Commonwealth Numbered Regulations - Explanatory Statements

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CUSTOMS REGULATIONS (AMENDMENT) 1997 NO. 255

STATUTORY RULES 1997 No. 255

issued by the Authority of the Minister for Customs and Consumer Affairs

Customs Act 1901

Customs Regulations (Amendment)

Section 270 of the Customs Act 1901 ("the Act") provides the general head of power for the Governor-General to make regulations prescribing all matters which are required, necessary or convenient to be prescribed for giving effect to the Act or for the conduct of any business relating to the Customs.

Division 1A of Part VIII of the Customs Act 1901 ("the Act"), Which includes section 153G, contains the "rules of origin" provisions which set out the method for determining whether preferential rates of customs duty apply to goods imported into Australia from preference countries.

The Forum Island Countries and Papua New Guinea (PNG) are included in the list of preference countries as specified in subsection 3(1) of and Part 1 of Schedule 1 to the Customs Tariff Act 1995 so that preferential rates apply to goods manufactured in these countries.

Subsection 153L(2) of the Act provides, inter alia, that goods are the manufacture of PNG or a Forum Island Country if their allowable factory cost is not less than the specified percentage of their total factory cost. Section 153B of the Act defines "allowable factory costs" to mean, inter alia, "the allowable expenditure of the factory on overheads in respect of the goods worked out under section 153G".

Subsection 153G(1) of the Act provides the general head of power to prescribe by regulation the costs the sum of which is the allowable expenditure of a factory on overheads in respect of preference claim goods. Subsection 153G(2) provides that regulations prescribing a cost for the purposes of subsection (1) may also specify the manner of working out that cost.

Regulation 107B of the Customs Regulations prescribes costs for the allowable expenditure of a factory on overheads for the purposes of subsection 153G(1).

The South Pacific Regional Trade and Economic Cooperation Agreement ("SPARTECA") is an agreement between Australia, New Zealand and the Forum Island Countries of the South Pacific which provides the Forum Island Countries with, inter alia, duty free entry into Australia and New Zealand, on a non-reciprocal basis, of goods (except sugar) regarded as originating in those countries.

These Regulations were introduced to align the application of the "rules of origin" provisions of the Customs Regulations under the SPARTECA with their application under the Australia New Zealand Closer Economic Relations Trade Agreement by including, in regulation 107B(4), the costs of contracting out of part of the manufacturing process within PNG and the Forum Island Countries for the purposes of calculating allowable expenditure of a factory on overheads under subsection 153G(1) of the Act. The Customs Regulations currently only prescribe the cost of contracting out part of the manufacturing process within Australia and New Zealand (paragraph 107B(1)(q) of the Customs Regulations) for the purposes of calculating the allowable expenditure of a factory on overheads under subsection 153G(1).

This method of calculating the cost is for the purposes of determining whether or not the allowable factory cost is not less than the specified percentage of a goods total factory cost for the purpose of determining whether the goods are the produce of PNG or the Forum Island Countries so that preferential rates of duty might be applied when those goods are imported into Australia.

These regulations also effected a minor technical amendment to subregulation 107B(2) consequential to a change in the drafting style of subregulation 107B(4) (subregulation 2.1 refers).

These regulations commenced on gazettal.