New challenges in China cross-border e-commerce

China has recently introduced two cross-border e-commerce rules:

  1. The Circular on Tax Policy for Cross-Border E-commerce Retail Imports (E-commerceTax Circular), which took effect from 8 April 2016, primarily adjusts tax rates and introduces an annual limit of RMB 20,000 per individual consumer. These changes will affect cross-border e-commerce, without seeking to strictly limit it.
  2. Publication of a “cross-border e-commerce retail list of imported goods” (Positive List), which raises a more serious challenge to cross-border e-commerce. Legally, the Positive List should be interpreted as a list which determines whether or not a product will enjoy the preferential tax policies granted to cross-border e-commerce. However, our consultations with a number of government authorities have indicated that products not included on the Positive List will be prohibited from being sold via cross-border e-commerce platforms.

The Positive List’s treatment of certain agricultural products is listed below:

Milk Products

Most milk products have been included in this list:

  1. Fluid milk and cream under HS Codes 04011000, 04012000, 04014000, 04015000, 04021000, 04022100 and 04022900 are included.
  2. Formula is allowed, provided that registration formalities as required under the Food Safety Law have been conducted. According to further explanations provided by PRC Customs, registration will be required from 1 January 2018. Until then formula products can be sold through cross-border ecommerce without such registration.


Wine grape juices under HS Codes 20096100 and 20096900 and wine in small packages under HS Code 22042100 are included in the Positive List.


Rice, rice powder, wheat, corn and other cereal powder under certain HS Codes are allowed to be imported. Cereal under HS Codes 10061099, 11010000, 11031100, 11022000 and 11042300 is allowed to be imported under Model 1 only.

We anticipate that the prices of some products will likely increase, but this is unlikely to have a major impact on Chinese consumers as trust and availability tend to be greater motivators. However, these regulatory changes may prevent other products that are not included on the Positive List from being sold using the cross-border e-commerce model.

For further information and analysis about these new regulations, see our recent alert on Further challenges in China cross-border e-commerce.

New country of origin food labelling reforms

Following the Australian Government’s announcement about the introduction of sweeping reforms to country of origin food labelling, new regulations were published on 18 April 2016. The Country of Origin Food Labelling Information Standard 2016 (Standards) is available on the Government’s Business website. The Standards will commence on 1 July 2016, with a two year transition period, meaning that food products packaged up until 1 July 2018 can be sold without the new labels.

Under the reforms, food grown, produced or made in Australia as well as food packaged in Australia and certain imported food will be required to have new labels. These labels will be specific to the food product and will contain two or more standard marks from which to choose, including:

  • green and gold kangaroo logo – if the food was grown, produced or made in Australia;
  • bar chart indicating the average proportion of Australian ingredients contained in the product; and
  • accompanying statement indicating whether the food was food was grown, produced and/or made in Australia.

The Australian Competition and Consumer Commission (ACCC) will receive an additional $4.2 million in funding over 5 years to enforce the new labelling laws.

ACCC releases issues paper for cattle and beef market study

The ACCC released an issues paper for its cattle and beef market study on 7 April 2016. The issues paper set out the scope of the market study, the key issues on which the ACCC is seeking submissions, and how interested parties can make submissions to the study.

The study will consider key issues including competition between buyers of cattle, and suppliers of processed meat to downstream customers; impediments to greater efficiency, such as bottlenecks or market power at certain points along the supply chain; seeking information on the share of profits among the cattle and beef production, processing and retailing sectors; and barriers to entry and expansion in cattle processing markets.

Submissions to this study are due by 6 May 2016. The ACCC intends to publish draft findings around September and issue a final report in late November.

Third round of tariff cuts under JAEPA

A third round of tariff cuts and quota volume increases came into effect on 1 April 2016 under the Japan-Australian Economic Partnership Agreement (JAEPA). Given that Japan is one of the world’s top markets for premium food and beverage products, this is forecasted to bring significant benefits and opportunities for Australian agricultural and food exporters, exporters of beef, dairy products, wine, seafood, nuts and horticulture products. In particular, effective from 1 April 2016:

  1. Beef: current tariffs of 38.5% have been reduced to 30.5% for chilled beef and 27.5% for frozen beef; and
  2. Wine: current tariffs of 13.1% on bottled wine have been reduced to 9.4%; current tariffs of 13.6% on bulk wine (between 2 and 150 litres) have been reduced to 10.9%.

Further information about the tariff cuts and quota volume increases is available in the Minister for Agriculture and Water Resources’ media release.

First Annual Agribusiness Law Conference on 5 and 6 May 2016

KWM partners Scott Bouvier and Lisa Huett will be presenting at the First Annual Agribusiness Law Conference organised by the Television Education Network Pty Ltd in association with The Australian Agricultural Company on Thursday 5 May and Friday 6 May 2016.

Scott Bouvier will be speaking about IP protection in agriculture including the world of agricultural R&D and how best to protect the fruits of the process. Lisa Huett will be speaking about food labelling and advertising, including exploring misleading conduct, the impact of trade marks on food labelling and certification trademarks. For more information and to register for this conference, see the Television Education Network’s website.

Australian Meat & Mingle event in Frankfurt on 11 May 2016

In cooperation with Austrade, Meat & Livestock Australia Limited (MLA) and the Food-Processing Initiative, we will be hosting an event for Australian meat processing companies and European investors focussing on the food sector in our Frankfurt office on 11 May 2016. Ramón Gallardo Garcia, a partner from our EU team and author of the “Exporting Australian high quality beef to the European Union: Ongoing challenges” article in this edition of AgriThinking, will be speaking at the event.

The Meat & Mingle event is part of the broader IFFA 2016 – the leading trade fair for processing, packaging and sales in the meat industry. If you are interested in attending, please email [email protected].

Australia conducts largest-ever trade mission to China

Prime Minister Turnbull led Australia’s largest ever trade mission, which included a delegation of over 1000 Australian business representatives, to China for “Australia Week in China”. The program consisted of trade, investment, education and tourism promotion events designed to highlight commercial opportunities underpinned by the rise of China’s affluent middle class and the recently signed China Australia Free Trade Agreement.

Eight sector-specific programs were held in cities including Hong Kong, Beijing, Chengdu, Hangzhou, Shenyang, Shenzhen, Guangzhou and Shanghai. Several KWM partners from Australia, Hong Kong and China were invited to participate in panel discussions relating to these 8 sectors.

Dumping duties to be applied on Italian canned tomatoes

The Australian Government’s Anti-Dumping Commission (Commission) has found that Italian canned tomato exporters La Doria and Feger di Gerardo Ferraioli (Feger) are guilty of selling their products for less than they are sold in Italy, causing material damage to the Australian canned tomato industry. SPC began proceedings in the Commission against all Italian canned tomato importers in 2013. In response to the Commission’s decision, the Industry Minister Christopher Pyne has announced that the Australian Government will impose dumping duties of 8.4% on Feger and 4.5% on La Doria, in an effort to “ensure that Australia’s only canned tomato producer, SPC Ardmona, can now compete equally in Australian stores and supermarkets”. As a result, dumping duties are now imposed on all Italian canned tomato importers.