Download - Australia’s System of Preferences
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Australia’s System of Preferences
What we need to know
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AIMS OF THIS SESSIONThe topic is about Tariff Treatment of goods
from certain countries
Re-aquaint you with preference terms
provisions
types
Recent developmentsSAFTALDC
Answering Exam questionsWhat to look for
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The TermsOrigin
Preference
Rules
Produce
Manufacture
Allowable Factory Cost
Qualifying Area
Total Factory Cost
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Origin & Preference•Origin
–A matter of fact–Where did it originate from?
“the act or fact of something coming into existence”
•Preference–A matter of determination –According to the rules
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The Rules
Produce or Manufacture of;
- a particular country not being Australia
- a Developing Country not being a particular Developing Country
Not produce or manufacture unless in accordance with the rules
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The Rules
See Section 153D(1)
153D(6)
153D(6A)
153E(2)
153J - 153Q
Determination of qualification parameters
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Produce or Manufacture
Produce:Unmanufactured Raw Products - Section 153H
Waste & Scrap - Section 153D(7)
Manufacture:Having regard to their
Final Process of Manufacture and
Allowable Factory Costs in their
Qualifying Area
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Qualifying AreaSection 153B
New Zealand
Canada
Papua New Guinea
Forum Island Country
particular Developing Country (inc. LDC)
DC but not a particular DC
Singapore
not a preference country
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Concept of: Total Factory CostAllowable Factory Cost
Section 153B, Total Factory Cost = sum of:Total Expenditure on materials (S153C) - received at factory
Allowable factory expenditure on labour(S153D)
Allowable factory expenditure on overheads (S153F)
Allowable factory cost = sum of:Allowable factory expenditure on materials (153D, E)
Allowable factory expenditure on labour
Allowable factory expenditure on overheads
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Allowable Expenditure - Factory Materials Section 153D(1) - the cost of materials as received at factory
- adjusted/disregarded as necessary (S153E)
- except for “partly manufactured from materials imported from outside the qualifying area” (2) - inland freight rule - PNG & FI (3) - “intervening manufacture” (4) - “intervening export of contributing materials”(5) - NZ, special rule - total expenditure (6)AFC of “particular materials” >50% of TFC on “particular materials”
- PNG & FI, special rule - total expenditure (6A)AFC of “particular materials” >50% of TFC on “particular materials”
- Transhipment- disregarded re country of export (8)
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Allowable Expenditure - Factory Labour
• Incurred by the manufacturer of the goods
• Relates to the manufacture of the goods
• Can be allocated to manufacture of the goods• Refer Reg. 107A
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Allowable Expenditure - Factory Overheads
• Incurred by the manufacturer of the goods
• Relates to the manufacture of the goods
• Can be allocated to manufacture of the goods• refer Reg 107B
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Rules for individual countries S153J New Zealand (1) Wholly manufactured(2) Partially manufactured
(a) final process of manufacture(b) AFC =/> specified % of TFC
(4) Specified % = 50% or less if CEO determines
may be 48% (153K) (non-recurring circumstances)
S153L PNG & FI(1) Wholly manufactured(2) Partially manufactured
(a) final process of manufacture(b) AFC =/> specified % of TFC
(4) Specified % = 50% or less if CEO determines
may be 48% (153LA) (non-recurring circumstances)
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Rules for individual countries S153P Canada (1) Shipped direct to Australia
not transhippedif transhipped, original destination Australia
(2) Wholly manufactured, from;unmanufactured raw productsmaterials wholly mfd in Aust and/or Canadadetermined manufactured raw materials
(3) Partially manufactured(a) final process of manufacture(b) AFC =/> specified % of TFC
(4) Specified % = 75% of commercially available goodsSpecified % = 25% of not comm. available goods
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Singapore-AustraliaFree Trade Agreement
• Rule 1 - Wholly obtained goods
• Rule 2 - Wholly manufactured goods
• Rule 3 - Partly manufactured goods– accumulation
• Rule 4 - Partly manufactured goods– no accumulation
New Section 153UA inserted
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Rule 1
• Wholly obtained goods– unmanufactured raw products– waste & scrap
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Wholly manufactured goods
• Made from– unmanufactured raw products– waste & scrap– material wholly manufactured in Singapore or
Australia– “determined manufactured raw materials”
• new term - DMRM
• not necessarily of Singapore origin
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Rule 3 Partly manufactured goods -
no accumulation• Final Process of manufacture in Singapore
• AFC => 30% TFC for Annex 2D goods– Annex 2D (i) specifies certain Tariff references– Annex 2D(ii) covers goods under current TCO
• AFC => 50% TFC for other goods
• Introduces “by or on behalf of the manufacturer”
• Covers partially processed outside Singapore
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Rule 4 Partly manufactured goods -
accumulation• Applies to goods other than Annex 2C
• One/more process of manufacture in Singapore
• A process in Singapore immed. before export
• A manufacturer identified as “principal manufacturer
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Transport Rules
• Transported directly, or
• Transported through another country only if:– Undergone minor operations to preserve them– Not traded or used in that country
• Transported from another country where minimal operations performed immediately after importation from Singapore
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Evidence of Origin• Certificate of Origin
– Issued by Singapore Customs– Specifies the Rule number and conditions
• e.g. Rule 3, Annex 2D(ii) TCO covered goods– must specify TCO number
– invalid if TCO number has changed
• Exporter Declaration– for each shipment– declares goods covered by Origin Certificate
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Areas most commonly examined
• Difference between Preference & Origin
• Calculation of component criteria– TFC– AFC
• “qualifying area”, – value inputs from different countries
– intervening manufacture
• expenditure on factory labour and materials – determined manufactured raw materials
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Be aware of:
• Special Rules - NZ, PNG, Forum Islands– inc. “manufactured” - 48% may be read as 50%
• definition of “produce”
• “Particular Developing Country”
• “But not in a Particular Developing Country”
• “Less Developed Countries”
• SAFTA
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QUESTIONS?QUESTIONS?