Bills Digest no. 24 2006–07
Customs Tariff Amendment (2007 Harmonized System
Changes) Bill 2006
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
Financial implications
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Customs Tariff Amendment (2007
Harmonized System Changes) Bill 2006
Date introduced: 7 September 2006
House: House of
Representatives
Portfolio: Justice and Customs
Commencement: On Royal Assent
To amend various classifications of goods contained in schedules
to the Customs Tariff Act 1995. The amendments result from
agreed changes in the international Harmonized Commodity
Description and Coding System.
Background
According to the World Customs
Organization, the international body responsible for the Harmonized
Commodity Description and Coding System (the Harmonized
System):
The Harmonized Commodity Description and Coding
System, generally referred to as "Harmonized System" or simply
"HS", is a multipurpose international product nomenclature
developed by the World Customs Organization (WCO). It comprises
about 5,000 commodity groups, each identified by a six digit code,
arranged in a legal and logical structure and is supported by
well-defined rules to achieve uniform classification. The system is
used by more than 190 countries and economies as a basis for their
Customs tariffs and for the collection of international trade
statistics. Over 98% of the merchandise in international trade is
classified in terms of the HS.
The HS contributes to the harmonization of Customs
and trade procedures, and the non-documentary trade data
interchange in connection with such procedures, thus reducing the
costs related to international trade. It is also extensively used
by governments, international organizations and the private sector
for many other purposes such as internal taxes, trade policies,
monitoring of controlled goods, rules of origin, freight tariffs,
transport statistics, price monitoring, quota controls, compilation
of national accounts, and economic research and analysis. The HS is
thus a universal economic language and code for goods, and an
indispensable tool for international trade.
The Harmonized System is governed by The
International Convention on the Harmonized Commodity Description
and Coding System.(1)
For the purposes of imports into Australia, the Harmonized
System classifications of goods are reflected in Schedules to the
Customs Tariff Act 1995. Each classification has a
corresponding rate of applicable customs tariff free, 5%, 10%
etc.
The Harmonized System is reviewed approximately every 5 years by
the World Customs Organization (WCO). The changes that are the
subject of this Bill were adopted in mid 2004. Under the provisions
of the International Convention on the Harmonized Commodity
Description and Coding System, member countries may notify the
WCO Secretary General of an objection to a Harmonized System change
within six months of being officially notified of that
change.(2) Neither the Explanatory Memorandum to the
Bill nor the second reading speech provides any information about
whether Australia did object.
The reasons for the changes fall into two main categories:
- technology changes, evolutions in trade patterns and various
administrative updating: and
- to assist in the monitoring and control of various commodities
to which various environmental and other international agreements
apply.(3)
In respect of the second dot point, the Explanatory Memorandum
notes that certain of the changes are designed in part to assist
the international implementation of the Rotterdam Convention on
the Prior Informed Consent Procedure for Certain Hazardous
Chemicals and Pesticides in International Trade (the Rotterdam
Convention). The emphasis of the Rotterdam Convention is the
exchange of information between countries so that importing
countries are fully aware of the potential hazards of importing
certain chemicals and pesticides.(4) For example,
item 89 of the Bill creates a new classification
category for Mercury compounds to assist in the tracking the export
of such substances.
In terms of the possible effects of the Bill on Australian
exports, the Attorney-General in his second reading speech
stated:
While giving effect to the changes to the
Harmonized System, the Customs Tariff Amendment (2007 Harmonized
System Changes) Bill 2006 ensures, to the greatest extent possible,
the preservation of existing duty rates and levels of tariff
protection for Australian industries and margins of preference
accorded to Australia s trading partners.(5)
The Explanatory Memorandum notes there are three commodity areas
in which existing duty rates have been changed through the
Bill.(6) These are for plywood and veneered panels
containing bamboo, certain forms of carbonising paper, and adhesive
paper. However, it appears that these goods are imported in small
quantities - details are set out in page 3 in the Explanatory
Memorandum.
Under both the Australia-US Free
Trade Agreement (AUSFTA) and Thailand-Australia Free Trade
Agreement (TAFTA), there is no customs duty payable for imported
goods originating in the United States or Thailand unless
a rate of customs duty is specifically provided for the relevant
goods.(7) Schedules 5 and 6 of the Customs Tariff
Act 1995 set out the rates for goods originating in these
countries which are dutiable. The Bill ensures that the duty
applicable to those products that are affected by the
classification changes discussed above remain unchanged. According
to the Explanatory Memorandum, this is in accordance with the
respective Free Trade Agreements.(8)
The Explanatory Memorandum states:
Extensive consultation has taken place with
relevant Government Departments and, where necessary, with industry
associations. As a result of these consultations, the Bill has been
designed to give effect to the [Harmonized System] changes while
maintaining, to the greatest extent possible, existing levels of
tariff protection and margins of tariff preference accorded to
Australia s trading partners.(9)
The Explanatory Memorandum states that the impact of the
reductions in some duties is negligible .
Schedule 1 contains almost 600 items, almost
all of which repeal or substitute new classification of goods for
the purposes described in the background to this Digest.
Item 599 provides that the effective date for
the coming into force of the new classifications is 1 January
2007.
Endnotes
- See
http://www.wcoomd.org/ie/En/Topics_Issues/HarmonizedSystem/hsconve2.html.
- See
http://www.wcoomd.org/ie/En/Topics_Issues/HarmonizedSystem/HS2007-net-Eng.pdf.
- ibid.
- Explanatory Memorandum, pp. 3-4.
- The Hon. Phillip Ruddock MP, House of Representatives,
Debates, 7 September 2006, p. 2.
- Explanatory Memorandum, p. 3.
- Explanatory Memorandum, pp 93 and 100. Due the time available
to draft this Digest, this has not been independently verified by
the author of this Digest.
- ibid.
- Explanatory Memorandum, p. 2.
Angus Martyn
13 September 2006
Bills Digest Service
Parliamentary Library
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ISSN 1328-8091
© Commonwealth of Australia 2006
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Published by the Parliamentary Library, 2006.
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