Bills Digest no. 57 2008–09
Customs Tariff Amendment (Australia-Chile Free Trade Agreement
Implementation) Bill 2008
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
Contact officer & copyright details
16 October 2008
Portfolio: Home Affairs
Sections 1 to 3 on Royal
Assent, Schedule 1 on 1 January 2009 or when the Australia-Chile
Free Trade Agreement comes into force, whichever is the later date.
The Minister must announce by notice in the Gazette the day on
which the Agreement comes into force for Australia. If the
Agreement does not come into force in Australia the Bill does not
commence at all.
relevant links to the Bill, Explanatory Memorandum and
second reading speech can be accessed via BillsNet, which is at
When Bills have been passed they can be found at ComLaw, which is
To amend the
Customs Tariff Act 1995 to implement the Australia-Chile
Free Trade Agreement to provide for Free rates and preferential
rates of customs duty on Chilean originating goods.
This Bill together with Customs Amendment
(Australia-Chile Free Trade Agreement Implementation) Bill 2008
will amend the Customs Act 1901 and the Customs Tariff
Act 1995 to implement the provisions of the
Australia-Chile Free Trade Agreement. The former Bill will amend
the Customs Act 1901 to insert a new Division 1F of Part
VIII to define the new rules of origin for Chilean originating
goods. This Bill proposes amendments to the Customs Tariff Act
1995 to provide for Free rates and preferential rates of
Detailed background information to this
Customs Bill can be found in the Bills
Digest to the Customs Amendment (Australia-Chile Free Trade
Agreement Implementation) Bill 2008.
The Explanatory Memorandum indicates that the
customs duty forgone as a result of implementing the Agreement will
- 2008-09 $1.9 million
- 2009-2012 between $4 million and $4.5 million per year.
Schedule 1 Amendments to the Customs Tariff
Item 6 inserts proposed section
13D to provide that Chilean originating goods for the
purposes of the Customs Tariff Act 1995 are goods under
Division 1F of Part VIII of the Customs Act 1901
where the nature of Chilean originating goods is defined.
Section 16 of the Customs Tariff Act
1995 is concerned with the calculation of duty.
Item 9, proposed paragraph
16(1)(m) provides that if goods are Chilean originating
goods and they can be classified to a heading or subheading in
Schedule 3 to be found in column 2 in Schedule 7 Chilean
originating goods then the rate of duty payable is determined from
column 3 in the Schedule 7 table in relation to that
16(1)(m)(ii) provides that all other Chilean
originating goods are free.
Chile is listed as a developing country under
Division 1 of Part 4 of Schedule 1 of the Customs Tariff
Act 1995. Item 10, proposed subsection
16(4) provides that the duty to be applied to Chilean
originating goods will be under paragraph 16(1)(m) and not
paragraph 16(1)(g) as applied previously. In other words the rate
of duty applicable to Chilean originating goods applies and not the
developing country rate.
Item 14 amends existing
subsection 18(2) and inserts proposed paragraph
18(2)(m) which provides that if goods are Chilean
originating goods and the goods are subject to a concessional rate
of duty, then the rate of duty specified in Schedule 4 for that
concessional item will apply. If there is no rate specified, then
it is Free. Item 15 repeals subsections 18(3) and
(4) and replaces them with proposed subsection
18(3). Section 18 of the Customs Tariff Act 1995
deals with the calculation of concessional duty rates.
Proposed subsection 18(3) provides that where
concessional rates of duty apply to a developing country under
paragraph 18(2)(g) and another paragraph of section 18(2) also
applies in relation to working out the duty for those goods then
the other paragraph applies and not section 18(2)(g). An example is
provided to illustrate how the subsection operates. The Explanatory
Memorandum states that proposed subsection 18(3) clarifies and
extends the application of previous subsections 18(3) and (4) to
all Developing Countries, including Chile and Thailand, with which
Australia has a free trade agreement. 
Schedule 3 of the Customs Tariff Act
1995 sets out the classification of goods and the general and
special rates of duty applicable to goods imported into Australia.
Schedule 3 states that the text in the schedule is based on the
wording in the Harmonized Commodity Description and Coding System
that is referred to in the International Convention on the
Harmonized Commodity Description and Coding System done at Brussels
on 14 June 1983.
Below is an extract from Schedule 3 giving an
example of the classification numbers of the Harmonized System. The
classification numbers contained in the Proposed Schedule 7 refer
to the classification numbers set out in Schedule 3.
Customs Tariff Act
Schedule 3 Classification of
goods and general and special rates of duty
Section XI Textiles and textile articles
Chapter 60 Knitted or crocheted fabrics
6003 KNITTED OR CROCHETED
FABRICS OF A WIDTH
NOT EXCEEDING 30 cm, OTHER THAN THOSE OF
6001 OR 6002:
|6003.10.00 -Of wool or fine animal
||From 1 January 2005
||From 1 January 2010
|6003.20.00 -Of cotton
||From 1 January 2005
||From 1 January 2010
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Item 33 is the most
substantive part of the Bill. It inserts new Schedule 7
Chilean originating goods and
incorporates the table of tariffs applicable to Chilean originating
goods. The Schedule consists of Column 1 containing item numbers,
Column 2 indicates the classification number in relation to the
harmonized system, that is the heading and subheading of Schedule 3
in the Customs Tariff Act 1995. Column 3 sets out the rate
of duty that will apply currently and the rates that will apply up
to 2015. The Explanatory Memorandum provides explanations of the
phasing rates of customs duty in Schedule 7 in relation to Chilean
originating goods. In relation to the items referring to alcohol,
tobacco and petroleum the Explanatory Memorandum states the
52. Items 3 to 119 of Schedule 7 impose customs
duty on the alcohol, tobacco and petroleum products that are
Chilean originating goods, at a rate that is equivalent to the
excise duty imposed under the Excise Tariff Act 1921, on
the same goods when domestically produced.
53. Customs Tariff Proposal (No. 1) 2008,
tabled in the House of Representatives on 13 May 2008,
contained alterations to the Customs Tariff to increase rates of
customs duty for those tariff subheadings applicable to certain
spirit based beverages with an alcohol content of less than 10%.
These goods are commonly referred to as alcopops . The tariff
subheadings affected are: 2203.00.31, 2204.10.23, 2204.10.83,
2204.21.30, 2204.29.30, 2205.10.30, 2205.90.30, 2206.00.52,
2206.00.62, 2206.00.92 and 2208.90.20.
11 November 2008
Bills Digest Service
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