Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2022
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CUSTOMS TARIFF AMENDMENT (AUSTRALIA-UNITED KINGDOM FREE TRADE
AGREEMENT IMPLEMENTATION) BILL 2022
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Home Affairs, the Honourable Clare O'Neil MP)
CUSTOMS TARIFF AMENDMENT (AUSTRALIA-UNITED KINGDOM FREE
TRADE AGREEMENT IMPLEMENTATION) BILL 2022
OUTLINE
The purpose of the Customs Tariff Amendment (Australia-United Kingdom Free Trade
Agreement Implementation) Bill 2022 (the Bill) is to amend the Customs Tariff Act 1995
(the Customs Tariff Act) to implement the Free Trade Agreement between Australia and the
United Kingdom of Great Britain and Northern Ireland (the Agreement). The Bill will
achieve this by:
• providing a 'Free' rate of customs duty for goods that are UK originating goods
(other than goods listed in new Schedule 15), with effect from entry into force of
the Agreement for Australia;
• inserting a new Schedule 15 to:
(i) specify the phasing rates of customs duty for certain UK originating goods
that will incrementally reduce to 'Free' by, at the latest, the fifth calendar
year after the Agreement enters into force for Australia; and
(ii) maintain rates of customs duty on certain alcohol, tobacco and petroleum
products equivalent to the rates of excise duty payable on the same good
when locally manufactured;
• inserting a 'safeguard' provision that would restore the customs duty rate to the
rate that applied immediately before the commencement of the Agreement for
certain products, so long as the United Kingdom maintain its equivalent
safeguard; and
• amending Schedule 4 to maintain customs duty rates for certain UK originating
goods in accordance with the applicable concessional items.
The Customs Amendment (Australia-United Kingdom Free Trade Agreement
Implementation) Bill 2022 (the Customs Amendment Bill) will make complementary
amendments to the Customs Act 1901 (the Customs Act) to introduce new rules of origin for
goods imported into Australia from the United Kingdom. The new rules will determine
whether goods are UK originating goods and therefore eligible for preferential customs duty
treatment in accordance with the Agreement. These rules will be set out in new Division 1P
of Part VIII of the Customs Act.
FINANCIAL IMPACT STATEMENT
The 2022-23 Budget released in March 2022, estimated that implementing the Agreement
will reduce customs duty receipts by $430 million over the forward estimates period.
Page 2 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
A Statement of Compatibility with Human rights in respect of the amendments contained in
the Bill is at Attachment A. The Statement assesses the amendments to be compatible with
Australia's human rights obligations.
REGULATION IMPACT STATEMENT
A Regulation Impact Statement for the Agreement, covering the tariff amendments, is
contained in the Explanatory Memorandum for the Customs Amendment Bill.
CUSTOMS TARIFF AMENDMENT (AUSTRALIA-UNITED KINGDOM FREE
TRADE AGREEMENT IMPLEMENTATION) BILL 2022
NOTES ON CLAUSES
Clause 1 Short title
1. This clause provides for the 'Customs Tariff Amendment (Australia-United Kingdom Free
Trade Agreement Implementation) Bill 2022' (the Bill), when enacted, to be cited as the
Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement
Implementation) Act 2022.
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 and anything in the Bill not elsewhere covered by the
table to commence on the day the Bill receives the Royal Assent.
4. Table item 2 provides for Schedule 1 of the Bill to commence at the same time as Schedule 1
to the Customs Amendment (Australia-United Kingdom Free Trade Agreement
Implementation) Act 2022.
5. The Customs Amendment Bill also relevantly provides that the Minister must announce the
day on which the Agreement enters into force for Australia by notifiable instrument, in
accordance with the Legislation Act 2003 (Legislation Act).
Clause 3 Schedules
6. This clause enables the Schedules of the Bill, when enacted, to amend or repeal provisions of
legislation specified in that Schedule in accordance with the applicable items. The Customs
Tariff Act 1995 (the Customs Tariff Act) is being amended by the Bill.
Page 3 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
Schedule 1-Amendments
Customs Tariff Act 1995
Introductory Comments
7. On 17 December 2021, the former Minister for Trade, Tourism and Investment, and his
counterparts from the United Kingdom of Great Britain and Northern Ireland (the United
Kingdom) signed the Australia-United Kingdom Free Trade Agreement (the Agreement).
8. The Agreement includes rules of origin to determine whether goods imported into Australia
are originating goods (referred to as 'UK originating goods'). Such goods are subject to
preferential rates of customs duty under the amendments to the Customs Tariff Act proposed
by the Bill. These rules of origin are inserted by the Customs Amendment Bill and are
contained in new Division 1P of Part VIII of the Customs Act 1901 (the Customs Act).
9. The Bill sets out customs duty rates for UK originating goods in accordance with the
Agreement. For goods classified to the tariff subheadings listed in new Schedule 15 inserted
by the Bill, the customs duty rate would accord with Article 2.5 of Chapter 2 of the
Agreement. For goods classified to tariff subheadings not listed in new Schedule 15,
a preferential customs duty rate of 'Free' will apply in accordance with Section 2A of
Annex 2A to Chapter 2 of the Agreement.
Item 1 Subsection 3(1) (at the end of the definition of rate column)
10. 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 the table in new Schedule 15.
11. New Schedule 15 will set out the rates of customs duty for UK originating goods classified to
tariff subheadings listed in that Schedule.
Item 2 Subsection 9(1)
12. This item amends subsection 9(1) of the Customs Tariff Act to insert a reference to new
Schedule 15.
13. This amendment allows ad valorem rates of custom duty that apply to UK originating goods
to be specified in the "rate column" in new Schedule 15 of the Customs Tariff Act.
Items 3 to 5
14. Section 11 of the Customs Tariff Act sets out the rules for determining when a phasing rate of
customs duty has effect. The amendments made by these items provide for phasing rates of
customs duty for UK originating goods.
15. Item 3 inserts new paragraph 11(1)(bk) 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 15 of
the Customs Tariff Act that applies to the goods.
Page 4 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
16. Item 4 inserts new paragraph 11(1)(o) into the Customs Tariff Act to include a reference to
the third column of an item in the table in new Schedule 15 that applies to UK originating
goods.
17. Item 5 inserts new paragraph 11(2)(bk) 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 15 of
the Customs Tariff Act that applies to UK originating goods.
Item 6 After section 13L
18. This item inserts new section 13M into the Customs Tariff Act, which sets out when goods
are UK originating goods for the purposes of the Customs Tariff Act.
19. Goods are UK originating goods if, and only if, they are UK originating goods under
Division 1P of Part VIII of the Customs Act. New Division 1P, inserted by the Customs
Amendment Bill, sets out the new rules of origin for determining whether goods are UK
originating goods.
Item 7 At the end of subsection 14(1)
20. This item inserts new subparagraph 14(1)(m) into the Customs Tariff Act.
Subsection 14(1) of the Customs Tariff Act sets out abbreviations for countries, places or
groups of countries and places to be used in the Customs Tariff Act to specify when a rate of
customs duty applies to goods from these countries or places.
21. The purpose of new subparagraph 14(1)(m) is to specify that the rate of duty set out in a
Schedule 4 item applies to the United Kingdom when 'UK' is listed in the rate column.
Item 8 After subparagraph 16(1)(a)(xii)
22. This item inserts new subparagraph 16(1)(a)(xiii) into the Customs Tariff Act.
23. Section 16 of the Customs Tariff Act sets out how duty is to be worked out, including for
goods that are originating goods of particular countries. Paragraph 16(1)(a) specifies that,
where goods are not the produce or manufacture of a Preference Country, or are not
originating goods under a Free Trade Agreement (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 to the Customs Tariff Act, under which the goods are classified.
24. The purpose of new subparagraph 16(1)(a)(xiii) is to ensure that the general rate of customs
duty set out in Schedule 3 does not apply to UK originating goods.
Items 9 and 10
25. Items 9 and 10 amend subsection 16(1) of the Customs Tariff Act.
26. Item 9 amends the punctuation of subparagraph 16(1)(t)(ii) as a consequence of the
amendments made by item 10, which inserts the subsequent paragraph 16(1)(u).
Page 5 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
27. Item 10 inserts new paragraph 16(1)(u) into the Customs Tariff Act. Subparagraph 16(1)(u)(i)
provides that, subject to section 16A, where UK originating goods are classified to a tariff
subheading in Schedule 3 that is specified in column 2 of an item in the table in new
Schedule 15, the rate of customs duty on the goods is to be calculated by reference to the rate
of duty set out in column 3 of the relevant item in Schedule 15.
28. However, where UK originating goods are not classified to a tariff subheading listed in new
Schedule 15, subparagraph 16(1)(u)(ii) provides for such goods to be subject to a customs
duty rate of 'Free,' in accordance with Article 2.5 of Chapter 2 of the Agreement and
Part 2A-2 of Section 2A of Annex 2A to the Agreement.
Item 11 After subsection 16(4B)
29. This item inserts new subsection 16(4C) into the Customs Tariff Act.
30. New subsection 16(4C) provides that a reference to year 2, 3, 4, 5 and 6 in new Schedule 15
for UK originating goods, is a reference to the first, second, third, fourth and fifth calendar
year, respectively, after this subsection commences.
31. This subsection commences when the Agreement enters into force for Australia. This accords
with the General Notes under Annex I to the Agreement and the Schedule of Australia under
that Annex, and is relevant to when phasing rates for certain UK originating goods come into
effect. For example:
UK originating goods
Column 1 Column 2 Column 3
Item Heading or subheading Rate
in Schedule 3
1 0406.10.00 $1.02/kg
From 1 January of year 2: $0.81/kg
From 1 January of year 3: $0.61/kg
From 1 January of year 4: $0.41/kg
From 1 January of year 5: $0.20/kg
From 1 January of year 6: Free
32. If the Agreement enters into force after 1 January 2023, the rate of duty will be $1.02/kg from
entry into force and will decrease to $0.81/kg on 1 January 2024 (as 2024 would be the
second calendar year after entry into force), and will be further incrementally reduced on the
first of January of 2025 to 2027 (calendar years 3 to 5), and will become 'Free' on
1 January 2028 (as the fifth calendar year after entry into force).
Item 12 After section 16
33. This item inserts new section 16A into the Customs Tariff Act.
34. New section 16A provides for the suspension of preferential tariff for certain UK originating
goods and gives effect to the footnote marked by an asterisk at the end of the table in
Part 2A-2 of Section 2A of Annex 2A to Agreement. This footnote identifies that all goods
marked with an asterisk in the table identifies that the application of the preferential tariff is
Page 6 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
suspended while the UK maintains global safeguards on Australian steel products under
Chapters 72 or 73. All goods in the table in Part 2A-2 marked with an asterisk would have
otherwise had a phasing rate of staging category B5, which would be incrementally reduced
to Free by 1 January of year five.
35. The purpose of new section 16A is to allow Australia to suspend preferential tariff treatment
for the same Chapter 72 and 73 goods subject to the UK global safeguard. This purpose is
achieved by allowing the Minister for Home Affairs to make a legislative instrument positing
that the rate of duty for steel goods subject to a global safeguard measure is the general rate
of duty for those goods for a specified period of time.
Duty rates
36. New subsection 16A(1) provides that, despite paragraph 16(1)(u), the duty rate in respect of
goods that are a safeguard good and imported into Australia during the period specified in a
notice made by the Minister for Home Affairs (the Minister) under this section, must be
worked out by reference to the general rate set out in the third column of the tariff
classification under which the goods are classified.
37. Subsection 16A(1) has the effect of applying the Schedule 3 general rates, instead of the FTA
rates mentioned in paragraph 16(1)(u), during the period specified by the Minister in a notice.
The language "the general rate of duty set out in the third column of the tariff classification
under which the goods are classified" is the language used in the Customs Tariff Act to refer
to the rates of duty in Schedule 3 of that Act. See the defined terms of "general rate",
"heading" and "subheading" in section 3 and "tariff classification" in section 6 of the
Customs Tariff Act.
38. Paragraph 16A(1)(b) provides that the Schedule 3 rates apply during "the period specified in
a notice made by the Minister under this section".
Notice
39. Subsection 16A(2) gives the power for the Minister to make a notice specifying the period of
time for which goods specified for the purposes of paragraph 16A(1)(a) will be subject to the
general rate of duty.
40. New subsection 16A(2) provides that the Minister may, by legislative instrument, make a
notice that specifies one or more safeguard goods and a period of time for the purposes of
paragraph 16A(1)(b).
41. Subsection 16A(3) provides that the Minister may only make the notice if the Minister is
satisfied that, during the period, the importation into the United Kingdom of one or more
goods that are safeguard goods classified to Chapter 72 or 73 of the Harmonized System is
under a law of the United Kingdom subject to a global safeguard measure referred to in
Section C of Chapter 3 of the Agreement.
42. For example, the UK currently has a safeguard in place over certain products listed in
Chapters 72 and 73 of the Harmonised System until 30 June 2024. The Minister may make a
notice that commences at the same time as the Agreement that those same goods subject to
Page 7 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
the UK safeguard will be subject to the general rate of duty until 30 June 2024. If the UK
subsequently made known that it will extend the safeguard, the Minister may choose to make
another notice that applies to the equivalent products for the same amount of time as the
extension of the safeguard.
43. New subsection 16A(4) provides that the Minister must not specify a period commencing
before the notice. The period of time specified in the instrument is limited to times when the
importation of products under Chapters 72 or 73 are subject to a global safeguard measure
under a law of the United Kingdom. Essentially, this provision prevents a notice from
applying retrospectively. A notice could however specify a period that starts on
commencement. For example, the Minister may make a notice after the Bill receives the
Royal Assent but before the Agreement enters into force and specify in that notice that the
notice commences at the same time as the Agreement enters into force.
Definitions
44. New subsection 16A(5) provides for definitions of 'Agreement' and 'safeguard goods'.
'Agreement' has the same meaning as in new subsection 153ZRB(1) of the Customs Act, as
proposed to be inserted by the Customs Amendment Bill.
45. 'Safeguard goods' means UK originating goods that are classified to a heading or subheading
in Schedule 3 that is specified in column 2 of any of items 150 to 238 in Schedule 15. These
items correspond to the items identified with an asterisk as being subject to the UK safeguard
in the table in Part 2A-2 of Section 2A of Annex 2A to the Agreement.
Items 13 to 15
46. Schedule 4 to the Customs Tariff Act lists items where a concessional rate of customs duty is
provided for particular goods and section 18 sets out how concessional rates of customs duty
are calculated. In particular, subsection 18(1) provides for a concessional rate of customs
duty to apply only where the rate is less than that which would otherwise apply under
Schedules 3 and the Schedules that provide for preferential rates for originating goods under
an agreement to which Australia is a party.
47. Item 13 inserts new paragraph 18(1)(l) into the Customs Tariff Act. This paragraph will
specify that a concessional item in Schedule 4 only applies to goods if the duty is lower than
the duty payable under new Schedule 15. This provision is consistent with the similar
provision for other Schedules to the Customs Tariff Act for other FTAs.
48. 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 applies, 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 applies
to the goods.
49. Item 14 inserts new subparagraph 18(2)(a)(xiii) into the Customs Tariff Act which provides
that the general rate of customs duty set out in Schedule 4 will not apply to UK originating
goods.
50. Item 15 inserts new paragraph 18(2)(u) into the Customs Tariff Act to set out how customs
duty is calculated for goods that are UK originating goods and that are subject to a
Page 8 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
concessional item in Schedule 4 of that Act. This new paragraph provides that, if the goods
are UK originating goods and 'UK' is specified in the third column of an item in Schedule 4,
the amount of duty is calculated by reference to that customs duty rate. If there is no such rate
specified, the rate of customs duty is 'Free'.
Item 16 Paragraph 19AAC(1)(a)
51. Item 16 substitutes the word 'section' in paragraph 19AAC(1)(a) with 'subsection'. This is a
technical amendment and does not have any effect on the operation of the paragraph.
Item 17 Paragraph 19AAC(1)(b)
52. Section 19 of the Customs Tariff Act provides for the automatic indexation of certain excise
equivalent customs duty rates in line with movements in the Consumer Price Index (CPI) in
February and August of each year. The goods to which automatic indexation applies are
certain alcohol and fuel products.
53. For this purpose, section 19AAC of the Customs Tariff Act includes a table that specifies the
fuel products subject to biannual indexation under section 19 of the Customs Tariff Act.
54. This item amends paragraph 19AAC(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 15 so that indexation under section 19 applies to the rates of excise equivalent
customs duty for those fuel products that are UK originating goods.
Item 18 Paragraph 19AAC(1)(b)
55. Item 18 replaces the word 'section' in paragraph 19AAC(1)(b) with 'subsection'. This is a
technical amendment and does not have any effect on the operation of the paragraph.
Item 19 Paragraph 19AA(b)
56. Section 19AA of the Customs Tariff Act includes a table, which sets out the alcohol products
subject to biannual indexation for the purposes of section 19 of the Customs Tariff Act.
57. This item amends paragraph 19AA(b) of the Customs Tariff Act to insert a reference to new
Schedule 15 so that the indexation provisions in section 19 of the Customs Tariff Act apply to
the rates of excise equivalent customs duty for those alcohol products that are UK originating
goods.
Item 20 Paragraph 19AC(b)
58. 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 (AWOTE), in March and September of each year. The goods to which
this automatic indexation applies are tobacco products.
59. 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 the Customs Tariff
Act.
Page 9 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
60. This item amends paragraph 19AC(b) of the Customs Tariff Act to insert a reference to new
Schedule 15 so that the indexation provisions in section 19AB apply to the rates of excise
equivalent customs duty for those tobacco products that are UK originating goods.
Item 21 Paragraph 19ACA(1)(b)
61. Section 19ACA of the Customs Tariff Act provides for a list of tobacco products that are not
covered by section 19AC of the Customs Tariff 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.
62. 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
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).
63. This item amends paragraph 19ACA(1)(b) of the Customs Tariff Act to insert a reference to
new Schedule 15 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 UK originating
goods.
Item 22 Schedule 4 (table item 17A, column headed "Rate of duty")
64. Table item 17A of Schedule 4 to the Customs Tariff Act provides for a concessional rate of
customs duty for goods produced in Australia that have been exported and returned to
Australia in an unaltered condition containing one or more components defined as 'tradex
components', 'drawback components' or 'excise components' within the meaning of the table
item on which taxes or charges to the Commonwealth are owing.
65. For goods that satisfy these criteria, the rate of concessional customs duty is determined to be
the amount that would apply to each tradex component, drawback component and excise
component if imported separately. For excise components, duty that is determined by
reference to a percentage of the value of the good is to be disregarded.
66. This item amends the rate column of table item 17A of Schedule 4 to the Customs Tariff Act
to insert a reference to 'UK' so that the concessional rate of customs duty applies to UK
originating goods that satisfy the eligibility criteria.
Item 23 Schedule 4 (table item 20, column headed "Description of goods",
paragraph (d))
67. Table item 20 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law, being goods exported for repair or renovation
that are not new or upgraded versions of the exported goods, for which the duty on the goods,
applied under a specified Schedule of the Customs Tariff Act, is worked out by reference to a
percentage of the value of the goods.
Page 10 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
68. For goods that satisfy these criteria, a concessional rate of customs duty of 'Free' applies to
the value of the good that was exported and the applicable percentage set out in a specified
Schedule of the Customs Tariff Act applies to the value of the repair or renovation.
69. This item amends paragraph (d) of the description column of table item 20 of Schedule 4 to
the Customs Tariff Act to insert a reference to Schedule 15 so that the concessional rate of
customs duty applies to UK originating goods that satisfy the eligibility criteria.
Item 24 Schedule 4 (table item 20, column headed "Rate of duty")
70. This item amends the rate column of table item 20 of Schedule 4 to the Customs Tariff Act to
insert a reference to "UK" so that the concessional rate of customs duty applies to UK
originating goods that satisfy the eligibility criteria.
Item 25 Schedule 4 (table item 22, column headed "Rate of duty")
71. Table item 22 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law, being containers used to import goods that will
be exported without being put to any other use.
72. For goods that satisfy these criteria, a concessional rate of customs duty of 'Free' applies.
Table item 22 further provides that the goods imported on or in such containers are subject to
the rate of customs duty that would apply to the goods if they had been imported separately.
73. This item amends the rate column of table item 22 of Schedule 4 to the Customs Tariff Act to
insert references to "UK" so that the concessional rate of customs duty applies to UK
originating goods that satisfy the eligibility criteria.
Item 26 Schedule 4 (table item 45, column headed "Rate of duty")
74. Table item 45 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods prescribed by by-law, being original components of a completed
machine or equipment that would be classified to a single tariff classification in Chapters 84
to 87 inclusive, or Chapters 89 to 90 inclusive, ordered and shipped from a single overseas
supplier at the same time that arrive in Australia on two or more vessels or aircraft.
75. Table item 45 does not apply to goods to which table item 44 of Schedule 4 to the Customs
Tariff Act applies.
76. For goods that satisfy these criteria, the rate of customs duty that would apply to the
completed machine or equipment applies.
77. This item amends the rate column of table item 45 of Schedule 4 to the Customs Tariff Act to
insert a reference to "UK" so that the concessional rate of customs duty applies to UK
originating goods that satisfy the eligibility criteria.
Item 27 Schedule 4 (table item 50, column headed "Rate of duty")
78. Table item 50 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods that are subject to a Tariff Concession Order (TCO). A TCO made by
Page 11 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
the Comptroller-General of Customs under Part XVA of the Customs Act grants a
concessional rate of customs duty for the goods meeting the description set out in the TCO.
79. For goods subject to a TCO the concessional rate of customs duty that applies is determined
by the tariff classification of the goods.
80. This item amends the rate column of table item 50 of Schedule 4 to the Customs Tariff Act to
insert references to "UK" so that the concessional rate of customs duty applies to UK
originating goods that are described in a TCO.
Item 28 Schedule 4 (table item 53, at the end of the column headed "Rate of duty")
81. Table item 53 of Schedule 4 to the Customs Tariff Act provides a concessional rate of
customs duty for goods of tariff subheading 3819.00.00 that are exempt from the Product
Stewardship Oil Levy.
82. Table item 53 does not apply to goods to which table item 50 of Schedule 4 to the Customs
Tariff Act applies.
83. For goods that satisfy this criteria the concessional rate of customs duty of 5 per cent applies.
84. The item amends the rate column of table item 53 of Schedule 4 to the Customs Tariff Act to
insert a reference to "UK:5%" so that the concessional rate of customs duty applies to UK
originating goods.
Item 29 At the end of the Act
85. This item inserts new Schedule 15 into the Customs Tariff Act to provide for
excise-equivalent rates of duty on certain alcohol, tobacco, fuel and petroleum products and
for preferential rates of customs duty and phasing rates of customs duty in accordance with
the Agreement that applies to certain goods.
86. Section 16 of the Customs Tariff Act, as amended by items 8, 9 and 10 of Schedule 1 to the
Bill, provides that the customs duty rate for UK originating goods is 'Free' unless a customs
duty rate is specified for those goods in new Schedule 15.
87. Article 2.5 of Chapter 2 of the Agreement provides in part that, except as otherwise provided
in the Agreement, each Party shall reduce or eliminate its customs duties on originating
goods of other Parties in Accordance with its Schedule in Part 2A-2 of Section 2 of
Annex 2A of Chapter 2 to the Agreement. The Schedule of Australia in Part 2A-2 of Section
2 of Annex 2A of Chapter 2 to the Agreement sets out the tariff commitments, for Australia,
under that Agreement in relation to the reduction of tariffs in stages.
88. Table items 1 to 5 and 150 to 238 in new Schedule 15 reduce the customs duty on UK
originating goods in accordance with the staging categories specified in the Schedule for
Australia in Part 2A-2 of Section 2 of Annex 2A to the Agreement. On 1 January of the fifth
calendar year after the Agreement enters into force, customs duties on all UK originating
goods in these table items will be eliminated.
Page 12 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
89. As mentioned above, goods imported under tariff subheadings in items 150 - 238 may be
subject to a suspension of the preferential rate of while the UK maintains global safeguards
on Australian steel products under Chapters 72 or 73. This suspension would be enforced by
a determination made by the Minister under section 16A of the Customs Tariff Act.
90. Article 1.4 of Chapter 1 of the 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 Act), on those goods when
domestically produced.
91. Table items 6 to 149 in new Schedule 15 impose customs duty on certain alcohol, tobacco,
fuel and petroleum products that are UK 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.
Items 30 to 33
92. The User's Guide is located in the preamble of the Customs Tariff Act and provides a general
overview of the operation and organisation of the Customs Tariff Act.
93. These items amend the text of the User's Guide as required, to insert references to new
Schedule 15 for UK originating goods so that users can identify provisions relating to these
originating goods.
Item 34 Application provision
94. This item provides that the amendments made by items 1 to 16, 18 and 22 to 29 of the Bill
apply in relation to:
(a) goods imported into Australia on or after the commencement of this Schedule; and
(b) goods imported into Australia before the commencement of this Schedule, where
the time for working out the rate of import duty on the goods had not occurred
before the commencement of this Schedule.
95. The amendments contained in Schedule 1 to the Bill will commence at the same time as
Schedule 1 to the Customs Amendment Bill.
Item 35 Transitional provisions--indexation
96. This item provides for transitional provisions for alcohol duty rates and fuel duty rates, and
tobacco duty rates subject to indexation under sections 19 and 19AB respectively.
97. Sections 19 and 19AA of the Customs Tariff Act provide that customs rates of duty for
certain alcohol products are adjusted automatically, twice yearly, in line with movements in
the CPI. These adjustments occur in February and August of each year. Sections 19AB
and 19AC of the Customs Tariff Act provides that customs rates of duty for certain tobacco
products, are adjusted automatically twice yearly, in line with movements in the AWOTE.
The adjustments occur in March and September of each year.
Page 13 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
98. The Bill has been drafted using rates of customs duty that include those indexed as part of the
CPI and AWOTE increases that occurred on 1 August 2022 and 1 September 2022
respectively, following the release of the June 2022 CPI and May 2022 AWOTE figure.
99. The transitional provisions, if required, will amend the alcohol, fuel and tobacco duty rates
currently on the face of the Bill such that upon commencement of Schedule 1, the customs
duty rates for relevant tariff subheadings in Schedule 15 will be increased by the indexation
amount or the sum of the indexation amounts in the case if multiple indexation events,
without the need for further legislative amendments.
Page 14 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
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 (Australia-United Kingdom Free Trade
Agreement Implementation) Bill 2022
The Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement
Implementation) Bill 2022 (the Bill) is compatible with 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 purpose of the Bill is to amend the Customs Tariff Act 1995 (the Customs Tariff Act) to
give effect to the Free Trade Agreement between Australia and the United Kingdom of Great
Britain and Northern Ireland (the Agreement), signed on 17 December 2021. In particular, the
Bill will:
• provide a 'Free' rate of customs duty for goods that are 'UK originating goods'
(other than goods listed in new Schedule 15), with effect from entry into force of
the Agreement for Australia;
• insert a new Schedule 15 to:
(i) specify the phasing rates of customs duty for certain 'UK originating
goods' that will incrementally reduce to 'Free' by, at the latest, the 5th
calendar year after the Agreement enters into force for Australia; and
(ii) maintain rates of customs duty on certain alcohol, tobacco and petroleum
products equivalent to the rates of excise duty payable on the same good
when locally manufactured;
• insert a 'safeguard' provision that would restore the current 5 per cent rate of
customs duty that applied immediately before the commencement of the
Agreement for certain products classified in Chapter 72 and 73 of Schedule 3 of
the Customs Tariff Act imported from the United Kingdom of Great Britain and
Northern Ireland (United Kingdom); and
• amend Schedule 4 to maintain customs duty rates for certain UK originating
goods in accordance with the applicable concessional item.
The amendments contained in the Bill will commence at the same time as the Customs
Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022
(the Customs Amendment Bill). That is, the later of the day on which this Act receives the
Royal Assent and the day on which the Agreement, done on 17 December 2021, enters into
force for Australia.
The Customs Amendment Bill will make complementary amendments to the Customs
Act 1901 (the Customs Act) to introduce new rules of origin for goods imported into
Australia from the United Kingdom. The new rules will determine whether goods are UK
originating goods and therefore eligible for preferential tariff treatment in accordance with
the Agreement. These rules will be set out in new Division 1P of Part VIII of the Customs
Act.
Page 15 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022
Human rights implications
The Bill does not engage any of the applicable rights or freedoms.
Conclusions
The Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in the definition of human rights in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
The Honourable Clare O'Neil MP, Minister for Home Affairs
Page 16 Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation)
Bill 2022