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2016-2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS TARIFF AMENDMENT (SINGAPORE-AUSTRALIA FREE TRADE
AGREEMENT AMENDMENT IMPLEMENTATION) BILL 2017
EXPLANATORY MEMORANDUM
(Circulated by authority of the Assistant Minister for Immigration and Border Protection,
the Honourable Alex Hawke MP)
CUSTOMS TARIFF AMENDMENT (SINGAPORE-AUSTRALIA FREE TRADE
AGREEMENT AMENDMENT IMPLEMENTATION) BILL 2017
OUTLINE
The purpose of the Customs Tariff Amendment (Singapore-Australia Free Trade Agreement
Amendment Implementation) Bill 2017 (the Bill) is to amend the Customs Tariff Act 1995
(the Customs Tariff Act) to give effect to new Chapters and Annex in the Singapore-Australia
Free Trade Agreement (SAFTA) inserted by the Agreement to Amend the Singapore-
Australia Free Trade Agreement (the Amendment Agreement). The first mentioned
Agreement as amended is heron referred as the "amended Agreement".
In particular, the Bill will:
provide for duty-free access entry into force of the amended Agreement for most
eligible goods determined in accordance with new Division 1BA of Part VIII of the
Customs Act 1901 (the Customs Act). The new Division 1BA is inserted into the
Customs Act by the Customs Amendment (Singapore-Australia Free Trade
Agreement Amendment Implementation) Bill 2017 (the Customs Amendment Bill);
amend certain concessional items in Schedule 4 to the Customs Tariff Act to maintain
customs duty rates in line with the applicable concessional item;
insert new Schedule 4A to provide for excise-equivalent rates of duty on certain
alcohol, tobacco, fuel and petroleum products in accordance with the amended
Agreement; and
repeal provisions in Schedule 3 to the Customs Tariff Act that provide for excise
equivalent rates of duty on certain alcohol, tobacco, fuel and petroleum products in
accordance with the Amendment Agreement, after the expiration of a three-year
transition period.
Complementary amendments will be made to the Customs Act by the Customs Amendment
Bill to give effect to the amended Agreement.
FINANCIAL IMPACT STATEMENT
Implementing the Agreement is expected to have negligible cost to revenue over the forward
estimates.
Revenue ($m) 2015-16 2016-17 2017-18 2018-19 2019-20
Department of Immigration and
- .. .. .. ..
Border Protection
.. Not zero, but rounded to zero.
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
A Statement of Compatibility with Human Rights has been completed in relation to the
amendments in this Bill and assesses that the amendments are compatible with Australia's
human rights obligations. A copy of the Statement of Compatibility with Human Rights is at
Attachment A.
REGULATION IMPACT STATEMENT
A Regulation Impact Statement covering the tariff amendments is contained in the
Explanatory Memorandum for the Customs Bill.
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CUSTOMS TARIFF AMENDMENT (SINGAPORE-AUSTRALIA FREE TRADE
AGREEMENT AMENDMENT IMPLEMENTATION) BILL 2017
NOTES ON CLAUSES
Clause 1 Short title
1. This clause provides for the Bill, when enacted, to be cited as the Customs Tariff Amendment
(Singapore-Australia Free Trade Agreement Amendment Implementation) Act 2017.
Clause 2 Commencement
2. This clause sets out, in a table, the date on which provisions of the Bill, when enacted, will
commence.
3. Table item 1 provides for clauses 1 to 3, which with the enactment of the Bill will become
"Sections", to commence on the day it receives Royal Assent.
4. Table item 2 provides for Schedule 1 of the Bill, when enacted, to commence at the same
time as Schedule 1 to the Customs Amendment (Singapore-Australia Free Trade Agreement
Amendment Implementation) Act 2017.
5. Table item 3 provides that Schedule 2 to the Bill, when enacted, will commence on the third
anniversary of the day on which the provisions covered by table item 2 commence
(the Schedule 1 provisions). The delayed commencement of Schedule 2 is to allow for a
three-year transitional period in accordance with amending clause 3 of the Amendment
Agreement.
6. Amending clause 3 of the Amendment Agreement provides for the requirements in new
Chapter 3 of the amended Agreement to operate as an alternative to the requirements under
the previous Chapter 3 (please see the note on clauses for Schedule 2).
Clause 3 Schedules
7. This clause is the formal enabling provision for the Schedule to the Bill, providing that each
Act specified in a Schedule is amended or repealed in accordance with the applicable items in
the Schedule. In the context of the Bill, the Customs Tariff Act is being amended.
8. Clause 3 also provides that any other items of the Schedule have effect according to their
terms. This is a standard enabling clause for transitional, savings and application items in
amending legislation.
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Schedule 1-Main amendments
Part 1-Singaporean originating goods
Customs Tariff Act 1995
Introductory Comments
9. SAFTA entered into force on 28 July 2003, and in part sets out a mutual obligation for goods
that are the produce and manufacture of Singapore and Australia that satisfy rules of origin to
be subject to a preferential rate of customs duty. The framework for the related rules of origin
is contained in Division 1B of Part VIII of the Customs Act. The preferential rates of customs
duty that are applicable to goods that satisfy Division 1B of Part VIII is set out in in
Schedule 3 to the Customs Tariff Act.
10. On 13 October 2016, in Canberra, the Hon. Steven Ciobo MP, Minister for Trade, Tourism,
and Investment and his Singaporean counterpart Mr. Lim Hng Kiang, Minister for Trade and
Investment signed the Amendment Agreement.
11. The Amendment Agreement, in part, sets out a new set of rules or origin that used to
determine Singaporean originating goods and their applicable preferential rates of customs
duty.
12. On entry into force of the amended Agreement, the Customs Amendment Bill will amend
Part VIII of the Customs Act to insert new Division 1BA. The new Division will set out the
framework for the new rules of origin for determining if goods are Singaporean originating
goods and, as such, are eligible for a preferential rate of customs duty.
13. To allow importers to claim preference under the new rules of origin on entry into force of
the amended Agreement, the Bill will amend the Customs Tariff Act to insert new
Schedule 4A. New Schedule 4A will set out a list of tariff headings and subheadings and the
related preferential rates of customs duty to which those goods relate. Goods that are
determined to be Singaporean originating goods in accordance with new Division 1BA of
Part VIII of the Customs Act, but that are not classified under Schedule 4A will, consistent
with similar goods covered under other Free Trade Agreements (FTAs), have an applicable
rate of customs duty of "Free".
14. To give importers time to adjust to the new rules of origin for originating goods, the rules of
origin for produce and manufacture will remain operative for a transitional period of three
years after the entry into force of the amended Agreement. At the expiration of the
transitional period, rules of origin for produce and manufacture and related requirements is
repealed.
Item 1 Subsection 3(1) (after paragraph (b) of rate column)
15. This item amends the definition of "rate column" in subsection 3(1) of the Customs Tariff
Act to include a reference to the third column of new Schedule 4A. New Schedule 4A will be
used to specify the rates of customs duty for certain Singaporean originating goods.
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Item 2 Subsection 9(1)
16. Item 2 amends subsection 9(1) of the Customs Tariff Act to insert a reference to new
Schedule 4A.
17. This amendment allows rates of custom duty that apply to Singaporean originating goods to
be specified in the "rate column" in Schedule 4A of the Customs Tariff Act.
Item 3 After paragraph 11(1)(b)
18. This item inserts new paragraph 11(1)(baa) into the Customs Tariff Act to include a reference
to a rate of customs duty set out in the third column of an item in the table in new
Schedule 4A of the Customs Tariff Act that applies to the goods. Section 11 sets out the rules
for determining when a phasing rate of customs duty takes effect
Item 4 After paragraph 11(1)(d)
19. This item inserts new paragraph 11(1)(da) into the Customs Tariff Act to include a reference
to a specified date set out in the third column of an item in the table in new Schedule 4A that
applies to Singaporean originating goods.
Item 5 After paragraph 11(2)(b)
20. This item inserts new paragraph 11(2)(baa) into the Customs Tariff Act to include a reference
to a rate of customs duty set out in the third column of an item in the table in the new
Schedule 4A of the Customs Tariff Act that applies to Singaporean originating goods.
Item 6 After section 13
21. This item amends the Customs Tariff Act to insert new section 13AA. This new section
provides that, for the purposes of the Customs Tariff Act, goods that are Singaporean
originating goods if, and only if they are Singaporean originating goods under new
Division 1BA of Part VIII of the Customs Act. New Division 1BA sets out the new rules of
origin for determining whether goods are Singaporean originating goods.
Item 7 After subparagraph 16(1)(a)(i)
22. This item amends subsection 16(1) of the Customs Tariff Act to insert new
subparagraph 16(1)(a)(ia).
23. Section 16 of the Customs Tariff Act sets out how customs duty is calculated, including for
goods that are originating goods of particular countries for preference purposes.
Paragraph 16(1)(a), in part, sets out that, if goods are not the produce or manufacture of a
Preference Country, or originating goods, to which a FTA, the duty must be worked out by
reference to the general rate set out in the third column of the tariff classification in
Schedule 3 under which the goods are classified.
24. New subparagraph 16(1)(a)(ia) ensures that the general rate of customs duty set out in
Schedule 3 does not apply to Singaporean originating goods.
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Item 8 After paragraph 16(1)(j)
25. This item amends subsection 16(1) of the Customs Tariff Act to insert new
subparagraph 16(1)(ja). This paragraph sets out that a "Free" rate of customs duty is applied
to on goods that are Singaporean originating goods unless the goods are classified to a tariff
heading or subheading in Schedule 3 that is specified in column 2 of an item in the table in
new Schedule 4A. If the goods are so classified, the duty on those goods will be worked out
by reference to the rate of duty set out in column 3 of the relevant item in Schedule 4A.
Item 9 After paragraph 18(1)(a)
26. Section 18 of the Customs Tariff Act sets out how customs duty is calculated in those
circumstances where a concessional rate of customs duty under an item in Schedule 4 of the
Customs Tariff Act is provided for certain goods. In particular, subsection 18(1) provides for
a concessional rate of customs duty to only be used where the rate of customs duty is less
than that, which would otherwise be payable under Schedules 3, 5, 6, 7, 8, 9, 10, 11 or 12.
27. Item 9 amends subsection 18(1) to insert new paragraph 18(1)(aa). This amendment will add
that a concessional item in Schedule 4 only applies to goods if the duty is lower than the duty
payable under new Schedule 4A. This provision is consistent with the same provision for
other Schedules to the Customs Tariff Act, for example Schedule 12, Chinese originating
goods.
Item 10 After subparagraph 18(2)(a)(i)
28. This item amends the Customs Tariff Act to insert new subparagraph 18(2)(a)(ia).
29. Schedule 4 of the Customs Tariff Act lists 57 items where a concessional rate of customs
duty is provided for particular goods. Section 18 of the Customs Tariff Act sets out how
customs duty is calculated for such goods, in particular for originating goods to which a FTA
apply for preference purposes. Paragraph 18(2)(a) provides that, if the goods are not the
produce or manufacture of a preference country or a country to which a FTA apply, the duty
must be worked out by reference to the general rate set out in the third column of an item in
Schedule 4 that apply to the goods.
30. New paragraph 18(2)(a)(ia) ensures that the general rate of customs duty set out in
Schedule 4 does not apply to Singaporean originating goods.
Item 11 After paragraph 18(2)(j)
31. This item inserts new paragraph 18(2)(ja) into the Customs Tariff Act to set out how customs
duty is calculated for goods that are Singaporean originating goods and that are subject to a
concessional item in Schedule 4 of that Act. This paragraph provides that, if the goods are
Singaporean originating goods and "SG" is specified in the third column of an item in
Schedule 4, the amount of duty is calculated by reference to that rate of customs duty. If there
is not such rate, the rate of customs duty is "Free".
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Item 12 Paragraph 19AAC(1)(b)
32. Section 19 of the Customs Tariff Act provides for the automatic indexation of certain excise-
equivalent rates of duty in line with movements in the Consumer Price Index, in February and
August of each year. The goods to which automatic indexation applies are certain alcohol and
fuel products.
33. For this purpose, section 19AAC of the Customs Tariff Act contains a table that sets out the
fuel products subject to biannual indexation under section 19 of that Act.
34. Item 12 amends subsection 19AAC(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 4A so that the indexation provisions in section 19 of that Act apply to the rates
of excise-equivalent customs duty for those fuel products that are Singaporean originating
goods.
Item 13 Paragraph 19AA(b)
35. For section 19 of the Customs Tariff Act, section 19AA of that Act contains a table that sets
out the alcohol products subject to biannual indexation under section 19 that Act.
36. Item 13 amends subsection 19AA(b) of the Customs Tariff Act to insert a reference to new
Schedule 4A so that the indexation provisions in section 19 of that Act apply to the rates of
excise-equivalent customs duty for those alcohol products that are Singaporean originating
goods.
Item 14 Paragraph 19AC(b)
37. Section 19AB of the Customs Tariff Act provides for the automatic indexation of certain
excise-equivalent rates of duty in line with movements in the full-time adult average weekly
ordinary time earnings, in March and September of each year. The goods to which this
automatic indexation applies are tobacco products.
38. For this purpose, section 19AC of the Customs Tariff Act contains a table that sets out the
tobacco products subject to biannual indexation under section 19AB of that Act.
39. Item 14 amends subsection 19AC(b) of the Customs Tariff Act to insert a reference to new
Schedule 4A so that the indexation provisions in section 19AB of that Act apply to the rates
of excise-equivalent customs duty for those tobacco products that are Singaporean originating
goods.
Item 15 Paragraph 19ACA(b)
40. Section 19ACA of the Customs Tariff Act provides for a list of tobacco products that are not
covered by Section 19AC of that Act, specifically tobacco products where the amount of
customs duty is determined by the weight of the product or the weight of the tobacco content
in the product.
41. For goods classified to a subheading listed in section 19ACA, the rate of customs duty is
amended biannually on the same day as the tobacco products listed in section 19AC. The
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applicable rate is determined with reference to the indexed rate associated with tariff
subheading 2402.20.20 adjusted by the relevant annual weight conversion factor provided for
in subsection 19ACA(2).
42. Item 15 amends subsection 19ACA(b) of the Customs Tariff Act to insert a reference to new
Schedule 4A so that the indexation provisions in section 19AB of that Act apply to the rates
of excise-equivalent customs duty for those tobacco products that are Singaporean originating
goods.
Items 16 and 17
43. Item 17 amends the Customs Tariff Act to insert new Schedule 4A. This Schedule sets out
the excise-equivalent rates of duty on certain alcohol, tobacco, fuel and petroleum products
that applies to certain goods that are determined be Singaporean originating goods in
accordance with new Division 1BA of Part VIII of the Customs Act, inserted by the Customs
Amendment Bill for the purpose of the amended Agreement.
44. Article 2: General Definitions, of new Chapter 1 of the amended Agreement provides in part
that customs duty does not include duties that are equivalent to an internal tax imposed on the
same goods when domestically produced. Such goods are certain alcohol, tobacco, fuel and
petroleum products that are subject to customs duties at a rate that is equivalent to the excise
duty imposed under the Schedule to the Excise Tariff Act 1921 (the Excise Tariff), on those
goods when domestically produced.
45. Section 16 of the Customs Tariff Act, as amended, provides that the rates of customs duty for
Singaporean originating goods are "Free" unless a rate of customs duty is specified for those
goods in new Schedule 4A. Therefore, it is necessary to specify the relevant tariff headings
and subheadings for the above alcohol, tobacco and petroleum products in Schedule 4A and
the appropriate rate of customs duty.
46. The table items in new Schedule 4A operate to impose customs duty on the alcohol, tobacco,
fuel and petroleum products that are Singaporean originating goods, at a rate that is
equivalent to the excise duty imposed under the Excise Tariff Act, on the same goods when
domestically produced. As mentioned above, these rates of duty may be subject to indexation
in accordance with sections 19 and 19AB of the Customs Tariff Act.
47. Section 18 of the Customs Tariff Act, as amended by items 9 to 11 above, allows the
calculation of concessional duty to be the lower of, the preferential rate of customs duty in
Schedule 4, or new Schedule 4A, for those goods that are classified under the tariff headings
and subheadings contained in new Schedule 4A.
48. Paragraph (a) in the cell under the column headed "Rate of duty" of table item 53 refers to
goods prescribed by by-law that are classified under heading 3819.00.00 of Schedule 3 and
that are goods to which item 50 of Schedule 4 does not apply.
49. While table item 133 of new Schedule 4A provides for heading 3819.00.00, a subset of
heading 3819.00.00 is prescribed by the Customs By-Law No. 1301133 (the Customs By-
Law) for Schedule 4 of the Customs Tariff Act.
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50. Item 16 amends the cell under the column headed "Rate of duty" in table item 53 of
Schedule 4 to the Customs Tariff Act to insert a reference to "SG:5%".
51. The purpose of the amendment made by item 16, with the application of section 18 of the
Customs Tariff Act as amended by items 9 to 11 above, is to provide for a concessional rate
of duty that may be more favourable for the relevant subset of goods for calculating import
duty. For example, while table item 133 of new Schedule 4A provides for the relevant rate to
be $0.085 per litre, depending on the quantity imported, the 5% rate in table item 53 of
Schedule 4 may be more favourable and applied.
Items 18 to 21
52. These items amend the text in the User's Guide in the preamble of the Customs Tariff Act, as
required, to insert references to new Schedule 4A.
Item 22 Application provision
53. This item provides that the amendments made by items 1 to 11, 16 and 17 set out in
Schedule 1 of the Bill will apply to goods imported into Australia on or after the
commencement of Schedule 1 of the Bill (items 12 to 15 relate to the indexation provisions in
sections 19AAC, 19AA, 19AC and 19ACA of the Customs Tariff Act and are not covered by
the application provision - the comments under items 12 to 15 refer).
54. The commencement provisions of the Bill provide that Schedule 1 of the Bill commences at
the same time as Schedule 1 to the Customs Amendment Bill; that is the later of the day on
which that Act receives the Royal Assent and the day that the amended Agreement enters into
force for Australia.
55. Item 22 also applies to goods that were imported before that day but for which the time for
working out the rate of import duty on those goods had not occurred before that day. For
example, if the amended Agreement commences on 1 December 2017, item 22 provides that
amendments to the Customs Tariff Act shall apply to goods that were imported before
1 December 2017 but not entered for home consumption until on or after 1 December 2017.
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Schedule 2-Other Amendments
Customs Tariff Act 1995
Introductory Comments
56. Chapter 3 of the SAFTA prior to the amendments made by the Amendment Agreement
(the previous Chapter 3) sets out rules to which goods that are the produce and manufacture
of Singapore and Australia must satisfy in order to claim a preferential rate of customs duty,
and related matters.
57. Amending clause 3 of the Amendment Agreement provides for the previous Chapter 3 to be
replaced with a new Chapter 3, which sets out rules for Singaporean originating goods and
Australian originating goods. However, for a transitional period of three years, the
requirements under the new Chapter 3 will operate as an alternative to the requirements under
the previous Chapter 3. That is, for the duration of three years, the amended Agreement allow
importers to satisfy either the requirements relating to produce and manufacture, or
originating goods, to claim a preferential rate of customs duty.
58. After the expiration of the three-year transitional period, the requirements for the previous
Chapter 3 (Division 1B of Part VIII of the Customs Act) are repealed by Schedule 2 of the
Customs Amendment Bill, such that from the date of expiration only originating goods can
be subject to a preferential rate of customs duty. Schedule 2 of the Customs Amendment Bill
will repeal Division 1B of Part VIII of the Customs Act and related provisions in that Act.
59. As a result, items 1 to 4 of Schedule 2 to this Bill, amend the Customs Tariff Act to:
amend section 13 to omit the reference to Division 1B of Part VIII of the Customs
Tariff Act; and
repeal paragraphs 14(1)(j), 16(1)(j) and 18(2)(j).
60. These items will have effect on the third anniversary of the commencement of the items in
Schedule 1 of this Bill.
61. In accordance with amending clause 3 of the Amendment Agreement, the purpose of the
above amendments is to repeal and omit, at the expiration of the three-year transitional
period, all provisions relating to the produce and manufacture of Singapore under the
previous Chapter 3. With the repeal of Division 1B of Part VIII of the Customs Act, the
references and provision concerned are no longer necessary and as such are omitted and
repealed.
Items 5 to 141
62. Goods determined to be the produce and manufacture of Singapore under Division 1B of
Part VIII of the Customs Act were able to claim a preferential customs duty rate. The
applicable preferential rates of customs duty are those rates denoted by "SG" next to the rate
in the third column of items in Schedule 3 of the Customs Tariff Act. Where no "SG" rate
was provided the applicable customs duty rate was "Free".
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63. With the repeal of Division 1B of Part VIII of the Customs Act, the related the preferential
rates of customs duty for goods that are determined to be the produce and manufacture of
Singapore in Schedule 3 of the Customs Tariff Act are no longer required and as such the
related references to "SG" in that Schedule are repealed.
Item 142 Saving provision
64. This item sets out a saving provision such that, despite an amendments made by Schedule 2
of the Bill of a particular provision of the Customs Tariff Act, the provision, as in force
immediately before the commencement of this item, continues to apply on and after that
commencement in relation to goods imported into Australia before that commencement.
65. The purpose of this item is to allow importers of goods imported into Australia before the
repeal of Division 1B by the Customs Amendment Bill, where the time for working out the
rate of import duty on the goods had not occurred, to continue to use the related preferential
rates of customs duty in Schedule 3 of the Customs Tariff Act after they are omitted for
working out import duty. A similar saving provision is contained in item 10 of Schedule 2 to
the Customs Amendment Bill to ensure Divisional 1B of Part VIII of the Customs Act
continues to have effect.
Formatted: Don't keep with next,
Don't keep lines together
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Attachment A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Customs Tariff Amendment (Singapore-Australia Free Trade Agreement Amendment
Implementation) Bill 2017
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
The Customs Tariff Act 1995 (the Customs Tariff Act), amongst other things, sets out
preferential rates of customs duty that may be applied onto goods that are produce and
manufacture of Singapore in accordance with the Singapore-Australia Free Trade Agreement
(SAFTA) that entered into force in 2003 as implemented in the Schedule 3 to the Customs
Tariff Act.
On 13 October 2016, in Canberra, the Hon. Steven Ciobo MP, Minister for Trade, Tourism,
and Investment and his Singaporean counterpart Mr. Lim Hng Kiang, Minister for Trade and
Investment signed the Agreement to Amend the Singapore-Australia Free Trade Agreement
(the Amendment Agreement).
The Customs Tariff Amendment (Singapore-Australia Free Trade Agreement Amendment
Implementation) Bill 2017 (the Customs Tariff Bill), when enacted, will amend the Customs
Tariff Act in order to implement SAFTA, as amended by the Amendment Agreement (the
first mentioned Agreement as amended is hereon referred as the "amended Agreement").
In particular, the Bill will:
provide for duty-free access on entry into force of the amended Agreement for
most eligible goods determined in accordance with new Division 1BA of Part VIII
of the Customs Act 1901 (the Customs Act). The new Division 1BA is to be
inserted into the Customs Act by the Customs Amendment (Singapore-Australia
Free Trade Agreement Amendment Implementation) Bill 2017 (the Customs
Amendment Bill);
amend certain concessional items in Schedule 4 to the Customs Tariff Act to
maintain customs duty rates in line with the applicable concessional item;
insert new Schedule 4A to provide for excise-equivalent rates of duty on certain
alcohol, tobacco, fuel and petroleum products in accordance with the amended
Agreement; and
repeal provisions in Schedule 3 to the Customs Tariff Act that provide for excise
equivalent rates of duty on certain alcohol, tobacco, fuel and petroleum products
in accordance with the Amendment Agreement, after the expiration of a three year
transition period.
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Human rights implications
The Bill does not engage any of the applicable rights or freedoms.
Conclusion
The Bill is compatible with human rights as it does not raise any human rights issues.
ASSISTANT MINISTER FOR IMMIGRATION AND BORDER PROTECTION
THE HONOURABLE ALEX HAWKE MP
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