Bills Digest No. 228 1997-98
Customs Tariff Amendment Bill (No.2) 1998
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
Concluding Comments
Endnotes
Contact Officer and Copyright Details
Customs Tariff Amendment Bill (No.2) 1998
Date Introduced: 27
May 1998
House: House of Representatives
Portfolio: Customs
and Consumer Affairs
Commencement: Sections
1, 2 and 3 commence upon Royal Assent; Schedule 1 commences on 1 July
1998.
This Bill amends the Customs Tariff
Act 1995 (the Act) to remove customs duties from certain inputs to
the manufacture of information technology (IT) industry equipment in Australia.(1)
The Bill also establishes a new Schedule 4 item. This
allows duty free entry for those inputs not covered by the Information
Technology Agreement (ITA).
The ITA refers to the Ministerial Declaration on Trade
in Information Technology Products (the Declaration).(2)
Australia, along with forty-two other countries, is a
signatory to the Declaration.
The Declaration provides for the elimination of customs
and other duties and charges on certain IT products.
The commitments undertaken require participants to bind
these commitments in their World Trade Organisation (WTO) schedules.
World Trade Organisation Ministerial Declaration
On 26 March 1997 participant Ministers agreed in Singapore
on the expansion of world trade in IT products.
Key elements of the Declaration were based on:
- considering the key role of trade in IT products in the development
of information industries and in the dynamic expansion of the world
economy
- recognising the goals of raising standards of living and expanding
the production of and trade in goods
- desiring to achieve maximum freedom of world trade in IT products
- desiring to encourage the continued technological development of the
IT industry on a world-wide basis
- being mindful of the positive contribution IT technology makes to
global economic growth and welfare.(3)
The Declaration provided that the duty eliminations would
occur provided participants representing approximately ninety percent
of world trade in IT products agreed to participate. Participants now
collectively account for approximately ninety-three percent of world trade
in IT products.(4)
In general, there are six main categories of products
covered:
- computers
- telecommunications
- semiconductors
- semiconductor manufacturing equipment
- software and
- scientific instruments.
The Declaration provides for IT tariffs to be eliminated
in four steps by the year 2000. With the exception of a small range of
finished goods, this Bill brings forward, from 1 January 2000 to 1 July
1998, all duty reductions scheduled under the Declaration.
The goods which remain on the 1 January 2000 reduction
schedule include:
- line telephone, cordless, mobile and other telephone sets
- facsimile and answering machines
- digital still image cameras
- pagers and
- antennas and aerial reflectors.
Impact on Australian manufactures
Currently, most fully assembled IT goods (eg. printed
circuit boards, computers) are imported duty free. These goods use inputs
such as chemical products, electronic components and sub-assemblies during
the manufacturing process.
Australian made IT goods use the same inputs, however
these inputs currently attract either a 3% or 5% tariff. The result is
that Australian companies manufacturing IT equipment face an anomalous
tariff situation whereby the 3% or 5% duties payable on inputs necessarily
flow onto the cost of their goods.
In the past, the computer bounty had the effect of redressing
this tariff disparity, but with the cessation of the bounty in July 1997,
manufacturers have faced a situation of negative assistance.
In the 'Investment for Growth' statement of 8 December
1997, the Prime Minister said that tariffs would be removed on inputs
to the manufacture of information industries equipment to reduce input
costs, after a short consultation process with local component suppliers
to assess the likely impact on them. He also said that whenever doubts
over classification of information technology equipment arise, the lowest
tariff would be applied.(5)
New Schedule 4 Item
The second element of the Bill establishes a new Schedule
4 item in the Act. This will allow duty free entry for inputs, not covered
by the Declaration, which are currently subject to a Commercial Tariff
Concession Order or a Tariff Concession Order.
Clause 3 is the formal enabling provision for
the Schedule to the Bill. It provides that each Act specified in the Schedule
is amended in accordance with the applicable items of the Schedule.
Schedule 1 provides for the listed amendments
to commence on 1 July 1998. Amendment 74 of the Schedule allows the duty
free importation of certain other inputs to the manufacture of information
industries equipment which were not covered by the Declaration.
Though the Bill will enhance Australia's trade liberalisation
credentials, it is estimated that the action will cost the Federal Government
$52m in 1998-99, $28m in the following year and $5m per annum thereafter.
- Inputs are goods that are an integral part of the manufacturing process
for equipment, and include goods that are incorporated into the equipment
or consumed during the manufacturing of the equipment, as well as certain
capital equipment utilised in the manufacturing process.
- World Trade Organisation, Singapore Conference, declared 26 March
1997.
- World Trade Organisation Internet site: http://www.wto.org/wto/new/inftech.htm.
- Ibid.
- Explanatory Memorandum, Custom Tariff Amendment Bill (No.2)
1998.
Ross Kilmurray
5 June 1998
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1998
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Published by the Department of the Parliamentary Library, 1998.
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