At a recent ECA Ministerial Roundtable, the Minister for Trade and Investment indicated that he and his Chinese counterpart were working towards a commencement date for ChAFTA of 20 December 2015. Even so, there was no corresponding public announcement and some doubted that was to be the case.
However, during the course of the DFAT Trade Agreement Negotiations and Implementation meeting of Peak Organisations in Canberra on 8 December 2015 (which I attended on behalf of the ECA), DFAT confirmed that Australia and China were to exchange "Diplomatic Notes" today (9 December 2015) with the intent that ChAFTA would then commence on 20 December 2015.
The proposed commencement has a number of immediate consequences:
- It abridges the standard 30 day period for commencement following the exchange of Diplomatic Notes in the same manner as applied to the commencement of KAFTA.
- It will deliver one tariff cut for 2015 on commencement with one to follow on 1 January 2016.
- For those in the supply chain for goods including importers, exporters, producers and service providers such as licensed customs brokers and freight forwarders, it means a busy time. Parties will be scrambling to secure appropriate Certificates of Origin (CoO), Advance Rulings, Declarations of Origin (DoO) and to arrange freight to take advantage of ChAFTA from its commencement.
- The DIBP website (click here) includes some resources regarding the "customs" aspects of ChAFTA including details of the parties issuing CoO in China and Australia as well as the address for applications in Australia for Advance Rulings required for DoO.
- The DIBP website also contains some answers to FAQs – which represent the position of the DIBP on some important issues, although it must be said that I do not necessarily agree with all the comments.
- The issue regarding the consignment of goods to Australia through HK seems to have been remedied through the passage of a new Regulation summarised here. In essence the Regulation states that so long as goods are transported from China through the "Customs Territory of HK" they are deemed to be subject to customs control and remain entitled to retain the status as China originating goods. However, other acts in relation to goods in HK can still cause those goods to lose their status as China originating goods so care must be taken.
- The issue of consignment of Australian originating goods from Australia to China through HK (or other "non – parties") has yet to be resolved and is still a "work in progress". That will cause issues for Australian exporters.
- DFAT has advised that further information on ChAFTA commencement arrangements will be published on its website (click here) from the exchange of Diplomatic Notes today.
While I recognise the difficulties experienced in finalising the commencement arrangements for ChAFTA, I think it is fair to say (as DFAT did) that there may be some "teething problems" with these customs aspects of ChAFTA. We can only hope that the DIBP recognises those problems and puts away the Infringement Notice pad for inadvertent and innocent breaches of the ChAFTA origin procedures.