Bills Digest No. 22 2001-02
Customs Tariff Amendment Bill (No. 5) 2001
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Customs Tariff Amendment Bill (No. 5) 2001
Date Introduced: 8 August
2001
House: House of Representatives
Portfolio: Justice and Customs
Commencement: 1 January
2002
The amendments proposed by this Bill
give effect to Australia's obligations under the International Convention
on the Harmonized Commodity Description and Coding System. The major amendments
proposed by this Bill provide new headings and subheadings and separately
identify new tariff products.
The amendments proposed by this Bill result from the
second review of the Harmonized Commodity Description and Coding System.
The Harmonized Commodity Description and Coding
System
The Harmonized Commodity Description and Coding System,
commonly known as the Harmonized System or HS, is a multipurpose goods
nomenclature or language used as the basis for Customs tariffs and of
the compilation of trade statistics around the globe.
The HS was developed by the World Customs Organization
(WCO) and was implemented on 1 January 1988 through an international convention,
the International Convention on the Harmonized Commodity Description and
Coding System (the HS Convention). The HS is maintained by the WCO through
the Harmonized System Committee, which is composed of representatives
of parties to the HS Convention.
The HS operates as a global language and code for transportable
goods in international trade. Approximately 170 countries and economies
use the HS for Customs tariffs and trade statistics. The accounts for
more than 98 per cent of world trade. HS is used by governments, international
organisations and the private sector for diverse purposes including:
- trade policies
- monitoring of controlled goods
- rules of origin
- freight tariffs
- transport statistics
- internal taxes
- quota controls, and
- economic research and analysis.
Goods classification under the HS
The HS is an international six-digit commodity classification
developed under the auspices of the Customs Cooperation Council. Individual
countries have extended it to ten digits for customs purposes, and to
8 digits for export purposes.
Under the HS goods are classified by what they are, and
not according to their stage of fabrication, their use, or origin. The
HS nomenclature, or language, is structured by economic activity or component
material. For example, animals and animal products are found in one section
whilst machinery and mechanical appliances which are grouped by function
are found in another. The nomenclature is divided into 21 sections each
of which group together goods produced in the same sector of the economy.
Each section is comprised of one or more chapters, with the entire nomenclature
comprising 97 chapters. Chapters I to XV (except XII) are grouped by biological
genus or by the component material form which articles are made from.
For those chapters in which goods are grouped by raw material, a vertical
structure is used in which articles are classified according to their
degree of processing.
The WCO monitors the application of HS with the objective
of achieving the greatest measure of certainty and uniformity in the global
classification of goods. The Harmonized System Explanatory Notes prepared
by the Harmonized System Committee are the official interpretation of
the HS. The HS Committee meets twice yearly to resolve classification
questions and disputes. Determinations of the HS Committee are available
on the internet through the WCO web site on www.wcoomd.org.
Updating of HS
The HS is periodically updated. Updates are prepared
in the form of amendments to the HS Convention adopted by member states.
Member states are obliged under the Convention to implement the amendments
on the date schedule for their coming into force. To date the HS has been
amended twice. The first time was in 1992 and those amendments consisted
primarily of editorial amendments. The second amendments came into operation
on 1 January 1996 and incorporated major changes affecting approximately
10 per cent of the HS nomenclature.
The amendments proposed by this Bill represent the results
of the second major review of the HS. The HS Review Sub-Committee comprising
experts from national administrations and international organizations
carried out this work. The recommendations of the second major review
were adopted by the WCO in June 1999. Australia along with other parties
to the Convention are required to implement the changes into its customs
tariff arrangements with effect from 1 January 2002.
Scope of the HS amendments
The changes recommended by the WCO introduce amendments
to 57 of the HS systems 97 chapters. The most extensive changes relate
to:
- fruit and vegetable preparation
- chemicals, pharmaceutical products
- rubber
- leather
- wood and paper products
- knitted or crocheted fabrics
- miscellaneous non-ferrous base metals
- machinery, and
- electrical equipment.
The proposed amendments make changes extending to the
six-digit level and as such amendments to the eight-digit tariff item
level are also required.
Maintenance of existing tariff levels
The Government in its Explanatory Memorandum to the Bill
states the Bill has:
been designed to give effect to the HS changes while
maintaining existing levels of tariff protection and margins of tariff
preference accorded Australia's trading partners.
Where necessary, the option available under the HS
to create new domestic tariff splits at the seven and eight digit
levels has been used to preserve duty rates and margins of preference.
Using this approach, it has been possible to preserve
existing duty rates in all instances except for those relating to
certified reference materials. These goods are "materials used
for analytical purposes and which are accompanied by a certificate
specifying the values of their certified properties". Certified
reference materials can include a range of materials such as metals,
rubber, textiles and other goods, some of which have rates of customs
duty other than Free.(1)
As noted in the Background to this Bills Digest, the
amendments proposed by this Bill give effect to Australia's obligations
under the HS Convention. The major amendments proposed by this Bill provide
new headings and subheadings and separately identify new products such
as narcotic drugs and psychotropic substances (see items 95-133
of Schedule 1) and chemical wastes (see items 145-157 of
Schedule 1).
- Customs Tariff Amendment Bill (No. 5) 2001, Explanatory Memorandum,
pp. 2 and 3.
Ian Ireland
20 August 2001
Bills Digest Service
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ISSN 1328-8091
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