Arch Bevis (Brisbane, Australian Labor Party, Shadow Minister for Aviation and Transport Security) Share this | Hansard source

I rise to speak on the Customs Tariff Amendment (2007 Harmonized System Changes) Bill 2006 and the Customs Amendment (2007 Harmonized System Changes) Bill 2006. These bills amend the Customs Tariff Act to bring it in line with the third review of the World Customs Organisation’s Harmonised Commodity Description and Coding System, or the harmonised system as it is commonly known, and to update the Customs Act slightly to give Customs the power to ensure that Australia will be compliant with the new changes as soon as they come into effect on 1 January next year.

I turn first to the Customs Tariff Amendment (2007 Harmonized Systems Changes) Bill. This bill will update the Customs Tariff Act to ensure that Australia continues to be in line with international standards with respect to the harmonised system. The harmonised system is a standardised classification system that is developed and maintained by the World Customs Organisation. Australia is a signatory to the international convention establishing the system, which first came into force in 1988 and which is reviewed every four to six years. The system basically provides a six-digit classification code for all sorts of products and commodities, everything from works of art to wood pulp to ammunition. The six-digit classification code is then taken by Customs and supplemented with an additional two digits for other purposes.

As I said earlier, this system is reviewed and updated by the World Customs Organisation every few years to take into account the changing circumstances and fluctuations of world trade. To quote the World Customs Organisation, the latest revision was based on the following factors, amongst others:

Technological progress;

Changes in trade patterns—that is, to alter classifications where there are low levels of international trade;

Amendments relating to social and environmental fields ...

The review, in total, contains nearly 700 classification changes to the harmonised system, which translates to approximately 1,200 changes to the implementation of the system by Customs.

The second bill, the Customs Amendment (2007 Harmonized Systems Changes) Bill, updates the Customs Act to ensure that the changes to tariff concession orders are in place before the cut-over date of 1 January 2007. In order to properly update Australia’s tariff concession orders, Customs advises that the CEO will be required to revoke about 750 tariff concession orders, replacing them with 1,200 new ones. The problem at the moment is that, at present, the CEO of Customs may only make changes to tariff concession orders under the act after the classification change has taken place. So the CEO would not be able to make the required changes until after the classification change had taken place, which would have raised the potential to prove disruptive to trade. The customs amendment bill will introduce a new section to ensure that the CEO has the power to make these replacements before the formal change has taken place but in anticipation of the change. So the tariff changes will be in place before next year and will take effect from the exact cut-over time, allowing, we all hope, a smooth transition into the new arrangements.

In addition, the bills make some amendments to current rates of duty. Although Customs advises that it has attempted to maintain existing rates of duty and preference as far as possible, there are three items which have altered duty rates. The first is certain plywood and veneered panels containing bamboo, where the general rate of duty will move from free to five per cent. The second is certain carbonising base paper, where the general rate of duty of five per cent will be retained, except if imported from Canada when it will attract a rate of duty of 2.5 per cent or free. Similarly, for carbonised paper imported from certain developing countries, we are advised that the preferential rate will move from four to five per cent or free, depending on the nature of the goods. The third is adhesive paper, where the general rate of duty of five per cent is preserved, except if imported from Canada, when it will attract a rate of either 2.5 per cent or free.

Labor’s understanding from information provided by the government is that the first of the three changes, that is, to plywood and veneered panels, would only have affected goods to the value of $1,350 in the three years to 30 June 2005. In relation to the change of duties for Canadian goods, the second change would not have affected any goods imported in the three years to June 2005. The goods imported from developing countries that fall under the second category only attract approximately $500 worth of duty in the same time period. The third change—to adhesive paper imported from Canada—relates to goods which had a total duty paid of around $42,000 in the same time period as the others. From these figures it is obvious we are not talking about substantial changes in tariffs or duties, or a substantial amount of goods.

The updated changes to the harmonised system tariffs will require the amendment of the rules of origin of two of Australia’s free-trade agreements: the Australia-US Free Trade Agreement and the Thailand-Australia Free Trade Agreement. Negotiations for these changes to the rules of origin are, we have been advised, currently underway and, additionally, are currently being examined by the Joint Standing Committee on Treaties, which is expected to report in mid-October, after which new amendments for the purposes of updating those agreements will be required.

We have also received a number of undertakings from the government regarding this legislation. Firstly, the government will approach the Joint Standing Committee on Treaties to ascertain whether it is appropriate for them to consider the legislation in its entirety. Secondly, Labor have sought assurances from the government that, in the event of underpayment of duty by industry arising out of any transposition error in the changeover, the government will not seek to recover the underpaid duty.

Labor are supportive of the bill. It implements changes which will ensure that Australia remains in line with what are almost universally accepted international standards and avoids the onerous financial and administrative burdens that our importers and exporters would incur if we failed to comply with them. As I have already said, some aspects of the changes to the free trade agreement arising out of the new harmonised system are being examined by the Joint Standing Committee on Treaties.

It is normal practice that the treaties committee report prior to the matter being dealt with in this parliament. Labor are concerned that we do not have the final report from the joint treaties committee on the aspects that have been referred to it. However, we believe that these changes should also be referred to the Senate Standing Committee on Foreign Affairs, Defence and Trade to ensure that there is proper time for any interested stakeholders to make any suggestions regarding drafting errors that the government may have missed, or other problems with the bill. That is something we would encourage the government to pick up.

Other than that, the Labor Party in principle supports the bill. If there are any matters that arise out of either the Joint Standing Committee on Treaties or the Senate Standing Committee on Foreign Affairs, Defence and Trade, then this matter will be further considered in the Senate where, I have no doubt, my colleague Senator Ludwig will do that job with his usual great eye for detail and efficiency.

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