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CUSTOMS (CHINESE RULES OF ORIGIN) REGULATION 2015 (SLI NO 209 OF 2015)

EXPLANATORY STATEMENT

 

SELECT LEGISLATIVE INSTRUMENT No. 209, 2015

 

Issued by the Authority of the Minister for Immigration and Border Protection

 

Customs Act 1901

 

Customs (Chinese Rules of Origin) Regulation 2015

 

The Customs Act 1901 (the Act) concerns customs related functions and is the legislative authority that sets out the customs requirements for the importation, and exportation, of goods to and from Australia.

 

Subsection 270(1) of the Act provides, in part, that the Governor-General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to the Act.

The Customs Amendment (China-Australia Free Trade Agreement Implementation) Act 2015 (the ChAFTA Act) amends the Act to fulfil Australia's obligations under Chapter 3 of the Agreement, which deals with rules of origin.  These rules determine whether goods imported into Australia from the territory of China are Chinese originating goods and are thereby eligible for preferential rates of customs duty.  Chinese originating goods are goods from the territory of China that satisfy the new rules of origin which are contained in new Division 1L of Part VIII of the Act, inserted by the ChAFTA Act.

Relevant provisions of the ChAFTA Act which amend the Act are expressed to commence on the later of the day after the Act receives the Royal Assent or the day the Agreement enters into force for Australia.

The purpose of the amending Regulation is to prescribe matters relating to the rules of origin that will be required to be prescribed under new Division 1L (Chinese originating goods).  The relevant provisions of new Division 1L are set out in Attachment A.

The amending Regulation:

    sets out a table in Schedule 1 detailing the product-specific requirements relevant to each tariff classification for goods;

    explains the method used to determine the regional value content (a calculation used in determining whether a good is a Chinese originating good) of goods for the purposes of some of the product-specific requirements set out in Schedule 1;

    specifies the valuation rules for different kinds of goods;

    sets out the record keeping requirements that apply to Australian exporters or producers who export goods to China and obtain preferential tariff treatment in China;

    sets out the circumstances in which Chinese originating goods would be subject to customs control while in the customs territory of Hong Kong, China; and

    prescribes other matters that are required to be prescribed under new Division 1L.

Details of the amending Regulation are set out in Attachment B.

Broad consultation was conducted in relation to the Agreement.  Consequently, the consultation process undertaken for the Agreement also encompassed all matters set out in the Regulation.  Government Departments conducted extensive public and targeted stakeholder consultations during the negotiations of the Agreement.  Details of these consultations were set out in the consultation attachment to the National Interest Analysis of the Agreement.  The Joint Standing Committee on Treaties also conducted an enquiry on the Agreement.  The enquiry included written submissions and a public hearing that resulted in a report recommending binding treaty action be taken. 

The amending Regulation commences on the commencement of Schedule 1 to the ChAFTA Act which will be the later of the day after the Act receives the Royal Assent or the day the Agreement enters into force for Australia.

OPC61528 - A


Attachment A

 

Details of provisions in new Division 1L of Part VIII of the Customs Act 1901 relevant to the Customs (Chinese Rules of Origin) Regulation 2015

 

The Customs Amendment (China-Australia Free Trade Agreement) Act 2015 (the ChAFTA Act) will insert new Division 1L of Part VIII into the Customs Act 1901 (the Act).  New Division 1L of Part VIII of the Act (new Division 1L) will contain the rules of origin set out in Chapter 3 of the China-Australia Free Trade Agreement (the Agreement).  These rules determine whether goods imported into Australia from China are Chinese originating goods and are thereby eligible for preferential rates of customs duty.

 

Subdivision D of new Division 1L will relate to goods that are produced wholly or partly from non-originating materials (relevant goods).

 

Under new subsection 153ZOB(1) of the Act, 'non-originating materials' will mean goods that are not originating materials.  'Originating materials' will be further defined to mean:

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

(b)   Australian originating goods that are used in the production of other goods (Australian originating goods are goods that are Australian originating goods under a law of China that implements the Agreement); or

(c)    indirect materials.

 

Indirect materials is defined in subsection 153ZOB(1) as:

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

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

including:

(c)    fuel (within its ordinary meaning); and

(d)   tools, dies and moulds; and

(e)    spare parts and materials; and

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

(g)   gloves, glasses, footwear, clothing, safety equipment and supplies; and

(h)   catalysts and solvents.

 

New section 153ZOE(1) of the Act will provide that goods are Chinese originating goods if:

(a)    they are classified to a heading or subheading of the Harmonized System that is specified in column 1 of the table in Part 2 of Schedule 1 to regulations made for the purposes of Subdivision D of Division 1L; and

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

(c)    each requirement specified in the regulations to apply in relation to the goods is satisfied; and

(d)   either:

(i)            the importer of the goods has, at the time the for working out the rate of import duty on the goods, a Certificate of Origin, a Declaration of Origin, or a copy of one, for the goods; or

(ii)          Australia has waived the requirement for a Certificate of Origin or a Declaration of Origin.

 

One of the requirements that may be specified in the regulations is a change in tariff classification requirement.  Under new subsections 153ZOE(2) and (3) of the Act, the regulations may make it a requirement that each non-originating material used to produce goods must satisfy a particular change in tariff classification and when the material will be taken to satisfy the change.  The amending Regulation includes this requirement and also specifies each particular change in tariff classification for each relevant Chapter, heading and subheading of the Harmonized System.

 

Another of the requirements that may be specified in the regulations be a regional value content (RVC) requirement.  New subsection 153ZOE(5) of the Act will provide that the regulations may make it a requirement that the goods must have a RVC content of at a least a prescribed percentage.  Under new subsection 153ZOB(2) of the Act, the regulations may prescribe different RVC requirements for different kinds of goods.  The amending Regulation specifies one method of calculating RVC.

 

For the purposes of new Division 1L, new subsection 153ZOB(3) will provide that the value of goods is to be worked out in accordance with regulations, and the regulations may prescribe different valuation rules for different kinds of goods.

 

The amending Regulation prescribes how the value of materials is to be worked out for the purposes of new Division 1L and the amending Regulation.

 

Under new subsection 153ZOE(6) of the Act, the regulations must require the value of standard accessories, spare parts or tools imported together with goods to be taken into account as non-originating materials, for the purposes of any RVC requirement applicable to the goods.  For the purposes of new subsection 153ZOE(6) of the Act, the amending Regulation requires that the value of such accessories, spare parts or tools be taken into account for the purposes of any RVC requirement applicable to goods, and prescribe how such value is to be worked out and taken into account.

 

Under new subsection 153ZOF(2) of the Act, the regulations must require the value of certain packaging materials or containers used to package goods for retail sale to be taken into account as non-originating materials for the purposes of any RVC requirement applicable to the relevant goods.  For the purposes of new subsection 153ZOF(2) of the Act, the amending Regulation requires that the value of such packaging materials or containers be taken into account for the purposes of any RVC requirement applicable to goods, and prescribe how such value is to be worked out and taken into account.

New subsection 153ZOI(1) of the Act provides that goods are not Chinese originating goods under Division 1L if they are transported through the territory of a non-party and one or more of the following apply:

(a)     the goods undergo any operation in the territory of a non-party (other than unloading, reloading, repacking, relabelling for the purpose of satisfying the requirements of Australia, splitting up of the goods for further transport, temporary storage or any operation that is necessary to preserve the goods in good condition);

(b)        if the goods undergo temporary storage in the territory of a non-party--the goods remain in the territory of a non-party for a period exceeding 12 months;

(c)        the goods do not remain under customs control at all times while the goods are in the territory of a non-party.

New subsection 153ZOI(2) provides that without limiting paragraph (1)(c), the regulations may make provision for the circumstances in which goods are under customs control while the goods are in the territory of a non-party.  The amending Regulation prescribes the circumstances of when goods are under customs control in the territory of Hong Kong, China.

 


Attachment B

 

Details of the Customs (Chinese Rules of origin) Regulation 2015

 

Part 1 - Preliminary

 

Section 1         Name of Regulation

 

Section 1 provides that the amending Regulation is the Customs (Chinese Rules of Origin) Regulation 2015.

 

Section 2         Commencement

 

Section 2 provides that sections 1 to 4 commence on the day after the instrument is registered and the remaining sections commences on the commencement of Schedule 1 to the Customs Amendment (China-Australia Free Trade Agreement Implementation) Act 2015 (the ChAFTA Act).  Schedule 1 to the ChAFTA Act will commence on the later of the day after the ChAFTA Act receives the Royal Assent or the day the China-Australia Free Trade Agreement enters into force for Australia.

 

Section 3         Authority

Section 3 provides that the authority the amending Regulation is made is under the Customs Act 1901.

 

Section 4         Definitions

 

Section 4 sets out the definitions for the purpose of the amending Regulation:

(a)    'Act' means the Customs Act 1901 (the Act);  

(b)   'Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994' means the Agreement of that name set out in Annex 1A of the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994;

(c)    'chapter' means the first 2 digits in the tariff classification number under the Harmonized System;

(d)   'heading' means the first 4 digits in the tariff classification number under the Harmonized System;

(e)    'regional rubber content' has the same meaning as it has in Annex II to Chapter 3 of the Agreement

(f)    'subheading' means the first 6 digits in the tariff classification number under the Harmonized System;

(g)   'total rubber content' has the same meaning as it has in Annex II to Chapter 3 of the Agreement.

 

 

 

The following words and expressions have the meanings as in new Division 1L of Part VIII of the Act (new Division 1L):

(h)   Agreement;

(i)Australian originating goods;

(j)Certificate of Origin;

(k)   Chinese originating goods;

(l)Declaration of Origin;

(m) Harmonized System;

(n)   Non-originating materials;

(o)   Originating materials;

(p)   Produce;

(q)   Territory of Australia; and

(r)     Territory of China.

 

New Division 1L will be inserted into the Act by Schedule 1 to the ChAFTA Act.

 


 

part 2 - Tariff change requirement

 

Section 5         Change in tariff classification requirement for non-originating materials

 

Subsection 5(1) provides that for subsection 153ZOE(2) of the Act, each non-originating material used in the production of the goods is required to satisfy a specified change in tariff classification.  The particular change in tariff classification for each relevant heading or subheading of the Harmonized Commodity Description and Coding System (the Harmonized System) is to be included in the table in Schedule 1 to the amending Regulation.

 

Under new subsection 153ZOB(1) of the Act, 'non-originating materials' will mean goods that are not originating materials.  'Originating materials' will be further defined to mean:

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

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

(c)     indirect materials.

 

Subsection 5(2) provides that each non-originating material that does not satisfy the change in tariff classification mentioned in subsection 5(1) is taken to satisfy the change in tariff classification if:

(a)    it was produced entirely in the territory of China or in the territory of China and Australia from other non-originating materials; and

(b)   each of those materials satisfies the change in tariff classification mentioned in subsection (1), including by one or more applications of this subsection.

 

Paragraph (b) gives effect to the cumulation provisions contained in Article 3.6 of the Agreement and applies where the non-originating materials that are used to directly produce the final good do not satisfy the change in tariff classification.

 

In producing a final good, a producer may use goods that are produced in China by another producer.  The components of these goods may be produced by yet another producer in China or may have been imported into China by another importer.  It is possible that the change in tariff classification rule may not be satisfied at each step in the production process from the imported component to the final good, which may mean that the final good is non-originating.

 

In such circumstances, it will be necessary to examine each step in the production process of each non-originating material that occurs in China or in Australia in order to determine whether each step satisfies the change in tariff classification rule for the final good.  If this does occur, the material will be an originating material and the final good will be an originating good (subject to satisfying all other requirements of new Division 1L of Part VIII of the Act).  This is how paragraph 5(2)(b) of the amending Regulation operates.

 

Example: The following diagram relates to the production of particular goods that occurred entirely in China.  The diagram and the accompanying text illustrate the application of paragraph 5(2)(b).

 

 

The goods are produced from non-originating materials 1 and 2.

 

First application of paragraph (b)

 

Non-originating materials 1 and 2 must satisfy the change in tariff classification.  Under paragraph 5(2)(a), non-originating material 1 does satisfy the relevant change in tariff classification.  Under paragraph 5(2)(b), non-originating material 2 does not satisfy the relevant change in tariff classification, but it has been produced by non-originating materials 3 and 4.

 

Second application of paragraph (b)

 

Non-originating materials 3 and 4 must satisfy the change in tariff classification.  Under paragraph 5(2)(a), non-originating material 3 does satisfy the relevant change in tariff classification.  Under paragraph 5(2)(b), non-originating material 4 does not satisfy the relevant change in tariff classification, but it has been produced by non-originating material 5.

 

 

Third application of paragraph (b)

 

Non-originating material 5 must satisfy the change in tariff classification. Under paragraph 5(2)(a), non-originating material 5 does satisfy the relevant change in tariff classification.

 

Final result

 

The result of the 3 applications of paragraph (b) is that non-originating material 2 does satisfy substantial transformation.

 

Part 3 - Regional value content requirement

 

Section 6         Regional value content requirement

 

New subsection 153ZOE(5) of the Act will provide that the regulations may specify that goods are required to have a regional value content of at least a specified percentage.  The regional value content for each relevant heading, subheading or split subheading of the Harmonized System be included in the table in Schedule 1 to the amending Regulation.  New subsection 153ZOB(2) of the Act will provide that the regulations may prescribe different regional value content requirements for different kinds of goods.

 

Section 6 provides that for the purposes of the table in Schedule 1, this Part explains how 'regional value content' is worked out using the build-down method.  For Part 3, 'RVC' means regional value content.

 

Subsection 6(2) provides that the build-down method is the formula:

 

RVC = Customs value - Value of non-originating materials  x 100

Customs value

where:

 

Customs value means the customs value of the goods, as worked out under Division 2 of Part VIII of the Act; and

 

value of non-originating materials means the value of non-originating materials, including materials of undetermined origin, that are worked out under Part 4 of the Regulation that are acquired and used by the producer in the production of the goods.

 

Subsection 6(3) provides that RVC is to be expressed as a percentage.

Under the build-down method, the RVC calculation requires the determination of the percentage of non-originating materials used in the production of goods.

 

For example, an electric toaster is made from non-originating toaster housings. Each toaster is sold for $5.00 and the value of the non-originating parts is $2.00.  Using the build-down method, the RVC is calculated as follows:

 

RVC =    $5.00 - $2.00   x 100

$5.00

 

Therefore, the RVC equals 60%.

 


 

 

Part 4 -requirements for goods that are oils, chemicals, plastics or rubber

 

Section 7         Requirements for goods that are oils, chemicals, plastics or rubber

 

Subsection 7(1) provides that for the purposes of 153ZOE(1)(c) of the Act for goods classified to a chapter, heading or subheading of the Harmonized System specified in subsection (2), (5), (6), (7), (8), (10) or (11), that subsection sets out an alternative requirement to any requirements set out in column 3 of an item in the table in Part 2 of Schedule 1 in relation to the goods.

 

Subsection 7(2) will provide that for goods classified to any of chapters 27 to 40 of the Harmonized System, the alternative requirement to the requirements set out in Column 3 of an item in Part 2 of Schedule 1 in relation to the goods is that the goods are the product of a chemical reaction.

 

Subsections 7(3) and 7(4) define the chemical reactions referred to in section 7(2).

 

Subsection 7(5) will provide that for goods classified to any of Chapters 28 to 35, 38 and 39 of the Harmonized System, the alternative requirement to the requirements set out in Column 3 of an item in Part 2 of Schedule 1 in relation to the goods is that the goods are the product of  purification.

 

Paragraphs 7(5)(a) and 7(5)(b) define the purification criteria.

 

Subsection 7(6) will provide that for goods classified to any of Chapters 30 and 31, heading 33.02, subheading 3502.20 and headings 35.06, 35.07 and 37.07 of the Harmonized System, the alternative requirement to the requirements set out in Column 3 of an item in Part 2 of Schedule 1 in relation to the goods is that the goods are the product of  mixtures and blends.

 

Paragraphs 7(6)(a) and 7(6)(b) define mixtures and blends criteria.

 

Subsection 7(7) will provide that for goods classified to any of Chapters 30, 31 and 39 of the Harmonized System, the alternative requirement to the requirements set out in Column 3 of an item in Part 2 of Schedule 1 in relation to the goods is that goods have been controlled and deliberately modified to change their particle size, other than by crushing or pressing.

 

Paragraphs 7(7)(a) and 7(7)(b) define the change in particle size criteria.

 

Subsection 7(8) will provide that for goods classified to any of Chapters 28 to 32, 35 and 38 of the Harmonized System, the alternative requirement to the requirements set out in Column 3 of an item in Part 2 of Schedule 1 in relation to the goods is that the goods are standard materials or standard solutions.

 

Subsection 7(9) defines the criteria for the standard materials or solutions referred to in subsection 7(8).

 

Subsection 7(10) will provide that for goods classified to any of Chapters 28 to 32, 35 and 39 of the Harmonized System, the alternative requirement to the requirements set out in Column 3 of an item in Part 2 of Schedule 1 in relation to the goods is that the goods were produced from the isolation or separation of isomers from mixtures of isomers.

 

Subsection 7(11) will provide that for goods classified to heading 27.10 of the Harmonized System, the alternative requirement to the requirements set out in Column 3 of an item in Part 2 of Schedule 1 in relation to the goods is that the goods were produced using atmospheric distillation or vacuum distillation.

 

Goods produced from petroleum distillation using the atmospheric distillation process may include liquefied petroleum gas, naphtha, gasoline, kerosene, diesel/heating oil, light gas oils and lubricating oil.

 

Vacuum distillation is useful for distilling high-boiling and heat-sensitive materials such as heavy distillates in petroleum oils to produce light to heavy vacuum gas oils and residuum in some refineries, gas oils may be further processed into lubricating oils.

 

Subsection 7(12) defines the criteria for the standard materials or solutions referred to in subsection 7(11).

 

Subsection 7(13) will provide that subsection 7(2), (5), (6), (7), (8), (10) or (11) does not apply in relation to goods mentioned in an item in the table in Part 2 of Schedule 1 if that item specifies that the subsection or this section does not apply.


 

 

Part 5 - Other rules of origin requirements

 

Section 8 provides that for the purposes of 153ZOE(1)(c) of the Act for goods mentioned in an item in the table in Part 2 of Schedule 1, in addition to any requirement covered by section 5, 6 or 7, each other requirement mentioned in column 3 of the item applies in relation to the goods.  For example:

 

38.08

Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulphur-treated bands, wicks and candles, and fly-papers).

(a) a change to heading 38.08 from any other subheading; and

(b) at least 50%, by weight, of the active ingredient or ingredients are originating materials

 

For goods classified to heading 38.08 in addition to the change in subheading requirement, goods must also have at least 50% by weight, of the active ingredients as originating materials. 


 

Part 6 - Determination of value

 

For the purposes of new Division 1L, new subsection 153ZOB(3) will provide that the value of goods is to be worked out in accordance with regulations, and the sections may prescribe different valuation rules for different kinds of goods.

 

Part 6 deals with the determination of the value of different kinds of goods that are materials used in the production of the relevant goods for the purposes of new Division 1L and the amending Regulation.

 

Section 9         Value of goods that are non-originating materials

 

Section 9, for the purposes of new subsection 153ZOB(3) and the amending Regulation, sets out how the value of non-originating materials is to be worked out.

 

Subsection 9(1) provides that the value of non-originating materials is to be worked out as follows:

(a)    for a non-originating material imported into the territory of China-the value of the material worked out under a law of China that implements the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994;

(b)   for a non-originating material acquired in the territory of China and not imported into the territory of China - the value of those materials worked out under paragraph (a) on the assumption that those materials had been imported into the territory of China.

 

Subsection 9(2) provides that for the purposes of paragraph 1(b), freight, insurance, packing and any other transportation costs within the territory of China should be disregarded.

Section 10       Value of accessories, spare parts or tools

 

New subsection 153ZOE(6) provides that, when working out if goods are Chinese originating goods, if the goods must have a RVC of at least a particular percentage, the regulations may require the value of the accessories, spare parts or tools to be taken into account as non-originating materials for the purposes of working out the RVC requirement.

 

Section 10 provides that for subsection 153ZOE(6) of the Act, if goods imported in the circumstances mentioned in that subsection are required to have a RVC of at least a particular percentage mentioned in Schedule 1:

(a)    the value of accessories, spare parts or tools that are imported with the goods and are not Chinese originating goods must be included in the value of non-originating materials used in the production of the goods for the purposes of working out the regional value content of the goods; and

 

(b)   the value of accessories, spare parts or tools is to be worked out under section 9.

 

 

Section 11       Value of packaging material and container

 

Under new subsection 153ZOF(1) of the Act, 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 of the Harmonized System;

then the packaging material or container is to be disregarded for the purposes of new Subdivision D of Division 1L, with one exception.

 

Under new subsection 153ZOF(2), in working out whether the goods are Chinese originating goods, if the goods are required to have a RVC of at least a particular percentage, and the packaging material or container is a non-originating material, the regulations must require the value of the packaging material or container to be taken into account as non-originating materials for the purposes of that RVC requirement.

 

Section 11 provides that for section 153ZOF of the Act, if goods mentioned in subsection 153ZOF(2) of the Act are required to have a RVC under Subdivision D of Division 1L of Part VIII of the Act:

(a)    then the value of the packaging material or container in which the goods are packaged must be included in the value of non-originating materials used in the production of the goods for the purposes of working out the regional value content of the goods; and

(b)   the value of the packaging material or container in which the goods are packaged must be worked out under section 9.

 


 

Part 7 - Consignment

Section 12 - Consignment

Subsection 153ZOI(1) of the Act sets out the consignment provision in respect to Chinese originating goods.  Goods are not Chinese originating goods if the goods are transported through a territory of a non-party and one or more of a set of circumstances apply.  One circumstance is where the goods do not remain under customs control at all times while the goods are in the territory of a non-party.

 

Subsection 153ZOI(2) provides that regulations may make provision for where the goods are under customs control while in the territory of a non-party. It is necessary to prescribe such circumstances for the customs territory of Hong Kong, China (see the definition of territory of a non-party in subsection 153ZOB(1) of the Act).  Hong Kong, China is a free port and only has bonded warehouses for certain dutiable goods and does not have the more traditional concept of customs control as understood in Australia. 

 

Section 12 provides that for subsection 153ZOI(2) of the Act, for goods transported through the customs territory of Hong Kong, China, the goods are under customs control at all times while the goods are in that customs territory.

 

Without the circumstances set out in section 12, goods would never be under customs control while they are in the customs territory of Hong Kong, China and would therefore not be Chinese originating goods.

 

However, if one or more of other circumstances in subsection 153ZOI(1) apply while the goods are in the customs territory of Hong Kong, China and are therefore subject to customs control, the goods will not be Chinese originating goods.  For example, if the goods are put in temporary storage in Hong Kong, China which exceeds 12 months, they will not be Chinese originating goods under paragraph 153ZOI(1)(b) despite being under customs control.


 

 

Part  8 - Record keeping obligations

 

Section 13       Exportation of goods to China-record keeping by exporter who is not the producer of the goods

 

Section 13 provides that for new section 126AOB(1) of the Act, an exporter of goods mentioned in that subsection, who is not also the producer of the goods, must keep the following records:

(a)     records of the purchase of the goods by the exporter;

(b)     records of the purchase of the goods by the person to whom the goods are exported;

(c)     evidence that payment has been made for the goods;

(d)     evidence of the classification of the goods under the Harmonized System;

(e)     if the goods include any spare parts, accessories or tools that were purchased by the exporter records of the purchase of the spare parts, accessories or tools and evidence of their value;

(f)     if the goods include any spare parts, accessories or tools that were produced by the exporter-records of the purchase of all materials that were purchased for use or consumption in the production of such goods, evidence of the value of these materials and records of the production of the spare parts, accessories or tools;

(g)     if the goods are packaged for retail sale in packaging material or a container that was purchased by the exporter-records of the purchase of the packaging material or container and evidence of their value;

(h)     if the goods are packaged for retail sale in packaging material or a container that was produced by the exporter-records of the purchase of all materials that were purchased for use or consumption in the production of such goods, evidence of the value of these materials and records of the production of the packaging material or container; and

(i)      a copy of the Certificate of Origin, or Declaration of Origin for the goods.

 

The goods mentioned in subsection 126AOB(1) are goods that are exported to China and are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in China.

 

Subsection 13(2) provides that the records must be kept for a period of at least 5 years starting on the date the Certificate of Origin or Declaration of Origin for the goods is signed.

 

Subsection 13(3) sets out the manner in which a record is to be kept.  A record may be kept in any place, whether or not in Australia, and the exporter must ensure that:

(a)     the record is kept in a form that enables a determination of whether the goods are Australian originating goods in accordance with the Agreement; and

(b)     if the record is not in English - the record is kept in a place and form that enables an English translation to be readily made; and

(c)     if the record is kept by mechanical or electronic means - the record is readily convertible into a hard copy in English.

 

 

Section 14       Exportation of goods to China - record keeping by the producer of the goods

 

Section 14 provides that for section 126AOB(1) of the Act, the producer of goods mentioned in that subsection, whether or not the producer is the exporter of the goods, must keep the following records:

(a)     records of the purchase of the goods;

(b)     if the producer is the exporter of the goods-evidence of the classification of the goods under the Harmonized System;

(c)     evidence that payment has been made for the goods;

(d)    evidence of the value of the goods;

(e)     records of the purchase of all materials that were purchased for use or consumption in the production of the goods and evidence of the classification of the materials under the Harmonized System;

(f)     evidence of the value of those materials;

(g)     records of the production of the goods;

(h)     if the goods include any spare parts, accessories or tools - records of the purchase of these materials and evidence of their value;

(i)      if the goods include any spare parts, accessories or tools - records of the purchase of all materials that were purchased for use or consumption in the production of such goods, evidence of the value of these materials and records of the production of the spare parts, accessories or tools;

(j)      if the goods are packaged for retail sale in packaging material or a container that was purchased by the producer - records of the purchase of the packaging material or container and evidence of their value;

(k)     if the goods are packaged for retail sale in packaging material or a container that was produced by the producer - records of the purchase of all materials that were purchased for use or consumption in the production of such goods, evidence of the value of these materials and records of the production of the packaging material or container; and

(l)      a copy of the Certificate of Origin, or Declaration of Origin for the goods.

 

Subsection 14(2) provides that the records must be kept for a period of at least 5 years starting on the date the Certificate of Origin or Declaration of Origin for the goods is signed.

 

Subsection 14(3) sets out the manner in which a record is to be kept. A record may be kept in any place, whether or not in Australia, and the exporter must ensure that:

(a)     the record is kept in a form that enables a determination of whether the goods are Australian originating goods in accordance with the Agreement; and

(b)     if the record is not in English - the record is kept in a place and form that enables an English translation to be readily made; and

(c)     if the record is kept by mechanical or electronic means - the record is readily convertible into a hard copy in English.

 


 

 

Schedule 1 - Rules of origin requirements

 

Schedule 1 sets out the table, which specifies the different product-specific rules of origin applicable to goods for each Chapter, heading and subheading in the Harmonized System.  Schedule 1 also sets out interpretation provisions relevant to the product-specific requirements in the table.  Schedule 1 is based on Annex II to the Agreement.

 

Part 1 of Schedule 1 sets out the Interpretation provisions relevant to the product-specific rules of origin specified in the table.  Part 2 of Schedule 1 set out the table.

 


 

 

Statement of Compatibility with Human Rights

 

(Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011)

 

Customs (Chinese Rules of Origin) Regulation 2015

 

This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Regulation

 

The Customs Amendment (China-Australia Free Trade Agreement Implementation) Act 2015 (the ChAFTA Act) amends the Customs Act 1901 to fulfil Australia's obligations under Chapter 3 of the China-Australia Free Trade Agreement (the Agreement), which deals with rules of origin. These rules determine whether goods imported into Australia from China are Chinese originating goods and are thereby eligible for preferential rates of customs duty. These rules are contained in new Division 1L of Part VIII of the Act (new Division 1L).

The purpose of the amending Regulation is to prescribe matters relating to the rules of origin that will be required to be prescribed under new Division 1L (Chinese originating goods).  

The amending Regulation:

    sets out a table in Schedule 1 detailing the product-specific requirements relevant to each tariff classification for goods;

    explains the method used to determine the regional value content (a calculation used in determining whether a good is a Chinese originating good) of goods for the purposes of some of the product-specific requirements set out in Schedule 1;

    specifies the valuation rules for different kinds of goods;

    sets out the record keeping requirements that apply to Australian exporters or producers who export goods to China and obtain preferential tariff treatment in China;

    sets out the circumstances in which Chinese originating goods would be subject to customs control while in the customs territory of Hong Kong, China; and

    prescribes other matters that are required to be prescribed under new Division 1L.

Human Rights implications

 

This legislative instrument does not engage, impact on or limit in any way, the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights at section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Conclusion

 

This legislative instrument does not raise any human rights issues.

 

Minister for Immigration and Border Protection


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