Every free trade agreement is slightly different and understanding the unique features of an FTA is the key to ensuring you utilizing the FTA in the trade compliant manner.
Commencement
The Australia UK FTA will commence on 31 May 2023. For imports to Australia it will apply to goods imported after this date and goods imported before this date where the date for determining customs duty has not yet passed. This means goods that have landed in Australia but an import declaration is yet to be lodged. For UK goods arriving over the next few weeks importers should assess whether it is better to delay clearance and pay storage and enter the goods duty free from 31 May.
Document requirements
The Australia UK FTA is not overly onerous in its documentation requirements compared to other FTAs. There is no requirement for a government issued certificate of origin. Rather, origin can be proven in two ways:
· A declaration of origin produced by a manufacturer, producer or exporter; or
· An importer’s knowledge that the good is originating in either the UK or Australia.
Declaration of origin
In respect of the declaration of origin:
· there is no prescribed format,
· it can be in electronic form;
· it can be on an invoice or other commercial document;
· must meet specified data requirements. This includes a specifically worded declaration, a description of the goods, the tariff classification of the goods and specifying the rule of origin that applies.
Users of the FTA should specifically review these requirements as a failure to leave out one required piece of data could invalidate the claim for duty free entry.
A declaration can cover multiple consignments of identical goods over a 12 month period.
A declaration of origin is valid for 12 months after the date that it is completed.
Importer’s knowledge
A declaration of origin is not mandatory. An importer can rely on their own knowledge of origin to claim the preference. However, caution should be exercised. A customs broker should require documentary evidence to support the importer’s claim. What documents will be required will vary from case to case.
It is important that the knowledge needs to be that the goods satisfy the rules of origin in this particular FTA. It will not be enough that the goods quality as being of “UK origin” under other free trade agreements. Just because a good is exported from the UK or the importer understand that it is “made in the UK” does not mean it will qualify under the Australia UK free trade agreement.
Direct shipment
Like most FTAs there is no requirement that the goods are directly shipped to Australia. However, it is a requirement that the goods are not released to free circulation in a country other than the UK or Australia. For instance, if UK goods are shipped to a European or Asian distribution centre prior to shipment to Australia, the goods may lose their qualifying status.
It is also important that the goods do not undergo further processing once they leave the UK other than certain permitted acts such as storage, repacking, labelling or marking required by Australia.
Tariff outcomes
This FTA offers substantial benefits to both Australian and UK importers. In respect of UK imports into Australia, almost all UK goods will be duty free. The exceptions are goods subject to excise equivalent duties (fuel, tobacco, alcohol) and some steel products.
Australian exports to the UK have more mixed results. Some goods will have full duty reductions immediately on entry into force of the agreement. For other products the duty rates are phased down over time. There will also be some products that do not have any duty reductions.
Assumptions should not be made. The exact duty outcome for exports can be obtained from reviewing the tariff commitment schedule to the FTA.
Action to take
As with any FTA, the key is to look into the details of the FTA and how it applies to your particular products. As a starting point, determine whether you have any trade with the UK that is attracting duty. If there is, it is worth assessing whether those goods qualify for the FTA and the duty benefits that can be achieved.
If it makes sense to use the FTA, put in place procedures to ensure that the origin documentation requirements are being met. But don’t just forget about these procedures, regularly check to ensure that they are being followed.
Every new FTA is a good prompt to review your use of other tariff concessions. This review should not just be whether concessions are being fully utilised, but whether they are being utilised in a trade compliant manner. How would you feel if tomorrow you received an audit notice from the Australian Border Force?
Please do not hesitate to contact us with any questions regarding the use of trade concessions or trade compliance.