What you need to know about the China-Australia Free Trade Agreement (ChAFTA)

Commentary from Hunt & Hunt Lawyers

The China Australia Free Trade Agreement was signed recently, meaning the wording is now finalised and can be released to the public. We can now review the tariff commitments and inform clients what will be the preferential duty rate if they meet the applicable rules of origin.

Below we set out 7 key points we have identified from the 1000 page agreement:

1.       Certificate of origin – Imports into both Australia and China will need either a Certificate of Origin or a Declaration of Origin to claim the preferential rate.
Each origin document will only apply to a single consignment. At this point in time, it is not known who will be the approved Chinese issuing authority.

2.       Declaration of origin – Declarations of origin can be issued by either the producer or exporter but only if they have an origin ruling covering the produce from the importing Customs Authority.
This means that before a Chinese manufacturer can produce a declaration of origin they will need an origin advice from Australian Customs (soon to be re-branded as
Australian Border Force, or ABF).
We expect this requirement will have a serious impact on the turn-around times of Australian Customs issuing such rulings.

3.      Clothing and Textiles – Note: Whoever negotiated the duty reductions for clothing and textiles must not have realised the general rates would drop to 5% on 1 January 2015.  The “preferential” rates for clothing and textiles under ChAFTA for year 1 are scheduled to be 6.6% !!

4.       Rules of origin – There is almost no use of regional value content to demonstrate Australian or Chinese origin of the goods. The main method for determining origin will be change in tariff classification.  On the rare occasion where regional value content is used, it is often an additional requirement to the change in tariff classification rule, not an alternative requirement.

5.      Commencement – Now that the text has been released, a commencement in late 2015 is likely.  Before commencement the agreement will be subject to Senate review and then have to be implemented via domestic legislation.  If the agreement commences in 2015, year 2 of the agreement will commence on 1 January 2016.  A 2015 commencement will see most products that are not immediately duty free, have a 0 duty rate by 1 January 2017.

** Please refer to the ACS Web Site –  Click here

Should you have any questions or concerns on this matter please do not hesitate to contact this office.

The OCAM Global Logistics Team

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