2022-2023

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

 

CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS) BILL 2023

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Home Affairs, the Honourable Clare O’Neil MP)

 

CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS) BILL 2023

 

OUTLINE

 

The purpose of the Customs Tariff Amendment (Incorporation of Proposals) Bill 2023 (the Bill) is to amend the Customs Tariff Act 1995 (the Customs Tariff Act) to:

·          insert new section 18A to provide for a temporary increase in customs duties for goods that are the produce or manufacture of Russia or Belarus and that are imported into Australia between 25 April 2022 and 24 October 2023. A temporary duty of 35 per cent will apply to these goods in addition to the general rate of customs duty that would ordinarily apply, except where these goods are eligible for certain tariff concessions or left for direct shipment to Australia before 25 April 2022. This measure incorporates Customs Tariff Proposal (No. 3) 2022 and Customs Tariff Proposal (No. 6) 2022, which were tabled in Parliament on 2 August 2022 and 9 November 2022, respectively. The amendments are contained in Part 1 of Schedule 1 to the Bill;

·          insert new section 18B to provide a ‘Free’ rate of customs duty for goods that are the produce or manufacture of Ukraine, and a reduced rate for goods classified under a tariff classification in Chapter 22, 24, 27, 29, 34 or 38 of Schedule 3 for which a ‘DC’ tariff rate is listed, and where the goods are imported into Australia during the period of 12 months beginning on 4 July 2022. This measure incorporates Customs Tariff Proposal (No. 4) 2022, which was tabled in Parliament on 2 August 2022. The amendments are contained in Part 2 of Schedule 1 to the Bill;

·          amend item 57 of Schedule 4 to permanently extend the ‘Free’ rate of customs duty for prescribed medical products and hygiene products capable of use in combatting COVID-19, and to expand the application of that concession starting on 1 July 2022 to such products used in other contexts unrelated to COVID-19, as well as to ingredients and containers for certain medicaments and other goods of Chapter 30 of Schedule 3. This measure incorporates Customs Tariff Proposal (No. 2) 2022, which was tabled in Parliament on 2 August 2022. The amendments are contained in Part 3 of Schedule 1 to the Bill;

·          amend Chapter 87 of Schedule 3 to separately provide for the classification of certain electric and low emission vehicles with a customs value less than the ‘fuel-efficient car limit’ within the meaning of the A New Tax System (Luxury Car Tax) Act 1999 where the goods are imported into Australia on or after 1 July 2022 or where the time for working out the rate of import duty on the goods had not occurred before 1 July 2022. This measure incorporates Customs Tariff Proposal (No. 5) 2022, which was tabled in Parliament on 2 August 2022. The amendments are contained in Part 4 of Schedule 1 to the Bill; and

·          make minor amendments to correct tariff reference s for blood-grouping reagents and ‘herbicides, anti-sprouting products and plant-growth regulators’ following their reclassification from the Customs Tariff Amendment (2022 Harmonized System Changes) Act 2021 . The amendments are contained in Part 5 of Schedule 1 to the Bill.

 

 

FINANCIAL IMPACT STATEMENT

 

The financial implications of the measures in the Bill are outlined in the table below.

 

	2021-22 $m	2022-23 $m	2023-24 $m	2024-25 $m	2025-26 $m
Increase to customs duties on goods from Russia and Belarus	..	6.0	3.0	-	-
‘Free’ rate of duty for goods from Ukraine	-	-2.0	-	-	-
Expanded medical and hygiene goods concession	-	-1.7	-1.7	-1.7	-1.7
‘Free’ rate of duty for certain vehicles	-	-20.0	-25.0	-40.0	-55.0
Minor amendments	-	-	-	-	-

 

.. Not zero, but rounded to zero.

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

A Statement of Compatibility with Human rights in respect of the amendments contained in the Bill is at Attachment A . The Statement assesses the amendments to be compatible with Australia’s human rights obligations.

 

 

 

CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS) BILL 2023

 

NOTES ON CLAUSES

 

Clause 1  Short title

 

1.             This clause provides for the Customs Tariff Amendment (Incorporation of Proposals) Bill 2023 (the Bill), when enacted, to be cited as the Customs Tariff Amendment (Incorporation of Proposals) Act 2023 .

 

Clause 2  Commencement

 

2.             This clause sets out, in a table, the date on which provisions of the Bill, when enacted, will commence. It provides that information in column 3 of this table is not part of the Act, and that the information in this column or information in it may be edited, in any published version of the Act.

 

3.             Table item 1 provides for clauses 1 to 3 and anything in the Bill not elsewhere covered by the table to commence on the day the Bill receives the Royal Assent.

 

4.             Table item 2 provides for Part 1 of Schedule 1 to commence on 25 April 2022.

 

5.             Table item 3 provides for Part 2 of Schedule 1 to commence on 4 July 2022.

 

6.             Table item 4 provides for items 6 to 8 of Schedule 1 to commence on 1 July 2021.

 

7.             Table item 5 provides for items 9 and 10 of Schedule 1 to commence on 1 July 2022.

 

8.             Table item 6 provides for Part 4 of Schedule 1 to commence of 1 July 2022.

 

9.             Table item 7 provides for Part 5 of Schedule 1 to commence immediately after the commencement of Schedule 1 to the Customs Tariff Amendment (Regional Comprehensive Economic Partnership Agreement Implementation) Act 2021 , on 1 January 2022.

 

Clause 3  Schedules

 

10.         This clause enables the Schedules of the Bill, when enacted, to amend or repeal provisions of legislation specified in the Schedules, in accordance with the applicable items. The Customs Tariff Act 1995 (the Customs Tariff Act) is being amended by the Bill.

 

 

Schedule 1-Amendments

 

Part 1 — Temporary increase in duties for goods from Russia and Belarus

 

Customs Tariff Act 1995

 

Introductory comments

 

11.         The Customs Tariff Proposal mechanism is used for effecting alterations to the Customs Tariff Act, particularly when such alterations are required to have effect in a short timeframe that cannot be achieved by a Customs Tariff Amendment Bill. Customs Tariff Proposals are used most commonly for introducing new items, for changing rates of duty or for restructuring items in the Schedules to the Customs Tariff Act.

 

12.         When the Parliament is sitting, Customs Tariff Proposals are tabled in the House of Representatives, specifying alterations to the Customs Tariff Act. Where Parliament is not sitting for a period exceeding 7 days, the Minister may under section 273EA of the Customs Act 1901 (the Customs Act) publish a notice in the Commonwealth of Australia Gazette , giving notice that, within 7 sitting days of the House of Representatives after the date of publication of the notice, the Minister will propose in Parliament a Customs Tariff alteration in accordance with particulars in the notice and operating as from such time in the notice.

 

13.         Following the introduction of a Customs Tariff Proposal in the House of Representatives, the alterations contained in the Proposal are incorporated into the Customs Tariff Act through the enactment of a Customs Tariff Amendment Bill.

 

14.         On 31 March 2022, the then Prime Minister announced that Australia would join like-minded countries in temporarily removing Most Favoured Nation (MFN) tariff treatment and imposing an additional duty on goods from Russia and Belarus. Ordinarily, goods from Russia and Belarus would be subject to the general rate of customs duty, most commonly 5 per cent or ‘Free’. Instead, most goods that are the produce or manufacture of Russia and Belarus are subject to a temporary rate of customs duty of 35 per cent in addition to the general rate of customs duty that would have ordinarily applied to the goods. The temporary removal of MFN treatment and imposition of additional duty is a response to Russia’s illegal invasion of Ukraine and is necessary for the protection of Australia’s essential security interests. This violation of Ukraine’s sovereignty and territorial integrity undermines the rules-based international order, which is essential to Australia’s international, regional and domestic stability and security. Economic measures against Russia and Belarus are a necessary part of the international community’s response to their flagrant violation of the Charter of the United Nations.

 

15.         The temporary additional duty applies to all goods that are the produce or manufacture of Russia or Belarus, left on or after 25 April 2022 for direct shipment to Australia and that are imported into Australia between 25 April 2022 and 24 October 2023. The additional duty does not apply to goods that are otherwise eligible for certain tariff concessions provided under Schedule 4 to the Customs Tariff Act. Relevant concessions are identified in new subsection 18A(3).

 

16.         The additional duty applies to goods that are the produce or manufacture of Russia or Belarus regardless of when the goods were manufactured. This includes goods that were the produce of manufacture of places that are geographically part of present day Russia or Belarus but not named as such. The additional duty also applies in circumstances where the goods were imported into Australia from a country other than Russia or Belarus.

 

17.         On 15 November 2022, the Notice of Intention to Propose Customs Tariff Alterations (No. 4) 2022 (Notice No. 4) was registered on the Federal Register of Legislation for the purposes of section 273EA of the Customs Act. Notice No. 4 advised of the intention to apply additional duty to goods that are the produce or manufacture of Russia or Belarus. The related Customs Tariff Proposal (No. 3) 2022, in the same terms as Notice No. 4, was proposed in the House of Representatives on 2 August 2022.

 

18.         On 14 October 2022, the Notice of Intention to Propose Customs Tariff Alterations (No. 7) 2022 (Notice No. 7) was registered on the Federal Register of Legislation for the purposes of section 273EA of the Customs Act. Notice No. 7 advised of the intention to extend the application of the existing tariff measure to impose increased rates of duty on goods from Russia and Belarus. It also amended Notice No. 4 to ensure that certain concessions in Schedule 4 to the Customs Tariff Act for goods that are the produce or manufacture of Russia or Belarus were at all times available to exempt those goods from additional duty. Customs Tariff Proposal (No. 6) 2022, in the same terms as the Notice, was proposed in the House of Representatives on 9 November 2022.

 

Item 1  Subsection 16(1)

 

19.         Subsection 16(1) of the Customs Tariff Act sets out how the rate of customs duty is calculated under that Act, subject to other sections that may affect the calculation. It provides for customs duty being calculated by reference to the general rate set out in the third column of the tariff classification under which the goods are classified, where the goods are not the produce or manufacture of a Preference Country or not originating goods from a country already eligible for a preferential rate of duty under an existing free trade agreement.

 

20.         Item 3 of the Bill inserts new section 18A, which sets out how the rate of customs duty for additional duty goods are calculated. These are goods set out in new subsection 18A(5). To complement the operation of new section 18A, item 1 inserts a reference to new section 18A in subsection 16(1) and, in doing so, has the effect that the method in new section 18A is applicable instead of the method in subsection 16(1) for calculating the rate of customs duties for additional duty goods.

 

Item 2  Subsection 18(1)

 

21.         Subsection 18(1) of the Customs Tariff Act provides that goods may receive concessional rates of customs duty under Schedule 4 to the Customs Tariff Act, subject to other sections. Item 3 of the Bill inserts new section 18A, which set out certain concessional rates of customs duty (identified in subsection 18A(3)) for additional duty goods (as described in subsection 18A(5)). To complement the operation of new section 18A and ensure that the concessional rate of customs duty is to be worked out in accordance with new section 18A for additional duty goods, item 2 inserts a reference to new section 18A and, in doing so, has the effect of excluding goods subject to additional duty from receiving most concessional rates of duty under Schedule 4 to the Customs Tariff Act.

Item 3  After section 18

 

22.         This item inserts new section 18A, which concerns the temporary increase in the amount of customs duty for goods that are the produce or manufacture of Russia or Belarus and when additional duty applies to these goods.

 

General rate of duty

 

23.         New subsection 18A(1) sets out the method for calculating the 35 per cent rate of customs duty that is applied in addition to the general rate of customs duty, excise-equivalent and similar customs duties expressed in dollar amounts in Schedule 3 to the Customs Tariff Act, for additional duty goods.

 

24.         New paragraph 18A(1)(a) provides that where the general rate set out in the third column of the tariff classification, under which additional duty goods are classified, is ‘Free’ the amount of duty in respect of those goods is an amount equal to 35 per cent of the value of the goods. For example, a duty rate of 35 per cent of the customs value of the goods is payable for certain surgical appliances that are classified to tariff subheading 9018.90.00, which has a general rate of customs duty of ‘Free’.

 

25.         New paragraph 18A(1)(b) provides that where the general rate set out in the third column of the tariff classification, under which additional duty goods are classified, is not ‘Free’ the amount of duty in respect of the goods would be calculated by adding an amount equal to 35 per cent of the value of the goods to the general rate. For example, a duty rate of 40 per cent of the customs value of the goods is payable for shampoos classified to tariff subheading 3305.10.00, which is the sum of a general rate of customs duty of ‘5%’ plus the additional duty.

 

26.         The note to new subsection 18A(1) indicates that the definition of ‘additional duty goods’ is set out in new subsection 18A(5).

 

27.         New subsection 18A(2) provides that new subsection 18A(1) has effect despite paragraph 16(1)(a) and section 18 of the Customs Tariff Act. Sections 16 and 18 deal with the calculation of duty and calculation of concessional duty respectively. The effect of this new subsection is that, for the purpose of working out the rate of customs duty for additional duty goods, only new section 18A is applicable.

 

Concessional rate of duty

 

28.         New subsection 18A(3) provides that, if items 9, 10, 14, 15, 16, 17, 18, 19, 20 or 25 of Schedule 4 apply to the goods, then the amount of duty payable in respect of the goods is worked out by reference to the general rate of duty set out in the third column of that item. This subsection has the effect of excluding certain goods from the additional rate of customs duty and enables access to the following concessions in Schedule 4 for goods that are the produce or manufacture of Russia or Belarus:

(a)           goods covered by item 15—goods that are personal effects

(b)           goods covered by any of items 16, 17, 18, 19 and 20—certain goods that are returned to Australia after export (including items dealing with the overseas repair of goods, to prevent application of the tariff to the same good multiple times); and

(c)           goods covered by items 9, 10, 14, or 25—tariff concessions relating to Australia’s obligations as party to an international agreement.

 

29.         New subsection 18A(4) provides that, for the purposes of new subsection 18A(3), as it applies to item 20 of Schedule 4, the applicable rate of duty percentage is:

(a)           if the general rate set out in the third column of the tariff classification under which the goods are classified is ‘Free’—35%; or

(b)           if the general rate set out in the third column of the tariff classification under which the goods are classified is a percentage of the value of the goods—that percentage, plus 35%.

 

Additional duty goods

 

30.         New subsection 18A(5) has the effect that goods are additional duty goods if all of the following apply:

(a)           the goods are the produce or manufacture of Russia or Belarus;

(b)           the goods are imported into Australia during the period beginning on 25 April 2022 and ending at the end of 24 October 2023;

(c)           the goods had not left for direct shipment to Australia before 25 April 2022 from a place of manufacture or warehouse in the country from which the goods were exported; and

(d)           the goods are not already the subject of a free trade agreement or other preferential duty arrangement under subsection 16(1) of the Customs Tariff Act.

 

When goods are the produce or manufacture of Russia or Belarus

 

31.         New subsections 18A(6) to (8) set out when goods are the produce or manufacture of Russia or Belarus.

 

32.         New subsection 18A(6) provides that goods are the produce or manufacture of Russia or Belarus only if the goods are unmanufactured raw products of those countries or where the last process of manufacture occurred in those countries.

 

33.         New paragraph 18A(6)(a) clarifies that ‘unmanufactured raw products’ has the same meaning as in section 4 of the Customs Act. This means natural or primary products that have not been subjected to an industrial process, other than an ordinary process of primary production. This could include, but is not limited to, goods such as animals and parts of animals, greasy wool, plants and parts of plants, minerals in their natural state, ores, and crude petroleum.

 

34.         New paragraph 18A(6)(b) provides that goods are the manufacture of Russia or Belarus where the last process in the manufacture of the goods was performed in Russia or Belarus. Goods will also be the manufacture of Russia or Belarus where the last process in the manufacture of goods were minimal operations or processes that occurred in another country (see new subsections 18A(7) and 18A(8)).

 

35.         New subsection 18A(7) provides that minimal operations or processes that take place in a country other than Russia or Belarus are not taken to be a process in the manufacture of the goods for the purposes of new paragraph 18A(6)(b). This ensures that goods that undergo minimal operations or processes in countries other than Russia or Belarus are still subject to the additional duty rate.

 

36.         New subsection 18A(8) provides a non-exhaustive list of examples of minimal operations or processes, and includes the following:

(a)           operations to preserve goods in good condition for the purposes of transport or storage;

(b)           changing of packaging or the breaking up or assembly of packages;

(c)           disassembly of goods;

(d)           placing goods in bottles, cases or boxes, fixing on cards or other simple packaging operations;

(e)           affixing of marks, labels or other similar distinguishing signs on goods or their packaging;

(f)            simple processes of sifting, screening, sorting or classifying or other similar simple processes.

 

Part 2 — Temporary decrease in duties for goods from Ukraine

 

Customs Tariff Act 1995

 

Introductory Comments

 

37.         On 4 July 2022, the Prime Minister announced that Australia would join like-minded countries in providing a temporary ‘Free’ rate of customs duty for goods that are the produce or manufacture of Ukraine. This measure aims to assist Ukraine’s continued participation in international trade and support its efforts to uphold its territorial integrity in response to Russia’s illegal invasion and is necessary for the protection of Australia’s essential security interests. This violation of Ukraine’s sovereignty and territorial integrity undermines the rules-based international order, which is essential to Australia’s international, regional and domestic stability and security.

 

38.         The temporary ‘Free’ rate of duty applies to goods imported between 4 July 2022 and 3 July 2023 that are the produce or manufacture of Ukraine. Where goods are the produce or manufacture of Ukraine and are imported into Australia during the period of twelve months commencing on 4 July 2022, proposed new section 18B provides that the rates of customs duty for goods that are classified to tariff subheadings in Chapters 22, 24, 27, 29, 34 and 38 of Schedule 3 to the Customs Tariff Act for which a ‘DC’ tariff rate is listed, would be calculated as the lower of either the ‘DC’ rate in Schedule 3 or any concessional rate applying in Schedule 4. All other goods that are the produce or manufacture of Ukraine and are imported within this period have a duty rate of ‘Free’.

 

39.         On 13 July 2022, the Notice of Intention to Propose Customs Tariff Alterations (No. 5) 2022 (Notice No. 5) was registered on the Federal Register of Legislation for the purposes of section 273EA of the Customs Act. Notice No. 5 advised of the intention to implement the temporary concession on goods that are the produce or manufacture of Ukraine. The related Customs Tariff Proposal (No. 4) 2022, in the same terms as Notice No. 5, was proposed in the House of Representatives on 2 August 2022.

 

Item 4  Subsection 16(1)

 

40.         Subsection 16(1) of the Customs Tariff Act sets out how the rate of customs duty is calculated under that Act, subject to other sections that may affect the calculation. It provides that customs duty is calculated by reference to the general rate set out in the third column of the tariff classification under which the goods are classified. This does not apply where the goods are the produce or manufacture of a Preference Country or are originating goods from a country already eligible for a preferential rate of duty under an existing free trade agreement.

 

41.         Item 5 of the Bill inserts section 18B, which sets out how the rate of customs duties for goods from Ukraine during a specified period are calculated. To complement new section 18B, item 4 inserts a reference to new section 18B in subsection 16(1). This has the effect that, for the purpose of calculating the rate of customs duty for goods that are the produce or manufacture of Ukraine during the specified period, the method in new section 18B is applicable instead of the method in subsection 16(1).

 

Item 5  Before section 19

 

42.         This item inserts new section 18B, which concerns the temporary decrease in the amount of customs duty for goods that are the produce or manufacture of Ukraine and sets out when the reduced customs duty applies to these goods.

 

General rate of duty

 

43.         New subsection 18B(1) sets out the method for calculating the rate of customs duty in respect of goods that meet the requirements under new subsections 18B(1)(a) and (b). New section 18B applies to goods that are:

(a)    the produce or manufacture of Ukraine (subsection 18A(1)(a)); and

(b)    imported into Australia during the period of 12 months beginning on 4 July 2022 and ending on 3 July 2023 (subsection 18A(1)(b)).

 

44.         For the purposes of paragraph 18B(1)(a), whether goods are the produce or manufacture of Ukraine is determined in accordance with section 13 of the Customs Tariff Act as modified by new subsection 18B(4). This means that the rules of origin in Division 1A of Part VIII of the Customs Act apply as if Ukraine were a Developing Country.

 

45.         For goods that meet the requirements of new subsections 18B(1)(a) and (b), new paragraph 18B(1)(c) has the effect that if the goods are classified under a tariff classification in Chapter 22, 24, 27, 29, 34 or 38 of Schedule 3 to the Customs Tariff Act and a rate of duty that applies in relation to Developing Countries specified in Part 3 of Schedule 1 to the regulations is set out in the third column of that tariff classification, the reference to that rate of customs duty is applicable. This paragraph provides for the rate of customs duty for these goods being calculated by reference to the rate of customs duty that applies to goods of the Developing Countries specified in Part 3 of Schedule 1 to the Customs Tariff Regulations 2004 (Customs Tariff Regulations). This is the rate that is identified by the letters ‘DC’ in the third column of the tariff classification for those goods in Schedule 3 to the Customs Tariff Act.

 

46.         New paragraph 18B(1)(d) has the effect that where goods are not classified under a tariff classification in a Chapter mentioned in new paragraph 18B(1)(c), or where the goods are classified in those Chapters but there is no ‘DC’ rate listed, the applicable rate of customs duty for those goods is ‘Free’.

 

 

Concessional rate of duty

 

47.         New subsection 18B(2) concerns concessional rates of customs duty and provides that, if:

(a)           subparagraphs (1)(c)(i) and (ii) apply in relation to the goods; and

(b)           an item in Schedule 4 prima facie applies to the goods; and

(c)           if the goods were the produce or manufacture of a Developing Country specified in Part 3 of Schedule 1 to the Customs Tariff Regulations—the rate of duty (the concessional rate) under paragraph 18(2)(h) in respect of the goods would be less than the rate of duty that would otherwise apply under paragraph (1)(c) of this section in respect of the goods;

then the duty in respect of the goods must be worked out by reference to the concessional rate.

 

48.         The effect of this subsection is that excise-equivalent goods classified under Chapter 22, 24, 27, 29, 34 or 38 of Schedule 3 to the Customs Tariff Act may be eligible for concessional rates of duty under Schedule 4 where these rates are lower than the ‘DC’ rate in Schedule 3 to the Customs Tariff Act.

 

Interpretative provisions

 

49.         New subsection 18B(3) provides that new section 18B has effect despite sections 16 and 18 of the Customs Tariff Act. Sections 16 and 18 deal with the calculation of duty and calculation of concessional duty respectively. The effect of this new subsection is that, for working out the rate of customs duty for goods that meet both new paragraphs 18B(1)(a) and (b), only new section 18B is applicable.

 

50.         New subsection 18B(4) provides that for the purposes of section 13 of the Customs Tariff Act, duty in respect of goods that are the produce or manufacture of Ukraine is calculated as if Ukraine (which is not listed as a Developing Country under Division 1 of Part 3 of Schedule 1 to the Customs Tariff Regulations) were a Developing Country. However, subsection 18B(4) does not modify how Division 1A of Part VIII of the Customs Act operates for determining whether goods are the produce or manufacture of other countries.

 

Part 3 — Medical products or hygiene products

 

Customs Tariff Act 1995

 

Introductory Comments

 

51.         In May 2020, to assist Australians in accessing medical and hygiene goods capable of limiting the spread of the virus that causes the disease known as COVID-19, the government put in place a temporary tariff concession. The tariff concession provided a ‘Free’ rate of customs duty for certain goods including masks, soap, gloves, protective clothing and testing kits. The temporary concession was extended several times, most recently to 30 June 2022.

 

52.         In the 2022-23 Budget, released in March 2022, the then-government announced that the concession would be made permanent and the scope of the concession expanded to also provide a ‘Free’ rate of duty for ingredients and primary containers used in the manufacture of COVID-19 vaccines and treatments.

 

53.         On 1 April 2022, the Notice of Intention to Propose Customs Tariff Alterations (No. 2) 2022 (Notice No. 2) was registered on the Federal Register of Legislation for the purposes of section 273EA of the Customs Act. Notice No. 2 advised of the intention to permanently extend the concession for medical products and hygiene products capable of use in combatting COVID-19 from 1 April 2022 and expand the scope of the concession from 1 July 2022. The related Customs Tariff Proposal (No. 2) 2022, in the same terms as the Notice, was proposed in the House of Representatives on 2 August 2022.

 

54.         Item 57 of the table in Schedule 4 of the Customs Tariff Act provides a ‘Free’ rate of customs duty for prescribed medical and hygiene products, ingredients used in the production of medicaments or containers to be used for containing medicaments. Broadly, the products prescribed in Customs By-law Nos. 2200082, 2200083 and 2200084 are:

(a)           certain medical and hygiene goods that are capable of use in combatting pathogens or viruses that are transmitted through droplets or airborne spread;

(b)           active ingredients to be used in the manufacture of medicaments, vaccines and other goods, which if imported would be classified under Chapter 30 of Schedule 3 to the Customs Tariff Act, that are to be used in the treatment, prevention or to limit the severity of COVID-19; and

(c)           primary receptacles to be used for containing medicaments, vaccines or other goods, which if imported would be classified under Chapter 30 of Schedule 3 to the Customs Tariff Act, that are to be used in the treatment, prevention or to limit the severity of COVID-19.

 

Item 6  Schedule 4 (table item 57, column headed “Description of goods”, paragraph (b))

 

55.         This item amends paragraph (b) to omit ‘COVID-19; and’ and substitute ‘COVID-19’ as a consequence of the repeal of paragraph (c) by item 7 of this Bill.

 

Item 7  Schedule 4 (table item 57, column headed “Description of goods”, paragraph (c))

 

56.         This item repeals paragraph (c) from the description of goods covered by the concession in item 57 of Schedule 4 to the Customs Tariff Act. Paragraph (c) provides that the concession applies only where the time for working out the rate of duty on the goods is in the period beginning on 1 February 2020 and ending at the end of 30 June 2021.

 

57.         This item removes the end date on this concessional item, enabling its continued operation and making the concession permanent. This amendment supports the continued supply of medical and hygiene goods. In practice, the amendment extends the duration of the concession until its repeal and substitution by item 9 of this Bill on 1 July 2022.

 

Item 8  Application provision

 

58.         This item provides that the amendments made by items 6 and 7 of Schedule 1 to this Bill apply in relation to:

(a)           goods imported into Australia on or after the commencement of this item; and

(b)           goods imported into Australia before the commencement of this item, where the time for working out the rate of import duty on the goods had not occurred before the commencement of this item.

 

59.         As concessional item 57 applies where the time for working out the rate of customs duty is between 1 February 2020 and the end of 30 June 2021, the 1 July 2021 commencement date for items 6 and 7 of this Bill which remove the end date ensures the continued operation of the concession.

 

Item 9  Schedule 4 (cell at table item 57, column headed “Description of goods”)

 

60.         This item repeals and replaces the description of goods covered by the concession in item 57 of Schedule 4 to the Customs Tariff Act to provide for:

(a)           medical and hygiene products;

(b)           ingredients to be used in the manufacture of medicaments or other goods which, if imported, would be classified under Chapter 30 of Schedule 3 to the Customs Tariff Act; and

(c)           primary receptacles to be used for containing goods which, if imported, would be classified under Chapter 30 of Schedule 3.

 

61.         The new description removes the requirement for the goods to be capable of use in combatting COVID-19 and has no end date. Furthermore, it expands the scope of the concession to also provide for ingredients to be used in the manufacture of goods of Chapter 30 of Schedule 3 to the Customs Tariff Act such as medicaments and vaccines, and primary receptacles to be used for containing goods of Chapter 30. The expanded concession will only apply to goods of this kind that are prescribed by by-law.

 

Item 10  Application provision

 

62.         This item provides that the amendment made by item 9 applies in relation to:

(a)           goods imported into Australia on or after the commencement of this item; and

(b)           goods imported into Australia before the commencement of this item, where the time for working out the rate of import duty on the goods had not occurred before the commencement of this item.

 

63.         This item provides that the ‘Free’ rate of customs duty for the expanded set of goods applies starting on 1 July 2022.

 

Part 4 — Electric vehicles

 

Customs Tariff Act 1995

 

Introductory Comments

 

64.         The Government is supporting the uptake of no-emission and low-emission vehicles, including electric, hydrogen fuel cell and plug-in hybrid vehicles, by providing a ‘Free’ rate of customs duty for vehicles with a value below the luxury car tax threshold, which applies to fuel-efficient vehicles.

 

65.         Prior to 1 July 2022, a 5 per cent general rate of customs duty applied to all new passenger motor vehicles. From 1 July 2022, the general rate of customs duty was reduced to ‘Free’ for electric, hydrogen and plug-in hybrid vehicles classified to the new tariff classifications inserted into Chapter 87 of Schedule 3 to the Customs Tariff Act.

 

66.         Items 13 to 16 of this Bill insert new tariff classifications with a ‘Free’ rate of customs for the following types of passenger motor vehicles:

(a)    with a spark-ignition and electric motor as motors for propulsion, and which are capable of being charged by plugging to external sources of electric power;

(b)    with a compression-ignition internal combustion piston engine and electric motor as motors for propulsion, and which are capable of being charged by plugging to external sources of electric power;

(c)    with only an electric motor for propulsion;

(d)    with an engine or motor other than a spark-ignition or compression-ignition internal combustion piston engine and an electric motor for propulsion, and which are capable of being charged by plugging to external sources of electric power.

 

67.         On 21 July 2022, the Notice of Intention to Propose Customs Tariff Alterations (No. 6) 2022 (Notice No. 6) was registered on the Federal Register of Legislation for the purposes of section 273EA of the Customs Act. Notice No. 6 advised of the intention to reduce the rates of customs duty for certain types of passenger motor vehicles. The related Customs Tariff Proposal (No. 5) 2022, in the same terms as Notice No. 6, was moved in the House of Representatives on 2 August 2022.

 

Item 11  (Chapter 87, after Additional Note 5)

 

68.         This item inserts new Additional Note 6. The Additional Note directs the tariff classification of certain motor vehicles, that have a customs value less than the ‘fuel-efficient car limit’, within the meaning of the  A New Tax System (Luxury Car Tax) Act 1999 (Luxury Car Tax Act) for the financial year in which the time for working out the rate of import duty on the goods occurs. The ‘fuel-efficient car limit’ is defined in subsection 25-1(5) of the Luxury Car Tax Act to be $75,000 for the 2008-09 financial year and indexed annually using Subdivision 960-M of the  Income Tax Assessment Act 1997 . For example, the ‘fuel-efficient car limit’ for the 2022-23 financial year is $84,916.

 

69.         The effect of the amendment, with the amendments in items 13 to 16, is to direct some goods previously classified to tariff subheadings 8703.60.19, 8703.70.19, 8703.80.19 and 8703.90.19 to new tariff subheadings 8703.60.12, 8703.70.12, 8703.80.12 and 8703.90.12, respectively. Goods directed to these new tariff subheadings will be eligible for a ‘Free’ rate of customs duty.

 

Item 12  (Chapter 87, Additional Notes 6 to 8)

 

70.         This item renumbers Additional Notes 6 to 8 of Chapter 87 of Schedule 3 to the Customs Tariff Act as Additional Notes 7 to 9 as a consequence of the insertion of Additional Note 6 by item 11 of this Bill.

 

Item 13  (after subheading 8703.60.11)

 

71.         This item inserts new subheading 8703.60.12 for new petrol-electric hybrid passenger motor vehicles, capable of being charged by plugging into an external source of electrical power, with a value less than the fuel-efficient car limit, as defined in new Additional Note 6 to Chapter 87 of Schedule 3 to the Customs Tariff Act. The classification of these goods transfers from 8703.60.19.

 

72.         From 1 July 2022, the general rate of customs duty applied to new subheading 8703.60.12 is ‘Free’.

 

Item 14  (after subheading 8703.70.11)

 

73.         This item inserts new subheading 8703.70.12 for new diesel-electric hybrid passenger motor vehicles, capable of being charged by plugging into an external source of electrical power, with a value less than the fuel-efficient car limit as defined in new Additional Note 6 to Chapter 87 of Schedule 3 to the Customs Tariff Act. The classification of these goods transfers from 8703.70.19.

 

74.         From 1 July 2022, the general rate of customs duty applied to new subheading 8703.70.12 is ‘Free’.

 

Item 15  (after subheading 8703.80.11)

 

75.         This item inserts new subheading 8703.80.12 for new electric passenger motor vehicles with a value less than the fuel-efficient car limit as defined in new Additional Note 6 to Chapter 87 of Schedule 3 to the Customs Tariff Act. The classification of these goods transfers from 8703.80.19.

 

76.         From 1 July 2022, the general rate of customs duty applied to new subheading 8703.80.12 is ‘Free’.

 

Item 16  (after subheading 8703.90.11)

 

77.         This item inserts new subheading 8703.90.12 for new hybrid passenger motor vehicles, not specified in the preceding subheadings, capable of being charged by plugging into an external source of electrical power with a value less than the fuel-efficient limit as defined in new Additional Note 6 to Chapter 87 of Schedule 3 to the Customs Tariff Act. The classification of these goods transfers from 8703.90.19.

 

78.         From 1 July 2022, the general rate of customs duty applied to new subheading 8703.90.12 is ‘Free’.

 

Item 17  (table item 36, column headed “Description of goods”, paragraph (a))

 

79.         This item repeals the reference to ‘Additional Note 7’ and substitutes ‘Additional Note 8’ as a consequence of the amendment made by item 12 of this Bill to renumber Additional Note 7.

 

Item 18  Application provision

 

80.         This item provides that the amendment made by this Part apply in relation to:

(a)    goods imported into Australia on or after 1 July 2022; and

(b)    goods imported into Australia before 1 July 2022, where the time for working out the rate of import duty on the goods had not occurred before 1 July 2022.

 

 

Part 5 — Minor amendments

 

Customs Tariff Act 1995

 

Introductory Comments

 

81.         On 1 January 2022, the Customs Tariff Amendment (2022 Harmonized System Changes) Act 2021 (the 2022 Harmonized System Act) and the Customs Tariff Amendment (Regional Comprehensive Economic Partnership Agreement Implementation) Act 2021 (the RCEP Implementation Act) commenced.

 

82.         The amendments made by the 2022 Harmonized System Act ensured that Australia’s customs tariff architecture was updated to reflect the outcomes of the World Customs Organization’s (WCO) most recent review of the international tariff architecture. To assist countries in undertaking this update, the WCO published guidance material. The primary guidance and supplementary documents were published in November 2020 and June 2021, respectively. As the 2022 Harmonized System Act was introduced into Parliament earlier in June 2021, an amendment to one of the legal notes was not included in the Act.

 

83.         The RCEP Implementation Act inserted Schedule 14 into the Customs Tariff Act, which provides for the preferential rates of customs duty for goods determined to be originating in accordance with the Regional Comprehensive Economic Partnership Agreement (RCEP). One of the tariff subheadings included in this schedule was not transposed from the previously negotiated version of the Harmonized Commodity Description and Coding System.

 

84.         To ensure both of these matters were corrected before the respective amendments commenced, the Notice of Intention to Propose Customs Tariff Alterations (No. 4) 2021 was published in the Commonwealth of Australia Gazette  on 16 December 2021. The related Customs Tariff Proposal (No. 1) 2022, in the same terms as the Notice, was proposed in the House of Representatives on 9 February 2022. To maintain the integrity of Australia’s customs tariff architecture, these amendments need to be reflected in the Customs Tariff Act.

 

Item 19  Schedule 3 (Chapter 13, paragraph (g) of Note 1)

 

85.         This item repeals the reference to tariff heading 3006 in paragraph (g) of Note 1 to Chapter 13 of Schedule 3 to the Customs Tariff Act and inserts a reference to tariff heading 3822.

 

86.         This amendment reflects the transfer of blood-grouping reagents into the new tariff subheading 3822.13.00, which was inserted by the Customs Tariff Amendment (2022 Harmonized System Changes) Act 2021 . The amendment to paragraph (g) of Note 1 to Chapter 13 of Schedule 3 to the Customs tariff Act is consequential to the insertion of the new subheading and ensures that blood-grouping reagents are correctly classified in Chapter 38 of Schedule 3 to the Customs Tariff Act.

 

Item 20  Schedule 14 (cell at table item 270, column 2)

 

87.         The Customs Tariff Amendment (2022 Harmonized System Changes) Act 2021 changed the tariff classification of certain types of herbicides, anti-sprouting products and plant-growth regulators from 3808.93.90 to 3808.93.00 in Schedule 3 to the Customs Tariff Act.

 

88.         Schedule 14 to the Customs Tariff Act provides for the preferential customs duty rates for goods that are determined to be RCEP originating. The subheadings listed in this schedule are those subheadings of Schedule 3 to the Customs Tariff Act which have a duty rate other than ‘Free’ under RCEP. The RCEP Implementation Act incorrectly inserted into Schedule 14 a reference to the previous tariff classification, subheading 3808.93.90.

 

89.         This item amends column 2 of the cell at table item 270 in Schedule 14 to the Customs Tariff Act to omit the reference to tariff subheading 3808.93.90 and substitute a reference to subheading 3808.93.00.

 

90.          

Attachment A

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Customs Tariff Amendment (Incorporation of Proposals) Bill 2023

 

The Customs Tariff Amendment (Incorporation of Proposals) Bill 2023 (the Bill) is compatible with human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Bill

 

The Customs Act 1901 (the Customs Act) concerns customs related functions and is the legislative authority that sets out the customs requirements for the importation and exportation of goods to and from Australia.

 

The Customs Tariff Act 1995 (the Customs Tariff Act) gives effect to Australia’s import trade classification system. It is used to assign rates of customs duty, both general and preferential, to imported goods and enables the collection of these duties.

 

Subsection 273EA(1) of the Customs Act provides that where Parliament is not sitting for a period exceeding 7 days, the Minster may publish a notice that, within 7 sitting days of the House of Representatives after the date of publication of the notice, the Minister will propose in Parliament a Customs Tariff alteration in accordance with particulars in the notice and operating as from such time in the notice.

 

Following the introduction of a customs tariff proposal in the House of Representatives, the alterations contained in that proposal are incorporated into the Customs Tariff Act by a Customs Tariff Amendment Bill.

 

The Customs Tariff Amendment (Incorporation of Proposals) Bill 2023 (the Bill) amends the Customs Tariff Act as follows.

 

Part 1 - Temporary increase in duties for goods from Russia and Belarus

 

In Australia, Most-Favoured Nation (MFN) tariff treatment is given effect through the general rates of duty in Schedule 3 of the Customs Tariff Act. Australia has joined like-minded countries in temporarily removing MFN tariff treatment and imposing an additional duty on goods from Russia and Belarus.

 

The purpose of Part 1 of Schedule 1 to the Bill is to amend the Customs Tariff Act to insert new section 18A to provide for a temporary increase in customs duties for goods that are the produce or manufacture of Russia or Belarus imported into Australia between 25 April 2022 and 24 October 2023. A temporary duty of 35 per cent will apply to these goods in addition to the general rate of duty that would ordinarily apply, except where these goods are eligible for certain tariff concessions or left for direct shipment to Australia before 25 April 2022.

 

The amendments contained in Part 1 of Schedule 1 to the Bill incorporate the amendments proposed by the Notice of Intention to Propose Customs Tariff Alterations (No.  4)  2022 and the Notice of Intention to Propose Customs Tariff Alterations (No.  7)  2022. The related Customs Tariff Proposal (No. 3) 2022, in the same terms as Notice No. 4, and Customs Tariff Proposal (No. 6) 2022, in the same terms as Notice No. 7, were proposed in the House of Representatives on 2 August 2022 and 9 November 2022, respectively. The amendments contained in Part 1 of Schedule 1 to the Bill commence on 25 April 2022.

 

Part 2 - Temporary decrease in duties for goods from Ukraine

 

The purpose of Part 2 of Schedule 1 to the Bill is to amend the Customs Tariff Act to insert new section 18B to provide a ‘Free’ rate of customs duty for goods that are the produce or manufacture of Ukraine, except for excise equivalent goods such as certain alcohol, tobacco, fuel and petroleum products, imported into Australia between 4 July 2022 and 3 July 2023.

 

This measure is a response to Russia’s illegal invasion of Ukraine, supported by Belarus. This measure contributes to Ukraine’s continued participation in international trade and supports efforts by Ukraine to uphold its territorial integrity. The measure is consistent with similar initiatives from the United States, European Union and United Kingdom.

 

The amendments contained in Part 2 of Schedule 1 to the Bill incorporate the amendments proposed by the Notice of Intention to Propose Customs Tariff Alterations (No.  5)  2022. The related Customs Tariff Proposal (No. 4) 2022, in the same terms as Notice No. 5 was proposed in the House of Representatives on 2 August 2022. The amendments contained in Part 2 of Schedule 1 to the Bill commence on 4 July 2022.

 

Part 3 - Medical products or hygiene products

 

The purpose of Part 3 of Schedule 1 to the Bill is to amend the Customs Tariff Act to amend item 57 of Schedule 4, so that it provides a ‘Free’ rate of customs duty for prescribed medical and hygiene goods, and prescribed ingredients and containers to be used in the production of medicaments or other goods of Chapter 30 of Schedule 3.

 

The amendments extend the duration of the temporary ‘Free’ rate of customs duty for prescribed medical products and hygiene products capable of use in combatting the novel coronavirus that causes COVID-19 from 1 April 2022. The amendments also expand the scope of the concession from 1 July 2022 by removing the requirement for the goods to be capable of use in combatting COVID-19 and has no end date.

 

The amendments contained in Part 3 of Schedule 1 to the Bill incorporate the amendments proposed by the Notice of Intention to Propose Customs Tariff Alterations (No.  2)  2022. The related Customs Tariff Proposal (No. 2) 2022, in the same terms as Notice No. 2 was proposed in the House of Representatives on 2 August 2022.  The amendments contained in Part 3, items 6 to 8 commence on 1 April 2022. The amendments contained in Part 3 items 9 and 10 commence on 1 July 2022.

 

Part 4 - Electric vehicles

 

The purpose of Part 4 of Schedule 1 to the Bill is to amend Chapter 87 of Schedule 3 to separately provide for the classification of certain electric and low emission vehicles with a customs value less than the ‘fuel-efficient car limit’ within the meaning of the A New Tax System (Luxury Car Tax) Act 1999 .

 

The reduction in the duty rate for battery electric cars, hydrogen fuel cell electric cars and plug-in hybrid vehicles, is part of the Australian Government’s commitment to increasing the affordability of these cars.

 

The amendments contained in Part 4 of Schedule 1 to the Bill incorporate the amendments proposed by the Notice of Intention to Propose Customs Tariff Alterations (No. 6) 2022. The related Customs Tariff Proposal (No. 5) 2022, in the same terms as Notice No. 6 was proposed in the House of Representatives on 2 August 2022. The amendments contained in Part 4 of Schedule 1 to the Bill commence on 1 July 2022.

 

Part 5 - Minor amendments

 

The purpose of Part 5 of Schedule 1 to the Bill is to make minor amendments to correct a reference in paragraph (g) of Note 1 to Chapter 13 of Schedule 3, and amend a subheading referenced in Schedule 14. These amendments are contained in Part 5 of Schedule 1 to the Bill.

 

The amendments contained in Part 5 of Schedule 1 to the Bill commence immediately after the Customs Tariff Amendment (Regional Comprehensive Economic Partnership Agreement Implementation) Act 2021 , which commenced on 1 January 2022.

 

Human rights implications

 

The amendments contained in Part 1 of Schedule 1 to the Bill, which impose a temporary additional duty on goods that are the produce or manufacture of Russia or Belarus, may engage:

·          the right to an adequate standard of living, including adequate food, clothing and housing in Article 11(1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR); and

·          the right to the highest attainable standard of health, in Article 12 of the ICESCR.

 

These rights are engaged to the extent that the imposition of an additional duty impacts the importation of relevant goods into the Australian market. These measures are not expected to have a detrimental effect on the Australian market as they are temporary and any impacts can be absorbed by alternative markets. 

 

Economic measures, such as the temporary additional duty, against Russia and Belarus are a necessary part of the international community’s response to their flagrant violation of the Charter of the United Nations. This violation of Ukraine’s sovereignty and territorial integrity undermines the rules-based international order, which is essential to Australia’s international, regional and domestic stability and security. As such, to the extent that these rights may be engaged, it is reasonable, necessary and proportionate in addressing the public, social and international concern with the conflict in Ukraine.

 

 

The amendments contained in Part 3 of Schedule 1 to the Bill, which amend the tariff concession for certain medical and hygiene goods, engage the following human rights:

·                the right to the enjoyment of the highest attainable standard of physical and mental health in Article 12 of the ICESCR; and

·                the right to life in Article 6 of the International Covenant on Civil and Political Rights (ICCPR).

 

The right to the enjoyment of the highest attainable standard of physical and mental health

 

The Bill amends the Customs Tariff Act to extend the concessional rate of customs duty applicable to prescribed medical and hygiene products that are capable of use in combating the coronavirus that causes COVID-19. Starting on 1 July 2022, the Bill expands the scope of that concession to medical and hygiene products used in other contexts, as well as ingredients and containers for certain medicaments and other goods.

 

Providing a ‘Free’ rate of customs duty for imported medical products or hygiene products, ingredients for the manufacture of medicaments and containers for those medicaments promotes the right to the enjoyment of the highest attainable standard of physical and mental health under Article 12 of ICESCR. This Article requires that State Parties take steps to achieve the full realisation of this right, including those necessary for the prevention, treatment and control of epidemics.

 

The amendments, in ending the temporary nature of the concession and expanding the scope of goods, will promote the right by continuing to facilitate the importation into Australia of essential medical and hygiene products, as well as inputs to the domestic manufacture of medicaments. Together with the products manufactured domestically, the amendment will facilitate greater access to such products for people in Australia.

 

The right to life

 

The Bill also positively engages the right to life in Article 6(1) of the ICCPR; specifically, the responsibility that a State Party has to take appropriate steps to protect the right to life of those within its jurisdiction.

 

This amendment facilitates the continued access to medical products or hygiene products imported into Australia at a lower cost. Access to these products inhibits the spread of communicable diseases and limits the potential for death due to the spread of COVID-19. As a result, this amendment promotes the right to life.

 

The other amendments in the Bill do not engage, impact on or limit in any way, the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights at section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

 

Conclusions

 

The Bill is compatible with human rights because it promotes human rights, specifically Part 3 of Schedule 1 to the Bill promotes the rights in Article 12 of the ICESCR and Article 6(1) of the ICCPR. To the extent that the Bill may limit human rights, those limitations are reasonable, necessary and proportionate.

 

 

 

The Honourable Clare O’Neil MP, Minister for Home Affairs