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Customs Tariff Amendment Bill (No.2)
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)
World Trade Organisation Ministerial
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
- 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
- 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
In general, there are six main categories of
- 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 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
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
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
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
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
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
- World Trade Organisation, Singapore Conference, declared 26
- World Trade Organisation Internet site:
- Explanatory Memorandum, Custom Tariff Amendment Bill
5 June 1998
Bills Digest Service
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© Commonwealth of Australia 1998
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