US Free Trade Agreement Implementation Act 2004 (120 of 2004)

Schedule 1 Customs amendments

Part 1 US originating goods

Customs Act 1901

1 After Division 1B of Part VIII

Insert:

Division 1C - US originating goods

Subdivision A - Preliminary

153Y Simplified outline

The following is a simplified outline of this Division:

• This Division defines US originating goods . Preferential rates of customs duty under the Customs Tariff Act 1995 apply to US originating goods that are imported into Australia.

• Subdivision B provides that goods are US originating goods if they are wholly obtained or produced entirely in the US.

• Subdivision C provides that goods are US originating goods if they are produced entirely in the US, or in the US and Australia, exclusively from originating materials.

• Subdivision D sets out when goods (except clothing and textiles) that are produced entirely in the US, or in the US and Australia, from non-originating materials only, or from non-originating materials and originating materials, are US originating goods.

• Subdivision E sets out when goods that are clothing or textiles that are produced entirely in the US, or in the US and Australia, from non-originating materials only, or from non-originating materials and originating materials, are US originating goods.

• Subdivision F sets out when accessories, spare parts or tools (imported with other goods) are US originating goods.

• Subdivision G deals with how the packaging materials or containers in which goods are packaged affects whether the goods are US originating goods.

• Subdivision H deals with how the consignment of goods affects whether the goods are US originating goods.

153YA Interpretation

Definitions

(1) In this Division:

Agreement means the Australia-United States Free Trade Agreement done at Washington DC on 18 May 2004, as amended from time to time.

Note: In 2004 the text of the Agreement was accessible on the Internet through the web site of the Department of Foreign Affairs and Trade.

Australian originating goods means goods that are Australian originating goods under a law of the US that implements the Agreement.

Convention means the International Convention on the Harmonized Commodity Description and Coding System done at Brussels on 14 June 1983.

Note: The text of the Convention is set out in Australian Treaty Series 1988 No. 30. In 2004 this was available in the Australian Treaties Library of the Department of Foreign Affairs and Trade, accessible on the Internet through that Department's world-wide web site.

customs value , in relation to goods, has the meaning given by section 159.

fuel has its ordinary meaning.

Harmonized System means the Harmonized Commodity Description and Coding System (as in force from time to time) that is established by or under the Convention.

Harmonized US Tariff Schedule means the Harmonized Tariff Schedule of the United States (as in force from time to time).

indirect materials means:

(a) goods used in the production, testing or inspection of other goods, but that are not physically incorporated in the other goods; or

(b) goods used in the operation or maintenance of buildings or equipment associated with the production of other goods;

including:

(d) tools, dies and moulds; and

(e) lubricants, greases, compounding materials and other similar goods; and

(f) gloves, glasses, footwear, clothing, safety equipment and supplies for any of these things; and

(g) catalysts and solvents.

Interpretation Rules means the General Rules for the Interpretation of the Harmonized System provided for by the Convention.

national of the US has the meaning given by Annex 1-A to Chapter 1 of the Agreement.

non-originating materials means goods that are not originating materials.

originating materials means:

(a) goods that are used in the production of other goods and that are US originating goods; or

(b) goods that are used in the production of other goods and that are Australian originating goods; or

Example: This example illustrates goods produced from originating materials and non-originating materials.

Pork sausages are produced in the US from US cereals, Hungarian frozen pork meat and Brazilian spices.

The US cereals are originating materials since they are goods used in the production of other goods (the sausages) and they are US originating goods under Subdivision B.

The Hungarian frozen pork meat and Brazilian spices are non-originating materials since they are produced in countries other than the US and Australia.

produce means grow, raise, mine, harvest, fish, trap, hunt, manufacture, process, assemble or disassemble. Producer and production have corresponding meanings.

recovered goods means goods in the form of individual parts that:

(a) have resulted from the complete disassembly of goods which have passed their useful life or which are no longer useable due to defects; and

(b) have been cleaned, inspected or tested (as necessary) to bring them into reliable working condition.

remanufactured goods means goods that:

(a) are produced entirely in the US; and

(b) are classified to:

(i) Chapter 84, 85 or 87 (other than heading 8418, 8516 or 8701 to 8706), or to heading 9026, 9031 or 9032 of Chapter 90, of the Harmonized System; or

(ii) any other tariff classification prescribed by the regulations; and

(d) have a similar useful life, and meet the same performance standards, as new goods:

(i) that are so classified; and

(ii) that are not comprised of any recovered goods; and

(e) have a producer's warranty similar to such new goods.

Schedule 1 tariff table means the table in Schedule 1 to the Customs (Australia-United States Free Trade Agreement) Regulations 2004.

Schedule 2 tariff table means the table in Schedule 2 to the Customs (Australia-United States Free Trade Agreement) Regulations 2004.

US means the United States of America.

used means used or consumed in the production of goods.

US originating goods means goods that, under this Division, are US originating goods.

Value of goods

(2) The value of goods for the purposes of this Division is to be worked out in accordance with the regulations. The regulations may prescribe different valuation rules for different kinds of goods.

Tariff classifications

(3) In specifying tariff classifications for the purposes of this Division, the regulations may refer to the following:

(a) the Harmonized System;

(b) the Harmonized US Tariff Schedule.

(4) Subsection 4(3A) does not apply for the purposes of this Division.

Regulations

(5) For the purposes of this Division, the regulations may apply, adopt or incorporate any matter contained in any instrument or other writing as in force or existing from time to time.

Subdivision B - Goods wholly obtained or produced entirely in the US

153YB Goods wholly obtained or produced entirely in the US

(1) Goods are US originating goods if they are wholly obtained or produced entirely in the US.

(2) Goods are wholly obtained or produced entirely in the US if, and only if, the goods are:

(a) minerals extracted in the US; or

(b) plants grown in the US, or in the US and Australia, or products obtained from such plants; or

(d) goods obtained from hunting, trapping, fishing or aquaculture conducted in the US; or

(e) fish, shellfish or other marine life taken from the sea by ships registered or recorded in the US and flying the flag of the US; or

(f) goods produced exclusively from goods referred to in paragraph (e) on board factory ships registered or recorded in the US and flying the flag of the US; or

(g) goods taken from the seabed, or beneath the seabed, outside the territorial waters of the US by the US or a national of the US, but only if the US has the right to exploit that part of the seabed; or

(h) goods taken from outer space by the US or a national of the US; or

(i) waste and scrap that:

(i) has been derived from production operations in the US; or

(ii) has been derived from used goods that are collected in the US and that are fit only for the recovery of raw materials; or

(j) recovered goods derived in the US and used in the US in the production of remanufactured goods; or

(k) goods produced entirely in the US exclusively from goods referred to in paragraphs (a) to (i) or from their derivatives.

Subdivision C - Goods produced entirely in the US or in the US and Australia exclusively from originating materials

153YC Goods produced entirely in the US or in the US and Australia exclusively from originating materials

Goods are US originating goods if they are produced entirely in the US, or entirely in the US and Australia, exclusively from originating materials.

Subdivision D - Goods (except clothing and textiles) produced entirely in the US or in the US and Australia from non-originating materials

153YD Simplified outline

The following is a simplified outline of this Subdivision:

• This Subdivision sets out when goods (except clothing and textiles) that are produced entirely in the US, or in the US and Australia, from non-originating materials only, or from non-originating materials and originating materials, are US originating goods.

• The goods may be US originating goods under section 153YE (which applies to all goods except clothing and textiles).

• The goods may also be US originating goods under section 153YF (which applies only to goods that are chemicals, plastics or rubber).

153YE Goods (except clothing and textiles) produced entirely in the US or in the US and Australia from non-originating materials

(1) Goods are US originating goods if:

(a) a tariff classification (the final classification ) that is specified in column 2 of the Schedule 1 tariff table applies to the goods; and

(b) they are produced entirely in the US, or entirely in the US and Australia, from non-originating materials only or from non-originating materials and originating materials; and

First requirement

(2) Subject to subsection (3), the first requirement applies only if a change in tariff classification is specified in column 3 of the Schedule 1 tariff table opposite the final classification for the goods. The first requirement is that:

(a) each of the non-originating materials satisfies the transformation test (see subsection (8)); or

(b) the following are satisfied:

(i) the total value of all the non-originating materials does not exceed 10% of the customs value of the goods;

(ii) if one or more of the non-originating materials are prescribed for the purposes of this paragraph - each of those non-originating materials satisfies the transformation test (see subsection (8)).

Note 1: Paragraph (2)(b) relates to Article 5.2 (De Minimis) of the Agreement.

Note 2: The value of the non-originating materials is to be worked out in accordance with the regulations: see subsection 153YA(2).

(3) However, the first requirement does not apply if:

(a) an alternative requirement to the change in tariff classification is also specified in column 3 of the Schedule 1 tariff table opposite the final classification for the goods; and

(b) that alternative requirement is satisfied.

Second requirement

(4) Subject to subsection (5), the second requirement applies only if a regional value content requirement is specified in column 3 of the Schedule 1 tariff table opposite the final classification for the goods. The second requirement is that the goods satisfy that regional value content requirement.

(5) However, the second requirement does not apply if:

(a) an alternative requirement to the regional value content requirement is also specified in column 3 of the Schedule 1 tariff table opposite the final classification for the goods; and

(b) that alternative requirement is satisfied.

(6) The regulations may prescribe different regional value content requirements for different kinds of goods.

Third requirement

(7) The third requirement is that the goods satisfy any other requirement that is specified in, or referred to in, column 3 of the Schedule 1 tariff table opposite the final classification for the goods.

Transformation test

(8) A non-originating material satisfies the transformation test if:

(a) it satisfies the change in tariff classification that is specified in column 3 of the Schedule 1 tariff table opposite the final classification for the goods; or

(b) it does not satisfy the change in tariff classification mentioned in paragraph (a), but it was produced entirely in the US, or entirely in the US and Australia, from other non-originating materials, and each of those materials satisfies the transformation test (including by one or more applications of this subsection).

Note 1: Paragraph (8)(b) relates to paragraph 2 of Article 5.3 (Accumulation) of the Agreement.

Note 2: Subsection (8) operates in a recursive manner: a non-originating material may satisfy the transformation test in its own right, or it may satisfy it because each non-originating material used to produce it satisfies the transformation test (whether because each of those materials does so in its own right, or because each non-originating material used to produce the material does so), and so on.

153YF Goods that are chemicals, plastics or rubber

Goods are US originating goods if:

(a) they are produced entirely in the US, or entirely in the US and Australia, from non-originating materials only or from non-originating materials and originating materials; and

(b) they are goods that are classified to any of Chapters 28 to 40 of the Harmonized System; and

(c) a tariff classification (the final classification ) that is specified in column 2 of the Schedule 1 tariff table applies to the goods; and

(d) before the tariff classifications in column 2 of that table in relation to Chapter 28 or 39 of the Harmonized System, the regulations specify particular rules in column 3 of that table; and

(e) those rules apply in relation to the final classification for the goods; and

(f) the goods satisfy those rules.

Subdivision E - Goods that are clothing or textiles produced entirely in the US or in the US and Australia from non-originating materials

153YG Simplified outline

The following is a simplified outline of this Subdivision:

• This Subdivision sets out when goods that are clothing or textiles that are produced entirely in the US, or in the US and Australia, from non-originating materials only, or from non-originating materials and originating materials, are US originating goods.

• The goods may be US originating goods under section 153YH (which applies to all clothing and textiles).

• The goods may also be US originating goods under section 153YI (which applies only to clothing and textiles classified to Chapter 62 of the Harmonized System).

153YH Goods that are clothing or textiles produced entirely in the US or in the US and Australia from non-originating materials

(1) Subject to subsection (5), goods are US originating goods if:

(a) a tariff classification (the final classification ) that is specified in column 2 of the Schedule 2 tariff table applies to the goods; and

(b) they are produced entirely in the US, or entirely in the US and Australia, from non-originating materials only or from non-originating materials and originating materials; and

Note: Subsection (5) sets out a qualification for goods put up in a set for retail sale.

First requirement

(2) The first requirement applies only if a change in tariff classification is specified in column 3 of the Schedule 2 tariff table opposite the final classification for the goods. The first requirement is that:

(a) subject to subsection (3), each of the non-originating materials satisfies the transformation test (see subsection (7)); or

(b) the following are satisfied:

(i) the total weight of all the non-originating materials does not exceed 7% of the total weight of the goods;

Note: Paragraph (2)(b) relates to paragraphs 6 and 7 (De Minimis) of Article 4.2 of the Agreement.

(3) In relation to goods classified to Chapter 61, 62 or 63 of the Harmonized System, paragraph (2)(a) is to be applied by applying:

(a) for goods covered by Chapter 61 of the Harmonized System - Chapter Rule 2 for Chapter 61 that is set out in the Schedule 2 tariff table; and

(b) for goods covered by Chapter 62 of the Harmonized System - Chapter Rule 3 for Chapter 62 that is set out in the Schedule 2 tariff table; and

(c) for goods covered by Chapter 63 of the Harmonized System - Chapter Rule 1 for Chapter 63 that is set out in the Schedule 2 tariff table.

Second requirement

(4) The second requirement is that the goods satisfy any other requirement that is specified in, or referred to in, column 3 of the Schedule 2 tariff table opposite the final classification for the goods.

Goods put up in a set for retail sale

(5) However, if:

(a) the goods are put up in a set for retail sale; and

(b) the goods are classified in accordance with Rule 3 of the Interpretation Rules;

the goods are US originating goods only if:

(d) the total value of the goods in the set that are not US originating goods under this Division does not exceed 10% of the customs value of the set of goods.

Note: The value of the goods in the set is to be worked out in accordance with the regulations: see subsection 153YA(2).

(6) In applying paragraph (5)(c), assume the goods were not part of a set.

Example: A skirt and a belt are put up in a set for retail sale. The skirt and the belt have been classified under Rule 3 of the Interpretation Rules according to the tariff classification applicable to skirts.

The effect of subsection (6) is that the origin of the belt must now be determined according to the tariff classification applicable to belts.

Transformation test

(7) A non-originating material satisfies the transformation test if:

(a) it satisfies the change in tariff classification that is specified in column 3 of the Schedule 2 tariff table opposite the final classification for the goods; or

Note 1: Paragraph (7)(b) relates to paragraph 2 of Article 5.3 (Accumulation) of the Agreement.

Note 2: Subsection (7) operates in a recursive manner: a non-originating material may satisfy the transformation test in its own right, or it may satisfy it because each non-originating material used to produce it satisfies the transformation test (whether because each of those materials does so in its own right, or because each non-originating material used to produce the material does so), and so on.

153YI Goods that are clothing and textiles classified to Chapter 62 of the Harmonized System

Goods are US originating goods if:

(a) they are produced entirely in the US, or entirely in the US and Australia, from non-originating materials only or from non-originating materials and originating materials; and

(b) they are goods that are classified to Chapter 62 of the Harmonized System; and

(i) in any case - the goods satisfy Chapter Rule 2 for Chapter 62 that is set out in the Schedule 2 tariff table; or

(ii) in the case of goods that are classified to subheading 6205.20 or 6205.30 of Chapter 62 of the Harmonized System - the goods satisfy the subheading rule for that subheading that is set out in the Schedule 2 tariff table.

Subdivision F - Other US originating goods

153YJ Standard accessories, spare parts and tools

(1) If goods (the underlying goods ) are imported into Australia with standard accessories, standard spare parts or standard tools, then the accessories, spare parts or tools are US originating goods if:

(a) the underlying goods are US originating goods; and

(b) the accessories, spare parts or tools are not invoiced separately from the underlying goods; and

(c) the quantities and value of the accessories, spare parts or tools are the usual quantities and value in relation to the underlying goods.

(2) In working out if the underlying goods are US originating goods, if the goods must satisfy a regional value content requirement under Subdivision D, the regulations must require the value of the accessories, spare parts or tools to be taken into account for the purposes of that requirement.

Note: The value of the accessories, spare parts or tools is to be worked out in accordance with the regulations: see subsection 153YA(2).

Subdivision G - Packaging materials and containers

153YK Packaging materials and containers

(1) If:

(a) goods are packaged for retail sale in packaging material or a container; and

(b) the packaging material or container is classified with the goods in accordance with Rule 5 of the Interpretation Rules;

then the packaging material or container is to be disregarded for the purposes of this Division (with 1 exception).

(2) The exception is that in working out if the goods are US originating goods, if the goods must satisfy a regional value content requirement under Subdivision D, the regulations must require the value of the packaging material or container to be taken into account for the purposes of that requirement.

Note: The value of the packaging material or container is to be worked out in accordance with the regulations: see subsection 153YA(2).

Subdivision H - Consignment

153YL Consignment

(1) Goods are not US originating goods under this Division if:

(a) they are transported through a country or place other than the US or Australia; and

(b) they undergo any process of production in that country or place (other than unloading, reloading, any operation to preserve them in good condition or any operation that is necessary for them to be transported to Australia).

(2) This section applies despite any other provision of this Division.

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