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L/3982January 1974 TARIFFS and TRADE Limited Distribution

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L/3982January 1974 TARIFFS and TRADE Limited Distribution RESTRICTED GENERAL AGREEMENT ON 28L/3982January 1974 TARIFFS AND TRADE Limited Distribution Original: English GENERALIZED SYSTEM OF PREFERENCES Notification by Australia The following communication, dated 21 December 1973, has been received from the Permanent! Mission of Australia. Pursuant to the Decision of the CONTRACTING PARTIES of 28 March 1966, Australia introduced a. system of tariff preferences for developing countries on a list of manufactures, semi-manufactures and handicrafts annexed to that Decision. The scheme has been progressively expanded with the CONTRACTING PARTIES being fully informed as changes have been proposed. The last notifications of changes were set out in document L/3884 of 28 July 1973 and L/3884/Add.l of 5 October 1973. The last annual report, the Sixth Annual Report. by Australia, was in document L/3798 of 18 January 1973. Arising from a detailed reappraisal of the existing system, the Australian government has decided to implement, from 1 January 1974, a new and substantially broader system of preferences for developing countries. This will replace compleely tho system initiated under the waiver of 28 March 1966. The GATTCouncil was informed on 30 July 1973 of Australia's broad intentions in. this respect (subsequently circulated in document L/3896 of 8 August 1973) and full details were to be provided as soon as these had been determined. Because the new scheme of tariff preferences being introduced by Australia relates the Australian system closely to the approaches adopted in the Generalized Preferences Schemes of other contracting parties, it is the intention of the Australi government to operate its new system of -iariff preferences for developing countries in accordance with 'he provisions of the waiver adopted by the CONTRACTINTG PARTIES under t*e Decision of 25. June 1971, .Lnl these circumstances the waiver to Australia of 28 March 1966 will not have any application after 31 December 1973. The new system being introduced by Australia will be complemented by the establishment, as soon as practicable, of a trade development facility within the Australian Department of Overseas Trade. This facility is designed to provide practical assistance to developing countries by way of market information and p-ocessing. of trade enquiries, so that.opportunities under the system. of preferences can be maximized. In accordance with the notification procedures under paragraph (c) of the Decision of 25 June 1971, set out below for the information of the CONTRACTING PARTIES are full details of the new proposals. In no instance has a General Rate of duty (mf.n.) been raised to establish a preference for developing countries. L/3982 Page 2 AUSTRALIAN TARIFF PREFERENCES DEVELOPINGFOR COUNTRIES Introduction 1. The valuable contribution towards the economic expansion of developing countries which can be made by providing increased opportunities for export sales by developing countries is widely recognised. 2. Australia, in 1966, introduced a non-reciprocal preferential tariff scheme under which specified manufactured and semi-manufactured products could be imported from developing countries free of duty or at reduced rates of duty but generally subject to quota limitations. In addition, specified handicraft products could be imported free of duty and quota limitation. That system, which has been progressively expanded, gave acknowledgement to the difficulties which developing countries face in international trade, and was designed to place developing countries in. a better position to compete in the Australian Taarket. 3. In a conscious effort to expand further the opportunities available ,to developing countries, the Australian Government has decided to make a major revision of its system of tariff preferences for developing countries. The government has also decided to establish a small trade development facility (which will become operative during 1974) to help developing countries with trade Inquiries and market information. 4. The introduction of a greatly expanded system of tariff preferences taken with the general reduction by one-quarter in Australian import duties made by the Government on 13' July 1973, means that duties on a wide range of products included in the revised system have been reduced by one-third to three-quarters of the pre-July 1973 rates with a median reduction of about 50 per cent. In addition about 860 items or approximately one-third of the total items in the Australian Tariff are free of duty when imported from developing countries under the tariff preferences system and a further 325 items, including a number in BTI chapters 1-24, are free of duty from any source. Operative date 5. The revised system operates from 1 January 1974. Eligible countries 6. Countries, territories and provinces which are declared to be eligible for beneficiary status for the purposes of the Australian system of tariff preferences for developing countries are set out in Appendix 1. L/3982 Page 3 Product coverage 7. The system has a wide product c verage extending to most dutiable manufactured, semi-manufactured and substantially processed primary products without quota limitations except for a few products. Products excluded from the system are mainly: products subject to revenue duties such as tobacco products, beer and spirits; products where developing countries are already. competitive or are likely quickly to become competitive in the Australian market at General Tariff rates of duty. All the products covered by the original system of tariff preferences have, been incorporated in the revised system,.mostly without the quota limitations that previously. applied. 8. Details .if products falling within .BTN Chapters 1 to 24 and which are included in the tariff preferences system are listed in Appendix 2. Products falling within BTN Chapters 25 to 99 which are excluded from the tariff preferences system are listed in Appendix 3. Those subject to quota limitation are shown in Appendix 4 with details of the quotas and preferential rates of duty. Quotas are allocated to importers on an annual calendar year basis and can be used for imports at the preferential rates of duty from any eligible developing country. Preferential rates of duty 9.. Generally, the initial preferential rates are 10 per cent ad valorem (10 percentage points or equivalent for products subject to specific rates of' duty) below the relevant General Tariff rates (i.e. if the General 'Taziff rate is 30 per cent ad valciem, the rate for eligib a developing count--.ies is 20 per cent ad valorem). 10. There are some variations to this general approach. Products included in the system are free of duty where the General Tariff rate is 12 1/2 per cent ad valorem or less. The prelierentiaJ. rates of duty on products included in the original system have been maintained wherever possible, at rates of duty more than 10 per cent ad valorem below the relevant General Tariff rates. Details of these variations are set out in Appendix 5. Handicraft products .1. Certain specified goods, as listed in Appendix 6 when imported into Australia from eligible developing countries, and qualifying as traditional handicraft products under the procedures outlined in paragraphs.19 and 20 below are already being admitted free of duty without quantitative limitation and this treatment will continue. L/3982 Page 4 Future action 12. Full-scale reviews of the system will be undertaken every two years with the objective of making further predictions of '1a per cent ad valorem (10 percentage points) in preferential rate's of duties until such time as imports from developing countries become competitive in the Australian market. Additionally, at the time of each review, consideration will be given to more liberal treatment in respect of individual items excluded from the system or subject to quota limitation. Safeguard action and consultations 13. This demanded Australian system, like those of other. developed market economy countries, *is a unilateral nd non-reciprocal provision of preferential tariff advantages to developing countries. In consonance with the relevant decisions of the United Nations Conference on Trade and Development (UNCTAD) and the' CONTRACTING PARTIES to the General Agreement on Tariffs and Trade (GATT), Australia reserves the right at any time, to modify, withdraws suspend or limit the prefer- ential treatment for any item and with respect to any beneficiary country. Any such action arising from cases of serious injury or threat of serious injury to domestic industry Mill only be taken after full consideration of all the circum- stances. Noreover, Australia will provide adequate opportunity for consultations at the request of any of its trading partners about the operation of its system of tariff preferences. 14. A basic purpose of the tariff preference system is to assist developing countries to compete in the Australian market. If it is concluded that nartict.lar countries have become competitive they may be excluded f-rom or otherwise limited as regards the benefit of the preferential treatment in respect of the specific products concerned. The only country limitation at present in the system applies in respect of Hong Kong for the few products listed in Appendix 7. Documentaton requirements 15. Documentation requirements for imports under the Australian preference system have been kept to a minimum. 16. For eligible products other than handicrafts, the exporter must make a declaration on the normal invoice to the effect that (a) the final process of manufacture was performed in the developing country exporting the goods; and (b) not less than one-half of the factory or works cost of the goods is represented by the value of labour and materials of developing countries and/or Australia (tie country or countries concerned must be named and, may include developing countries other than the exporting country). In addition, the goods must either be shipped direct to Australia or, if trans-shipped, Australia must have been the intended destination when the goods were exported from the developing country of origin.
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