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2002-2003
CUSTOMS TARIFF AMENDMENT BILL (NO. 1)
2003
(Circulated by authority of
the
Minister for Justice and Customs, Senator
the Honourable
Christopher Martin Ellison)
CUSTOMS TARIFF AMENDMENT BILL (NO. 1) 2003
The purpose of this Bill is to amend the Customs Tariff Act 1995
(the Tariff) to:
• Add East Timor to the list of Developing
Countries;
• Define Least Developed Countries (LDCs) and provide
for the duty-free entry of goods originating in LDCs and East
Timor;
• Provide for the duty-free entry of goods originating in
Singapore in accordance with the Singapore-Australia Free Trade Agreement
(SAFTA); and
• Implement related amendments to the
Tariff.
Customs Tariff Amendment Bill (No. 1) 2003 is complementary to
and is being tabled cognately with the Customs Amendment Bill (No. 1) 2003.
Customs Amendment Bill (No. 1) 2003 amends the Customs Act 1901
to insert rules for determining whether goods originate in LDCs, East Timor or
in Singapore, for the purposes of the new initiatives.
Amendments set
out in Schedule 1 to this Bill – East Timor
East Timor is
listed as a Developing Country in the Tariff for the purposes of the Australian
System of Tariff Preferences (ASTP).
From 1 April 2003, goods of East
Timorese origin will be given a preference of five percentage points below the
general tariff rate, where available.
The duty-free entry for goods originating in LDCs and East Timor is an
Australian Government initiative that demonstrates Australia’s commitment
to the Doha round of World Trade Organization negotiations.
The Doha
Ministerial Declaration in November 2001 stated that World Trade Organization
members should work towards duty-free access for LDCs that are listed by the
United Nations.
On 25 October 2002, at the Asia-Pacific Economic Leaders
Summit in Los Cabos, the Prime Minister announced Australia’s decision to
accord duty-free access to LDCs and East Timor.
Schedule 1 to the Tariff
contains lists of countries and places to which preferential rates of duty apply
under the ASTP. The ASTP allows goods originating in Developing Countries to
benefit from a 5% reduction on the general tariff rate. As tariffs on many
primary products and manufactured goods are currently either Free or 5%, this
means that most goods originating from Developing Countries enter Australia free
of duty.
The main exceptions are certain textiles, clothing and footwear
goods, passenger motor vehicles and certain components therefore. The general
rate of duty for these goods is above 5%.
The amendments contained in
Schedule 2 of this Bill list LDCs in Schedule 1 of the Tariff and give effect to
the Government’s decision to give duty-free access to Australia for goods
originating in LDCs and East Timor.
Duty-free entry for goods originating
in LDCs and East Timor will commence on
1 July 2003, subject to goods from
these countries meeting the requirements of the rules of origin provided in
Customs Amendment Bill (No. 1) 2003.
LDCs and East Timor will continue to
be listed as Developing Countries and, should goods from these countries not
meet the rules of origin requirements for LDCs, these goods may still be
eligible for preferential tariff treatment applicable to Developing
Countries.
Formal talks between the Governments of Australia and Singapore to
establish a Free Trade Agreement between the two countries began on 15 November
2000. These negotiations concluded on 17 February 2003 with the signing of the
Singapore-Australia Free Trade Agreement.
SAFTA covers areas of interest
such as market access for service suppliers, transparent customs procedures and
the removal of tariffs imposed by each country against the other.
The
amendments contained in Customs Tariff Amendment Bill (No. 1) 2003 give effect
to Australia’s commitment to remove tariffs on goods of Singapore origin.
Duty-free entry for goods originating in Singapore will commence on the day on
which SAFTA enters into force and will be subject to the rules of origin
provided in Customs Amendment Bill (No. 1) 2003.
Singapore will continue
to be listed as a Developing Country and, should goods from Singapore not meet
the rules of origin requirements under SAFTA, these goods will continue to
receive the preferential tariff treatment that they now receive.
These amendments include:
(1) The listing of Palau as a
Developing Country rather than as a Place treated as a Developing Country (item
13 of Schedule 2 of the Bill – refer to Part 3,
Division
1);
(2) The inclusion of Papua New Guinea in the list of Forum Island
Countries (item 13 of Schedule 2 of the Bill – refer to Part 1);
and
(3) The introduction of two character International Standards
Organization (ISO) Country Codes throughout the Tariff (item 13 of Schedule 2 of
the Bill).
FINANCIAL IMPACT STATEMENT
The cost
to the Government, through decreased tariff collections, of the listing of East
Timor as a Developing Country is considered to be negligible.
The cost to
the Government of removing remaining tariffs from goods of Least Developed
Countries and East Timor is estimated to be a maximum of $2.5 million per annum
(based on revenue currently collected). Planned tariff reductions in 2005 mean
that the revenue foregone past that date would most likely be
smaller.
The Singapore-Australia Free Trade Agreement will reduce revenue
collections through decreased tariff collections. This is estimated to be $30
million in each of the financial years 2003-04 and 2004-05. However, as SAFTA
may not commence on the first of July 2003, the loss in 2003-04 may be a
proportion of this figure. In each of the financial years 2005-06 and 2006-07
the loss to revenue is estimated to be $35 million.
The remaining
amendments in this Bill are of an administrative nature and have no financial
impact.
REGULATION IMPACT STATEMENT
(RIS)
Least Developed Countries
Refer to the
Productivity Commission Report “Removing Tariffs on Goods Originating from
Least Developed Countries”, published in October
2002.
REGULATION IMPACT STATEMENT
(RIS)
Singapore-Australia Free Trade
Agreement
PROBLEM IDENTIFICATION
Australia and
Singapore have a well developed trading relationship, with Singapore
counting as both Australia's 7th largest
overall trading partner and 7th largest export market. The value of
our merchandise exports to Singapore amounted to A$4.9 billion (or 4.1 percent
of Australia's total exports) in the 2001 - 2002 financial year, while service
exports to Singapore for 2001 were worth almost A$2.2 billion to Australia. For
the same periods, Australia had a merchandise trade surplus with Singapore of
almost a billion dollars, and a small services trade deficit ($8
million).
Access for Australian goods exports to Singapore is very open,
with few restrictions, but the same cannot be said for services exports. The
nature of these restrictions varies from the absence of an enforceable and
transparent competition policy and practice to lack of recognition of Australian
educational qualifications. There are also restrictions on the operations of
Australian financial services exporters that impair their ability to take full
advantage of the Singaporean financial services market. The Singapore-Australia
Free Trade Agreement (SAFTA) will go some way to overcoming these restrictions,
and give Australian service providers a better opportunity to compete
successfully in the Singapore market.
While these market access issues
particular to Singapore were important considerations, the initiative to
negotiate a FTA with Singapore also reflected Australia's broader trade and
economic interests in the Asian region. Singapore shares Australia's outlook on
the value of trade liberalisation and expanding trade and investment links with
regional neighbours. Australia believes the substantive and comprehensive FTA
between the two countries will signal strong support for multilateral, regional
and bilateral initiatives, help create an open global and regional trading
environment and promote strength and stability in the region.
Singapore
has completed FTAs with New Zealand, Japan and the European Free Trade
Association, and in November 2002 reached agreement in substance on a FTA with
the United States. Singapore is also involved in ongoing FTA negotiations with
Mexico, Canada, and Korea, as well as the ASEAN/China FTA talks. While
Singapore's existing FTAs address the same kind of issues as SAFTA and conform
to the same basic model (i.e. chapters on trade in goods, trade in services
etc), SAFTA will be a more comprehensive and trade liberalising agreement. For
example, Singapore's agreement with Japan excludes agriculture, whereas SAFTA
has no exceptions on trade in goods. The details of the US-Singapore agreement
are not yet publicly available, but US Government press releases indicate that
it will be similar in structure and coverage to
SAFTA.
OBJECTIVES
The broad objectives of SAFTA for
Australia are to gain improvements in market access for Australian goods and
services exporters (particularly services), and promote closer economic
integration with the East Asian region. A FTA with Singapore should also
provide a stimulus for further liberalisation in the region, and set
WTO-consistent standards for any such
liberalisation.
OPTIONS
Australia can seek to address the
problems identified above (i.e. the barriers to trade it faces world-wide and,
in this particular case, in Singapore) through multilateral, regional and
bilateral trade negotiations.
The Australian government recognises that
the most effective mechanism through which to achieve comprehensive, global
trade reform is through multilateral negotiations. The successful, early
conclusion of the recently launched Doha Round of negotiations in the World
Trade Organization (WTO) is, therefore, the Australian government's highest
trade policy priority.
The Australian government remains committed to the
achievement of the APEC Bogor goals of free trade and investment in the region
by 2010 for industrialised economies and 2020 for developing
economies.
Australia has also pursued and continues to pursue its trade
liberalisation objectives through the negotiation of Free Trade Agreements
(FTAs). Prior to SAFTA, the only other FTA Australia has negotiated was
the Australia-New Zealand Closer Economic Relations Trade Agreement (CER),
concluded in 1983. Australia is also preparing to commence formal negotiations
on a FTA with the United States in February/March 2003, and has commenced
negotiations with Thailand on a bilateral FTA.
FTAs that are
comprehensive in scope and set high standards in terms of compliance with WTO
rules and developing new benchmarks, can complement the multilateral process,
creating incentives for other countries to participate in trade liberalisation
process. Decisions by the Australian government to negotiate FTAs are based on
assessments about the potential for the FTA to deliver greater benefits to the
negotiating parties than can be achieved in a similar timeframe through WTO
negotiations. The government considers that any proposed FTA must comply with
relevant WTO agreements, in particular Article XXIV of the GATT and Article V of
the GATS, which state that FTAs must cover substantially all trade.
Given
the size and value of the existing trade relationship, Singapore was a strong
candidate in East Asia for Australia's first bilateral Free Trade Agreement
since 1983. Singapore had the most developed economy and the strongest
regulatory framework in South East Asia, and was clearly willing and able to
move more quickly than other ASEAN partners. It also lacked the barriers
protecting sensitive sectors for trade in goods that would have made FTAs with
North Asian economies such as Japan and Korea difficult to initiate. Before
SAFTA negotiations were initiated, Singapore had already concluded a bilateral
FTA with New Zealand (August 2000), and was negotiating one with Japan. It also
launched FTA negotiations with the US in 2000. Apart from indicating
Singapore's willingness to pursue bilateral trade liberalisation agreements,
this very wide negotiating experience reflects Singapore's capacity to undertake
complex trade negotiations.
SAFTA negotiations began in March 2001,
following an announcement by Prime Minister Howard and Prime Minister Goh Chok
Tong of Singapore on 15 November 2000 that Australia and Singapore had agreed to
start negotiations on a FTA.
SAFTA's chapter headings give an indication
of the issues that were the focus of the negotiations. These include:
• Trade in Goods
- tariffs on all goods
have been eliminated
• Rules of
Origin
- negotiations focused on what percentage of value added of a
good would constitute origin, and whether origin would be calculated on the
basis of “accumulation” (see the section on Trade in Goods below for
more detail)
• Trade in
Services
- negative list (as opposed to positive list) approach
taken
- removal of discriminatory measures against Australian
professionals
- recognition of more Australian university law
schools
• Government
Procurement
- improved opportunities for Australian firms to the
Singapore GP market
• Competition Policy
- negotiations focussed on gaining agreement on principles covering
cartel activity, misuse of market power, mergers and acquisitions, and exclusive
dealing
• Investment
- focus was
ensuring FTA was consistent with Australia's existing international commitments
on investment in the OECD and other
forums
• E-commerce
- aim was to
establish cutting-edge commitments, including the mutual recognition of
electronic accreditation
procedures
• Intellectual
Property
- focus was on building bilateral cooperation mechanisms in
order to address industry concerns about intellectual property enforcement in
Singapore.
A major issue not covered in the negotiations was air
services. Separate negotiations for all "Open Skies" agreement between
Australia and Singapore were already underway before SAFTA negotiations
commenced. These "Open Skies" negotiations were kept separate from SAFTA so as
not to needlessly complicate the FTA talks.
IMPACT
ANALYSIS
This section analyses the economy-wide impacts of the
Singapore-Australia Free Trade Agreement. Firstly, the general macroeconomic
impacts are examined to the extent that they can be identified. Next the impact
on business is analysed in some detail. The impact on consumers is then
considered, before identifying the likely costs and benefits for government of
the agreement. Finally, the broader trade policy considerations of the
agreement are examined.
Macroeconomic Impacts
An
Access Economics study commissioned by DFAT into the costs and benefits of FTA
with Singapore[1] was unable to give
any quantitative estimates of the likely impact of such an agreement at the
macroeconomic level. As will be discussed in detail below, trade in goods
between Singapore and Australia is already substantially liberalised, and
therefore the impact on the Australian economy of removing the remaining
barriers to trade in goods is unlikely to be large. Access Economics expects
“the economy would benefit at the margin from lower input
costs”.[2]
The most
important impact of SAFTA for the Australian economy will result from
liberalisation of those areas where Australian firms still face restrictions,
namely the services sector. But due to the paucity of reliable trade data for
services, econometric estimates of the likely growth in Australian services
exports resulting from the FTA with Singapore would be unreliable.
Access
Economics consequently adopted a survey approach to get estimates of the impact
of the FTA on particular services sectors (e.g. financial services and
education). These estimates give some insight into the possible gains for some
sectors, but they are incomplete (telecommunications firms, for example, were
unwilling to give any estimates, citing commercial confidentiality
considerations), and therefore cannot be used to get an estimate of the
aggregate macroeconomic impact. The researchers also had methodological
reservations about such an
approach[3].
Nevertheless, the
study indicated that the gains from SAFTA are likely to be substantial for some
service sectors and firms (see the Trade in Services section below),
although they are not likely to have a heavy impact on macroeconomic aggregates
such as GDP, employment or net exports. This is because Singapore, though
wealthy, is a relatively small economy (with a population of just over 4
million), and the bilateral trade relationship is already well developed. Thus
any dynamic gains from increased economies of scale and other advantages
resulting from improved integration of the Australian and Singaporean economies
are unlikely to be large. Some firms surveyed by Access Economics (particularly
in high technology areas) saw benefits coming from the raising of Australia's
profile in Singapore that SAFTA will entail. This will encourage a sharper
focus on the Australian economy by Singaporean investors - however, no
quantitative estimates of the impact on aggregate investment were
made.
SAFTA's Impact on Business
1. Trade in
Goods
The Singapore-Australia Free Trade Agreement will see
Australia and Singapore eliminate tariffs on all goods imported from the other
country. However, trade in goods between the two countries is already largely
liberalised, and therefore the impact on Australian industry of removing the
remaining barriers will not be substantial. Following the implementation of
SAFTA, Australian beer and stout producers will have duty free access to
Singapore, but all other Australian products already enjoy such
access.
As Table 1 indicates, a large proportion of Australia's imports
from Singapore – 86 per cent - already enter Australia duty free and
most of the remainder enter at relatively low rates (only one percent of
imports enter at duties higher than 10 percent). Therefore the adjustment
effects on Australian industry from removing the remaining tariffs are likely to
be small.
As Access Economics found in its survey of Australian
‘business’ attitudes toward a FTA with Singapore, there could be
costs to some individual firms from eliminating tariffs on imports from
Singapore, but overall the economy would benefit at the margin from lower input
costs[4].
The basic approach to
the Rules of Origin (ROO) for determining eligibility for duty free entry is the
50 percent local content formula adopted from the Australia-New Zealand Closer
Economic Relations Trade Agreement. The exceptions to this general rule are
goods subject to an Australian Tariff Concession Order (Tariff Concession Orders
are available for products not made in Australia), and a list of approximately
100 electrical and electronic items. These goods will be subject to a 30 per
cent local content rule.
Australia also recognised the special
circumstances of Singapore manufacturing, where offshore processing is a
feature, by agreeing to the concept of accumulation. The application of
accumulation means that Singapore/Australian content in intermediate goods sent
offshore for processing and returned before export, will be allowed in
determining origin. Value added during offshore processing will not be allowed.
The textiles, clothing and footwear and passenger motor vehicle sectors were
excluded from the accumulation rule as it was considered inappropriate to offer
ROO concessions to Singapore on these highly protected sectors.
The
concessions on ROOs were granted to Singapore in return for concessions from
Singapore in other parts of the Agreement. Australian industry was consulted on
this matter and supported the final ROO offer.
Australian industry will
benefit to the extent that the FTA provides opportunities for Australian
industry to gain access to duty free industrial inputs. By the same token,
there could be increased competition for Australian industry from duty free
products from Singapore although this is not expected to be significant.
|
Table 1: Imports from Singapore*,
2001-2002
|
||||
|
Entry Type
|
Duty Rate
|
Trade value
$m
|
% of total
trade
|
Duty
$m |
|
|
|
|
|
|
|
MFN#, preferential
♦or concessional duty
free
|
0%
|
3,362.55
|
86%
|
0
|
|
TCOφ (industrial
goods)
|
3%
|
175.50
|
4%
|
5.27
|
|
MFN or preferential
|
≥4%
|
345.99
|
9%
|
18.45
|
|
Other
|
Variable
|
30.15
|
1%
|
0.79
|
Total |
|
3,914.19
|
100%
|
24.50
|
*Excludes anti-dumping duties and excise, where payable:
these amounted to 1.35 % of the value of total imports from Singapore, and ASFTA
will not affect these
duties.
#Most
Favoured Nation.
♦Entry
made under the Australian System of Tariff Preferences, applied to developing
countries.
φTariff
Concession Order.
The agreement will also affect trade in goods in
less direct ways. Costs of trading goods between Singapore and Australia should
be reduced by promotion of paperless trading and improvement in visa
arrangements for both short and long term business visitors and residents. The
provisions on mandatory technical regulations establish a framework for
determining equivalence of Australian and Singapore standards and have the
potential to reduce the costs of complying with each other's regime. This will
build on the existing Mutual Recognition Agreement with Singapore that provides
for recognition of test results. The main potential benefit to Australia from
these provisions of the FTA will be in the area of facilitating compliance with
Singapore’s food standards. For Singapore, the main potential benefit
will be facilitating entry of cut flowers into Australia.
These cost
reductions will allow Australian exporters to become more competitive in the
Singapore market. Similarly, they may make imports from Singapore cheaper,
creating increased competition for Australian producers of like goods, but also
allowing more efficient production for Australian manufacturing firms using such
goods as inputs.
2. Trade in Services and Investment
The
most significant gains from SAFTA for Australian service providers are in the
financial and legal services sectors along with outcomes for education,
environmental services and professional services such as architects and
engineers. Some of these gains are listed in the box below. Moreover, the
agreement binds Singapore's current - in many cases, recently liberalised -
regulatory regime in a number of important service sectors, and thus Singapore
will not be able to introduce more restrictive measures in these areas, at least
with respect to Australian service suppliers.
These gains were achieved
much faster than would have been possible under the WTO. Furthermore, the
framework of the agreement ensures that commitments are more far reaching than
those negotiated under the General Agreement on Trade in Services (GATS). For
example, whereas the GATS follows a positive list approach and does not cover
all sectors in Singapore, SAFTA uses a negative list under which market access
and national treatment obligations apply to all services trade except for
measures or sectors specified in annexed lists of reservations. This approach
has a liberalising and transparent thrust in that all exceptions must be
specifically reserved or they are deemed to be liberalised.
|
Gains for Australia's Services Providers
|
|
§ Restrictions on the number of
wholesale banking licences to be eased over time
|
|
|
|
§ Banks
to be allowed to transfer information, including electronic data, to
Australia
|
|
|
|
§ Conditions eased on establishment of joint
ventures involving Australian law firms
|
|
|
|
§ Number of Australian law degrees
recognised in Singapore doubled from 4 to 8
|
|
|
|
§ Removal/easing of residency
requirements for Australian professionals
|
|
|
|
§ Mutual
recognition agreements (MRAs) between architects and engineers
under way
|
|
|
|
§ National
treatment and market access commitments for Australian education
providers
|
|
|
|
§ Singapore government overseas
scholarships will be tenable at Australian universities
|
|
|
|
§ The
environmental services sector will be largely open to Australian
businesses
|
|
|
|
§ Open
market access and national treatment for a range of other service
sectors
|
|
|
|
§ Spouses of business people can work
as managers, specialists, office administrators
|
SAFTA is also GATS-plus in relation to domestic regulation. Like GATS,
SAFTA respects the right of governments to adopt domestic regulation affecting
trade in services, but contains enhanced provisions on transparency and the
processes for adopting such regulations reflecting proposals, which Australia
has put forward in the WTO services negotiations.
Given these outcomes
and the related benefits negotiated on investment - including better protection
against expropriation and greater transparency regarding investment restrictions
applying to Singapore's government-linked corporations (GLCs) - SAFTA creates a
more liberal transparent and predictable environment for Australian service
exporters and investors in the Singapore market. All this effectively reduces
the risk of doing business in and with Singapore, and should lead to increased
services exports and investment by Australian providers in one of Asia's
most advanced economies.
As noted above, lack of reliable trade data for
services makes quantitative estimates of the likely growth in Australian service
exports to Singapore resulting from the agreement difficult to predict.
Nevertheless, in its survey of Australian business' attitudes to a FTA with
Singapore, Access Economics was able to obtain some quantitative estimates of
the possible increases in exports for two service sectors. These are around $50
million in additional education services exports per year (compared with $246
million in 1999/00), and up to $60 million for financial services (from a base
of $40 million in 2000/01). These figures were reported in August 2001, well
before the finalisation of SAFTA, and based on estimates of a few representative
firms in each sector without a clear picture of what the agreement would
actually deliver. The estimates nevertheless indicate that service firms
believe a more liberal and predictable business environment in Singapore will
deliver them significant benefits.
It could be argued that in as much as
SAFTA will provide similar regulatory transparency and predictability for
Singaporean service exporters to Australia, it is possible more Singaporean
service providers will be encouraged to enter the Australian market, and
Australian service suppliers will face increased competition. However,
regulation of the Australian services sector was already highly transparent and
predictable by international standards before the SAFTA negotiations, and it is
therefore unlikely that the implementation of SAFTA will result in a major
increase of Singaporean service providers into any particular sector of the
Australian services market. It is clear that most of Singapore's gains from the
FTA will come from Australia's elimination of tariffs, not from increased
services exports.
In any case, if there are any efficiency gains
resulting from increased competition in the services sector these are likely to
be passed on in the form of lower prices to Australian businesses consuming the
services effected, and thus the overall effect should be beneficial
economy-wide.
3. Telecommunications, Government Procurement and Other
Areas
Australian telecommunications firms will benefit from SAFTA in
that the agreement provides greater transparency of decision making, rights of
appeal, more even handed treatment and effective enforcement by the regulator in
Singapore, non-discriminatory pricing for interconnection and consultation with
industry in development of standards and policy. These provisions address
specific concerns raised by Australian telecommunication providers.
SAFTA
ensures Australian firms will also have more secure access to Singapore's
government procurement market. Although Australia is not a party to the WTO
Government Procurement Agreement (GPA), Singapore will match for Australia its
commitments under this agreement, guaranteeing non-discriminatory national
treatment for Australian firms in tendering for government business with 47
Singapore ministries, agencies and statutory authorities. SAFTA guarantees this
access without the limits on thresholds and product coverage that are included
in its GPA commitments. The impact at SAFTA's measures relating to government
procurement on government, as opposed to business, can be found in the sections
on the Commonwealth Government and State and Territory Governments
below.
SAFTA also includes a framework to strengthen protection of
intellectual property rights in government procurement.
SAFTA includes
important outcomes on competition policy, which will encourage strengthening and
development of the competition regime in Singapore, and will allow Australia to
address specific anti-competitive practices of concern. Furthermore,
competitive neutrality provisions will improve the conditions for Australian
companies seeking to penetrate and expand in the Singapore market in
circumstances where a number of government-linked corporation incumbents have
dominant market power. These measures will improve conditions for Australian
firms doing business with Singapore.
SAFTA's Impact on
Consumers
This is likely to be wholly positive. With the
increase in trade of goods between Singapore and Australia, consumers will gain
access to a wider range of products, probably at lower prices. Australian
consumers are likely to benefit directly from cheaper imports of household
electrical and electronic appliances and certain processed foods, for example.
Consumers may also benefit indirectly if cost savings to industry from lower
input costs (e.g. for chemicals and machinery) are passed on in the form of
reduced prices for consumer goods.
SAFTA's Impact on
Government
1. Commonwealth Government
The
Singapore-Australia Free Trade Agreement will have two major impacts on the
Commonwealth Government. These are related to (i) revenue collection and (ii)
reduced regulatory flexibility in some areas.
(i) Table 1 above shows
tariff duty collected from imports from Singapore in 2001-2002 of $24.5 million.
On this basis, Treasury has estimated the financial impact of SAFTA on the
Commonwealth Government. Assuming that SAFTA would enter into force near the
beginning of the 2003-2004 financial year, and that imports from Singapore would
grow steadily overtime in line with the domestic economy, Treasury produced the
forecasts set out below in Table 2 of the FTA's possible financial impact for
the Commonwealth Government.
|
Table 2: Financial Impact
|
|
|
|
Revenue Impact on Impact on
|
|
fiscal balance underlying cash balance
|
|
$m $m $m
|
|
|
|
2002-03 0 0 0
|
|
2003-04 -30 -30 -30
|
|
2004-05 -30 -30 -30
|
|
2005-06 -35 -35 -35
|
|
2006-07 -35 -35 -35
|
It should be noted that the potential economic growth that SAFTA may
generate and any additional taxation revenue resulting from that were not
considered in these estimates. Furthermore, it is not possible at this stage to
identify to what extent imports from Singapore will not meet the 50 per cent
rule of origin (30 percent for a small number of products) in order to qualify
for tariff-free entry. If a significant proportion of imports from Singapore
does not meet the relevant rules of origin, and hence continue to be subject to
tariff duties, then the estimate in Table 2 of SAFTA's impact on Commonwealth
Government revenue may be overstated. It should also be noted that these
estimates did not take into account possible additional losses in tariff revenue
that could arise if imports from Singapore displace imports from other
countries. The Agreement's true impact on the Federal Government's tariff
revenue will become clearer after SAFTA comes into force and mechanisms to
administer rules of origin are established. It should also be noted that, at
this stage, Australian Customs cannot predict what resources will need to be
devoted to verifying origin, and it is therefore not possible to put a figure on
these administrative costs.
(ii) Although Australia's commitments on
services (including telecommunications) and investment will not require any
changes to existing measures in these areas, SAFTA does include binding
commitments that go beyond our existing WTO obligations and limit the
Government's flexibility in adopting new regulations in some areas in the
future. For example, SAFTA preserves our screening process for foreign
investment (through the Foreign Investment Review Board), but binds the current
thresholds for triggering prior approval of investment proposals. This is
similar to commitments Australia has already made in the OECD. SAFTA also binds
the current limits on foreign ownership of Telstra, Qantas, and other Australian
international airlines. Hence, after entry into force of the agreement the
Government will not be able to revise upward these thresholds and limits without
adequately compensating Singapore as set out in the terms of the Agreement.
Such compensation would normally be made by undertaking, with Singapore's
consent, a new additional commitment under the agreement, possibly in an
entirely different sector.
The Government Procurement Chapter provides
guarantees of non-discrimination against Singapore firms bidding on Commonwealth
contracts. Various types of procurement are excluded from the agreement such as
overseas development assistance and exceptions exist, inter alia, for defence
equipment, environmental measures, and for the use of government procurement for
industry development purposes including measures to assist small and medium
enterprises. In essence, the Agreement does not require any change to the
Commonwealth Procurement Guidelines as these Guidelines are based on the
value-for-money principle of which non-discrimination is an implicit part.
Nevertheless, procurement officials will need to be conscious that the Agreement
now provides a legal requirement (that did not exist before) not to discriminate
against Singaporean firms. Whereas, under Financial Management and
Accountability Regulation, agencies have some degree of discretion to set aside
the guidelines when executing a procurement, they will not be able to set aside
the Commonwealth's obligations under the GP chapter.
2. State and
Territory Governments
SAFTA obligations in services and investment
will also apply to State and Territory government measures, but gives States and
Territories until the first review of the agreement (one year after entry into
force) to complete their reservations lists. This is similar to that approach
taken by the signatories to the North American Free Trade Agreement (NAFTA),
where the Parties were in principle given two years to submit their reservations
for states and provinces (although in practice they have not yet done
so).
It is not possible at this stage to identify what State and
Territory Governments will reserve, but Singapore would expect - and WTO rules
would require - that a relatively high percentage of trade-restrictive trade
measures would be bound at existing levels. There will be little scope for
Singapore to secure the removal of barriers that the States arid Territories are
reluctant to lower, given that Singapore has already signed on to the rest of
the agreement. However, it was also clear from the course of the negotiations
that Singapore's concerns regarding services sector regulation were at the
Commonwealth level (in telecommunications regulations, for example), rather than
at the State and Territory level.
SAFTA obligations on Government
Procurement do not apply to procurement by State and Territory Governments.
However, the Commonwealth has undertaken to encourage the State and Territory
Governments to consider joining the Agreement by the time of its first
review.
Strategic Policy Considerations
SAFTA
represents a valuable instrument with which to pursue Australia's goal of
engagement and closer economic integration with the East Asian region. Together
with the ongoing negotiations toward an Australia-Thailand FTA, SAFTA provides
impetus to Australia’s continuing efforts to build a closer economic
partnership with ASEAN. This in turn will be important in linking Australia to
developments that result from strengthened cooperation between ASEAN and
Australia's key trading partners in North Asia - Japan, China and South
Korea.
CONSULTATIONS
The Trade Minister, Mr Vaile, and DFAT
officers undertook extensive public consultations in the lead up to the
commencement of discussions on the FTA with Singapore and throughout the
subsequent negotiations. These included regular discussion with business and
industry, as well as State and Territory Governments and interested
non-government organisations. Consultations on SAFTA were frequently part of
forums also covering broader trade policy such as the National Trade
Consultations, and the Trade Policy Advisory Council.
Consultations with
Australian business and industry representatives have taken place in State and
Territory capitals, Canberra and Singapore. The Trade Minister held a
roundtable discussion with industry leaders at Parliament House on 8 February
2001. DFAT subsequently consulted industry peak organisations such as the
Australian Chamber of Commerce and Industry, a wide range of individual firms,
and members of the Singapore Australia Business Council.
DFAT negotiators
visited State and Territory Governments to speak to Premier and Cabinet and
Departments of Commerce, Industry and State Development (and equivalents) in
capital cities. There were regular briefings of States and Territories through
the National Trade Consultations process. There were also regular consultations
on commitments that required State and Territory approval, including roundtables
with all States and Territories on 5 September 2001, 26 July 2002 (in Melbourne)
and 9 October 2002. Consultations are continuing with State and Territory
agencies with a view to finalising their reservations lists. SAFTA was also
discussed when DFAT consulted with the Australian Fair Trade and Investment
Network - an umbrella for a broad range of NGOs interested in Australia's trade
policy - on
22 February 2002.
The stakeholders consulted were broadly
supportive of a truly liberalising and comprehensive agreement with Singapore.
Australian manufacturers, for example, generally supported the removal of the
remaining tariff barriers to Singapore imports because of the opportunities this
would present to reduce input costs. There was a degree of concern from
particular sectors, e.g. the plastics and chemicals industry, about increased
competition from duty free imports from Singapore. However, industry as a whole
took the view that removal of tariffs was acceptable provided that the agreement
included rules of origin that ensured only goods genuinely originating from
Singapore would benefit from preferential arrangements. The ROO provisions in
the Agreement were the subject of last minute negotiations and relevant sectors
of Australian industry were consulted closely on the offers that were made to
Singapore.
IMPLEMENTATION AND REVIEW
Once the finalised
SAFTA text completes the current process of Cabinet approval, it can be signed
by representatives of the Australian and Singaporean governments. SAFTA would
then be tabled in Parliament for examination by the Joint Standing Committee on
Treaties.
Once domestic processes are completed, SAFTA would enter into
force through an exchange of diplomatic notes with Singapore. Tabling in
Parliament at the beginning of the first sitting session in 2003 should enable
entry into force by mid-2003. A number of industry organisations have expressed
an interest in having SAFTA enter into force at an early date.
The first
review of SAFTA will take place one year after entry into force. The States and
Territories have been given until this time to complete their reservations
lists. After the first review, unreserved State and Territory measures and
sectors will be subject to the national treatment and market access provisions
of SAFTA.
It is likely that the Trade Ministers of Australia and
Singapore, as well as trade officials from both countries, will be
involved in the first review. The review will consider the
implementation
and outcome of SAFTA to date, and any difficulties that have arisen. The
Australian delegation will take into account the views of stakeholders such as
industry and relevant government agencies.
Subsequent reviews of SAFTA
will take place biennially, or as agreed between the two
Governments.
CUSTOMS TARIFF AMENDMENT BILL (NO. 1)
2003
Clause 1 - Short Title - Customs Tariff Amendment Act (No. 1)
2003.
Clause 2 - Commencement
Item 1 of the table in this
clause specifies that sections 1 to 3 and anything in the Act not covered
elsewhere in the table will commence on the day on which the Act receives the
Royal Assent.
Items 2 to 4 of the table in this clause specify the date
of commencement of each of the three Schedules contained in the
Bill.
Item 2 of the table provides that Schedule 1 will commence on 1
April 2003. Schedule 1 includes East Timor as a Developing Country.
Item
3 of the table provides that Schedule 2 will commence on 1 July 2003. Schedule
2 defines Least Developed Countries (LDCs) and allows for the duty-free entry of
goods from LDCs.
Item 4 of the table provides that Schedule 3 will
commence on the entry into force of the Singapore-Australia Free Trade
Agreement. Schedule 3 provides for a preferential rate of duty for goods that
are the produce or manufacture of Singapore.
Clause 3 - Schedule(s)
This clause is the formal enabling provision for the Schedules to the
Bill, providing that each Act specified in the Schedule is amended in accordance
with the applicable items of that Schedule. The clause also provides that other
items of the Schedules have effect according to their own
terms.
SUMMARY OF AMENDMENTS
Customs Tariff Act 1995
Item 1 amends the Tariff to include East Timor in the list of Developing
Countries in Division 1 of Part 3 of Schedule 1. Part 3 of Schedule 1 lists
those countries that are, and places that are treated as Developing Countries
for the purposes of the Australian System of Tariff Preferences.
From 1
April 2003, goods of East Timorese origin will be given a preference of five
percentage points below the general tariff rate, where
available.
Schedule 2 - Least Developed
Countries
Customs Tariff Act 1995
The
amendments contained in Schedule 2 of this Bill give effect to the
Government’s decision to give duty-free access to Australia for goods
originating in LDCs. These amendments are proposed to take effect from 1 July
2003.
Item 1 amends the definition of a Developing Country in subsection 3(1)
of the Tariff by including references to new paragraphs 12(d) and 12(e) of the
Tariff. These new paragraphs refer to the list of Developing Countries in
Schedule 1 of the Tariff.
Item 2 inserts a new definition of LDCs in subsection 3(1) of the Tariff.
The definition provides that a LDC means a country that is, or place that is
treated as a LDC under paragraphs 12(b) and 12(c) of the Tariff. These
paragraphs refer to the list of LDCs in Part 2 of Schedule 1 to the
Tariff.
Item 3 amends the definition of Preference Country in subsection 3(1) of
the Tariff. This definition lists those countries and places that are eligible
for preferential tariff treatment. The amendment includes LDCs in this
list.
Section 12 of the Tariff formally specifies classes (that is groupings)
of countries and places to which special rates of duty apply. The present
provision includes the existing Developing Countries.
Item 4 amends
section 12 to include the new class of LDCs in paragraphs (b) and (c). The
existing references to Developing Countries now appear in paragraphs (d) and
(e).
Item 13 of this Bill restructures Schedule 1 of the Tariff.
Schedule 1 contains lists of countries and places to which preferential rates of
duty apply. Under this restructure, LDCs are listed in Part 2 of Schedule 1 and
Developing Countries in Parts 3 and 4.
Item 4 also inserts new references
in section 12 to reflect the restructure of Schedule 1.
Subsection 14(1) of the Tariff applies customs duties to particular
countries or places or classes of countries or places by reference to
abbreviations for these countries and classes of countries.
Item 5
inserts a new paragraph (d) in section 14(1) to specify that the abbreviation
for the class of Least Developed Countries is “LDC”. The remaining
paragraphs are re-lettered as (e) to (i).
Presently, the Australian
standard abbreviations “PNG” and “CAN” are used in
section 12 for Papua New Guinea and Canada respectively. To be consistent
with the decision to use International Standards Organization (ISO) Codes
throughout the Tariff item 5 also replaces these abbreviations with the ISO
abbreviations “PG” and “CA”.
Subsection 14(2) of the Tariff provides the means to exempt certain
countries from the duty rate applicable to a class of countries (of which that
particular country is a member). This permits duty rates for individual
countries to be specified, when required.
Item 6 amends subsection 14(2)
by inserting the abbreviation “LDC” as one of the classes of
countries to which this section applies.
Section 16 of the Tariff sets out how customs duty is calculated, in
particular for goods the produce or manufacture of particular countries and
classes of countries for preference purposes. For example, paragraph 16(b)
specifies that the duty rate for goods that are of New Zealand origin is Free
(in accordance with the preference scheme for New Zealand) unless a duty rate is
specified in the Tariff for goods from New Zealand.
Item 7 amends
subparagraph 16(f)(ii) to replace “Developing Countries specified in Part
2” with “Developing Countries specified in Part
4”.
Item 8 similarly amends paragraph 16(g) to replace
“Developing Countries specified in Part 2” with “Developing
Countries specified in Part 4”.
Item 13 of this Bill restructures
Schedule 1 of the Tariff. Schedule 1 contains lists of countries and places to
which preferential rates of duty apply. Prior to this amendment, Developing
Countries subject to DCS rates of duty were listed in Part 2 of Schedule 1.
After the amendment to Schedule 1, these countries will be listed in Part 4 of
that Schedule.
The amendments to subparagraphs 16(f)(ii) and 16(g) made
by this item reflect this change.
Item 9 inserts a new paragraph 16(i) that sets out how customs duty is
calculated for goods from LDCs. This paragraph provides that duty for goods,
the produce or manufacture of a LDC is Free unless a duty rate is specified in
the Tariff for those goods. The new paragraph contains a reference to sections
153H and 153NA of the Customs Act 1901, that provides rules for
determining whether goods are the produce or manufacture of LDCs.
Should
goods not meet the rules of origin requirements for LDCs, these goods will
continue to receive the preferential tariff treatment that they now receive
under the ASTP.
Schedule 4 of the Tariff lists approximately 100 items that prescribe
circumstances where concessional duty is provided for particular
goods.
Section 18(2) of the Tariff sets out how customs duty is
calculated for these items, in particular for goods the produce or manufacture
of particular countries and classes of countries for preference purposes. For
example, paragraph 18(2)(b) specifies that the duty rate for goods that are of
New Zealand origin is Free (in accordance with the preference scheme for New
Zealand) unless a duty rate is specified in the Tariff for goods from New
Zealand.
Item 10 amends subparagraph 18(2)(f)(ii) to replace
“Developing Countries specified in Part 2” with “Developing
Countries specified in Part 4”.
Item 11 similarly amends paragraph
18(2)(g) to replace “Developing Countries specified in Part 2” with
“Developing Countries specified in Part 4”.
Item 13 of this
Bill restructures Schedule 1 of the Tariff. Schedule 1 contains lists of
countries and places to which preferential rates of duty apply. Prior to this
amendment, Developing Countries subject to DCS rates of duty were listed in Part
2 of Schedule 1. After the amendment to Schedule 1, these countries will be
listed in Part 4 of that Schedule.
The amendments to subparagraphs
18(2)(f)(ii) and 18(2)(g) reflect this change.
Item 12 inserts a new paragraph 18(2)(i) that sets out how customs duty
is calculated for goods from LDCs that are subject to a concessional item in
Schedule 4 to the Tariff. This paragraph provides that the rate of duty for
goods, the produce or manufacture of a LDC is Free unless a duty rate is
specified in the Tariff for those goods. The new paragraph contains a reference
to sections 153H and 153NA of the Customs Act 1901, that provides rules
for determining whether goods are the produce or manufacture of
LDCs.
Should goods not meet the rules of origin requirements for LDCs,
these goods will continue to receive the preferential tariff treatment that they
now receive under the ASTP.
Schedule 1 to the Tariff contains lists of countries and places to which
preferential rates of duty apply under the ASTP.
Item 13 amends this
Schedule to replace Australian standard abbreviations for countries with ISO
Codes and to include a listing of LDCs.
Presently, the Australian
standard three or four letter abbreviations for countries are used throughout
the Tariff, including Schedule 1. For example, “RKOR” and
“MLAY” are the abbreviations used for the Republic of Korea and
Malaysia, respectively. These codes are not compatible with ISO Codes. With
the redevelopment of operational Information Technology systems in the
Australian Customs Service, Customs will apply a consistent standard across all
its computer systems. The two character codes meet ISO Standards and are the
accepted standard for Country Codes for use by the World Customs
Organization.
Item 13 replaces all current three and four alpha
references to countries and places with ISO two alpha references.
Part 1
of Schedule 1 lists those countries that are Forum Island Countries.
Item
13 inserts Papua New Guinea in the list of Forum Island Countries. While Papua
New Guinea is a Forum Island Country, this has not been formally reflected in
the Tariff. The treatment of imports from Papua New Guinea will not be affected
by this change.
Item 13 also lists the 49 United Nations defined LDCs in
Division 1 of Part 2 of Schedule 1. Division 2 of Part 2 also includes East
Timor. Goods from these countries that satisfy the rules of origin that apply
to LDCs are entitled to a free rate of customs duty.
In addition to the
newly defined LDCs, Developing Countries are divided into two groups, the less
advanced Developing Countries and the more advanced Developing Countries. The
less advanced Developing Countries and Places are listed in Divisions 1 and 2 of
Part 3. These countries and places receive a margin of tariff preference of 5%,
where available, compared to the general rate of duty.
The 49 United
Nations defined LDCs and East Timor were previously listed as Developing
Countries in Part 3 of Schedule 1. All these countries continue to be listed as
Developing Countries. This ensures that, should goods from these countries not
meet the rules of origin requirements for LDCs, these goods will continue to
receive the preferential tariff treatment that they now receive under the ASTP
as Developing Countries.
In Part 3 of Schedule 1, Palau has been removed
from the list of Places Treated as Developing Countries – Division 2
– and included in the list of Developing Countries – Division 1.
This amendment will not affect the treatment of goods from Palau but reflects
Palau’s status as an independent state.
More advanced Developing
Countries and Places, previously listed in Part 2 of Schedule 1, are now listed
in Divisions 1 and 2 of Part 4, respectively. While these countries continue to
be treated as Developing Countries for the purposes of the ASTP, they have in
many cases lost the margin of preference of five percentage points given to less
advanced developing countries. As a consequence, duty rates for goods of these
countries is the same as the general rate and/or the margin of preference is
less than five percentage points.
These three items amend Schedule 3 of the Tariff by replacing the
Australian Standard abbreviations “PNG”, “CAN” and
“MLAY” for Papua New Guinea, Canada and Malaysia with two letter ISO
Codes, “PG”, “CA” and “MY”,
respectively.
The Tariff imposes customs duties on certain alcohol, tobacco and
petroleum products that are equivalent to the excise duty imposed, under the
Excise Tariff Act 1921, on the same goods when domestically produced.
Such duties will continue to apply to those goods when imported from LDCs. As
section 16 of the Tariff provides that duty rates for goods from LDCs are free
unless otherwise specified, it is necessary to specify a rate of duty for the
above alcohol, tobacco and petroleum products when imported from
LDCs.
Items 17 to 34 together list those tariff subheadings that apply to
the above alcohol, tobacco and petroleum products. These items amend the
existing duty rate by adding an extra line that specifies the appropriate rate
for LDCs.
Item 35 amends Schedule 4 of the Tariff by replacing the Australian
Standard abbreviation “CAN” for Canada with the two letter ISO Code
“CA”.
Schedule 4 of the Tariff lists approximately 100 items that prescribe
circumstances where concessional duty is provided for particular goods. In most
cases, the concessional rate of duty for such goods is Free. However, in some
circumstances, the duty payable involves a calculation or reference to rates of
duty set out in Schedule 3 of the Tariff.
For example, item 34 in
Schedule 4 applies to goods that are imported in containers where the containers
are to be exported. In this case, the containers are free of customs duty but
the contents are subject to duty as if they were imported separately. As
subsection 18(2) of the Tariff provides that duty rates for goods from LDCs,
subject to a concessional item in Schedule 4, are Free unless otherwise
specified, it is necessary to specify a rate of duty for goods imported from
LDCs in these circumstances.
Items 36 to 41 and 43 to 44 amend the
existing duty rates for the relevant Schedule 4 items (17A, 20A, 20B, 34, 41E,
44, 61 and 70) by adding a reference to LDC in the duty rate for those items.
This mirrors similar treatment in Schedule 4 for other countries, such as New
Zealand, that are eligible for preferential duty rates.
Item 42 inserts a duty rate for LDCs for item 50(1)(b) in Schedule 4 to
the Tariff. Item 50(1)(b) applies to goods to which the Product Stewardship Oil
Levy applies and that are also subject to a Tariff Concession Order. The
appropriate duty rate is specified for LDCs for such
goods.
Schedule 3 - Singapore-Australia Free Trade
Agreement
Customs Tariff Act 1995
The
amendments contained in Schedule 3 of this Bill give effect to Australia’s
commitment to remove tariffs on goods of Singapore origin, as required under
SAFTA. These amendments are proposed to take effect from the commencement of
SAFTA.
Item 1 amends the definition of Developing Country in subsection 3(1) of
the Tariff by deleting the references to Hong Kong, Republic of Korea, Singapore
and Taiwan Province (Taiwan) in paragraph (c).
These countries, however,
will continue to be Developing Countries as a result of the amendments to
section 12 of the Tariff contained in item 3 below.
Item 2 amends the definition of Preference Country in subsection 3(1) of
the Tariff to include Singapore. This definition lists those countries and
classes of countries that are eligible for preferential tariff
treatment.
Section 12 of the Tariff formally defines classes (that is groupings) of
countries and places to which special rates of duty apply.
Item 3 amends
paragraphs (d) and (e) of this section to include a reference to countries and
places in Part 5 of Schedule 1.
Part 5 of Schedule 1 is created by item
13 below and lists Hong Kong, Republic of Korea, Singapore and Taiwan as a
Developing Country or a place treated as a Developing Country.
These
amendments ensure that Hong Kong, Republic of Korea, Singapore and Taiwan
continue to be listed as Developing Countries and will continue to receive the
preferential tariff treatment that they now receive.
Section 13 of the Tariff provides that goods are the produce or
manufacture of a country or place for the purposes of the Tariff only if they
are the produce or manufacture of that country or place under Division 1A of
Part VIII of the Customs Act 1901 (the Customs Act).
Item 4 amends
section 13 by inserting a reference to new Division 1B of Part VIII of the
Customs Act. Division 1B of Part VIII of the Customs Act sets out the rules
for determining whether goods are the produce or manufacture of
Singapore.
Items 5 and 6 Subsection 14(1)
Subsection 14(1) of
the Tariff applies customs duties to goods from particular countries or places
or classes of countries or places by reference to abbreviations for those
countries and classes of countries.
Item 5 amends paragraph (g) of
subsection 14(1) by deleting the references to Hong Kong, Republic of Korea,
Singapore and Taiwan. This is replaced with a reference to countries and places
in Part 5 of Schedule 1.
Part 5 of Schedule 1 is inserted by item 13
below and specifies Hong Kong, Republic of Korea, Singapore and Taiwan as a
Developing Country or a place treated as a Developing Country.
Item 6
adds a new paragraph (j) to section 14 to add Singapore and its abbreviation
“SG” to the list of countries defined for the purposes of imposing
duty under the Customs Tariff.
Section 16 of the Tariff sets out how customs duty is calculated, in
particular for goods the produce or manufacture of particular countries and
classes of countries for preference purposes. For example, paragraph 16(b)
specifies that the duty rate for goods that are of New Zealand origin is Free
(in accordance with the preference scheme for New Zealand) unless a duty rate is
specified in the Tariff for goods from New Zealand.
Paragraph 16(f)
currently sets out the calculation of duty for Hong Kong, Republic of Korea,
Singapore and Taiwan.
Items 7 and 8 amend paragraph 16(f) by deleting the
references to Hong Kong, Republic of Korea, Singapore and Taiwan. These are
replaced with a reference to countries and places in Part 5 of Schedule
1.
Part 5 of Schedule 1 is inserted by item 13 and specifies Hong Kong,
Republic of Korea, Singapore and Taiwan as a Developing Country or a place
treated as a Developing Country.
Item 9 inserts a new paragraph 16(j) that sets out how customs duty is
calculated for goods from Singapore. This paragraph provides that duty for
goods, the produce or manufacture of Singapore, is Free unless a duty rate is
specified in the Tariff for those goods. The new paragraph contains a reference
to Division 1B of Part VIII of the Customs Act (to be inserted by the Customs
Amendment Bill (No.1) 2003), that provides rules for determining whether goods
are the produce or manufacture of Singapore.
Singapore will continue to
be listed as a Developing Country and, should goods from Singapore not meet the
rules of origin requirements under SAFTA, these goods will continue to receive
the preferential tariff treatment that they now receive.
Schedule 4 to the Tariff lists approximately 100 items that prescribe
circumstances where concessional duty is provided for particular goods.
Subsection 18(2) of the Tariff sets out how customs duty is calculated for those
goods to which a concessional item applies. The provisions of subsection 18(2)
mirror those of section 16.
Paragraph 18(2)(f) sets out the calculation
of duty for Hong Kong, Republic of Korea, Singapore and Taiwan.
Items
10 and 11 amend paragraph 18(2)(f) by deleting the references to Hong Kong,
Republic of Korea, Singapore and Taiwan. These are replaced with a reference to
countries and places in Part 5 of Schedule 1.
Part 5 of Schedule 1 is
created by item 13 and specifies Hong Kong, Republic of Korea, Singapore and
Taiwan as a Developing Country or a place treated as a Developing Country.
Item 12 inserts a new paragraph 18(2)(j) that sets out how customs duty
is calculated for goods from Singapore that are subject to a concessional item
in Schedule 4 to the Tariff. This paragraph provides that duty for goods, the
produce or manufacture of Singapore is Free unless a duty rate is specified in
the Tariff for those goods. The new paragraph contains a reference to Division
1B of Part VIII of the Customs Act that provides rules for determining whether
goods are the produce or manufacture of Singapore (to be inserted by the Customs
Amendment Bill (No.1) 2003).
Singapore will continue to be listed as a
Developing Country and, should goods from Singapore not meet the rules of origin
requirements under SAFTA, these goods will continue to receive the preferential
tariff treatment that they now receive as a Developing Country.
Schedule 1 to the Tariff contains lists of countries and places to which
preferential rates of duty apply under the ASTP.
Item 13 creates a new
Part 5 to this Schedule. Part 5 lists, in Divisions 1 and 2, Hong Kong,
Republic of Korea, Singapore and Taiwan.
This amendment ensures that
goods of Singapore origin can be identified for the purposes of SAFTA and also
for the existing preferential tariff treatment that they now receive.
The Tariff imposes customs duties on certain alcohol, tobacco and
petroleum products that are equivalent to the excise duty imposed, under the
Excise Tariff Act 1921, on the same goods when domestically produced.
Such duties will continue to apply to those goods when imported from Singapore.
As section 16 of the Tariff provides that duty rates for goods from Singapore
are free unless otherwise specified, it is necessary to specify a rate of duty
for the above alcohol, tobacco and petroleum products when imported from
Singapore.
Items 14 to 31 together list those tariff subheadings that
apply to the above alcohol, tobacco and petroleum products. These items amend
the existing duty rate by adding an extra line that specifies the appropriate
rate for Singapore.
Schedule 4 to the Tariff lists approximately 100 items that prescribe
circumstances where concessional duty is provided for particular goods. In most
cases, the concessional rate of duty for such goods is Free. However, in some
circumstances, the duty payable involves a calculation or reference to rates of
duty set out in Schedule 3 to the Tariff.
For example, item 34 in
Schedule 4 applies to goods that are imported in containers where the containers
are to be exported. In this case, the containers are free of customs duty but
the contents are subject to duty as if they were imported separately. As
subsection 18(2) of the Tariff provides that duty rates for goods from
Singapore, subject to a concessional item in Schedule 4, are Free unless
otherwise specified, it is necessary to specify a rate of duty for goods
imported from Singapore in these circumstances.
Items 32 to 37 and 39 to
40 amend the existing duty rates for relevant Schedule 4 items (17A, 20A, 20B,
34, 41E, 44, 61 and 70) by adding an extra line that specifies the appropriate
duty rate for Singapore. This mirrors similar treatment in Schedule 4 for other
countries, such as New Zealand, that are eligible for preferential duty rates.
Item 38 inserts a duty rate for Singapore for item 50(1)(b) in Schedule 4
to the Tariff. Item 50(1)(b) applies to goods to which the Product Stewardship
Oil Levy applies and that are also subject to a Tariff Concession Order. The
appropriate duty rate is specified for Singapore.
[1] The Costs and Benefits of a Free Trade Agreement with Singapore, Access Economics, 2001.
[2] Ibid, p ii.
[3] Ibid, p 8.
[4] The Costs and Benefits of a Free Trade Agreement with Singapore, Access Economics, 2001 p ii.