David Coleman (Banks, Liberal Party, Minister for Immigration) Share this | Hansard source

I move:

That this bill be now read a second time.

The Customs Amendment (Product Specific Rule Modernisation) Bill 2018 amends the Customs Act 1901 (Customs Act) to streamline the implementation of our free trade agreements (FTAs) and help facilitate smoother trade between Australia and our FTA partners.

The bill does this by changing the way the product specific rules (PSRs) of Australia's FTAs are given effect in domestic legislation.

Australia's in-force FTAs contain rules of origin and PSRs. PSRs define the minimum requirements that must be met for goods that are comprised of materials that do not originate in a party to the FTA—to be considered eligible for a preferential rate of customs duty in accordance with the FTA. The PSRs are based upon the Harmonized Commodity Description and Coding System (harmonized system).

The harmonized system is an international naming system for the classification of traded products. It currently covers thousands of commodity groups and is used by more than 200 economies as a basis for customs tariffs and the collection of international trade statistics. Over 98 per cent of merchandise in international trade is classified in terms of the harmonized system.

Each FTA has a separate PSR annex, which is currently, (with the exception of the Singapore-Australia Free Trade Agreement (SAFTA)), implemented domestically in rules-of-origin regulations (ROO regulations) for each FTA. Five-yearly revisions of the harmonized system by the World Customs Organization usually compel FTA parties to update their agreements' PSRs, which, in Australia's case, means subsequent amendments to the FTA's ROO regulations. The size of these regulations ranges from 257 to 1,977 pages. Due to their size and the steadily increasing number of FTAs (currently 10), amendment of the ROO regulations to update the PSRs requires considerable time and resources for what are essentially technical changes that do not alter the operation of the treaty and do not have any direct financial implications for government, traders or consumers.

The proposed amendments seek to simplify this process by amending the Customs Act to apply FTA PSR annexes agreed by parties by direct reference and remove the need to replicate PSR annexes in ROO regulations.

The proposed amendments to the act are technical in nature. They will not affect the practical operation of the legislation or the agreements that are the subject of the bill.

Parties to the agreement to establish the ASEAN-Australia-New Zealand Free Trade Area, otherwise known as the AANZFTA, have agreed to take whatever steps are necessary to bring the HS2017 PSR schedule into force domestically on 1 January 2019.

These amendments will ensure that Australia is able to meet its AANZFTA deadline, to minimise the administrative burden on Australian businesses and officials in trying to juggle new and old HS codes, and will further streamline trade between Australia and our FTA partners. In 2017, trade with Australia under AANZFTA totalled A$120 billion.

ChAFTA and JAEPA PSR annexes are also included in the amendments, which will simplify the transposition process for these agreements once the FTA parties have agreed them. Further similar amendments to the Customs Act will be brought to parliament to facilitate the update of the PSRs of Australia's other existing FTAs in the foreseeable future.

The bill before this chamber will allow the revised PSR schedules of these FTAs to enter into force in a far more efficient and timely manner. Once these amendments are made, future changes to the PSR annexes for AANZFTA, ChAFTA, and JAEPA will be able to be made simply by the completion of any provisions contained in the agreement pertaining to such updates, and completion of Australia's domestic treaty-making process.

The bill also refers to and applies the annex containing the chemical rules of the SAFTA, which were not included in the amendments to the Customs Act that implemented the agreement to amend the Singapore-Australia Free Trade Agreement in 2017. The bill also makes minor amendments to existing FTA divisions in the Customs Act. These minor amendments will ensure consistency between our legislation and the FTA text in the Singapore, Thailand, Malaysia, Chile and ASEAN-New Zealand FTAs.

The government is committed to the passage of these amendments in 2018. They will greatly reduce the administrative burden of the current transposition process, cutting costs for business and taxpayers, with flow-on benefits to consumers and households.

In passing this bill, the government honours its commitments to its FTA partners to ensure our agreements remain up to date, supporting our jobs and growth agenda, reducing red tape for Australian businesses, and helping to keep costs down for Australian households.

I commend the bill to this chamber.

Debate adjourned.

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