The China-Australia Free Trade Agreement (“the ChAFTA”) came into force on 20 December 2015, with the aim of providing Australian businesses with improved access to Chinese markets and vice versa. Its primary purpose is to enable Australian and Chinese businesses to trade goods without the burden of substantial customs tariffs.      

Accessing Preferential Tariffs

Only those goods which “originate” in either China or Australia will be able to qualify for preferential tariff treatment under the ChAFTA.

Goods will be considered “originating” if:

  • they are wholly obtained or produced from wholly obtained goods in China or Australia; or
  • they are produced entirely in China or Australia from materials classified as ‘originating’; or
  • they are produced in China or Australia using inputs from other countries which meet the Product Specific Rules.

Wholly obtained goods typically include goods that are sourced directly from natural resources including live plant and animal products, minerals and naturally occurring substances and fish taken from the high seas by a registered vessel.

Retail packaging materials used in the transportation and sale of such goods are generally not taken into account when determining the origin of goods.  In the case of wine, the bottles used for retail packaging are unlikely to alter an ‘originating’ assessment. 

Certificate of Origin

Businesses seeking to access preferential tariffs under the ChAFTA are required to obtain a Certificate of Origin verifying the origin of their goods. The certificate will need to be issued by an authorised body in the country of origin.

For exporters to China, Australian bodies include The Australian Chamber of Commerce and Industry, The Australian Industry Group and The Australian Grape and Wine Authority (trading as Wine Australia). It is important to note that Chinese Customs will generally only accept certificates issued from 20 December 2015 onwards.

For importers to Australia, Chinese bodies include The General Administration of Quality Supervision, Inspection and Quarantine and The China Council for the Promotion of International Trade.

Certificates of origin apply to a single shipment of goods which do not exceed 20 unique items and are only valid for one year. Goods which do not exceed $1,000 AUD or 6,000 RMB may be exempt from the Certificate of Origin requirements.

Third-Party Transit

Goods which transit through third party destinations may still be considered ‘originating’ if:

  • they do not undergo any operation other than loading and repacking activities necessary for transportation to the destination location; and
  • they are not stored in a transport hub for longer than 12 months.

What Goods Are Eligible?

The ChAFTA operates on the basis of a cascading tariff schedule, whereby tariffs are gradually reduced in key areas across the next decade. The following goods, amongst others, will see a reduction and eventual complete tariff elimination:

  • Dairy
  • Wine
  • Beef
  • Wool
  • Pharmaceuticals
  • Coal (Coaking and Thermal)
  • Motor vehicle parts and engines
  • Plastic products

How We Can Assist Your Business?

  • Our firm is able to assist in applying for an “advance ruling.” Such rulings provide greater certainty in relation to how goods will be treated under the ChAFTA. Both the Australian Department of Immigration and Border Protection and the China Customs Service have the power to issue binding rulings in advance of trade occurring.
  • We are able to assist when applying for Export Licences and Rules of Origin certification. It is important to note that some products, such as wine, may require an additional licence.
  • For foreign traders, if required, we can assist with registration of a foreign company in Australia or setting up an Australian company.
  • As this area of law continues to evolve, it is important to be aware of any potential issues that may arise. We can provide your business with tailored advice in relation to ChAFTA compliance and tariff issues.