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Customs Tariff Amendment Bill (No. 2) 1998
Bills Digest No. 288 1997-98
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 statu s. Other sources should be consulted to determine the subsequent official status of the Bill.
Customs Tariff Amendment Bill (No.2) 1998
The Bill also establishes a new Schedule 4 item. This allows duty free entry for those inputs not covered by the Information Technology Agreement (ITA).
The ITA refers to the Ministerial Declaration on Trade in Information Technology Products (the Declaration).(2)
Australia, along with forty-two other countries, is a signatory to the Declaration.
The Declaration provides for the elimination o f customs and other duties and charges on certain IT products.
The commitments undertaken require participants to bind these commitments in their World Trade Organisation (WTO) schedules.
On 26 March 1997 p articipant Ministers agreed in Singapore on the expansion of world trade in IT products.
Key elements of the Declaration were based on:
â¢ considering the key role of trade in IT products in the development of information industries and in the dynamic expa nsion of the world economy
â¢ recognising the goals of raising standards of living and expanding the production of and trade in goods
â¢ desiring to achieve maximum freedom of world trade in IT products
â¢ desiring to encourage the continued technological dev elopment of the IT industry on a world-wide basis
â¢ being mindful of the positive contribution IT technology makes to global economic growth and welfare.(3)
The Declaration provided that the duty eliminations would occur provided participants representing approximately ninety percent of world trade in IT products agreed to participate. Participants now collectively account for approximately ninety-three percent of world trade in IT products.(4)
In general, there are six main categories of products covered:
â¢ semiconductor manufacturing equipment
â¢ software and
â¢ scientific instruments.
The Declaration provides for IT tariffs to be eliminated in four steps by the year 2000. With the exception of a small range of finished goods, this Bill brings forward, from 1 January 2000 to 1 July 1998, all duty reductions scheduled under the Declaration.
The goods which remain on the 1 January 2000 reduction schedule include:
â¢ line telephone, cordless, mobile and other telephone sets
â¢ facsimile and answering machines
â¢ digital still image cameras
â¢ pagers and
â¢ antennas and aerial reflectors.
Currently, most fully assembled IT goods (eg. prin ted circuit boards, computers) are imported duty free. These goods use inputs such as chemical products, electronic components and sub-assemblies during the manufacturing process.
Australian made IT goods use the same inputs, however these inputs currently attract either a 3% or 5% tariff. The result is that Australian companies manufacturing IT equipment face an anomalous tariff situation whereby the 3% or 5% duties payable on inputs necessarily flow onto the cost of their goods.
In the past, the computer bounty had the effect of redressing this tariff disparity, but with the cessation of the bounty in July 1997, manufacturers have faced a situation of negative assistance.
In the 'Investment for Growth' statement of 8 December 1997, the Prime Minister said that tariffs would be removed on inputs to the manufacture of information industries equipment to reduce input costs, after a short consultation process with local component suppliers to assess the likely impact on them. He also said that whenever doubts over classification of information technology equipment arise, the lowest tariff would be applied.(5)
The second element of the Bill establishes a new Schedule 4 item in the Act. This will allow duty free entry for inputs, not covered by the Declaration, which are currently subject to a Commercial Tariff Concession Order or a Tariff Concession Order.
Clause 3 is the formal enabling provision for the Schedule to the Bill. It provides that each Act specified in the Schedule is amended in accordance with the applicable items of the Schedule.
Schedule 1 provides for the listed amendments to commence on 1 July 1998. Amendment 74 of the Schedule allows the duty free importation of certain other inputs to the manufacture of information industries equipment which were not covered by the Declaration.
Though the Bill will enhance Australia's trade liberalisation credentials, it is estimated that the action will cost the Federal Government $52m in 1998-99, $28m i n the following year and $5m per annum thereafter.
1. Inputs are goods that are an integral part of the manufacturing process for equipment, and include goods that are incorporated into the equipment or consumed during the manufacturing of the equ ipment, as well as certain capital equipment utilised in the manufacturing process.
2. World Trade Organisation, Singapore Conference, declared 26 March 1997.
3. World Trade Organisation Internet site: http://www.wto.org/wto/new/inftech.htm.
5 . Explanatory Memorandum , Custom Tariff Amendment Bill (No.2) 1998.
5 June 1998
Bills Digest Service
Information and Research Services
This paper has been prepared for general distribution to Senators and Members of the Austra lian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document. IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.