The China Australia Free Trade Agreement that came into force on December 20 last year represented a massive advantage to Australia, according to DFAT, “by securing markets and providing Australians with even better access to China across a range of our key business interests …”
It is critical, given that China is Australia’s biggest trading partner, representing one quarter of all export markets and approximately $60 billion in goods and services imported from China in 2014-15.
To exporters there were a range of big advantages that will protect Australia against competition from other nations exporting to China, but for retailers and importers of goods from China, there were also some major benefits.
The agreement will see remaining Australian tariffs on Chinese imports eliminated progressively.
The savings come at a time when the US Dollar is high and businesses dealing in US dollars can be suffering. The duty savings take out some of the sting.
Prior to the agreement, most goods manufactured in China attracted a standard duty rate of 5 per cent. Under the new agreement, most importers will receive an immediate duty reduction if they can produce a valid Certificate of Origin (CoO).
Certificates of Origin cost around US$100 and can be obtained from the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) or the China Council for the Promotion of International Trade (CCPIT). Importers need to weigh up the costs versus savings on offer.
Imports valued at AUD$2000 would attract duty of 5 per cent, or AUD$100. Therefore for small imports such as this, the importer would not save by producing a Certificate of Origin under the new agreement, and therefore might choose to pay the duty and forego the certificate.
However, duty charges creep up quite high with high-value imports and high-volume imports. For example a shipment valued at AUD$10,000 attracts duty charges of $500 and therefore the importer would save significantly by obtaining a CoO.
Already brokers are seeing fraudulent Certificates of Origin being issued.
Border Force is aware of the issue and importers are urged to check the validity of their Certificate of Origin to avoid fees and fines associated with fraud. The CoO is issued after the commercial invoice has been finalized and the goods have been fully paid for.
Ensuring the validity of a Certificate of Origin is simple. The importer or their broker simply visits: http://www.chinaorigin.gov.cn/ and can type in the certificate number, invoice number and code to receive an automatic response verifying its authenticity. The process takes about 5 seconds and provides immediate confirmation if the CoO is valid.
If the importer or their Customs Broker clears the goods into Australia with a non-valid CoO, then Australian Border Force can request, for up to 5 years after the fact, the short payment to be remitted. This means well after the goods may have been on-sold. This could lead to massive losses for incorrect administration over a long period of time. It pays to be diligent.
For further information about trade with China for Australian importers, contact Platinum® Freight Management on 1300 882 877 or go to platinumfreight.com.au/jewellers