Bills Digest No. 22 2001-02
Customs Tariff Amendment Bill (No. 5) 2001
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Customs Tariff Amendment Bill (No. 5)
2001
Date Introduced: 8 August 2001
House: House of Representatives
Portfolio: Justice and Customs
Commencement: 1 January 2002
The amendments
proposed by this Bill give effect to Australia's obligations under
the International Convention on the Harmonized Commodity
Description and Coding System. The major amendments proposed by
this Bill provide new headings and subheadings and separately
identify new tariff products.
The amendments proposed by this Bill result from
the second review of the Harmonized Commodity Description and
Coding System.
The Harmonized Commodity Description and
Coding System
The Harmonized Commodity Description and Coding
System, commonly known as the Harmonized System or HS, is a
multipurpose goods nomenclature or language used as the basis for
Customs tariffs and of the compilation of trade statistics around
the globe.
The HS was developed by the World Customs
Organization (WCO) and was implemented on 1 January 1988 through an
international convention, the International Convention on the
Harmonized Commodity Description and Coding System (the HS
Convention). The HS is maintained by the WCO through the Harmonized
System Committee, which is composed of representatives of parties
to the HS Convention.
The HS operates as a global language and code
for transportable goods in international trade. Approximately 170
countries and economies use the HS for Customs tariffs and trade
statistics. The accounts for more than 98 per cent of world trade.
HS is used by governments, international organisations and the
private sector for diverse purposes including:
- trade policies
- monitoring of controlled goods
- rules of origin
- freight tariffs
- transport statistics
- internal taxes
- quota controls, and
- economic research and analysis.
Goods classification under the
HS
The HS is an international six-digit commodity
classification developed under the auspices of the Customs
Cooperation Council. Individual countries have extended it to ten
digits for customs purposes, and to 8 digits for export
purposes.
Under the HS goods are classified by what they
are, and not according to their stage of fabrication, their use, or
origin. The HS nomenclature, or language, is structured by economic
activity or component material. For example, animals and animal
products are found in one section whilst machinery and mechanical
appliances which are grouped by function are found in another. The
nomenclature is divided into 21 sections each of which group
together goods produced in the same sector of the economy. Each
section is comprised of one or more chapters, with the entire
nomenclature comprising 97 chapters. Chapters I to XV (except XII)
are grouped by biological genus or by the component material form
which articles are made from. For those chapters in which goods are
grouped by raw material, a vertical structure is used in which
articles are classified according to their degree of
processing.
The WCO monitors the application of HS with the
objective of achieving the greatest measure of certainty and
uniformity in the global classification of goods. The Harmonized
System Explanatory Notes prepared by the Harmonized System
Committee are the official interpretation of the HS. The HS
Committee meets twice yearly to resolve classification questions
and disputes. Determinations of the HS Committee are available on
the internet through the WCO web site on www.wcoomd.org.
Updating of HS
The HS is periodically updated. Updates are
prepared in the form of amendments to the HS Convention adopted by
member states. Member states are obliged under the Convention to
implement the amendments on the date schedule for their coming into
force. To date the HS has been amended twice. The first time was in
1992 and those amendments consisted primarily of editorial
amendments. The second amendments came into operation on 1 January
1996 and incorporated major changes affecting approximately 10 per
cent of the HS nomenclature.
The amendments proposed by this Bill represent
the results of the second major review of the HS. The HS Review
Sub-Committee comprising experts from national administrations and
international organizations carried out this work. The
recommendations of the second major review were adopted by the WCO
in June 1999. Australia along with other parties to the Convention
are required to implement the changes into its customs tariff
arrangements with effect from 1 January 2002.
Scope of the HS amendments
The changes recommended by the WCO introduce
amendments to 57 of the HS systems 97 chapters. The most extensive
changes relate to:
- fruit and vegetable preparation
- chemicals, pharmaceutical products
- rubber
- leather
- wood and paper products
- knitted or crocheted fabrics
- miscellaneous non-ferrous base metals
- machinery, and
- electrical equipment.
The proposed amendments make changes extending
to the six-digit level and as such amendments to the eight-digit
tariff item level are also required.
Maintenance of existing tariff
levels
The Government in its Explanatory Memorandum to
the Bill states the Bill has:
been designed to give effect to the HS changes
while maintaining existing levels of tariff protection and margins
of tariff preference accorded Australia's trading partners.
Where necessary, the option available under the
HS to create new domestic tariff splits at the seven and eight
digit levels has been used to preserve duty rates and margins of
preference.
Using this approach, it has been possible to
preserve existing duty rates in all instances except for those
relating to certified reference materials. These goods are
"materials used for analytical purposes and which are accompanied
by a certificate specifying the values of their certified
properties". Certified reference materials can include a range of
materials such as metals, rubber, textiles and other goods, some of
which have rates of customs duty other than Free.(1)
As noted in the Background to this Bills Digest,
the amendments proposed by this Bill give effect to Australia's
obligations under the HS Convention. The major amendments proposed
by this Bill provide new headings and subheadings and separately
identify new products such as narcotic drugs and psychotropic
substances (see items 95-133 of Schedule
1) and chemical wastes (see items 145-157
of Schedule 1).
- Customs Tariff Amendment Bill (No. 5) 2001, Explanatory
Memorandum, pp. 2 and 3.
Ian Ireland
20 August 2001
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ISSN 1328-8091
© Commonwealth of Australia 2000
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2001.
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