6. Case Study: The Australia - United States Free Trade Agreement

Case study: the Australia-United States Free Trade Agreement

To qualify as an originating good, and therefore become eligible for preferential tariff treatment into the US under the AUSFTA, the product must be:

01  Wholly obtained in Australia

The good is produced entirely in Australia, such as minerals extracted, vegetables harvested, or live animals born and raised.

02  Wholly from originating materials

The good is produced in Australia wholly from other originating materials sourced from either Australia or the United States.

03  Partly from non-originating materials

The good is produced in Australia partly from non-originating materials, where those materials meet the area content or transformation rules in the relevant Annex.

 

The change of tariff classification concept used in the Annexes means that inputs sourced from outside Australia or the US must not come from the same HS Code as the goods in question, and not from a defined set of related HS codes. This ensures that sufficient transformation has occurred within Australia to justify the claim that the product is a legitimate product of Australia.

Verifying the origin of goods imported under the AUSFTA

Article 5.12.1 of the Agreement allows a claim for preferential treatment based on the importer's knowledge or on information in the importer's possession that the good qualifies as an originating good, although the importer may be required to submit, on request, a statement setting forth the reasons that the good so qualifies. This may include relevant cost and manufacturing information.

Article 5.14 requires that importers maintain, for up to 5 years after the date of importation, records relating to the importation of the relevant goods, and may require that an importer provide, on request, records necessary to demonstrate that a good qualifies as an originating good.

Finally, in Article 5.15:

For the purpose of determining whether a good imported into its territory from the territory of the other Party qualifies as an originating good, a Party may conduct verification by means of one or more of the following:

■        Requests for information from the importer.

■        Written requests for information to an exporter or a producer in the territory of the other Party.

■        Requests for the importer to arrange for the producer or exporter to provide information directly to the Party conducting the verification.

■        Information received directly by the importing Party from an importer as a result of a request described in Article 5.12.2.

■        Visits to the premises of an exporter or a producer in the territory of the other Party, in accordance with any procedures that the Parties jointly adopt.

■        For textile and apparel goods, procedures set forth in Article 4.3 (Customs Cooperation).

■        Such other procedures as the Parties may agree.

 

A Party may deny preferential tariff treatment to a good where the importer, exporter, or producer fails to provide information that the Party requests in a verification conducted in accordance with paragraph 1 demonstrating that the good is an originating good.

When a customs entry states that a US preference rate of duty applies, this will be taken to indicate that the importer of the goods possesses information, or knowledge as required in Article 5.12.1, that this declaration is correct.

The criteria for eligibility are set out in Division 1C of Part VIII of the Australian Customs Act 1901. A Certificate of Origin is not required. The information can be in any form the manufacturer wishes to provide, as long as it shows that the imported good meets the rules of origin requirements of AUSFTA.

 

Further reading 4: Australia-United States Free Trade Agreement

Guide to Navigating the AUSFTA Tariff Schedules and Rules of Origin Annexes |

Australia US Free Trade Agreement (DFAT)

Module activity

Why are Rules of Origin essential in the context of Free Trade Agreements (FTAs), and what risk do they help prevent?

Post your responses on Moodle. Your response should be at least 300 words.