Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I won't spend a lot of time on the Customs Amendment (Product Specific Rule Modernisation) Bill 2018, because, frankly, it should have been treated as a non-controversial bill, but it clearly is part of the government's problem here that they don't have much of a legislative agenda.

Anne Ruston (SA, Liberal Party, Assistant Minister for International Development and the Pacific) Share this | Link to this | Hansard source

I'm happy to deal with the rest of it.

Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

Are you? That's very good. We'll be very quick then, won't we, because there's not much that can be said about it. This is a customs bill to streamline product-specific rules of origin for four of the free trade agreements: the Singapore-Australia Free Trade Agreement, the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area, the Japan-Australia Economic Partnership Agreement and the China-Australia Free Trade Agreement. The changes made by the bill are minor and technical in nature, and you would have expected it, as I said, to be non-controversial. The product-specific rules of origin are obviously important for free trade agreements, so they must be met by importers seeking preferential tariff treatment for goods that include materials not originating in the countries and territories covered by the agreement. If the goods meet the requirements, they essentially are deemed to have originated in the country that is party to the FTA and are entitled to preferential treatment with customs duty on imports to Australia.

The specific rules of origin are based on the harmonised commodity description, coding systems and international naming system for the classification of trade products, covering thousands of groups and used in over 200 economies. Each trade agreement has particular annexes which are implemented domestically for each of the free trade agreements.

The five-yearly revisions of these harmonised systems usually require the free trade parties to update their specific rules-of-origin amendments, and the bill, of course, applies to these annexes with regard to chemical rules not included in the amendments to the Customs Act and implemented in the Singapore-Australia Free Trade Agreement. The bill makes minor amendments to existing free trade agreements and the Customs Act. As I said, these are minor amendments ensuring consistency between our legislation and the various texts of the agreements between Singapore, Thailand, Malaysia and ASEAN. Labor supports the bill.

Anne Ruston (SA, Liberal Party, Assistant Minister for International Development and the Pacific) Share this | Link to this | Hansard source

The Customs Amendment (Product-specific Rule Modernisation) Bill 2018 amends the Customs Act 1901 to streamline the implementation of our free trade agreements 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 product-specific rules. Product-specific rules define the minimum requirements that must be met for goods that comprise 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 that FTA. The product-specific rules are based upon the harmonised commodity description and the coding system. The harmonised system is an international naming system for the classification of traded goods. It currently covers thousands of commodity groups and is used by more than 200 economies as the basis for custom tariffs and the collection of international trade statistics. Over 98 per cent of merchandise in international trade is classified in terms of the harmonised 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, or ROO regulations, for each FTA.

Five-yearly revisions of the harmonised system of 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 it sits at 10—amendments 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 the 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 the 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 AANZFTA, have agreed to take whatever steps are necessary to bring the HS 2017 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 out 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 to 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 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 contained in 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 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 businesses and taxpayers and having flow-on benefits to consumers and households. In passing this bill, the government honours the commitments to the FTA partners to ensure our agreements remain up to date to support our growth and jobs agenda, reduce red tape for Australian businesses and help to keep costs down for Australian households. I commend the bill to the chamber.

Question agreed to.

Bill read a second time.