MANAGING RISKS IN USING FTAS
Free Trade Agreements (FTA) presents fantastic opportunities to reduce the cost of trade. However, free trade is not the same as risk free trade. Qualification for FTA benefits is not automatic. Some of the problems we see with the use of FTAs are:
the goods not actually being from the relevant export market - what due diligence have you done to ensure that the claims of the exporter are true
the certificate of origin not meeting the requirements of the FTA - a common problem is that the HS code (tariff classification) on the certificate of origin (COO) does not match with the HS code on the import declaration
the goods are not shipped directly to Australia and do not comply with the indirect consignment rules - this will be a risk where regional distribution centres are used
even if you hold a COO, you cannot prove that the goods were produced in the claimed country
A way of gaining certainty around the use of FTAs is to obtain an origin ruling from the Australian Border Force (ABF). The ABF will be bound by its rulings even if it later adopts a different position.
CGT Law has helped importers facing ABF audits regarding the use of FTAs. We often find that the key to a successful outcome is helping the ABF understand your supply chain and why it may not fit into their idea of the standard supply chain. Other times we assist importers by convincing the ABF as to the correct application of the Customs Act and the relevant FTA.
If your business is a heavy user of FTAs, it is important to assess the level of risk associated with the incorrect use of the concession. Please contact us if you have any questions about FTA use or responding to an ABF audit.