Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005 Arrangements) Bill 2004

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

 

 

 

 

 

 

 

 

 

2002-2003-2004

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

CUSTOMS TARIFF AMENDMENT (TEXTILE, CLOTHING AND FOOTWEAR POST-2005 ARRANGEMENTS) BILL 2004

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

(C irculated by authority of the

Minister for Justice and Customs, Senator

the Honourable Christopher Martin Ellison )



CUSTOMS TARIFF AMENDMENT (TEXTILE, CLOTHING AND

FOOTWEAR POST-2005 ARRANGEMENTS) BILL 2004

 

 

OUTLINE

 

The purpose of the Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005 Arrangements) Bill 2004 (the Bill) is to amend the Customs Tariff Act 1995 (the Tariff) to:

 

·          reduce the general rate of customs duty applicable to a range of textile yarns, fabrics, certain finished textile goods and footwear parts which will be dutiable at 7.5% from 1 January 2005 to 5% from 1 January 2010;

 

·          reduce the general rate of customs duty  applicable to a range of footwear, cotton sheeting and woven and knitted fabrics of various textile materials which will be dutiable at 10% from 1 January 2005 to 5% from 1 January 2010;

 

·          reduce the general rate of customs duty applicable to most articles of apparel and certain finished textiles which will be dutiable at 17.5% from 1 January 2005 to 10% from 1 January 2010 and to 5% from 1 January 2015; and

 

·          create a new concessional item in Schedule 4 to the Tariff to enable the operation of a Product Diversification Scheme for certain clothing and finished textiles.

 

These amendments are complementary to the amendments contained in the Textile, Clothing and Footwear Strategic Investment Program Amendment (Post-2005 scheme) Bill 2004.  Together, these Bills extend the provisions of the Textile, Clothing and Footwear Strategic Investment Program for another ten years.

 

This regime of tariff reductions will mean that the general rate of customs duty applicable to all textile, clothing and footwear (TCF) goods will be 5% from 1 January 2015.

 

The enactment of the post-2010 and post-2015 rates of duty for TCF goods, at this time, will provide transparency and certainty for TCF manufacturers, enabling sufficient time for planning prior to the scheduled reductions in 2010 and 2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL IMPACT STATEMENT

 

The estimated cost to the Government in revenue forgone as a result of the proposed tariff reductions is set out in the Table below:

 

 

Period

Revenue Forgone

$ millions

 

2004-05

0.0

2005-06

0.0

2006-07

0.0

2007-08

0.0

2008-09

0.0

2009-10

300

2010-11

600

2011-12

600

2012-13

700

2013-14

700

2014-15

900

2015-16

1,200

2016-17

1,300

 

The tariff reductions, which commence on 1 January 2010, are estimated to result in revenue forgone of $6.3 billion over the period 2009-10 to 2016-17.

 

The Product Diversification Scheme, to operate through the new concessional item of the Tariff, is estimated to result in revenue forgone of up to $50 million over the life of the Scheme.

 

REGULATION IMPACT STATEMENT (RIS)

 

A Regulation Impact Statement covering the tariff amendments has been tabled in the Explanatory Memorandum for the cognate Textile, Clothing and Footwear Strategic Investment Program Amendment (Post-2005 scheme) Bill 2004.

 

 

 



CUSTOMS TARIFF AMENDMENT (TEXTILE, CLOTHING AND

FOOTWEAR POST-2005 ARRANGEMENTS) BILL 2004

 

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

 

This clause provides for the Act, when enacted, to be cited as the “ Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005 Arrangements) Act 2004 ”.

 

Clause 2 - Commencement

 

This clause specifies that this Act will commence on the day on which it receives the Royal Assent.

 

Clause 3 - Schedule(s)

 

This clause is the formal enabling provision for the Schedule to the Bill, providing that each Act specified in the Schedule is amended in accordance with the applicable items of that Schedule.  The clause also provides that other items of the Schedules have effect according to their own terms.

 

 



Schedule 1 - Amendment of the Customs Tariff Act 1995

 

Schedule 1 of this Bill inserts post-2010 and post-2015 duty rates for certain textile, clothing and footwear goods.

 

Part 1 - Schedule 3 headings and subheadings that have a rate of duty of 7.5% from 1 January 2005

 

Items 1 to 137

 

The amendments contained in items 1 to 137 in Part 1 of Schedule 1 to the Bill reduce the general rate of duty, for those headings and subheadings specified, to 5%, from 1 January 2010.

 

The headings and subheadings specified apply to a range of textile yarns, fabrics, certain finished textile goods and footwear parts (Part 1 goods).  The general rate of duty for Part 1 goods is currently 10%.  The Customs Tariff Amendment Act (No. 1) 1999 will reduce the general rate of duty for those goods to 7.5%, from 1 January 2005.

 

Some Part 1 goods are subject to lower rates of duty than the general rate of duty if produced or manufactured in certain Developing Countries, Forum Island Countries, Canada, New Zealand and Papua New Guinea (the preference countries).  This difference in rates is the margin of tariff preference and is at least 5 percentage points.

 

Items 7, 18, 49, 50, 56, 57, 110, 111, 112, 117 and 122 apply to subheadings for which the rate of duty for Canadian goods is currently Free or is Free on 1 January 2005.  Under paragraph 16(d) of the Tariff, if no rate is specified for Canadian goods, the general rate applies.  Hence these items specify the Canadian rate to be Free to ensure that the rate of duty for those goods remains Free from 1 January 2010.

 

The margin of tariff preference for Part 1 goods produced or manufactured in the other preference countries is being maintained from 1 January 2010.  Since that margin is 5 percentage points or greater for Part 1 goods produced or manufactured in those countries, the rate of duty for them will become Free.  Section 16 of the Tariff provides that if no rate is specified for those countries, the rate of duty is Free and hence no rates have been specified for those countries from 1 January 2010.

 

Generally when general duty rates are reduced, the duty rates for DCT and DCS countries are maintained at their existing levels until the general rate reduces to those levels, and thereafter the general rate of duty applies to those countries.  The DCT countries are Taiwan, Republic of Korea, Hong Kong and Singapore.  DCS countries are listed in Part 4 of Schedule 1 to the Tariff and include a number of more advanced Developing Countries such as Malaysia and Indonesia.  From 1 January 2010, the general rate of duty for Part 1 goods is the same or lower than the duty rate for DCT and DCS countries and hence the general rate will apply to Part 1 goods produced or manufactured in those countries.

 



Part 2 - Schedule 3 headings and subheadings that have a rate of duty of 10% from 1 January 2005

 

Items 138 to 432

 

The amendments contained in items 138 to 432 in Part 2 of Schedule 1 to the Bill reduce the general rate of duty, for those headings and subheadings specified, to 5%, from 1 January 2010.

 

The headings and subheadings specified apply to a range of footwear, cotton sheeting and woven and knitted fabrics of various textile materials (Part 2 goods).  The general rate of duty for Part 2 goods is currently 15%.  The Customs Tariff Amendment Act (No. 1) 1999 will reduce the general rate of duty for these goods to 10%, from 1 January 2005.

 

The amendments in Part 2 of the Schedule do not interfere with margins of tariff preference and duty-free entry for preference countries. 

 

Item 351 applies to subheading 5705.00.90 for which the margin of tariff preference presently accorded Canada is 10 percentage points.  From 1 January 2005 the rate for Canada will be Free.  Item 351 ensures that this Free rate continues after 1 January 2010.

 

Since the margin of tariff preference for the other preference countries is 5 percentage points or greater, Part 2 goods produced or manufactured in those preference countries will remain or become subject to a Free rate of duty from 1 January 2010.

 

The DCT and DCS countries will already be subject to the general rate of duty prior to 1 January 2010 and will continue to be subject to the general rate from that date.

 

Part 3 - Schedule 3 subheadings that have a rate of duty of 17.5% from 1 January 2005

 

Items 433 to 671

 

The amendments contained in items 433 to 671 in Part 1 of Schedule 1 to the Bill reduce the general rate of duty, for those headings and subheadings specified, to 10%, from 1 January 2010 and to 5% from 1 January 2015.

 

The headings and subheadings specified apply to most articles of apparel and certain finished textiles (Part 3 goods).  The general rate of duty for Part 3 goods is currently 25%.  The Customs Tariff Amendment Act (No. 1) 1999 will reduce the general rate of duty for these goods to 17.5%, from 1 January 2005.

 

The amendments in Part 3 of the Schedule do not interfere with margins of tariff preference and duty-free entry for preference countries.  For example item 433 amends the rate for subheading 3926.20.29.  From 1 January 2005 the general rate for that subheading will be 17.5% and for Developing Countries it will be 12.5% that is the margin of tariff preference is 5 percentage points.  Item 433 will amend the rates so that from 1 January 2010 the general rate will be 10% and the Developing Country rate will be 5%, hence maintaining the margin of tariff preference.  From 1 January 2015 the general rate will be 5%.  There is no rate specified for Developing Countries, as they will be subject to a Free rate of duty in accordance with section 16 of the Tariff.

 

Item 541 applies to subheading 6115.11.10 for which the margin of tariff preference presently accorded Canada is 10 percentage points.  The item reduces the rate of duty for Canada for this subheading to Free from 1 January 2010 when the general rate is reduced to 10%.  From 1 January 2015 the general rate will be reduced to 5% and the rate for goods produced or manufactured in Canada will remain Free.

 

The DCT and DCS countries will already be subject to the general rate of duty prior to 1 January 2010 and will continue to be subject to the general rate from that date.

 

Part 4 - Other amendments

 

Item 672

 

This item creates a new concessional item 73 in the Tariff to enable the operation of a Product Diversification Scheme for certain clothing and finished textiles.  New item 73 will apply to goods entered for home consumption between 1 July 2006 and 30 June 2017 (inclusive).  The item will enable eligible clothing and textile manufacturers to apply duty credits owned under that Scheme against imports of finished clothing and certain finished textile products (these will be prescribed in by-laws).  The amount of duty payable on these goods will be reduced by the amount of duty credits applied to the importation.  It is proposed that no new credits will be issued during the last year (2016-2017) of operation of the Scheme but holders of credits will be able to utilise them during that period.