| ChAFTA Commencement Date Named
China-Australia Free Trade Agreement (ChAFTA) will enter into force on 20 December 2015.
ChAFTA Trade Agreement – What you need to know
Last week the Australia’s Minister for Trade and Investment, Andrew Robb, has announced that the China-Australia Free Trade Agreement (ChAFTA) will enter into force on 20 December 2015. This will apply to imported and exported goods.
The following Chinese Authorities will be able to issue Certificates of Origin [COO] for imported goods:
- A Q S I Q (General Administration of Quality Supervision, Inspection and Quarantine) where the actual certificates will be issued by provincial Entry-Exit Inspection and Quarantine Bureaus, which are administered by AQSIQ; and
- C C P I T (China Council for the Promotion of International Trade:
Australia’s authorised bodies able to issue Certificates of Origin [COO] for exports are:
- the Australian Chamber of Commerce and Industry;
- the Australian Industry Group and affiliated bodies; and
- the Australian Grape and Wine Authority.
COOs will not be issued prior to the commencement date of CHAFTA.
Rules of origin
ChAFTA establishes transparent rules of origin (ROO) procedures to support implementation without creating unnecessary red tape or obstacles to trade.
To access the preferential trade arrangements for goods under ChAFTA, goods must meet the ROO (criteria for determining whether or not a good is “originating” in either Australia or China).
In general, a good can qualify as “originating” if:
- It is wholly obtained in either Party;
- It is produced entirely in the Party exclusively from originating materials of the Party; or
- It is manufactured in either Party using materials from other sources and meets the product-specific rules agreed in ChAFTA.
For a good which contains some materials sourced from outside China or Australia, the general approach is that it will qualify as “originating” if all materials from outside the Parties used in its production have undergone a “substantial transformation”.
For example an Australian exporter might use some imported fruit in a juice it manufactures. The juice would still be recognised as “originating” in Australia, even with the incorporation of the imported fruit, as the fruit has been transformed from one tariff classification to another in the process of manufacture. For some goods, a value-added method or production process rules can apply.
ChAFTA also includes a “de minimis” provision of 10 per cent. With some exceptions, this provision allows up to 10 per cent of the value of a good to consist of imported materials, without having to go through the change in tariff classification or a specific manufacturing or processing operation.
All exporters and importers wishing to claim the tariff reductions under ChAFTA will be required to make a claim for preferential treatment.
Direct Shipment Rule:
ChAFTA includes a “direct shipment rule” requirement. This is best considered on a case by case basis. Where you should have concerns, if your goods are;
- sourced from another country, including Hong Kong
- purchased from a warehouse supply in another country
- not shipped directly to or from China or Australia
We encourage importers and exporters who have concerns that their purchasing or logistic services may jeopardise or void their cargoes ChAFTA entitlements should speak to us.
For Chinese imported goods and Australian exported goods, a preference claim can be made on the basis of either:
- A certificate of origin (a COO) issued by an authorised body (usually on a fee-for service basis); or
- Where goods are covered by an advance ruling, a declaration of origin (a DOO) completed by the exporter or producer.
This approach provides flexibility for traders, particularly those who regularly export identical products and obtain an advance ruling, who may choose to certify their own products.
Traders will also be able to make post-importation claims for preferential tariff treatment, provided certain conditions are met.
Advice to Customers
Penalties will be invoked be Australian Border Force if preference under China-Australia Free Trade Agreement (ChAFTA) is not claimed correctly. We recommend that Customers contact us at their convenience, to discuss your specific circumstances, your entitlements and needs.
Finally, the timing of this notice will most likely assure that we will have a busy period of preparation. Everyone at Jackson Global Logistics and at TFI Global Melbourne would like to thank you for your continued support. We wish you all the compliments of the season and hope everyone has a happy and safe holiday period.