessions conferred by law or contract, including any concession to
search for, cultivate, extract or exploit natural resources.
46. The obligations are directed primarily at the post-establishment stage
of investment. These include requirements on Parties to:
- apply fair and equitable treatment and full protection and security (the
minimum standard of treatment at customary international law) to
investments;
- ensure non-discriminatory treatment in relation to measures for investors
that have suffered losses due to armed conflict, civil strife or states
of emergency;
- allow funds of an investor relating to an investment to be transferred
freely and without delay, subject to specified exceptions;
- ensure that any expropriation or nationalisation of an investment is only
for a public purpose, applied in a non-discriminatory manner, is in
accordance with due process of law and is accompanied by payment of
prompt, adequate and effective compensation (the Chapter includes an
Annex to elaborate the nature and scope of "indirect" expropriation).
47. There are detailed provisions on investor-state dispute settlement
(ISDS) which provide that, where an investor alleges that a Party has
breached specific obligations (including those mentioned in the previous
paragraph) in such a way as to cause loss or damage, and it has not been
possible to resolve the dispute by consultations, the dispute may be
referred to international arbitration. Investor-state dispute settlement
will not apply to investment screening or admission processes.
48. The Chapter provides for a work program to develop market access
schedules, covering pre-establishment issues such as foreign equity limits,
within five years of entry into force of the Agreement, subject to the
agreement of the Parties. The development of these schedules will be based
on a national treatment obligation and a two-annex "negative listing"
approach to scheduling, set out in the chapter. The work program notes,
inter alia, that further discussions between the Parties will take place on
the application of MFN treatment and procedures for the modification of
schedules.
49. The Chapter also contains provisions on transparency and performance
requirements, which cover both the pre- and post-establishment stages of
investment. The latter obligation prohibits a Party from adopting
performance requirements that are inconsistent with the WTO Agreement on
Trade-Related Investment Measures.
50. Australia's four bilateral investment treaties with ASEAN member
countries (Indonesia, Laos, the Philippines and Vietnam) and the investment
provisions of Australia's FTAs with Singapore and Thailand remain in force
(i.e. are not superseded or terminated by AANZFTA). AANZFTA does not
override existing investment agreements and makes it clear that, in the
event of any inconsistency between the Agreement and existing investment
agreements, Parties will immediately consult with a view to finding a
mutually satisfactory solution.
51. For further information, see AANZFTA Fact Sheet - Investment.
Chapter 12: Economic Cooperation
52. The Chapter on Economic Cooperation records the agreement of the
AANZFTA Parties to support implementation of the AANZFTA through economic
cooperation activities that are trade or investment related as set out in a
separate work program mutually determined by the parties prior to the entry-
into-force of the Agreement.
53. The Parties are obliged to contribute to the implementation of the
programme of economic cooperation activities ("the work program") taking
into account their different levels of development and capacities. The
work program is to be reviewed by the FTA Joint Committee to assess its
overall effectiveness. The Chapter is not subject to the AANZFTA dispute
settlement provisions.
54. For further information, see Annex F: AANZFTA Economic Cooperation.
Chapter 13: Intellectual Property
55. The Chapter on Intellectual Property (IP) reinforces the Parties'
existing rights and obligations under the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS), and builds on them in a
number of areas.
56. The Parties are obliged to accord national treatment in relation to the
protection of IP rights, subject to the exceptions provided for in the
TRIPS Agreement and in multilateral agreements concluded under the auspices
of the World Intellectual Property Organization (WIPO). The chapter
contains a number of specific obligations on protection of intellectual
property rights, government use of software and transparency. This
includes an obligation on Parties to endeavour to make available on
internet databases all pending and registered trade mark rights in their
respective jurisdictions.
57. The Chapter contains detailed provisions for cooperation between the
Parties to assist in the implementation of the chapter. These include the
establishment of contact points in relevant government agencies,
information exchange on infringement of IP rights, the promotion of IP
education and awareness, promotion of efficiency and transparency in IP
administration and registration systems, and the facilitation of responses
to requests by Parties for technical assistance to enhance their respective
national IP frameworks. The provisions also refer to cooperation to
support any Party's accession to, and implementation of, specified
international IP agreements, including the Patent Cooperation Treaty 1970
and Patent Law Treaty 2000; WIPO Copyright Treaty 1996, WIPO Performances
and Phonograms Treaty 1996 and the TRIPS Agreement.
58. The Chapter also establishes a Committee on Intellectual Property to
monitor the implementation of the chapter.
Chapter 14: Competition
59. The Chapter on Competition establishes a framework for cooperation in
the promotion of competition, economic efficiency, consumer welfare and the
curtailment of anti-competitive practices. The Chapter covers the
establishment of contact points, exchange of information and experience on
the promotion and enforcement of competition law and policy, and exchanges
of officials between Parties for training purposes and to participate in
advocacy programs. There is also provision for Australia and New Zealand
to assist ASEAN member countries, if Australia deems appropriate, with the
implementation of the Chapter, subject to appropriate identification of
competition policy-related needs and availability of resources. The
Chapter is not subject to the AANZFTA's dispute settlement provisions.
Chapter 15: General Provisions and Exceptions
60. The Chapter on General Provisions and Exceptions sets out a number of
general provisions and exceptions which apply to some or all chapters of
the AANZFTA. The WTO-style general and security exceptions specify that
nothing in certain chapters of the AANZFTA precludes the adoption by a
Party of certain measures, for example, to protect human, animal or plant
life or health, as provided for in these exceptions. The Chapter also
carves out application of the AANZFTA to a Party's taxation measures except
where specifically intended, such as in certain disciplines under the
Chapter on Investment. The Chapter also includes a WTO-style article
allowing a party in serious balance of payments and external financial
difficulties (or a threat thereof) to take restrictive measures in
prescribed circumstances. The Chapter further includes a New Zealand-
specific exception allowing New Zealand to take measures that it deems
necessary to accord more favourable treatment to Maori including in
fulfilment of its obligations under its Treaty of Waitangi, provided that
such measures do not involve arbitrary or unjustified discrimination, or a
disguised restriction on trade. There is also a general exception
available to all AANZFTA Parties relating to 'creative arts' which can be
exercised under prescribed circumstances.
Chapter 16: Institutional Provisions
61. The Chapter on Institutional Provisions establishes the FTA Joint
Committee, consisting of representatives of the Parties, to oversee
implementation and operation of the AANZFTA and supervise and coordinate
the work of subsidiary committees. Unless the Parties otherwise agree, the
FTA Joint Committee shall meet within one year after the AANZFTA enters
into force, and thereafter as the Parties mutually agree, and as necessary
to discharge its functions. The FTA Joint Committee reports to the ASEAN
Economic Ministers (AEM) - Closer Economic Relations (CER) Trade Ministers
consultations, through the related senior officials meetings (SEOM-CER).
The Chapter also establishes contact points for each Party to facilitate
communication on any matter relating to the AANZFTA. These contact points
are additional to subject matter-specific contact points established in
other chapters.
Chapter 17: Consultations and Dispute Settlement
62. The Chapter on Consultations and Dispute Settlement establishes a
process for consultations and for settlement of disputes arising under the
FTA. The Chapter does not apply to disputes arising under Chapter 5
(Sanitary and Phytosanitary Measures), Chapter 10 (Electronic Commerce),
Chapter 12 (Economic Cooperation) and Chapter 14 (Competition). If a
dispute arises on a matter under the FTA and under another international
agreement to which the disputing parties are party (such as the WTO), the
complaining party has a choice of forum. The Chapter sets out procedures
and timelines for consultations on disputes arising under the FTA and for
establishment, composition, proceedings and reports of arbitral tribunals.
Time periods specified in the Chapter may be modified by mutual agreement
of the Parties to a dispute.
Chapter 18: Final Provisions
63. The Chapter on Final Provisions governs the way in which AANZFTA
operates as a treaty. The AANZFTA does not derogate from the WTO Agreement
or other agreements to which the Parties are party, and Parties will
consult in the event of any inconsistencies. In the event of an
inconsistency between the AANZFTA and any other agreement to which two or
more Parties are party, those Parties shall consult with a view to finding
a mutually satisfactory solution. The Chapter provides that entry into
force shall occur on or after 1 July 2009 provided that Australia, New
Zealand and at least four ASEAN member countries have notified each other
of completion of their internal requirements. The Parties have also agreed
to conduct a general review of the AANZFTA in 2016.
ANNEX C
SUMMARY OF AANZFTA TARIFF COMMITMENTS
1. Following is a summary of the tariff outcomes for individual product
sectors in relation to the four largest ASEAN markets with which Australia
does not currently have an FTA, i.e. Indonesia, Malaysia, the Philippines
and Vietnam.
Agriculture and Fisheries Products
Live Animals and Meat
2. Indonesia will bind its current tariff-free treatment for most
livestock at entry-into-force (EIF). It will eliminate its 5% tariff on
other livestock tariff lines in 2010, except for one live animals line
(asses, mules etc) which is excluded from tariff commitments and 'other'
live bovine animals, for which the 5% tariff will be reduced to 2.5% in
2025. Most meat tariffs (generally at 5%) will be eliminated in 2010.
However, tariffs on some lines will be eliminated in 2020, and there is a
small number of lines that will be excluded from tariff commitments,
including some frozen sheepmeat lines (other cuts with bone-in, and
boneless) with significant trade, and 1 frozen beef line (other cuts, bone-
in), or which will be subject to a reduction in the tariff from 5% to 2.5%
in 2025 (some sheepmeat lines) or phase to 3.75% (1 pigmeat line). Tariffs
of 25% on frozen chicken thighs will be reduced to 12.5% in 2025. Tariffs
of 5% on most meat preparations will be eliminated in 2010, while the 5%
tariff on one line reduces to 4% in 2015 and will be eliminated in 2023.
3. Malaysia will bind its current tariff-free treatment for most livestock
and most meat lines. Country-specific tariff quota access will be provided
for Australia in relation to 4 live animal lines (live swine other than
pure bred, day old chicks and chickens) and 6 meat lines (meat of pork and
chicken), with elimination of the in-quota tariff rate by 2013 and
reduction of the out-of-quota tariff rate. Tariffs of 0% on most meat
preparations will be bound at 0% on EIF, with tariffs of 15% and 20%
phasing to 0% by 2012 or 2020.
4. The Philippines will eliminate most of its livestock tariffs, ranging
from 1% for sheep and goats (for breeding) and 3% for bovine animals (that
are to be eliminated in 2010) to 35% or 40% for other livestock. Tariffs
of 40% on goats, other than for breeding, phase to 5% by 2018. Tariffs of
40% on poultry will phase to 0% by 2013 or 2020 for some lines, or to 5% or
32% for other lines. The Philippines will also eliminate its 5% tariff on
sheepmeat in 2010, and its 10% tariff on beef in 2012, while tariffs on
beef offal will be eliminated in 2011, 2012 or 2019. Tariffs of 35% on
goat meat will phase to 5% by 2018. For most fresh or chilled pork,
tariffs of 40% will be reduced and eliminated by 2020. For the remaining
16 pork tariff lines, covering frozen pork and fresh or chilled boneless
cuts, tariffs will reduce to 32% in one step in 2020. Tariffs of 5-10% on
pork offal will be eliminated by 2011 or 2012; but the tariff of 5% on pork
liver will reduce from 5% to 4% in 2015. For meat preparations, tariffs of
30%, 35% or 40% on 13 lines will phase to 0% by 2015, and tariffs on the
remaining 11 lines will be reduced from 40% to 32% in 2020.
5. Vietnam's tariffs of 0% for breeding animals will be bound on EIF;
tariffs of 5% for other animals will be eliminated in one step in 2016.
Tariffs of 15% or 20% on beef and beef offal will phase to 0% by 2018 or
2019. Tariffs of 10% on sheep and goat meat will phase to 0% by 2016.
Tariffs of 30% on chilled or frozen pork will phase to 0% by 2020, while
tariffs of 15% on pork offal will phase to 0% by 2016. Tariffs of 50% on
meat preparations phase to 5% by 2022 on 17 lines, and are phased to 0% on
the remaining 2 lines by 2019 or 2020.
Fish and Fish Products
6. Indonesia will eliminate tariffs on most fisheries products (currently
generally 5%) in 2010. The 5% tariffs on tinned sardines, tuna and
mackerel will be reduced to 2.5% in 2025 (4 tariff lines). The 15% tariff
on live fish will phase to 0% by 2013. The 15% tariff on some fresh,
chilled or frozen fish (kerapu and tilapia) and some fish fillets and fish
meat will phase to 7.5% by 2025, with reductions commencing in 2013 (7
tariff lines).
7. Malaysia will eliminate tariffs on all fisheries products (currently 0%-
20%), with most tariffs bound at 0% on EIF, or eliminated in 2010 or phased
to 0% by 2011. The 20% tariffs on most octopus will phase to 0% by 2015.
8. The Philippines will eliminate most tariffs on fisheries products
ranging from 1% to 15%, by 2015 at the latest, with many eliminated or
phased to 0% by 2010, 2011 or 2012. Some 15% tariffs on tinned or
preserved fish will phase to 0% by 2015. The tariff on one product (fish
fillets, dried, salted or in brine) will phase from 15% to 5% by 2016, and
the 5% tariff on frozen mackerel will be reduced to 4% in 2015.
9. Vietnam will phase its tariffs, generally at 30%, on most fresh,
chilled, frozen and dried fish to 0% by 2018 (125 tariff lines). Tariffs
of 30% on some fish fillets, prawns and crabs will phase to 5% by 2022,
commencing in 2017 (17 tariff lines). Tariffs on processed fish and
crustaceans will generally phase from 40% to 5% by 2022, with reductions
commencing in 2015 (23 tariff lines).
Dairy Products
10. Indonesia will eliminate tariffs on 39 tariff lines, and phase tariffs
on the remaining 11 lines to 4%. It will eliminate 5% tariffs on 31 dairy
tariff lines in 2010 (including butter, most cheese, ice cream, dairy
spreads, yoghurt, and some milk powders including unsweetened WMP, milk
preparations) and on 7 tariff lines by 2017 (whey for human consumption),
2018 (cream) or 2019 (including unsweetened SMP for human consumption and
sweetened WMP). Tariffs of 5% on 11 lines will reduce to 4% in 2015
(including tariffs on milk, some milk powders, some whey products and
grated or powdered cheese). The 0% tariff on casein will be bound on EIF.
11. Malaysia will bind its current tariff-free treatment for many dairy
products (including whey, milk powders, casein), and eliminate tariffs on
all other dairy products except liquid milk. It will eliminate its 2%-5%
tariffs on several dairy products on EIF or in 2010 (butter, dairy spreads,
ice cream), eliminate its 25% tariff on some yoghurt on EIF, eliminate its
5%-10% tariff on processed cheese on EIF, and eliminate tariffs on certain
milk preparations by 2011. Malaysia will provide market access for
Australia through country-specific tariff quotas for liquid milk, with in-
quota tariffs to be eliminated from 2013, and out-of-quota tariffs to be
reduced from 45% to 20% by 2013.
12. The Philippines will eliminate tariffs on all but 2 products (liquid
yoghurt and dairy spreads, on which the 7% tariffs will reduce to 5%).
Many tariffs (including the 1% tariff on milk powder, casein, some cheese,
butter oil and whey) will be eliminated in 2010. Tariffs of 3% on milk,
and 7% on butter, filled milk and processed cheese, will phase to 0% by
2019. Tariffs of 10% on ice cream and 7% on dairy spreads will phase to 0%
by 2012.
13. Vietnam will eliminate all tariffs on dairy by 2020 at the latest.
Tariffs of 20% on milk, whey, butter and dairy spreads will phase to 0% by
2017, 2018 or 2019. Tariffs of 10%-30% on milk powders will phase to 0% by
2016 or 2019. Tariffs of 10% on cheese will phase to 0% by 2016, 2017,
2019 or 2020. Tariffs of 15% or 30% on milk preparations will phase to 0%
by 2016, 2018, 2019 or 2020. Tariffs of 30% on yoghurt will phase to 0% by
2017. The 50% tariff on ice cream will phase to 0% by 2018 while the 10%
tariff on casein will phase to 0% by 2019.
Grains and Milled Products (excluding Rice)
14. Indonesia will bind its current tariff free treatment for wheat, barley
and grain sorghum, and eliminate its 5% tariffs on many other grains in
2010. The 5% tariffs on wheat flour and unroasted malt will phase to 0% by
2020 and 2023 respectively, both of which are of significant trade interest
to Australia. Maize is excluded from tariff commitments.
15. Malaysia will bind its current tariff-free treatment for wheat, other
grains, wheat flour and malt at EIF, and will eliminate the tariff of 5% on
flour and meal of sago and manioc in 2010.
16. The Philippines will eliminate its 3% or 7% tariffs on wheat and wheat
flour and most other grains in 2010 or 2011. The 1% tariff on malt will be
eliminated in 2010. The 50% tariff on maize will reduce to 40% in 2020.
Tariffs on manioc starch and some maize products will reduce to 5% by 2017.
17. Vietnam will eliminate tariffs on all grains. Most tariffs (5% on
wheat, malt, maize and grain sorghum; 3% on rye, barley and oats) will be
eliminated in 2016, while the 20% tariff on wheat flour will phase to 0% by
2018. Tariffs of 5%-50% on other products will phase to 0% by 2020 at the
latest.
Rice
18. Indonesia, Malaysia and the Philippines will exclude rice from tariff
commitments. Vietnam will eliminate all its rice tariffs, which are
generally in the 40% to 50% range, by 2019 or 2020.
Horticulture (Plants, cut flowers, vegetables, fruit, nuts, preparations of
these)
19. Indonesia's horticulture tariffs (270 tariff lines) range between 0%
and 25%, with most at 5%. It will bind tariffs of 0% on EIF on 17 lines
and
eliminate tariffs on another 202 lines in 2010, and phase tariffs to 0% on
an additional 25 lines by 2023. The remaining lines will have tariffs
reduced to 4% or 5% (including pineapples, bananas, avocadoes, strawberries
and some vegetables), except for 6 lines (including mangoes, mandarins,
potatoes, shallots and carrots) where the current 25% tariff will be
reduced to 12.5% or 18.75% in 2025.
20. Malaysia will bind tariffs of 0% (covering most fruit, nuts and
vegetables) on 173 lines on EIF. Tariffs between 2% and 10% covering
apples, pears, peaches, and cherries, will be eliminated by 2012. Tariffs
of 20% and 30% (17 lines covering mainly dried fruits) will phase to 0% by
2020. Compound tariffs on 21 lines (some fruits, including mangoes and
melons) will have the specific component of the tariff eliminated by 2020,
leaving only a 5% tariff or a low specific rate (pineapples).
21. The Philippines has tariffs between 1% and 40% on 270 lines, with the
majority of tariffs (197 lines) between 1% and 10%. It will eliminate
tariffs on all but 22 lines between EIF and 2015, with another 10 lines
phased to 0% by 2020 (e.g. tariffs of 10% on mandarins will phase to 0% by
2015; other tariffs of 3%-15% on plants, fruit and nuts, vegetables will
phase to 0% by 2010, 2011, 2012 or 2013). The 15% tariff on cut flowers
will phase to 0% by 2013 or 2015. Tariffs of 25% on cauliflowers, broccoli
and lettuce will reduce from 25% to 20% in one step in 2020; tariffs of 20%
on celery will reduce in one step to 16% in 2020. Tariffs of 40% on onions
and garlic will reduce to 5% by 2018, while tariffs of 40% on potatoes and
carrots will reduce to 32% in 2020. Tariffs on all preparations of
vegetables, fruits and nuts, with tariffs between 1% and 15%, will phase to
0% by 2015 or, for 1 line, 2020.
22. Vietnam has tariffs between 0% and 50%, covering 261 lines. Tariffs
will be eliminated on all but one line ('other' citrus fruit), with
reductions generally commencing in 2010. Tariffs of 10%-20% on vegetables
will phase to 0% by 2016 or 2017 with tariffs of 30% to be eliminated by
2018. Tariffs of 20-25% for grapes, apples, pears, quinces, and berries
will phase to 0% by 2016; tariffs of 40% on one tariff line covering some
minor citrus fruit will reduce to 32% in one step in 2022; other tariffs of
40% will phase to 0% by 2017 or 2020. The 40% tariffs on cut flowers will
phase to 0% by 2017 or 2018. Tariffs on preparations of vegetables, fruits
and nuts will phase to 0% by 2018, 2019 or 2020.
Sugar
23. Indonesia and the Philippines will exclude sugar from tariff
commitments. Malaysia will bind its current tariff-free treatment on EIF.
Vietnam will retain the tariff quota treatment for sugar, but will phase
the 30% in-quota tariff to 0% by 2020, and reduce the 80% out-of-quota
tariff to 50% in 2022.
Wine
24. Indonesia and Malaysia will exclude all wine from tariff commitments.
25. The Philippines will phase all wine tariffs, currently in the 5%-7%
range, to 0% by 2010 (3 tariff lines covering sparkling wine and some grape
must), 2011 (1 tariff line for wine not exceeding 15% alcohol in containers
exceeding 2 litres) or 2015 (remaining 7 tariff lines covering other wine
and some grape must lines).
26. In 2022, Vietnam will reduce its current 80% tariffs to 20% on wine and
40% on grape must.
Wool and Cotton
27. Indonesia will eliminate tariffs of 5% on all wool in 2010. It will
bind current tariff-free treatment for uncarded uncombed cotton, and will
eliminate 5% tariffs on other cotton, cotton yarn and cotton sewing thread
in 2010.
28. Malaysia will bind all wool and cotton tariffs at 0% on EIF. Tariffs
on wool yarn will also be bound at 0% on EIF, while tariffs of 10% and 15%
on cotton yarn and sewing thread will phase to 0% by 2011 and 2012
respectively.
29. The Philippines will eliminate all wool and cotton tariffs. Tariffs of
1% or 3% on raw, carded, combed, waste (as well as wool yarn) will be
eliminated in 2010. Tariffs of 7% and 10% on cotton yarn and sewing thread
phase to 0% by 2011 and 2012 respectively.
30. Vietnam will bind its current tariff-free treatment for raw wool and
cotton and carded or combed wool on EIF. Tariffs of 10% on wool waste and
cotton waste will phase to 0% by 2016. Tariffs of 20% on wool yarn and
cotton yarn will phase to 0% by 2017, while the 30% tariff on cotton sewing
thread will phase to 0% by 2018.
Resources and Industrial Products
Wood
31. Indonesia will eliminate tariffs on all 235 tariff lines covering wood.
Tariffs of 0% on unworked timber will be bound at 0% on EIF. Tariffs of
5% will be eliminated in 2010 (including most sawn timber, particleboard).
Most tariffs of 10% (most plywoods and other worked timbers) will phase to
0% by 2012, with tariffs on only 3 lines phasing from 10% to 0% by 2020.
32. Malaysia will bind tariffs of 0% on EIF (1,857 lines) and will phase
all other tariffs (113 lines) to 0%. Tariffs of 5% will be eliminated by
2010, tariffs of 10% will be eliminated by 2011, and tariffs in the 15%-40%
range will be eliminated by 2012 or 2013.
33. The Philippines' tariffs range from 0% to 15%. The Philippines will
eliminate tariffs on all 235 tariff lines, mostly by 2012 or earlier.
Tariffs of 15% on plywoods and veneers generally will phase to 0% by 2020.
Other tariffs of 15% (e.g. on particleboard, fibreboard) will mostly phase
to 0% by 2013 or 2015.
34. Vietnam will eliminate tariffs on all 235 tariff lines covering wood
(with tariffs ranging from 0% to 40%), mostly by 2016, but with higher
tariffs phasing to 0% by 2017, 2018 or 2020.
Pulp and Paper
35. Indonesia will eliminate tariffs on all 244 tariff lines covering pulp
and paper. Tariffs of 5% (240 lines) will be eliminated in 2010, while
tariffs of 15% will phase to 0% by 2013.
36. Malaysia will eliminate tariffs on all 310 pulp and paper tariff lines.
Tariffs on 113 lines will be bound at 0% on EIF, with most other tariffs
(ranging from 5% to 30%) being eliminated by 2011, 2012 or 2013. Tariffs
of 10% on newsprint in rolls (1 tariff line) will phase to 0% by 2020.
37. The Philippines will eliminate tariffs between 1% and 15% on all 317
pulp and paper tariff lines. Many tariffs will be eliminated by 2010, 2011
or 2012, with the remaining tariffs phasing to 0% by 2020 at the latest.
38. Vietnam's tariffs range from 0% to 50%. Tariffs of 0% will be bound on
EIF. Vietnam will eliminate tariffs of 1%-15% by 2016, but higher tariffs
will phase to 0% by 2017, 2018 or 2020. Tariffs will eventually phase to
0% on a total of 197 tariff lines out of a total of 231 lines. Tariffs of
50% and some 40% tariffs will phase to 5% by 2022 (involving the remaining
34 tariff lines).
Minerals
39. Indonesia's tariffs range from 0% to 30%. Tariffs of 0% on 75 tariff
lines will be bound on EIF. Tariffs on lubricating oils, greases and
hydraulic brake fluid (4 lines) will phase from 30% to 15% by 2025.
Tariffs on some salt will phase from 10% or 15% to 5% by 2015 or 2016 (2
tariff lines). Tariffs on some other salt (2 tariff lines) will phase to
0% by 2013. All other tariffs will be eliminated in 2010 or phase to 0% by
2013.
40. Malaysia's tariffs range from 0% to 50%. Tariffs of 0% will be bound
on EIF (179 lines) and all other tariffs (25 lines) will phase to 0% by
2010, 2012, 2013 or 2020.
41. The Philippines' tariffs range from 1% to 7%. Tariffs will phase to 0%
by 2010, 2015 or 2018 for 210 tariff lines but for the remaining 3 lines
(some types of cement) the tariff of 5% will reduce to 4% in 2015.
42. Vietnam's tariffs range from 0% to 60%, including a tariff quota on
salt which Vietnam will retain but where in-quota tariffs will phase to 0%
by 2020. Some petroleum oils are excluded from Vietnam's tariff
commitments, and the current tariffs of 5% on condensate and some gases and
15% on one line for crude oil will be bound but not reduced. All other
tariffs (171 lines out of a total of 220 lines) will phase to 0% by 2016
(121 tariff lines), 2018 or 2020.
Iron and Steel, and Articles of Iron and Steel
43. Indonesia will bind current tariff-free treatment for 88 iron and steel
tariff lines, and eliminate tariffs on 512 other lines (currently between
5% and 20%) by 2015, with most of these eliminated by 2010 or 2012.
Tariffs on an additional 8 lines will phase to 0% by 2020, with tariffs on
the remaining 187 lines being reduced to levels no higher than 5%.
44. Malaysia's tariffs on iron and steel range between 0% and 50%, with
more than half in the 20% to 50% range. Malaysia will bind current tariff-
free treatment for 121 tariff lines, and eliminate tariffs on another 315
tariff lines by 2013 at the latest. Tariffs on a further 12 lines will be
phased to 0% by 2020. Tariffs on the remaining 189 lines will be phased to
a level no higher than 10% (3 lines no higher than 5%) by 2019.
45. The Philippines' iron and steel tariffs range between 0% and 15%. The
Philippines will eliminate tariffs on 320 iron and steel tariff lines by
2010. Tariffs on a further 177 lines will be eliminated by 2011, 2012,
2013 or 2015. Tariffs on another 162 lines will be reduced to a level
between 2% and 8%. The remaining 77 lines, with tariffs at levels of 0%-
3%, will be excluded from tariff commitments.
46. Vietnam's iron and steel tariffs range between 0% and 50%. Vietnam
will bind tariffs on 246 tariff lines at 0% on EIF. Tariffs on 145 lines
will be eliminated by 2016, tariffs on 96 lines will phase to 0% by 2017,
2018, 2019 or 2020. Of the remaining 243 tariff lines in this sector,
tariffs on 95 lines will be reduced mostly to levels no higher than 5% (but
will not be eliminated), tariffs on a further 95 lines will be bound at
their base rates ranging from 3% to 30% (but will not be reduced), and 53
lines (generally with tariffs of 40%) will be excluded from tariff
commitments.
Other Metals (Aluminium, Copper, Lead, Zinc, and Articles of these metals)
47. With the exception of 1 tariff line, Indonesia will eliminate tariffs
on copper and copper products (ranging from 0% to 20%) by 2014, with most
eliminated by 2012. The tariff of 5% on copper cathodes will be bound but
not reduced. All tariffs, ranging from 0% to 20% on aluminium and
aluminium products will be bound at 0% on EIF or will phase to 0% by 2015
at the latest, with the majority of tariffs eliminated by 2010 or 2012.
All tariffs, ranging from 0% to 15%, on lead and zinc products will be
bound at 0% on EIF or will phase to 0% by 2013 at the latest.
48. Malaysia's tariffs on copper and copper products range from 0% to 25%.
Malaysia will bind all tariffs at 0% on EIF or phase them to 0% by 2013
(except for 2 lines that will be phased to 0% in 2020). Malaysia's tariffs
on aluminium and aluminium products range from 0% to 30%. Malaysia will
bind all tariffs at 0% on EIF or will phase them to 0% by 2013 at the
latest. All lead and zinc tariffs (currently 0%-25%) will be bound at 0%
on EIF or phased to 0% by 2013.
49. The Philippines' tariffs on copper and copper products range from 1% to
15%. The Philippines will phase all tariffs to 0% by 2013 at the latest.
Tariffs on all aluminium and aluminium products (where tariffs range
between 1% and 15%) will be eliminated by 2015, with the majority
eliminated by 2010 or 2012. Tariffs on all lead and zinc products (where
tariffs are between 1% and 5%) will be eliminated in 2010.
50. Vietnam's tariffs on 94 copper and copper products range from 0% to
40%. Vietnam will bind all 0% tariffs at EIF, and eliminate or phase
tariffs to 0% by 2018 at the latest. Vietnam will bind tariffs on all 88
aluminium and aluminium products tariff lines at 0% on EIF or will phase
tariffs (ranging from 1% to 40%) to 0% by 2020 at the latest, with the
majority reaching 0% by 2016. All tariffs on lead and zinc will either be
bound at 0% on EIF or will be phased to 0% by 2016.
Passenger Motor Vehicles, other Automotive Vehicles and Automotive Parts
51. Indonesia, which has vehicle tariffs ranging between 25% and 80%, will
eliminate tariffs on passenger motor vehicles (PMV) with an engine capacity
between 3000cc and 4000cc in 2014, and on PMV with smaller engines in 2019.
Tariffs on PMV with engines above 4000cc, or with diesel engines, will
only be subject to a modest reduction to 50%. Buses and vehicles for the
transport of goods generally have tariffs in the 25% to 40% range, and most
of these will be phased to 0% by 2012, 2015 or 2020, but some of those with
40% tariffs will only have these reduced to 20% in 2025. Some other
vehicle tariffs of 45% and 80% will reduce to 22.5% and 50% respectively in
2025. Tariffs on automotive parts (323 tariff lines) range between 0% and
15%. Tariffs at 0% will increase from 62 tariff lines on EIF, to 121 lines
in 2010, 261 lines in 2013, and 318 lines in 2020. Tariffs will be
retained at reduced levels on 5 lines - 3 lines will reduce from 5% to 4%
in 2015 and 2 lines (bodies for some vehicles) will reduce from 45% to
22.5% in 2025.
52. Malaysia, which has tariffs of 30% to 50 % for most vehicles, will
eliminate tariffs on larger PMV (engines above 2500cc) in 2013, and phase
tariffs on PMV with smaller engines to 5% in 2017. Buses generally have
30% tariffs that will be phased to 5% by 2017. Trucks and other vehicles
for transporting goods generally have 30%-35% tariffs that will be phased
to 5% by 2017. Automotive parts tariffs (168 tariff lines) range from 0%
to 50%, with about half in the 0% to 5% range. Tariffs on 56 lines will be
bound at 0% on EIF, with the tariff eliminated on another 32 lines in 2010.
The number of tariff lines at 0% will increase to 148 lines in 2015, and
to all 168 lines by 2020.
53. The Philippines, which has tariffs for PMV of 30%, for buses of 15%-
20%, and for trucks and other vehicles for transporting goods of 20%-30%,
will eliminate tariffs on 187 vehicle lines on EIF. Tariffs on PMV with an
engine capacity greater than 3000cc will be eliminated in 2010, and tariffs
on PMV with smaller engines will be eliminated in 2012. All tariff lines
for buses and vehicles for the transport of goods will be phased to 0% no
later than 2012. Automotive parts (327 tariff lines) have tariffs ranging
between 0% and 15%. Tariffs on 164 lines will be at 0% on EIF, with
another 134 lines phasing to 0% in 2010, 2012 or 2013. By 2015 tariffs on
304 lines will be at 0%, and tariffs on 17 lines (horns, some seat belts,
some brakes, some gearboxes, some radiators and silencers, exhausts, some
clutches and some chassis) will be 5% and will remain at this level; 4
lines (some body parts, seats and springs) will fall to 5% in 2016 and
remain at that level; and 1 line (toughened safety glass) will fall to 8%
in 2020.
54. Vietnam, with many vehicle tariffs at 100%, will reduce the tariffs on
PMV, buses and some vehicles for transporting goods, to 50% in 2022. For
those vehicles for transporting goods which currently have tariffs in the
15%-60% range, these will be reduced to 5%-30% by 2022. Tariffs on
automotive parts (323 tariff lines) range between 0% and 50%, with over
half at 30%. By 2017, 283 tariff lines will be in the 0%-5% range, with
all of these lines falling to 0% by 2020. A further 36 lines (diesel
engines, locks, new tyres, signalling equipment, some bodies and chassis,
carburettors and pistons) will reduce to 5% in 2022. Three tariff lines
(retreated tyres) are excluded from tariff commitments.
Chemicals
55. Indonesia's tariffs range from 0% to 170%. Tariffs on 1181 tariff
lines will either be bound at 0% on EIF or phased to 0% in 2010, 2012 or
2013, and tariffs on 3 lines will be phased to 0% by 2020. Tariffs on the
remaining 2 lines covering odoriferous alcoholic preparations will reduce
from 170% to 85% in 2025.
56. Malaysia's tariffs range from 0% to 50% and all will be eliminated.
Current tariffs of 0% on 837 lines will be bound on EIF. Tariffs on a
further 93 lines will phase to 0% by 2013. Tariffs on the remaining 100
lines (currently mainly at levels of 20% -50%) will phase to 0% by 2020.
57. The Philippines' tariffs range from 0% to 30% on 1187 tariff lines.
Tariffs of 0% will be bound on EIF. Tariffs on almost all tariff lines
will be phased to 0% by 2010 or 2011. Remaining tariffs will be phased to
0% by 2020, except for tariffs on 6 products that will be reduced from 5%
to 4% or from 7% to 5%.
58. Vietnam's tariffs range from 0% to 50%. Tariffs on all 1164 tariff
lines will either be bound at 0% on EIF (631 lines) or phased to 0% by
2016, 2017, 2018, 2019 or 2020, except for 18 lines covering explosives,
fireworks and waste chemicals that will be excluded from tariff
commitments.
Pharmaceutical Products
59. Indonesia will exclude 1 tariff line (waste pharmaceuticals) from
tariff commitments, but all other 124 pharmaceutical lines will either be
bound at 0% on EIF or eliminated by 2011.
60. Malaysia will bind on EIF its current tariff-free treatment for all
pharmaceutical products (198 lines).
61. The Philippines will bind its 0% tariff on 1 pharmaceutical tariff line
at EIF and eliminate tariffs (ranging from 1% to 5%) on another 118 lines
in 2010, with the remaining tariff line (waste pharmaceuticals) phasing
from 20% to 0% by 2013.
62. Vietnam's tariffs on pharmaceuticals range from 0% to 20%. Tariffs on
113 lines will either be bound at 0% on EIF or will phase to 0% by 2016.
Tariffs on another 3 lines will phase to 0% by 2020, another 3 lines will
phase to 5% by 2022. One line (waste pharmaceuticals) is excluded from
tariff commitments.
Textiles, Clothing and Footwear
63. Indonesia's textile tariffs are generally 5%, 10% or 15%, and it will
eliminate tariffs on almost all tariff lines, with tariffs on the remaining
12 lines reduced to 5%. About 98% of all textile lines will have tariff-
free treatment by 2013. Clothing tariffs are generally 10% or 15%.
Indonesia will eliminate tariffs on 338 clothing lines by 2012 or 2013,
eliminate the tariff on 1 line in 2020, and reduce tariffs on the remaining
77 tariffs to 5% by 2016. Tariffs on footwear range between 5% and 15%,
and all will be eliminated, the 5% tariffs (on parts) by 2010 and the rest
at 10% or 15% by 2012 or 2013.
64. Malaysia's textile tariffs range between 0% and 30%, and it will bind
tariffs of 0% on EIF, and eliminate all other textile tariffs by 2013.
Clothing tariffs range between 0% and 20%, and Malaysia will bind 0%
tariffs on EIF for 49 lines and eliminate other tariffs (252 lines) by
2012. On footwear, it will bind the current tariff-free treatment on 21
tariff lines, and eliminate tariffs ranging between 2% and 30% on the other
29 lines by 2013.
65. The Philippines will eliminate almost all textile tariffs (724 out of
732 tariff lines, with tariffs ranging between 0% and 20%) by 2015, with
most eliminated by 2013. The remaining tariffs will be reduced to 5% or
12%. The Philippines will eliminate all clothing tariffs (397 lines with
base rates at 0-15%) by 2013. It will eliminate tariffs on 28 footwear
lines, generally with tariffs in the 10%-15% range, mostly by 2012, and
phase tariffs on a further 11 lines to 5% by 2016.
66. Vietnam's textile tariffs range between 0% and 100%, with a majority at
30%-40%, and it will eliminate tariffs on 712 textile lines by 2016-2019,
with the remaining 5 lines (worn clothing, textiles and rags) excluded from
tariff commitments. Tariffs on all clothing and footwear tariff lines will
be eliminated. Most lines have 50% tariffs that will phase to 0% by 2018
or, for a few lines 2019, with the remaining lines having tariffs in the
range of 5%-30% that will phase to 0% by 2016 or 2017.
Machinery and Mechanical Appliances
67. Indonesia will bind tariffs on 959 tariff lines at the current level of
0% on EIF, and will phase tariffs on another 423 tariff lines, with tariffs
between 5% and 15%, to 0%, mostly by 2013. Twenty-two lines will be
excluded from tariff commitments, while tariffs on the remaining 35 lines
will phase to 4% or 5%.
68. Malaysia will bind tariffs on 467 tariff lines at the current level of
0% on EIF, and will phase tariffs on the remaining 251 lines to 0% on EIF,
or by 2011 for lower tariffs (5%-15%) and mostly by 2020 for higher tariffs
(17%-35%).
69. The Philippines will bind 88 tariff lines at 0% on EIF and will phase
tariffs on another 1355 tariff lines (with tariffs currently ranging from
1% to 15%) to 0%, most (1224 lines) by 2010. Tariffs on some lines will
phase to 0% by 2011, 2012 or 2013. Tariffs on the remaining 6 lines (air
conditioners, some refrigerators, clothes dryers) will phase from 10% to
5%, or from 5% to 4%, by 2015.
70. Vietnam's tariffs on its 1436 machinery and mechanical appliance lines
range between 0% and 100%. Tariffs on 783 lines will be bound at 0% on
EIF, and tariffs on another 588 lines will be eliminated or phase to 0% by
2020 at the latest. Tariffs on the remaining 65 lines (covering certain
engines and engine parts) will phase to 5% (or 3% for 1 line) by 2022.
Electrical Machinery and Equipment
71. Indonesia's tariffs on the lines covered by this category range from 0%
to 15%. All but 20 of the 768 tariff lines will either be bound on EIF or
phased to 0%, with most (743 lines) at 0% by 2013. By 2016 all tariffs
will be at 5% or less, with the only remaining tariffs by 2025 being 3
lines at 4% and 17 lines at 5%.
72. Malaysia's tariffs range from 0% to 50%. Current tariffs of 0% on 228
of the 496 lines in this category will be bound on EIF, with tariffs on a
further 63 lines also being bound at 0% on EIF. Tariffs on all but 5 lines
will phase to 0% by 2013 - these remaining lines, all with current tariffs
at 30%, will phase to 0% by 2020.
73. The Philippines' tariffs range from 0% to 15%. Tariffs of 0% (170
tariff lines) will be bound on EIF. Virtually all other tariffs (covering
599 tariff lines) will be phased to 0% by 2013, with tariffs on 8 lines
falling to and remaining at 5% by 2016, and 2 lines covering transformers
with current tariffs at 10%, remaining at that level until 2020, when they
will fall to 8%.
74. Vietnam's tariffs, covering 766 tariff lines, range from 0% to 50%.
Tariffs on all but 3 tariff lines will either be bound at 0% on EIF (226
lines) or phased to 0% by 2016, 2017, 2018 or 2020. The 3 remaining lines,
covering some lighting equipment and with current tariff rates of 30%, will
phase to 5% by 2022.
Gaming Machines
75. Indonesia will phase the current 15% tariffs to 0% by 2013.
76. Malaysia will phase the current 5%-30% tariffs to 0% by 2013 (with the
5% tariff eliminated in 2010).
77. The Philippines will phase the current 7% tariffs to 0% by 2011.
78. Vietnam will phase its tariffs of 50% to 0% by 2017.
ANNEX D
AANZFTA SERVICES: KEY "WTO PLUS" GAINS
Professional services
- In accounting services, Malaysia has committed to aggregate 40 per cent
foreign equity participation in locally registered partnerships or
Malaysian accounting firms; Laos has committed to allow temporary
authorisation of Australian accountants; and the Philippines has bound
arrangements under which foreign accountants can practice in the
Philippines under temporary permits issued by its Professional Regulation
Commission.
- In legal services, Indonesia has made a commitment to permit foreign
lawyers to work or take part in Indonesian law firms as employees or
experts in international law[6] and Vietnam has committed to allow
foreign lawyer organisations to employ Vietnamese lawyers and for foreign
lawyers to practice in Vietnamese law firms to advise on
foreign/international law.
- In engineering services, Malaysia has committed to 30 per cent foreign
equity participation in multidisciplinary joint ventures; Laos has
committed to allowing joint ventures with up to 70 per cent foreign
equity participation for the construction of manufacturing, water supply
and sanitation turnkey projects; and the Philippines has bound
arrangements under which foreign civil, mechanical, metallurgical, and
sanitary engineers can practice in the Philippines under temporary
permits issued by its Professional Regulation Commission.
- In architectural services, Brunei has committed to allow 40 per cent
foreign equity in architectural firms; Malaysia has committed to 30 per
cent foreign equity participation in multidisciplinary joint ventures;
Laos has committed to allow 100 per cent foreign equity in landscape
architectural firms; and the Philippines has bound arrangements under
which foreign landscape architects can practice in the Philippines under
temporary permits issued by its Professional Regulation Commission.
Education services
2. In higher education:
- Laos has committed to allowing foreign service suppliers to establish a
commercial presence with up to 100 per cent foreign equity;
- Malaysia has committed to allowing joint ventures with domestic
institutions with foreign equity limit of up to 51 per cent (subject to
relevance of courses to Malaysia's education objectives). Malaysia has
also made commitments providing for temporary entry and stay of lecturers
and experts and professionals (subject to numerical caps) and contractual
service suppliers in higher education for periods of stay of up to ten
years;
- The Philippines has committed to allowing 40 per cent foreign equity in
establishment of education institutions to engage in twinning programs in
the fields of agriculture, industrial, environment, natural resource
management, engineering, architecture, science and technology and health-
related programs and to allowing temporary entry and stay of experts in
these fields for periods of stay of one year, which may be extended;
- Indonesia has committed to allowing foreign education suppliers, in
cooperation with local partners, to establish in the cities of Jakarta,
Surabaya, Bandung, Yogyakarta and Medan; and
- Vietnam has committed to reduce the experience requirement for foreign
teachers in higher, secondary (for students that have completed nine
years of general education), and other education services from five to
three years and to expand the (WTO-committed) "fields of study" that can
be delivered by foreign education suppliers[7] . Vietnam has also
committed to provide Australian services suppliers with the same
treatment afforded to services suppliers from any third country in the
event that Vietnam makes commitments in cross-border supply of higher
education services, as part of an ASEAN-wide FTA, that go beyond those it
has made in AANZFTA.
3. In other education services Thailand has committed to allowing 49 per
cent foreign equity in foreign language tuition services and to allowing
temporary entry for teachers employed by firms established in the
secondary, higher, adult education (professional and short course), and
foreign language tuition services sub-sectors (period of stay of one year
with possibility of extension). Malaysia has committed to allowing joint
ventures with 49 per cent foreign equity in primary, secondary (general and
technical/vocational) and other education services.
Financial services
4. In banking services, the Philippines and Indonesia have committed to
foreign equity of 55 and 51 per cent respectively for acquisition of an
existing domestic bank. Indonesia has also increased by six, the number of
cities in which foreign banks and joint venture banks may open offices
(Padang, Manado, Balikpapan, Banda Aceh, Jayapura, Ambon). Laos has
committed to maintaining no market access or national treatment limitations
on the supply of banking services through commercial presence or cross-
border supply.
5. In insurance services, Indonesia has committed to allowing foreign
equity participation of 80 per cent for foreign services suppliers. In
other financial services, Malaysia has made commitments to allow joint
venture requirements with foreign equity limits of 49 per cent for
financial leasing and financial planning services.
6. All ASEAN countries have agreed to disciplines which promote greater
transparency and timely processing of licensing applications from financial
services suppliers.
Telecommunications
7. In telecommunications, Laos has committed to allow wholly foreign owned
enterprises to supply most services, although joint ventures are required
for telex services, electronic mail, voice mail and online information and
data base retrieval. Malaysia has committed to allowing foreign equity of
49 per cent for acquisition of shares in existing licensed operators (the
option of a locally incorporated joint venture with aggregate foreign
equity of 49 per cent is also bound in some sub-sectors, e.g., mobile
telephone services and data and message transmission services) and the
Philippines has made new commitments in private leased circuit services,
data and message transmission services and value-added services, such as
electronic mail, with foreign equity limits of 40 per cent.
8. In addition, ASEAN countries have agreed to pro-competitive regulatory
disciplines to ensure that foreign suppliers can compete on a level-playing
field with major domestic suppliers, which may own or control essential
network facilities and infrastructure.
- These provisions build on and go beyond the WTO Telecommunications
Reference Paper. The disciplines cover interconnection, competitive
safeguards, co-location; leased circuit services; regulatory
transparency; resolution of regulatory disputes and review of regulatory
decisions.
- Transitional arrangements apply to some countries in relation to some
disciplines (Burma, Cambodia, Laos, Thailand, Vietnam).
Construction services
9. In construction services, Indonesia and Malaysia have committed to
allowing joint ventures with foreign equity of 55 and 49 per cent
respectively. Brunei has committed to allow foreign equity in construction
firms of 50 per cent. Laos has committed to allowing 100 per cent foreign
owned firms to operation in its construction sector.
Mining and Energy related services
10. In mining and energy related services, the Philippines made commitments
that provide for up to 100 per cent foreign equity, subject to the
President's approval, for oil and gas exploration and development and 40
per cent foreign equity for geothermal exploration and development; coal
exploration and development; pipeline transport; and services related to
energy distribution or power generation (up to 100 per cent foreign equity
is allowed for construction of power plants under the "build-operate-
transfer" scheme). Thailand has committed to allowing 49 per cent foreign
equity for firms providing "related scientific and technical consulting
services" in relation to oil and gas exploration (eg., geological and
geophysical prospecting and surveys).
11. The Philippines has made commitments that allow up to 100 per cent
foreign equity for construction of large scale mining development projects
covered by a financial and technical assistance agreement under the
Philippine Mining Act. Indonesia and Malaysia have also made commitments
that cover construction work for mining. These commitments provide for 55
per cent and 49 per cent foreign equity respectively, subject to joint
venture requirements. Laos has committed to allowing 100 per cent foreign
owned firms to undertake construction work related to mining.
Environmental services
12. In environmental services, Laos has made commitments that allow for
wholly foreign owned firms to provide services through commercial presence.
The Philippines has made commitments in relation to sewerage services that
provide for foreign equity of 40 per cent.
Computer and related services
13. In computer and related services, Laos and Malaysia's commitments
contain no market access or national treatment limitations for the
establishment of a commercial presence or cross-border supply of services.
Thailand has made new commitments on programming services, systems
maintenance and software training services with foreign equity of 49 per
cent.
Tourism and travel services
14. The Philippines has no market access or national treatment limitations
in relation to accommodation facilities, including hotels and resorts;
Malaysia has committed to allowing aggregate foreign equity of 49 per cent
in joint ventures in hotel and restaurants; food serving; travel agencies
and tour operators; and Brunei has committed to allowing foreign equity of
up to 70 per cent in joint ventures in tourism accommodation facilities.
Other horizontal commitments
15. Some ASEAN countries have made commitments under AANZFTA that improve
on that horizontal or cross-cutting commitments that apply to all services
sectors listed in their Services schedule. These mainly cover investment-
related issues.
16. Malaysia has committed to a higher threshold of RMB10m (WTO level is
RMB5m), which will trigger approval requirements for the acquisition,
merger or takeover of a Malaysian business by foreign interests.
17. Laos has committed to allowing three forms of commercial presence in
the services sectors listed in its schedule: joint venture enterprises;
business cooperation by contract; and 100 per cent foreign-invested
enterprises. Laos has also committed to allowing foreign natural persons
and companies to lease land for up to 75 years and to own premises on the
leased land.
ANNEX E
AANZFTA TEMPORARY MOVEMENT OF NATURAL PERSONS (MNP):
KEY "WTO PLUS" GAINS
1. AANZFTA provides a framework, through the MNP chapter, for countries to
make commitments on temporary business entry that go beyond service
suppliers to include goods sellers and investors. There are further
disciplines on temporary business entry to promote expeditious processing
of formalities and enhanced transparency.
2. At this stage, the commitments of most ASEAN countries in their
schedules to the MNP chapter relate only to service suppliers, consistent
with the WTO GATS framework. Nevertheless, most ASEAN countries have
improved on their GATS commitments as follows.
3. Indonesia has made a general commitment to allow entry and stay of
intra-corporate transferees ("directors, mangers and technical experts")
for up to six years and business visitors for 60 days, with possible
extension to 120 days.
- There are some sectoral exceptions to these general commitments. For
example, the improvement on WTO commitments in relation to "managers"
does not apply in relation to computer and related services and insurance
services and the improvement on "technical experts" does not apply to
banking services.
4. Laos has made provision for business visitors (60 day period of stay)
and intra-corporate transferees - executives, managers and specialists (six
month period of stay with possibility of renewal for a further period of
one year). Malaysia has increased the period of stay for intra-corporate
transferees, specialists and other professionals to enter and stay for a
maximum of ten years, although there are some exceptions to this
commitment, including professional services, telecommunications and banking
services. Thailand has clarified that its "business visitor" commitments
(90 day period of stay) cover both "service sellers" and "persons
responsible for establishing a commercial presence" and has committed to an
increased period of stay for intra-corporate transferees (up to four
years). Singapore has extended its commitments for intra-corporate
transferees to all services sectors, not just those listed in its services
schedule (as per its WTO GATS commitments). In addition, it has committed
to a longer length of stay for intra-corporate transferee under AANZFTA
than under the GATS, namely, a maximum of eight years, as distinct from
five under the GATS.
5. The Philippines has made commitments that cover not only services
suppliers, but also goods sellers and investors. These include provision
for:
- business visitors (59 days with possible extension of up to one year);
- intra-corporate transferees (one year period of stay, which may be
extended) and investors (one year period of stay, which may be extended);
- contractual service suppliers, including persons in technical advisory or
supervisory positions and professionals (accountants, landscape
architects and certain engineering sub-sectors), subject to the issue of
temporary permits by the Filipino Professional Regulation Commission (one
year period, which may be extended); and
- specialists under contract as part of a higher education twinning or
bridging program, in the fields of nursing, midwifery, library and
laboratory enrichment, agriculture, industrial, environment, natural
resource management, engineering, architecture, science and technology
and health-related programs (one year period, which may be extended).
6. The MNP chapter provides a platform for countries to broaden and deepen
their commitments in movement of natural persons in future and thereby
facilitate freer movement of skilled labour within the region.
ANNEX F
AANZFTA ECONOMIC COOPERATION
1. The economic cooperation package comprises an Economic Cooperation
chapter text and a Work Program which outlines the assistance that will be
provided to parties to implement AANZFTA in eight areas of focus
("components") linked to different aspects of the AANZFTA. The broad
activities currently covered by the Work Program are:
- Rules of Origin;
- Sanitary and Phytosanitary Measures;
- Standards Technical Regulations and Conformity Assessment Procedures;
- Services;
- Investment;
- Intellectual property;
- Sectoral integration; and
- Customs.
2. The Work Program does not have Treaty-level status but forms part of
the AANZFTA package. The Implementing Arrangement formally integrates the
Work Program into the overall FTA package.
3. The Work Program will be implemented over five years after entry into
force of AANZFTA and is estimated to cost in the range of $20 - 25 million.
The funding will be borne largely by Australia and New Zealand, with 'in
kind' contributions from ASEAN member states. This funding reflects
proposed Economic Cooperation projects deemed high priority in the initial
planning phase. However, the work program provides flexibility for
emerging and changing priorities of parties to the FTA to be addressed
through an annual planning process. The work program is in addition to
Australia's ongoing economic cooperation assistance to ASEAN and
complements the ASEAN Australia Development Cooperation Program Phase II
($57 million 2008 - 2015).
ANNEX G
AANZFTA -UNDERSTANDING ON ARTICLE 1 OF THE CHAPTER ON TRADE IN GOODS
1. The Understanding affirms that the commitments relating to the
reduction or elimination of tariffs under AANZFTA do not prevent Parties
from applying measures consistent with the Basel Convention on the Control
of Transboundary Movements of Hazardous Wastes and their Disposal (the
Basel Convention), or other relevant international agreements.
ANNEX H
AANZFTA - CER RELATIONSHIP
1. Australia and New Zealand have exchanged letters setting out an
agreement to limit application of the AANZFTA between each other, given the
Australia-New Zealand Closer Economic Relations Trade Agreement and its
related agreements and understandings (CER).
2. The side-letters confirm that the introductory chapter of AANZFTA and
the AANZFTA tariff commitments and associated rules of origin will apply
between the two countries (i.e. exporters will be able to take advantage of
regional rules of origin under AANZFTA in trans-Tasman trade provided that
the AANZFTA Tariff Schedule is used). The general provisions and exceptions
chapter of AANZFTA will apply to the extent that AANZFTA is applied between
Australia and New Zealand.
3. Australia and New Zealand have further agreed that there will be no
trans Tasman application of AANZFTA's chapters on goods safeguards,
investment and dispute settlement.
4. Australia and New Zealand will consider the merits of having other
chapters of the AANZFTA apply between each other. In the interim, those
other chapters will not apply between Australia and New Zealand.
CUSTOMS AMENDMENT (ASEAN-australia-NEW zEALAND free trade agreement
implementation) BILL 2009
NOTES ON CLAUSES
Clause 1 - Short title
1. This clause provides for the Bill, when enacted, to be cited as the
Customs Amendment (ASEAN-Australia-New Zealand Free Trade Agreement
Implementation) Act 2009.
Clause 2 - Commencement
2. Subclause (1) provides that each provision of this Act specified in
column 1 of the table in that subclause commences, or is taken to have
commenced, on the day or at the time specified in column 2 of the
table. This subclause also provides that any other statement in column
2 of the table has effect according to its terms.
3. Item 1 of the table provides that sections 1 to 3 and anything in this
Act not elsewhere covered by the table will commence on the day on
which the Act receives the Royal Assent.
4. Item 2 of the table provides that Schedule 1 commences on the later of
the day this Act receives the Royal Assent or the day the Agreement
Establishing the ASEAN-Australia-New Zealand Free Trade Area (the
Agreement) done at Thailand on 27 February 2009 comes into force for
Australia. However, the provisions in Schedule 1 do not commence at
all if the event mentioned in paragraph (b) does not occur.
5. This item also provides that the Minister for Home Affairs must
announce by notice in the Gazette the day the Agreement enters into
force for Australia.
6. Subclause (2) provides that column 3 of the table contains additional
information that is not part of the Act.
Clause 3 - Schedule(s)
7. This clause is the formal enabling provision for the Schedule to the
Bill, providing that each Act specified in a Schedule is amended in
accordance with the applicable items of the Schedule. In this Bill,
the Customs Act is being amended.
8. The clause also provides that the other items of the Schedules have
effect according to their terms. This is a standard enabling clause
for transitional, savings and application items in amending
legislation.
Schedule 1 - Amendments
Customs Act 1901
Item 1 After Division 1F of Part VIII
9. This item amends the Customs Act 1901 (the Customs Act) by inserting
new Division 1G into Part VIII. New Division 1G is headed ASEAN-
Australia-New Zealand (AANZ) originating goods and sets out the rules
for determining whether goods are AANZ originating goods and therefore
eligible for a preferential rate of customs duty under the Customs
Tariff Act 1995 (the Customs Tariff Act). These rules are being
inserted to give effect to the Agreement Establishing the ASEAN-
Australia-New Zealand Free Trade Area (the Agreement), in particular
Chapter 3 of the Agreement.
10. New Division 1G contains six Subdivisions which are set out below.
Subdivision A - Preliminary
11. Subdivision A contains a simplified outline of Division 1G and
contains the interpretation provision for Division 1G.
Section 153ZKA Simplified outline
12. New section 153ZKA sets out a simplified outline of each of the
Subdivisions B to F of new Division 1G.
New section 153ZKB Interpretation
13. New subsection 153ZKB(1) sets out several new definitions for the
purposes of Division 1G. These definitions are:
AANZ originating goods which means goods that, under new Division 1G, are
AANZ originating goods;
Agreement which means the Agreement Establishing the ASEAN-Australia-New
Zealand Free Trade Area done at Thailand on 27 February 2009, as amended
from time to time. The Note to this definition indicates that in 2009, the
text of the Agreement was accessible through the Australian Treaties
Library on the AustLII Internet site;
aquaculture which has the meaning given by Article 1 of Chapter 3 of the
Agreement, which is the farming of aquatic organisms including fish,
molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from
seedstock such as eggs, fry, fingerlings and larvae, by intervention in the
rearing or growth processes to enhance production such as regular stocking,
feeding, or protection from predators;
Certificate of Origin which means a certificate that is in force and that
complies with the requirements of Rule 7 of the Annex to Chapter 3 of the
Agreement. Rule 7 sets out the format of, and the matters that are to be
included in, a Certificate of Origin;
Convention which means the International Convention on the Harmonized
Commodity Description and Coding System done at Brussels on 14 June 1983,
as in force from time to time. The Note to this definition indicates that
in 2009, the text of the Agreement was accessible through the Australian
Treaties Library on the AustLII Internet site;
customs value, of goods, which has the meaning given by section 159. In
most cases it will be the transaction value but there are other methods if
this value cannot be ascertained;
exclusive economic zone which has the same meaning as in the Seas and
Submerged Lands Act 1973. This definition is taken from Articles 55 and 57
of UNCLOS which provide as follows:
. The exclusive economic zone is an area beyond and adjacent to the
territorial sea, subject to the specific legal regime established in
this Part, under which the rights and jurisdiction of the coastal State
and the rights and freedoms of other States are governed by the relevant
provisions of this Convention.
. The exclusive economic zone shall not extend beyond 200 nautical miles
from the baselines from which the breadth of the territorial sea is
measured.
Harmonized System which means the Harmonized Commodity Description and
Coding System (as in force from time to time) that is established by or
under the Convention.
The Harmonized System (HS) is the worldwide classification system that has
been adopted by all countries that are members of the World Customs
Organization. In Australia, the HS has been adopted in the Customs Tariff
Act. The HS organises goods according to the degree of manufacture, and
assigns classification numbers to all goods. It is arranged into 96
chapters covering all goods, and each chapter is divided into headings,
subheadings, and tariff classifications. Under the HS, the chapter,
heading, and subheading numbers (6 digits) for any good are adopted in any
country using the HS. The Australian Customs Tariff is an 8 digit
classification, with the 4 and 6 digit international classification
supplemented for the domestic imposition of customs duty;
in a Party includes:
a. the territorial sea of a Party;
b. the exclusive economic zone of a Party over which the Party exercises
sovereign rights or jurisdiction in accordance with international law;
and
c. the continental shelf of a Party over which the Party exercises
sovereign rights or jurisdiction in accordance with international law.
Under the Agreement, activities are required to take place "in a Party" and
this definition ensures that these activities will be eligible activities
if they take place in the territorial sea, the EEZ and the continental
shelf of a Party as well as on the land mass of a Party;
indirect materials which means:
a. goods or energy used in the production, testing or inspection of goods,
but not physically incorporated in the goods; or
d. goods or energy used in the maintenance of buildings or the operation of
equipment associated with the production of goods;
including:
e. fuel (within its ordinary meaning); and
f. tools, dies and moulds; and
g. spare parts and materials; and
h. lubricants, greases, compounding materials and other similar goods; and
i. gloves, glasses, footwear, clothing, safety equipment and supplies; and
j. catalysts and solvents.
Interpretation Rules which means the General Rules (as in force from time
to time) for the Interpretation of the Harmonized System provided for by
the Convention;
non-originating materials which means goods that are not originating
materials;
originating materials which means:
a. AANZ originating goods that are used or consumed in the production
of other goods;
In some circumstances, in order to determine whether goods imported into
Australia are AANZ originating goods, and therefore eligible for a
preferential rate of customs duty, it may be necessary to have regard to
the goods from which the final goods are produced (see Subdivisions C and
D). These goods which are used to produce other goods can be originating or
non-originating.
Originating materials are those goods that are used to produce other goods
and that are also AANZ originating goods, which means that, in their own
right, they satisfy the requirements of new Division 1G. Non-originating
materials are goods that are not originating materials because they do not
satisfy the requirements of Division 1G in their own right. For example,
where frozen crumbed fish fillets are made in New Zealand from fish caught
in New Zealand that is coated with herbs and spices imported from
Argentina, the fish would be originating materials and the herbs and spices
would be non-originating materials (as Argentina is not a Party to the
Agreement); or
b. indirect materials.
Party which means a Party (within the meaning of the Agreement) for which
the Agreement has entered into force.
Under Article 3 of Chapter 1 to the Agreement, a Party means an ASEAN
Member State or Australia or New Zealand. The ASEAN Member States are
Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the
Lao People's Democratic Republic, Malaysia, the Union of Myanmar, the
Republic of the Philippines, the Republic of Singapore, the Kingdom of
Thailand and the Socialist Republic of Viet Nam.
Under Article 7 of Chapter 20 of the Agreement, the Agreement cannot enter
into force until Australia, New Zealand and at least four ASEAN Member
States have notified each Party to the Agreement, in writing, that the
internal requirements to implement the Agreement have been completed.
However, at that point in time, the Agreement will only enter into force
for those countries that have completed the internal requirements at that
time. If there are any ASEAN Member States that have not completed their
internal requirements at the time of the initial entry into force of the
Agreement, the Agreement shall only enter into force for these countries
after the date these countries notify each Party to the Agreement that they
have also completed their internal requirements. (See subsection 153ZKB(7)
below for requirement for the Minister to announce in the Gazette when the
Agreement enters into force for a Party other than Australia.)
If the Agreement is not in force for a Party, new Division 1G will not
apply in relation to that Party. For example, goods cannot claim to be
wholly obtained goods of a Party for which the Agreement has not entered
into force.
produce which means grow, farm, raise, breed, mine, harvest, fish, trap,
hunt, capture, gather, collect, extract, manufacture, process or assemble;
territorial sea which has the same meaning as in the Seas and Submerged
Lands Act 1973. This definition is taken from Articles 3 and 4 of UNCLOS
which provide as follows:
. Every State has the right to establish the breadth of its territorial
sea up to a limit not exceeding 12 nautical miles, measured from
baselines determined in accordance with this Convention.
. The outer limit of the territorial sea is the line every point of which
is at a distance from the nearest point of the baseline equal to the
breadth of the territorial sea.
14. New subsection 153ZKB(2) provides that the regional value content of
goods for the purposes of Division 1G is to be worked out in
accordance with the regulations. The regulations may prescribe
different regional value content rules for different kinds of goods.
15. New subsection 153ZKB(3) provides that the value of goods for the
purposes of Division 1G is to be worked out in accordance with the
regulations and that the regulations may prescribe different valuation
rules for different kinds of goods. The value of goods is relevant,
for example, in determining whether goods satisfy the de minimis
requirement in subsection 153ZKE(4). The value of goods is to be
distinguished from the customs value of goods which is to be worked
out under section 159 of the Customs Act.
16. New subsection 153ZKB(4) provides that in specifying tariff
classifications for the purposes of Division 1G, the regulations may
refer to the Harmonized System. The product specific rules in Annex 2
of the Agreement refer to tariff classifications of the Harmonized
System.
17. New subsection 153ZKB(5) provides that subsection 4(3A) of the Customs
Act does not apply for the purposes of Division 1G. Subsection 4(3A)
provides that reference in the Customs Act to the tariff
classification of goods is a reference to Schedule 3 of the Customs
Tariff Act, which is not the case in new Division 1G.
18. New subsection 153ZKB(6) provides that for the purposes of Division
1G, the regulations may apply, adopt or incorporate any matter
contained in any instrument or other writing as in force or existing
from time to time. This provision will override section 14 of the
Legislative Instruments Act 2003 should it be necessary to refer to
the laws of a Party to the Agreement (other than Australia) in the
Customs (ASEAN-Australia-New Zealand Rules of Origin) Regulations
2009.
19. New subsection 153ZKB(7) provides that the Minister (for Home Affairs)
must announce by notice in the Gazette the day on which the Agreement
enters into force for a Party (other than Australia). In this
subsection, Party means a Party to the Agreement, not necessarily a
Party for which the Agreement has entered into force. This means that
the Minister will be required to publish a notice in the Gazette
setting out the date the Agreement enters into force for each ASEAN
Member State and New Zealand. New subsection 153ZKB(8) provides that
notice referred to in subsection (7) is not a legislative instrument.
This means that the notice will not have to be registered on the
Federal Register of Legislative Instruments and is consistent with the
Legislative Instruments Regulations 2004, which provide that a notice
published in the Gazette that announces the day on which an
international agreement comes into force for Australia is not a
legislative instrument. Such notices are not legislative instruments
within the meaning of section 5 of the Legislative Instruments Act
2003.
Subdivision B - Wholly obtained goods of a Party
20. Subdivision B sets out the rules in relation to goods that are wholly
obtained goods of a Party.
Section 153ZKC Goods wholly obtained of a Party
21. New subsection 153ZKC(1) provides that goods are AANZ originating
goods:
a. if they are wholly obtained goods of a Party; and
b. the importer has, at the time the goods are imported, a Certificate of
Origin, or a copy of one, for the goods.
22. New subsection 153ZKC(2) provides that goods are wholly obtained of a
Party if, and only if, the goods are:
a. plants, or goods obtained from plants that are grown, harvested, picked
or gathered in a Party. These goods include all fruit, flowers,
vegetables, trees, seaweed, fungi and live plants; or
b. live animals born and raised in a Party; or
c. goods obtained from live animals in a Party; or
d. goods obtained from hunting, trapping, fishing, farming, gathering,
capturing or aquaculture in a Party; or
e. minerals or other naturally occurring substances extracted or taken in a
Party; or
f. fish, shellfish or other marine goods taken from the high seas in
accordance with international law, by ships that are registered or
recorded in a Party and are flying, or are entitled to fly, the flag of
that Party; or
g. goods produced from goods referred to in paragraph (f) on board factory
ships that are registered or recorded in a Party and are flying, or are
entitled to fly, the flag of that Party; or
h. goods taken by a Party, or by a person of a Party, from the seabed, or
beneath the seabed, outside:
. (i) the exclusive economic zone of that Party; or
. (ii) the continental shelf of that Party; or
. (ii) an area over which a third party exercises jurisdiction;
and taken under exploitation rights granted in accordance with
international law; or
i. waste and scrap that has been derived from production or consumption in
a Party and that is fit only for the recovery of raw materials; or
j. used goods that are collected in a Party and that are fit only for the
recovery of raw materials; or
k. goods produced or obtained entirely in a Party exclusively from goods
referred to in paragraphs (a) to (j) or from their derivatives. Under
this provision, all of the relevant activities must take place in the
one Party. For example, pork sausages that are made in Vietnam from
pigs born and raised in Vietnam and cereals and spices harvested in
Vietnam will be AANZ originating goods. It would not be possible to
claim that pork sausages made in Vietnam from pigs born in Cambodia and
cereals and spices harvested in Vietnam are AANZ originating goods under
this provision. However, such sausages could be AANZ originating goods
under new section 153ZKD below.
Subdivision C - Goods produced in a Party from originating materials
23. Subdivision C sets out the rule in relation to goods that are produced
entirely in the territory of a Party from originating materials only
under section 153ZKD. Such goods are AANZ originating goods where the
importer of the goods has, at the time the goods are imported, a
Certificate of Origin, or a copy of one, for the goods.
24. Under this section, it will be possible to combine originating
materials from any Party to make AANZ originating goods, as long as
the goods are produced entirely in a Party. Therefore, following on
from the above example, pork sausages made in Vietnam from pigs born
in Cambodia and cereals and spices harvested in Vietnam would be AANZ
originating goods under this section.
Subdivision D - Goods produced from non-originating materials
25. Subdivision D sets out the rules for determining whether goods that
are produced from non-originating materials only, or from non-
originating materials and originating materials, are AANZ originating
goods.
26. Under the Agreement, there are two different sets of rules of origin
that apply in relation to goods produced using non-originating
materials. Except for goods listed in Annex 2 to the Agreement, the
relevant rule of origin is a "general rule" of either a change in
tariff heading or a regional value content of at least 40% of the FOB
value of the goods. For the goods listed in Annex 2 to the Agreement,
the product-specific rules contained in the Annex are applicable.
Section 153ZKE Goods produced from non-originating materials and
classified in the tariff table
27. New section 153ZKE applies to goods that are classified to a heading
or subheading that is specified in the table in Schedule 1 to the
Customs (ASEAN-Australia-New Zealand Rules of Origin) Regulations 2009
(the AANZ Regulations). New subsection 153ZKE(1) provides that goods
are AANZ originating goods if:
a. they are classified to a heading or subheading of the Harmonized System
specified in column 1 or 2 of the table in Schedule 1 to the Customs
(ASEAN-Australia-New Zealand Rules of Origin) Regulations 2009; and
b. each requirement that is specified in the regulations to apply in
relation to the goods is satisfied; and
c. the importer of the goods has, at the time the goods are imported, a
Certificate of Origin, or a copy of one, for the goods.
28. The table in Schedule 1 to the AANZ Regulations will incorporate the
product specific rules relating to change in tariff classification,
regional value content and other rules that are included in Annex 2 to
the Agreement for the purposes of determining whether goods are AANZ
originating goods. Columns 1 and 2 of this table will set out the
tariff classifications, column 3 will set out the description of the
goods and column 4 will set out the product specific rules.
29. New subsection 153ZKE(2) refers to the first of the requirements that
may be specified in Schedule 1 to the AANZ Regulations. It provides
that the regulations may specify that each non-originating material
used or consumed in the production of the goods is required to satisfy
a specified change in tariff classification.
30. New subsection 153ZKE(3) provides that the regulations may also
specify when a non-originating material used or consumed in the
production of the goods is taken to satisfy the change in tariff
classification. Regulations made under these heads of power would
include provisions that would apply where the non-originating
materials that are used or consumed in the production of the good do
not satisfy the change in tariff classification.
31. The concept of the change in tariff classification only applies to non-
originating materials. Goods that have been sourced from outside any
of the Parties and that are used in the production of other goods are
non-originating materials. Goods sourced from within a Party that
have not fulfilled the requirements of Division 1G and that are used
in the production of other goods are also non-originating materials.
All non-originating materials used to produce other goods may not have
the same classification under the Harmonized System as the final good
into which they are produced. This means that the goods must be
classified under one tariff classification before the production
process and under a different tariff classification after the
production process. This approach ensures that sufficient
transformation of materials has occurred within a Party, or Parties,
to justify the claim that the goods originate in a Party.
32. For example, frozen fish fillets (HS 0304) are produced from fish
caught in Thailand (originating materials) and combined with herbs and
spices from Argentina (non-originating materials) (HS 0907 - 0910) to
make crumbed fish fillets (HS 1604.20). The applicable tariff change
for crumbed fish is "a change to subheading 1604.20 from any other
chapter". As the herbs and spices are classified to Chapter 9, these
non-originating materials meet the tariff change requirement. (The
fish is the wholly obtained good of a Party and is therefore an
originating material and is not required to change its
classification.)
33. In order to determine whether goods meet the applicable change in
tariff classification requirement, the tariff classification of the
final goods and each of the goods that are non-originating materials
used in the production of the goods needs to be known.
34. New subsection 153ZKE(4) incorporates the first de minimis provision
set out in Article 8 of Chapter 3 of the Agreement. This subsection
provides that the change in tariff classification is also taken to be
satisfied if the total value of all of the non-originating materials
used in the production of the goods that do not satisfy the particular
change in tariff classification requirement for the goods does not
exceed 10% of the customs value of the goods. This provision applies
to all goods listed in the table in Schedule 1 to the AANZ
Regulations.
35. New subsection 153ZKE(5) incorporates the second de minimis provision
set out in Article 8 of Chapter 3 of the Agreement. This provision
applies only in relation to goods that are classified to Chapters 50
to 63 of the Harmonized System, which apply to textiles and textile
articles. This subsection provides that the change in tariff
classification is also taken to be satisfied if the total weight of
all of the non-originating materials used or consumed in the
production of the goods that do not satisfy the particular change in
tariff classification of the goods does not exceed 10% of the total
weight of the goods
36. Therefore, under these two de minimis provisions, even if all the non-
originating materials used to produce a final good do not satisfy a
particular change in tariff classification, the final goods may still
be AANZ originating goods because the change in tariff classification
will be taken to be satisfied.
37. The value of non-originating materials for the purposes of this
section is to be worked out in accordance with the methods that will
be included in the AANZ Regulations.
38. New subsection 153ZKE(6) provides that the regulations may specify
that the goods are required to have a regional value content of at
least a specified percentage. The methods of calculation to determine
the regional value content will be included in the AANZ Regulations.
39. New subsection 153ZKE(7) provides that if:
a. the goods are required to have a regional value content of at least a
particular percentage; and
b. the goods are imported into Australia with accessories, spare parts,
tools or instructional or other information materials; and
c. the accessories, spare parts, tools or instructional or other
information materials are not invoiced separately from the goods; and
d. the quantities and value of the accessories, spare parts or tools are
customary for the goods;
then the regulations must require the value of the accessories, spare
parts, tools or instructional or other information materials to be taken
into account as originating or non-originating materials, as the case may
be, for the purposes of working out the regional value content of the
goods. Without this provision, the value of accessories, spare parts,
tools or instructional or other information materials would not normally
form part of the value of materials that are used in the production of the
underlying goods.
40. The Note to this section indicates that the value of the accessories,
spare parts, tools or instructional or other information materials is
to be worked out in accordance with the AANZ Regulations.
41. New subsection 153ZKE(8) provides that for the purposes of subsection
153ZKE(7), section 153ZKI is to be disregarded in working out whether
the accessories, spare parts, tools or instructional or other
information materials are originating or non-originating materials.
However, new subsection 153ZKE(9) provides that subsection 153ZKE(7)
does not apply if the accessories, spare parts, tools or instructional
or other information materials are imported solely for the purpose of
artificially raising the regional value content of the goods.
42. Subsection 153ZKE(9) and paragraph 153ZKI(c) (see below) are required
to ensure that accessories, spare parts, tools, instructional or other
information materials that are of a kind customarily provided with
other goods are not simply added to ensure one or both of the goods
are AANZ originating goods by artificially raising the regional value
content of the other goods.
For example, woollen trousers are made in Malaysia, and are to be sold to a
buyer in Australia for $80 each. Amongst other requirements, under the
Indirect/Build-down method for calculating regional value content in the
Agreement, woollen trousers must have a regional value content of 40% to be
AANZ originating goods. Because these trousers include Italian fabric
worth $48 per pair, the regional value content would be worked out as
follows:
$80 - $48 = 32%
$100
The trousers are non-originating, and ineligible for importation into
Australia at preferential rates of duty under the Agreement.
To get around this dilemma, the producer arranges for each pair of trousers
to be sold with a belt and agrees to buy the belt back later to ensure the
buyer ultimately pays no more than originally intended. On return of the
belts to the producer, they could then be used for subsequent shipments
under similar arrangements.
The belt is complete with a buckle and is classified to subheading 4203.30
and is sold to the producer for $12. It is made from a pre-made belt
without a buckle imported from a country that is not a Party to the
Agreement. The pre-made belt is classified to the same subheading as the
complete belt, and is valued at $2. The belt is non-originating because it
did not undergo an appropriate tariff change requirement.
Without subsection 153ZIE(8) and paragraph 153ZIG(c), the addition of the
belt to the trousers would mean that the regional value content of the
trousers would be worked out as follows:
$92 (trousers + belt) - $50 (imported fabric + belt without buckle) =
45.65%
$92
Therefore, the artificial inclusion of the belt would raise the price of
the goods (and to a lesser extent, the value of the imported content) to
enable both goods to become AANZ originating goods. Subsection153ZKE(9)
and paragraph 153ZKI(c) are required to deter traders from resorting to
artificial arrangements to meet the required regional value content.
43. New subsection 153ZKE(10) provides that subsections (2) and (6) do not
limit paragraph (1)(b). It is proposed that the regulations will
include other requirements in addition to change in tariff
classification and regional value content requirements.
44. For example, in addition to meeting a tariff change requirement, in
respect of textile articles classified in the headings of Chapter 63
of the Harmonized System where the starting material is fabric, the
fabric must be raw or unbleached and fully finished in one or more of
the Parties.
Section 153ZKF Goods produced from non-originating materials and not
classified in the tariff table
45. New section 153ZKF sets out the rules of origin that apply to goods
that are classified to a heading or subheading that is not specified
in the table in Schedule 1 to the AANZ Regulations. The reason they
are not specified in the table is because their qualification as
originating goods is that they need to meet a "general rule" of either
a change in tariff heading or a regional value content of at least
40%.
46. There are two different rules of origin that can be applied to goods
that are classified to a heading or subheading that is not specified
in the table.
47. This first rule is set out in subsection 153ZKF(1), and provides that
goods are AANZ originating goods if:
a. they are classified to a heading or subheading of the Harmonized System
that is not specified in column 1 or 2 of the table in Schedule 1 to the
Customs (ASEAN-Australia-New Zealand Rules of Origin) Regulations 2009;
and
b. the final process in their production was performed in a Party; and
c. the goods have a regional value content of at least 40%; and
d. the importer of the goods has, at the time the goods are imported, a
Certificate of Origin, or a copy of one, for the goods.
48. New subsection 153ZKF(2) provides that if:
a. the goods are imported into Australia with accessories, spare parts,
tools or instructional or other information materials; and
b. the accessories, spare parts, tools or instructional or other
information materials are not invoiced separately from the goods; and
c. the quantities and value of the accessories, spare parts or tools are
customary for the goods;
then the regulations must require the value of the accessories, spare
parts, tools or instructional or other information materials to be taken
into account as originating or non-originating materials, as the case may
be, for the purposes of working out the regional value content of the
goods. Without this provision, the value of accessories, spare parts,
tools or instructional or other information materials would not normally
form part of the value of materials that are used in the production of the
underlying goods. This provision is identical to the provision that
applies under 153ZKE(7) in relation to goods that are classified to a
heading or subheading of the Harmonized System that is specified in column
1 or 2 of the table in Schedule 1 to the AANZ Regulations.
49. The Note to this subsection indicates that the value of the
accessories, spare parts, tools or instructional or other information
materials is to be worked out in accordance with the AANZ Regulations.
50. Similar to new subsection 153ZKE(8), subsection 153ZKF(3) provides
that for the purposes of subsection 153ZKF(2), section 153ZKI is to be
disregarded in working out whether the accessories, spare parts, tools
or instructional or other information materials are originating or non-
originating materials. However, new subsection 153ZKF(4) provides
that subsection 153ZKF(2) does not apply if the accessories, spare
parts, tools or instructional or other information materials are
imported solely for the purpose of artificially raising the regional
value content of the goods.
51. Subsections 153ZKF(4) and paragraph 153ZKI(c) (see below) are, like
subsection 153ZKE(9), required to ensure that accessories, spare
parts, tools, instructional or other information materials that are of
a kind customarily provided with other goods are not simply added to
ensure one or both of the goods are AANZ originating goods by
artificially raising the regional value content of the other goods.
52. New subsection 153ZKF(5) sets out the second rule, and provides that
goods are AANZ originating goods if:
a. they are classified to a heading or subheading of the Harmonized System
that is not specified in column 1 or 2 of the table in Schedule 1 to the
AANZ Regulations; and
b. they are produced entirely in one or more Parties from non-originating
materials only, or from non-originating and originating materials; and
c. each non-originating material used or consumed in the production of the
goods undergoes a change in tariff classification that is a change to a
heading of the Harmonized System from any other heading of the
Harmonized System; and
d. the importer of the goods has, at the time the goods are imported, a
Certificate of Origin, or a copy of one, for the goods.
53. New subsections153ZKF(6) and (7) set out the same de minimis
provisions in relation to non-originating materials to those that
apply to goods that are classified to a heading or subheading of the
Harmonized System that is specified in column 1 or 2 of the table in
Schedule 1 to the AANZ Regulations (see new subsections 153ZKE(4) and
(5) above).
Section 153ZKG Non qualifying operations or processes
54. New subsection 153ZKG(1) provides that new section 153ZKG applies for
the purposes of working out if goods are AANZ originating goods under
either:
a. subsection 153ZKE(1), where, in relation to paragraph 153ZKE(1)(b),
goods are claimed to be AANZ originating goods solely on the basis that
the goods have a regional value content of at least a specified
percentage. This means that column 4 of the item in Schedule 1 to the
AANZ Regulations that applies to these goods must specify only a
regional value content requirement - this provision will not apply for
example where column 4 specifies a regional value content and a change
in tariff classification requirement; or
b. subsection 153ZKF(1).
55. New subsection 153ZKG(2) provides that goods are not AANZ originating
goods merely because of the following:
a. operations or processes to preserve goods in good condition for the
purpose of transport or storage of the goods;
b. operations or processes to facilitate the shipment or transportation of
the goods;
c. packaging (other than the encapsulation of electronics) for
transportation or sale or presenting goods for transportation or sale;
d. simple processes of sifting, classifying, washing, cutting, slitting,
bending, coiling, uncoiling or other similar simple processes;
e. affixing of marks, labels or other distinguishing signs on goods or on
their packaging;
f. dilution with water or another substance that does not materially alter
the characteristics of goods;
g. any combination of things referred to in paragraphs (a) to (f).
Therefore, if any of these operations are the only operations that take
place in a Party in relation to goods (either alone or as a combination),
this will not amount to production in relation to the goods. For example,
if non-originating goods such a spices from Bolivia are packaged into
bottles in Cambodia, this will not confer the status of AANZ originating
goods upon the spices.
Section 153ZKH Packaging materials and containers.
56. New subsection 153ZKH(1) provides that if:
a. goods are packaged for retail sale in packaging material or a container;
and
b. the packaging material or container is classified with the goods in
accordance with Rule 5 of the General Rules for the Interpretation of
the Harmonized System provided for by the Convention;
then the packaging material or container is to be disregarded for the
purposes of Subdivision D except for the purposes of the exception detailed
below. For example, this means that the packaging material or container
that are non-originating materials does not need to satisfy the change in
tariff classification test that might apply to the goods under the AANZ
Regulations.
Exception
57. However, subsection 153ZKH(2) provides one exception, which applies
where the goods are required to have a regional value content of at
least a particular percentage. Under this exception, the regulations
must require the value of the packaging material or container to be
taken into account as originating materials or non-originating
materials, as they case may be, for the purposes of working out the
regional value content of the goods. Without this provision, the value
of packaging materials and containers would not normally form part of
the value of materials that are used in the production of the goods.
58. The value of packaging materials and containers for the purposes of
this section is to be worked out in accordance with the methods that
will be included in the AANZ Regulations.
Subdivision E - Goods that are accessories, spare parts, tools or
instructional or other information materials
59. Subdivision E sets out a specific rule that applies to goods that are
accessories, spare parts, tools or instructional or other information
materials.
Section 153ZKI Accessories, spare parts, tools or instructional or other
information materials
60. New section 153ZKI provides that goods are AANZ originating goods if:
a. they are accessories, spare parts, tools or instructional or other
information materials in relation to other goods; and
b. the other goods are imported into Australia with the accessories, spare
parts, tools or instructional or other information materials; and
c. the accessories, spare parts, tools or instructional or other
information materials are not imported solely for the purpose of
artificially raising the regional value content of the other goods; and
d. the other goods are AANZ originating goods; and
e. the accessories, spare parts, tools or instructional or other
information materials are not invoiced separately from the other goods;
and
f. the quantities and value of the accessories, spare parts, tools or
instructional or other information materials are customary for the other
goods.
Therefore, under the provision, accessories, spare parts, tools or
instructional or other information materials will be deemed to be AANZ
originating goods even if, in fact, they are non-originating materials,
provided all of the requirements of this section are satisfied. However,
this deeming section is to be disregarded when performing a regional value
calculation on goods under subsections 153ZKE(7) and 153ZKF(2).
Subdivision F - Consignment
61. Subdivision F sets out the consignment requirements that must be
satisfied in transporting AANZ originating goods to Australia,
including in relation to production in other countries that are not
Parties to the Agreement during transportation to Australia.
Section 153ZKJ Consignment
62. New subsection 153ZKJ(1) provides that goods are not AANZ originating
goods under Division 1G if:
a. the goods are transported through a country or place other than a Party;
and
b. at least one of the following applies:
. (i) the goods undergo subsequent production or any other operation in
that country or place (other than unloading, reloading, storing or
any operation that is necessary to preserve them in good condition or
to transport them to Australia); or
. (ii) the goods enter the commerce of that country or place; or
. (ii) the transport through that country or place is not justified
by geographical, economic or logistical reasons.
63. Subsection 153ZKJ(2) provides that this section applies despite any
other provision of Division 1G. This means that even if goods are
AANZ originating goods in accordance with any other provisions of
Division 1G, if they do not comply with section 153ZKJ(1), they will
not be AANZ originating goods.
Item 2 Application
64. Item 2(1) provides that the amendment made by item 1 applies in
relation to:
a. goods imported into Australia on or after the commencement of item 2;
and
b. goods imported in Australia before the commencement of item 2, where the
time for working out the rate of import duty on the goods had not
occurred before the commencement of item 2. This means that if goods
are imported from a Party before the commencement date and are still in
a warehouse on that date, the new rules set out in item 1 will also
apply to them.
65. Item 2(2) applies in relation to a Party for which the Agreement
enters into force on a day later than the day on which the Agreement
enters into force for Australia (see the definition of Party in
subsection 153ZKB(1) above). This later day is the start day for the
purposes of item 2(2). Under this item, the amendment made by item 1
applies in relation to:
a. goods imported into Australia on or after the start day; and
b. goods imported in Australia before that the start day, where the time
for working out the rate of import duty on the goods had not occurred
before the start day. Again, this means that if goods are imported from
a relevant Party before the start day and are still in a warehouse on
that day, the new rules set out in item 1 will also apply to them.
66. In this item, Agreement means the Agreement Establishing the ASEAN-
Australia-New Zealand Free Trade Area done at Thailand on 27 February
2009, as amended from time to time and Party means a Party within the
meaning of the Agreement (ie any one of the ten ASEAN Member States,
Australia and New Zealand).
-----------------------
[1] The Members of ASEAN are Brunei, Burma, Cambodia, Indonesia, Laos,
Malaysia, the Philippines, Singapore, Thailand and Vietnam.
[2] Australia's FTA with New Zealand (ANZCERTA) already provides for free
trade in goods and services.
[3] All ASEAN countries are members of the WTO with the exception of Laos,
which has observer status and is undertaking accession negotiations.
[4] All ASEAN countries are members of APEC except Burma, Cambodia and
Laos.
[5] All ASEAN countries are EAS participants, along with Australia, China,
India, Japan, New Zealand and the Republic of Korea.
[6] The share of foreign lawyers in Indonesian law firms must not exceed 20
per cent and must be limited to five foreign lawyers per firm.
[7] Agriculture, architecture, building, business administration,
management, computer science, construction, information systems, dental
services, economics, education, engineering, environmental, surveying,
health, community services, land and marine resources, animal husbandry,
language studies, law, legal studies, life sciences, manufacturing,
mathematics, medical science, medicine, multi-field education, nursing,
pharmacy, physical sciences, science, services, culinary and
hospitality, transport, veterinary science, visual and performing arts.