Commonwealth of Australia Explanatory Memoranda

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CUSTOMS TARIFF AMENDMENT BILL (NO. 2) 1997

                          41Uxi~. 4~~NSON
                                     I~B~A~

                                           1996-97




              THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                                HOUSE OF REPRESENTATIVES




                      CUSTOMS TARiFF AMENDMENT BILL (No. 2)1997




                               EXPLANATORY MEMORANDUM




(Circulated by the Authority of the
Minister for Small Business and ConsumerAffairs,
the Honourable Geoffrey Prosser, MP)




88768 Cat No.96 9158 8 ISBN 0644 50455 6


.~u I CUSTOMS TARIFF AMENDMENT BILL (No. 2)1997 General Outline The purpose of this Bill, which includes 5 Schedules of amendments, is to enacta range of changes to the Customs TariffAct 1995. Schedule 1 contains an amendment to correct the current listing of subheading 8527.19.00. Schedule 2 removes the Canadian margin of preference on certain petrochemicals of Chapter 39. Schedule 3 amends the list of countries and places which benefit from the Australian System of Tariff Preferences. Schedule 4 contains amendments to: (a) remove Customs duty from sugar and certain sugar by-products; (b) implement Australia's tariff obligations under the Information Technology Agreement; and (c) reinstate the tariff assistance for surgical drapes, and toclarify the tariffclassification of certain types of lamps and power supply units for computers which were the subject of recent Administrative Appeals Tribunal decisions. Schedule 5 contains a number of close-ups of national tariffsubheadings where the rate ofduty will be the same on 1 July 1998. FINANCIAL IMPACT STATEMENT The action taken to remove the Canadian margin of preference will mean an additional $100 000 per annum is collected in Customs revenue. It is expected that less than $140 million per annum in Customs duty will be foregone when Australia has fully implemented the Information Technology Agreement in the year 2000. Between 1998 and 2000 the amount of duty foregone will progressively increase from zero as the phasings of the rates of duty are introduced. Other measures including the ASTP changes and the removal of sugar tariffs are difficult to quantify in monetary terms but are considered minimal. S 2


CUSTOMS TARIFF AMENDMENT BILL (No. 2)1997 NOTES ON SECTIONS A Bill for an Act to amend the Customs TariffAct 1995. Section 1 - Short Title - Customs Tariff Amendment Bill (No. 2)1997. Subsection 1 - Sections 1, 2 and 3 commence on the day on which this Act receives the Royal Assent. Section 2 - Commencement - Subsection 2 - Schedule 1 is taken to have commenced on 1 July 1996. Subsection 3 - Schedule 2 is taken to have commenced on 1 January 1997. Subsection 4 - Schedule 3 is taken to have commenced on 10 March 1997. Subsection 5 - Schedule 4 conunences on 1 July 1997. Subsection 6 - Schedule 5 commences on 1 July 1998. Section 3 - Conditions applying to the amendments contained in the Schedules to this Act. Schedule 1 provides that the amendment in this Schedule shall operate on and from 1 July 1996 immediately after the commencementof the Customs Tar~ffAct 995. 1 Covers - The Customs TariffAct 1995 is a complete rewrite of tariff legislation. The listing for subheading 8527.19.00 is shown in the legislation as 8727.19.00. Tariff working documents were changed to show the correct subheading number from the commencementdate of the new legislation. This is an administrative amendmentand has no affect on the rate of duty or the revenue collected since 1 July 1996. Schedule 2 provides that the amendments in this Schedule shall operate on and from 1 January 1997. Covers - These changes were formally tabled in the House ofRepresentatives as Customs Tariff Proposal No. 3(1996) on 9 December 1996. Until 31 December 1996, under the Canada-Australia Trade Agreement (CANATA), Australia accorded certain imports of Canadian petrochemicals duty free entry. Commencing 1 January 1997, the Government decided to withdraw these benefits from polymers of styrene of heading 3903, polymers of vinyl chloride of subheadings 3904.10.00 to 3904.50.00, and polymers of vinyl acetate or of other vinyl esters, and other vinyl polymers of heading 3905. From that date, these goods of Canadian origin have attracted the general rate of dutyof5%. Schedule 3 provides that the amendment in this Schedule shall operate on and from 10 March 1997. Covers - This change was formally tabled in the House ofRepresentatives as Customs Tariff Proposal No. 1(1997) on 18 March 1997. 3


Schedule 1 of the Customs TarWAct 1995 lists countries which are accorded concessions under Australia's System of Tariff Preferences (ASTP). This change inserts the "Territories Administered by the Palestinian Authority" in Division 2 of Part 2 of Schedule 1. Division 2 of Part 2 of that Schedule lists the "Places" which are accorded Developing Country (DCS) rates of duty under the ASTP. Schedule 4 provides that amendments in this Schedule shall commence on 1 July 1997. Covers - Amendments Nos. 1 to 5 of this Schedule were formally tabled in the House of Representativesas Customs Tariff Proposal No. 2 (1997) on 26 March 1997. 5 In October 1995, the Government convened ajoint Industry/Government Working Partyto enquire into the sugar industry. Their Report, titled "Sugar - Winning Globally" was handed to the Minister for Primary Industries and Energy on 29 November 1996. The Queensland and Commonwealth Governments endorsed the recommendations contained in the Report to remove the Customs rate of duty of $55.00 per tonne from sugar, molasses and treacle from 1 July 1997. These changes implement that decision. Amendments Nos. 6, 8 to 26 and 29 to 84 of this Schedule were formally tabled in the House of Representatives as Customs Tariff Proposal No. 3 (1997) on 4 June 1997. The Australian Govermnent formally signed the Ministerial Declaration or Trade in Information Technology Products - the Information Technology Agreement (ITA) - in Singapore on 13 December 1996. The Agreement seeks the elimination of tariffs on computer technology and teleconununicatk,~js products by the year 2000. When negotiations were completed on 26 March 1997, the ITA had 41 signatory countries, including Australia's APEC trading partners, the European Union and other European countries and India. The ITA will provide secure employment for employees within the information and telecommunications industry and should create new employment opportunities for this fast growing export industry. Two consequential administrative amendments (Nos. 83 and 84) to the Table of tariff subheadings in items 48 and 49 in Part III of Schedule 4 to the Customs TariffAct 1995 are also included in this package. The goods covered by these concessional items are not affected. These amendments implement Australia's tariff obligations under the ITA. A summary of the amendments follows: S 4


The following Table of existing subheadings (Column 1) has been split to create new subheadings (Column 2) to separately identify goods covered by the ITA. These new subheadings have tariffrate phasing regimes which have a final rate of zero on 1 January 2000. Please note that interim rate stagings vary from subheading to subheading. Existing Subheading New Subheading (pre 1.7.1997) (from 1.7. 1997) 7017.10.00 7017.10.10 Quartz reactor tubes and holders designed for insertion into diffusion and oxidation furnaces for production of semiconductor wafers. 7017.10.90 The remainder of the goods which were previously classified in 7017. 10.00. 8419.89.00 8419.89.10 Chemical vapor deposition apparatus for semiconductor production. 84 19.89.90 The remainder of the goods which were previously classified in 8419.89.00. 8419.90.90 8419.90.20 Parts of goods of 8419.89.10. 8419.90.90 The remainder of the goods which were previously classified in 84 19.90.90. 8421.19.00 8421.19.10 Spin dryers for semiconductor wafer processing. 8421.19.90 The remainder of the goods which were previously classified in 8421.19.00. 8421.91.00 8421.91.10 Parts ofgoods of 8421.19.10. 8421.91.90 The remainder of the goods which were previously classified in 8421.91.00. 8424.89.90 8424.89.20 Defiash machines for cleaning and removing contaminants from the metal leads of semiconductor packages prior to the electroplating process. 8424.89.30 Spraying appliances for etching, stripping or cleaning semiconductor wafers. 8424.89.90 The remainder of the goods which were previously classified in 8424.89.90. 8424.90.00 8424.90.10 Parts of goods of 8424.89.30. 8424.90.90 The remainder of the goods which were previously classified in 8424.90.00. 8464.10.00 8464.10.10 Machines for sawing monocrystal semiconductor boules into slices, or wafers into chips. 8464.10.90 The remainder of the goods which were previously classified in 8464.10.00. 8464.20.00 8464.20.10 Grinding, polishing or lapping machines for the processing of semiconductor wafers. 8464.20.90 The remainder of the goods which were previously classified in 8464.20.00. 8464.90.00 8464.90.10 Dicing machines for scribing or scoring semiconductor wafers. 8464.90.90 The remainder of the goods which were previously classified in 8464.90.00. 5


8466.91.00 8466.91.10 Parts for machines of 8464. 10. 10, 8464.20.10 or 8464.90.10. 8466.91.90 The remainder of the goods which were previously classified in 8466.91.00. 8466.93.00 8466.93.10 Parts for machines, asfollows: (a) focused ion beam milling machines to produce or repair masks and reticles for patterns on semiconductor devices; (b) laser cutters for cutting contacting tracks in semiconductor production by laser beam; (c) for working any material by removal of material, by laser or other light or photo beam in the production of semiconductor wafers; (d) for apparatus for stripping or cleaning semiconductor wafers; (e) for thy-etchingpatterns on semiconductor materials. 8466.93.90 The remainder of the goods which were previously classified in 8466.93.00. 8477.10.00 8477.10.10 Encapsulation equipment for the assembly of semiconductors. 8477.10.90 The remainder of the goods which were previously classified in 8477. 10.00. 8477.90.00 8477.90. 10 Parts ofgoods of 8477.10. 10. 8477.90.90 The remainder of the goods whichwere previously classified in 8477.90.00. 8479.50.90 8479.50.30 Automated machines for transport, handling and storing of semiconductor wafers, wafer cassettes, wafer boxes and other materials for semiconductor devices. 8479.50.90 The remainder of the goods which were previously classified in 8479.50.90. 8479.89.90 8479.89.20 Machines, apparatus or equipment, as follows: (a) for growing or pulling monocrystal semiconductor boules; (b) for physical depositionby sputtering on semiconductor wafers; (c) for wet-etching, developing, stripping or cleaning semiconductor wafers and fiat panel displays; (d) die attach, tape automated bonders, and wire bonders for the assembly of semiconductors; (e) encapsulation equipment for the assembly of semiconductors; (f) epitaxial deposition machines for semiconductor wafers; (g) for bending, folding and straightening semiconductor leads; (h) physical deposition apparatus for semiconductor production; (ij) spinners for coating photographic emulsions on semiconductor wafers. 8479.89.90 The remainder of the goods which were previously classified in 8479.89.90. 6


8479.90.00 8479.90. 10 Parts of goods of 8479.50.30 and 8479.89.20. 8479.90.90 The remainder of the goods which were previously classified in 8479.90.00. 8480.7 1.00 8480.71.10 Moulds for the manufacture of semiconductor devices. 8480.71.90 The remainder ofthe goods which were previously classified in 8480.71.00. 8504.40.90 8504.40.20 Static converters for telecommunication apparatus of 8517. 8504.40.90 The remainder of the goods which were previously classified in 8504.40.90. 8504.50.00 8504.50.10 Inductors, as follows: (a) designed for use with equipment of 8471; (b) for teleconununication apparatus of8517. 8504.50.90 The remainder of the goods which were previously classified in 8504.50.00. 8504.90.90 8504.90.20 Parts of goods of 8504.40.20. 8504.90.90 The remainder of the goods which were previously classified in 8504.90.90. 8514.10.00 8514.10.10 Resistance heated furnaces and ovens for the manufacture of semiconductor devices on semiconductor wafers. 8514.10.90 The remainder of the goods which were previously classified in 85 14. 10.00. 8514.20.00 8514.20.10 Induction or dielectric furnaces and ovens for the manufacture of semiconductor devices on semiconductor wafers. 85 14.20.90 The remainder of the goods which were previously classified in 85 14.20.00. 8514.30.00 8514.30.10 Apparatus for rapid heating of semiconductor wafers. 85 14.30.90 The remainder of the goods which were previously classified in 85 14.30.00. 8514.90.00 8514.90.10 Parts of goods of 8514.10.10, 8514.20.10 or 8514.30. 10. 8514.90.90 The remainder of the goods which were previously classified in 85 14.90.00. 8518.10.00 8518.10.10 Microphones having a frequency range of 300 Hz to 3.4 kHz with a diameter not exceeding 10 mm and a height not exceeding 3 mm, for telecommunication use. 8518.10.90 The remainder of the goods which were previously classified in 8518. 10.00. 8518.29.00 8518.29.10 Loudspeakers without housing, having a frequency range of 300 Hz to 3.4 kHz with a diameter not exceeding 50 mm, for telecommunication use. 85 18.29.90 The remainder of the goods which were previously classified in 85 18.29.00. 7


85 18.30.00 8518.30. 10 Line telephone handsets. 85 18.30.90 The remainderof the goods whichwere previously classified in 85 18.30.00. 85 18.40.00 85 18.40.10 Audio-frequency electric amplifiers for use as repeaters in line telephony products. t 85 18.40.90 The remainderof the goods whichwere previously classified in 85 18.40.00. 8525.10.00 8525.10.10 Transmission apparatus, as follows: (a) for radio-telephonyor radio telegraphy; (b) paging alert devices. 8525.10.90 The remainderof the goods whichwere previously classified in 8525.10.00. 8525.40.00 8525.40. 10 Digital still image video cameras. 8525.40.90 The remainder ofthe goods whichwere previously classified in 8525.40.00. 8527.90.00 8527.90.10 Portable receivers for calling, alerting or paging. 8527.90.90 The remainder of the goods which were previously classified in 8527.90.00. 8529. 10. 10 8529. 10.20 Parts for aerials of 8525.10.10, 8525.20.00, 8525.40. 10 or 8527.90. 10. 8529. 10.30 Parts for aerials of 8525 NSA, 8526 or 8527.90.90. 8529.90.10 8529.90.20 Parts for goods of 8525.10.10, 8525.20.00, 8525.40.10 or 8527.90. 10. 8529.90.30 Parts for goods of8525 NSA, 8526 or 8527.90.90. 8531.90.00 8531.90.10 Parts for goods of 8531.20.00 or 8531.80.00. 853 1.90.90 The remainderof the goods which were previously classified in 8531.90.00. 8536.50.91 8536.50.92 Goods, as follows: 8536.50.99 (a) electronic AC switches consisting of optically coupled input and output circuits (insulated thyristor AC switches); (b) electronic switches, including temperature protected electronic switches, consisting of a transistor and a logic chip (chip-on-chip technology) for a voltage not exceeding 1 000 volts; (C) electromechanical snap-action switches for a current not exceeding 11 amperes. 8536.50.91 8536.50.93 Switches of a kind used as replacement components in passenger motor vehicles, NSA. 8536.50.99 8536.50.99 The remainder of the goods which were previously classified in 8536.50.99. 8536.69.00 8536.69.10 Plugs and sockets for co-axial cables and printed circuits. 8536.69.90 The remainder of the goods which were previously classified in 8536.69.00. 8


8536.90.00 8536.90. 10 Goods, as follows: (a) connection and contact elements forwires and cables; (b) water probers. 8536.90.90 The remainder of the goods which were previously classified in 8536.90.00. 8543.30.00 8543.30. 10 Apparatus for wet-etching, developing, stripping or cleaning semiconductor wafers and flat panel displays. 8543.30.90 The remainder of the goods which were previously classified in 8543.30.00. 8543.90.00 8543.90.10 Parts of goods, as follows: (a) of 8543.11.00 or 8543.30. 10; (b) offiat panel display devices. 8543.90.90 The remainder of the goods which were previously classified in 8543.90.00. 8544.4 1.90 8544.41.20 Conductors of a kind used in telecommunications. 8544.41.90 The remainder of the goods which were previously classified in 8544.4 1.90. 8544.49.90 8544.49.20 Conductors of a kind used in telecommunications. 8544.49.90 The remainder of the goods which were previously classified in 8544.49.90. 8544.51.00 8544.51.10 Conductors of a kind used in telecommunications. 8544.5 1.90 The remainder of the goods which were previously classified in 8544.5 1.00. 9017.90.90 9017.90.20 Parts and accessories of pattern generating apparatus ofa kind used for producing masks or reticles from photoresist coated substrates of 9017.20.90. 9017.90.90 The remainder of the goods which were previously classified in 90 17.90.90. 9030.90.90 9030.90.20 Parts for goods of 9030.82.00. 9030.90.90 The remainder of the goods which were previously classified in 9030.90.90. 9031.90.90 9031.90.20 Parts for goods, asfollows: (a) of9031.41.00; (b) of optical instruments and appliances for measuring surface particulate contamination on semiconductor wafers. 9031.90.90 The remainder of the goods which were previously classified in 903 1.90.90. 9


The following Table of existing subheadings, whichis covered by the ITA, has had additional phasing rates of duty added to their duty regimes to allow for the duty free entry of goods by 1 January 2000. Please note the description of goods forthese subheadings has not been altered. 3818.00.00 8470.10.90 8520.20.00 8522.90.00 8532.22.00 8532.23.00 8533.90.00 8538.90.90 8473.21.10 8523.11.00 8532.24.00 8541.40.10 8473,50.10 8523.12.00 8532.25.00 8541.60.00 ~Yfl7.l1.00 8523.13.00 8532.29.00 8541.90.00 7.19.00 8523.20.00 8532.30.00 8544.70.00 / 21.00 22.00 2 .0) 00 8523.90.90 8524.91.10 8525.20.00 8532.90.00 8533.10.00 8533.21.00 9026.90.10 9027.30.10 9027.80. 10 t 851 7.50.90 8531.20.00 8533.29.00 9027.90.10 8517 80.00 853 1.80.00 8533.31.00 9027.90.20 85)7.90.90 8532.10.00 8533.39.00 9030.40.00 8518.90.00 8532.2 1.00 8533.40.00 9030.82.00 Amendments Nos. 7, and 27 to 29 of this Schedule were formally tabled in the House of Representativesas Customs Tariff Proposal No. 4 (1997) on 4 June 1997. Amendment 29 also contains a change made under the ITA. These amendments are as a result of recent Administrative Appeals Tribunal (AAT) decisions. Sterile surgical drapes made ofaseptic paper have beentraditionally classified in subheading 4818.90.90 which attracts a 5% rate ofduty. A recent AAT decision ruled that these surgical drapes should be reclassified into subheading 4818.90.10 which is free of duty. Amendment No. 7 clarifies the description of goods which are classified in subheading4828.90.10 and reinstates the level of tariffassistance intended by the Government. Amendment No. 28 creates a new Additional Note to clarify which lamps are classified in heading 8539. Another decision by the AAT has meant that certain lamps will be classified in heading 8539 rather than in Chapter 94. Previously, globes, tubes, bulbs and the like were classified in Chapter 85 while lamps equipped with lamp holders, globes, tubes, bulbs, plugs and flex, and the like were classified in Chapter 94. The Australian Customs Service has contacted the World Customs Organization (WCO) which has confirmed that, in accordance with Australia's obligations underthe Harmonized System, lamps fitted with lamp holders, globes, tubes, bulbs, plugs and flex, and the like were classified in Chapter 94. The new Additional Note clarifies the classification of each type of good. As a consequence of this amendment, the heading "Additional Note" in Chapter 85 becomes "Additional Notes" in Amendment No. 27. S 10


Amendment No. 29 results from the rewrite of the Customs Tariff in 1995. The Customs TariffAct 1995 gave effect to approximately 350 tariff classification amendments recommended by the WCO to which Australia is acontracting party. In preparingthe new Act, cognizance was given to the need for tariff stability so that tariffchanges were kept to a minimum. Tariff subheading 8504.40.10, which covers power supply units for computers, was created to give a duty free rate to the particular goods which were covered by an earlier AAT decision. Experience since 1 July 1996 has proven that the description of goods encompasses more types ofpower supply units than was covered by the AAT decision. The amendment will have the effect of restricting the type of goods which will be classified under subheading 8504.40.10. The goodsexcluded by the new description will now be classified in 8504.40.90 and attract duty at 5%. Schedule 5 provides that amendments in this Schedule shall commence on 1 July 1998. Covers - The WCO's Harmonized Tariff on which the Australian Customs Tariff is based is a six digitdocument. Australia has added national seventh and eighth digits to enable the separate listing of goods and to levydifferent rates of duty on these goods. In the 1980's many seven and eight digit subheadings were created to apply different ratesof duty to textile goods of Section 11 of the Customs Tarift On 1 July 1998 the phasing regime means that the rates of the duty for some of these tariff subheadings will reach the same level. The amendments in this Schedule close-up these national seven and eight digit tariffsubheadings. Rates of duty are not affected by this exercise and where industry requires separate trade statistics, the Australian Bureau of Statistics will be provide new statistical items. Printed by Authority by the Commonwealth Government Printer 11


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