House of Representatives

Explanatory Memorandum

Circulated By Authority of the Minister for Home Affairs, the Honourable Brendan O'Connor Mp

OUTLINE

The purpose of this Bill is to amend the Customs Act 1901 (the Customs Act) to introduce new rules of origin for goods that are imported into Australia from a Party to the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (the Agreement). The Customs Act amendments will enable goods that satisfy the rules of origin to enter Australia at preferential rates of customs duty.

Complementary amendments will also be made to the Customs Tariff Act 1995 (the Customs Tariff Act) by the Customs Tariff Amendment (ASEAN-Australia-New Zealand Free Trade Agreement Implementation) Bill 2009.

Formal talks between the Governments of the ten Association of South East Asian Nations (ASEAN) Member States, New Zealand and Australia to establish a Free Trade Agreement commenced in March 2005, culminating in the signing of the Agreement in February 2009.

The Agreement is the first free trade agreement Australia has signed since the onset of the global financial crisis and demonstrates the Government's commitment to providing a solid platform to support growth in Australia's trade and investment with the region.

As a group, ASEAN and New Zealand constitute a larger trading partner for Australia than any single country. Two-way trade was valued at $103 billion in 2007-08, accounting for 21% of Australia's total trade. Australia's two-way trade with ASEAN has grown by an annual average of 10 per cent over the past decade - faster than Australia's trade with any of its top 10 commercial partners, except China.

The Agreement is the most comprehensive free trade agreement that ASEAN has concluded. It covers goods, services, investment, intellectual property, e-commerce, temporary movement of business people, and economic cooperation. The Agreement also binds ASEAN tariffs and contains substantial tariff elimination commitments, which will strengthen Australia's commercial ties with the region. It also contains commitments that will expand and deepen over time in line with development of the ASEAN Economic Community.

To give effect to the preferential entry of goods under the Agreement, the amendments contained in this Bill provide rules for determining whether goods are AANZ originating goods. The amendments to the Customs Tariff Act will provide for the preferential entry of goods that meet those rules.

The amendments contained in this Bill will be operative from the later of the day the Bill receives the Royal Assent or the day the Agreement enters into force for Australia.