Skip to Content

Blog Archives

ChAFTA Update

Now that the Federal Opposition Leader Bill Shorten says he has reached a compromise with the Government and will now support the Chinese Free Trade Agreement it is worth going over a few of the key points as we see them.

A COUPLE OF KEY POINTS AS WE SEE THEM:

Hong Kong is not part of China  Hong Kong is classified as a different customs territory to mainland China and is a Freeport.  For the purpose of ChAFTA goods shipped via Hong Kong will not retain their status as Chinese originating goods unless the goods remain under customs control at all times (this was also the case for the China-NZ FTA).

The implications of this are profound for the many organisations that operate distribution centres and warehouses (that are not bonded warehouses) in Hong Kong as the goods entering Hong Kong will lose their China Preferential status.

Phasing of Duty  At present for items originating in China that have a duty rates of 5%.  It should not be assumed that from implementation of the FTA the duty rate will simply drop to 0%.  Although it is the aim to reduce all items to 0%, this will be phased in for some items over a period of some years (up to 5 years in some circumstances).  Clothing is one of these items where under the first year of the CHAFTA operation the duty rate will not be changed at all.

WHAT YOU CAN DO:

Whilst the agreement has been signed and now has bipartisan support in the Parliament, there is still a lot of detail to be finalised in order to provide greater certainty to industry. This process has already taken some time and is expected take a couple more months before implementation (we are expecting Dec 2015 or early 2016).  If you have any questions about how the ChAFTA will impact your imports please get in touch with Magellan 1300 651 888 or by email.

 

0 Continue Reading →

China – Australia (ChAFTA) – Now what?

The China–Australia Free Trade Agreement (ChAFTA) is a bilateral Free Trade Agreement (FTA) between the governments of Australia and China. Since the announcement of a joint feasibility study in early 2005, 21 negotiating rounds have been completed and the announcement of the conclusion of negotiations was made by Australia’s Prime Minister Tony Abbott and Chinese President Xi Jinping on 17th November 2014.

The long-awaited agreement was signed by Trade Minister Andrew Robb and Chinese Commerce Minister Gao Hucheng last Wednesday in Canberra.  The agreement is expected to open the vast Chinese market for Australian investment, primary products and services.

The agreement will ensure 85 per cent of all Australian exports will enter China tariff-free, rising to 93 per cent within four years and 95 per cent when it is in full force.

China is Australia’s largest trading partner, with the two-way flow of goods and services exceeding $160 billion last year.

Now that both sides have completed the legal review and translation of the text of the Agreement the signature of the Agreement;

What happens next…

  • The text of the Agreement, accompanied by a National Interest Analysis, will then be tabled in the Australian Parliament for 20 joint sitting days;
  • Following tabling, the Joint Standing Committee on Treaties (JSCOT) will conduct an inquiry into the Agreement and will report back to Parliament;
  • Legislation will be introduced to make any necessary amendments to existing legislation and will be considered by the Parliament;
  • Relevant Regulations would also be amended in due course;
  • During this time, the Chinese Government will undertake its own domestic treaty-making processes;
  • When Australia and China have completed their domestic processes, both countries will exchange diplomatic notes to certify that they are ready for the Agreement to enter into force;
  • 30 days after this exchange or on a date otherwise agreed, ChAFTA will enter into force.

Because it is expected that the above processes will take some time, the agreement is not anticipated to take effect until sometime in early 2016.
If you’d like some more information in this topic, please get in touch with Magellan on 1300 651 888.

0 Continue Reading →

Australia Korea FTA in effect 12 December 2014

Trade and Investment Minister Andrew Robb has announced that Australia’s Free Trade Agreement with South Korea will enter into force on 12 December 2014.

The Korea-Australia Free Trade Agreement (KAFTA) was signed in Seoul, South Korea, on 8 April 2014 and KAFTA will enter into force when both Korea and Australia have completed their domestic legal procedures.1

Below is an outline of top imports from Korea into Australia in 2012-2013.2  For Magellan customers, this agreement may also affect those importing textiles or other similar products from Korea.

There are a range of products that will have reduced duty rates under this agreement, and to get access to these lower rates, suppliers will have to provide importers a KAFTA certificate.

Four steps to using KAFTA

Step 1: WHAT goods am I exporting or importing? (tariff classification)

Step 2: HOW are these goods treated under KAFTA? (tariff treatment)

Step 3: WHERE are my goods produced? (rules of origin)

Step 4: CERTIFY your goods with a Certificate of Origin

For further information on what items will have reduced rates and the detail behind the KAFTA stepped process above please refer to this media release and/or speak to your friendly Magellan Logistics Customs Broker who can provide more detail on 1300 651 888.

To read more about Free Trade Agreements and how they help Australian exporters, read our recent blog

 

Sources:

1 Customs Brokers & Forwarders Council of Australia Inc. – CBFCA

.2 Department of Foreign Affairs and Trade http://www.dfat.gov.au/fta/kafta/

0 Continue Reading →