What is the U.S.-Australia Free Trade Agreement (FTA)?
The U.S.-Australia FTA is an agreement between the United States and Australia that allows both nations to strengthen and develop economic relations and to establish free trade between the two nations through the reduction and elimination of barriers to trade in goods and services and to investment.
Duties on more than 99 percent of U.S. manufactured goods exports to Australia were eliminated as soon as the Agreement entered into force on January 01, 2005. Manufactured goods account for 93 percent of U.S. exports to Australia. Australia is a key export market for important U.S. manufacturing sectors such as aircraft, autos and auto parts, machinery, computers and electronic products, chemicals, and wood and paper products. All U.S. farm exports-nearly $700 million last year - are now duty-free to Australia, benefiting many sectors such as processed foods, fruits and vegetables, corn, and soybeans.
The Agreement also requires the elimination of a variety of non-tariff barriers. The FTA will open markets and streamline mutual access in intellectual property, services, government procurement, e-commerce, and investment.
Companies in all 50 U.S. states export to Australia, and Australia is among the top 25 export destinations for companies in 48 of the 50 states.
Among other benefits from the elimination of non-tariff barriers, the FTA allows the U.S. supplier to be more price-competitive in the Australian market simply due to duty reduction and elimination. A U.S. exporter whose goods qualify under the Agreement may afford its buyer considerable savings. U.S. exporters will also be more competitive in Australia against competing third country products that do not have the duty benefits.
The product must qualify as an "originating" good under the terms of the Agreement. This means that the product must have sufficient U.S. or Australian content or processing to meet the criteria of the Agreement. If goods contain only U.S. or Australian inputs, they qualify. If they contain some inputs from other countries, they still might qualify if they meet specific criteria set out in the Rules of Origin of the Agreement. Each product has a unique rule, based on its tariff classification. Most of the rules require either that the non-U.S./Australian inputs undergo a specified transformation through processing in the United States or Australia (tariff shift method) and/or that they have a sufficient level of U.S. and/or Australian content as determined by a formula (regional value content method). See the Rules of Origin section for more information.
First, you do not need to provide any additional information if the importer does not claim preferential treatment under the Agreement. U.S. goods can still enter Australia without FTA benefits. If your goods qualify, however, your importer will want to claim FTA duty benefits. The importer will need to be able to supply a statement of why the goods qualify. So your importer may ask you for proof of qualification, such as a Certificate of Origin or another statement.
The U.S.-Australia FTA calls for the importer to make a claim of preference. This Agreement does not require that the importer provide a certificate of origin in support of the claim of preference. However, importers claiming a preference for a good must be prepared to submit, upon request by Customs authorities, a statement setting out the reasons that the good qualifies, including pertinent cost and manufacturing information if necessary. No particular format for such a statement is specified in the Agreement.
The importer may therefore ask the exporter for this information. The exporter (seller) may give confirmation, in an un-prescribed format, of why the goods qualify as "originating," which the importer may use to validate its claim. It is advisable to work with your importer and provide your importer with a written statement of origin upon request.
Customs officials can require importers to maintain documents relating to purchases and costs for up to five years after importation, should investigation and verification of claims be required. Customs officials can also seek information from exporters in verifying claims.
No. The U.S.-Australia FTA differs from NAFTA. Under the U.S.-Australia FTA, there is no standard Certificate of Origin document for the exporter to complete and some of the rules of origin are different. For further information visit the "Documenting Origin" section of the website.
Any claim for preferential treatment under the U.S.-Australia FTA is a declaration whose truthfulness may be verified or audited by Australian customs. If a preference has been claimed and the goods are found not to qualify, the duty benefit will be lost and penalties may be assessed. Declarations that are found after the fact to be deliberately false may result in significant penalties.
When the packing materials and containers are being used for shipping purposes, the materials and containers are disregarded in determining whether the good being shipped qualifies for FTA treatment.
In cases where the packaging material or container is for retail sale, it will be disregarded in determining whether the good qualifies under the FTA only if it is classified with the good and qualification is determined using the tariff shift method. If the container is not classified with the good, or the regional value content method is used, the material or container will need to be considered in determining whether the good qualifies as originating.
No. When accessories, spare parts, or tools are delivered with a good, they are regarded as a material used in the production of the good as long as 1) they form part of the good's standard package and are not invoiced separately from the good and 2) the quantities and values are customary for the good. However, when these ancillary items are sent separately from the original good, they are treated as a separate export and must qualify as such.
It can, provided it does not undergo processing in the third country. According to the U.S.-Australia FTA, a good that undergoes subsequent production or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good to the territory of a Party can no longer qualify for preferential treatment under the FTA.
The Agreement ensures that digital products, including software, music, video, and text, will receive non-discriminatory treatment and makes permanent the current practice of not subjecting such transmissions to customs duties. This is the first Agreement to include provisions on facilitating authentication of electronic signatures, encouraging paperless trade and establishing a program for cooperation on other e-commerce issues.
All U.S. investment in new businesses is exempted from screening under Australia's Foreign Investment Review Board. Thresholds for acquisitions by U.S. investors in nearly all sectors are raised significantly, from A$50 million to A$800 million, exempting the vast majority of transactions from screening.
In recognition of the unique circumstances of this Agreement - including, for example, the longstanding economic ties between the United States and Australia, their shared legal traditions, and the confidence of their investors in operating in each others' markets - the two countries agreed not to adopt procedures in the Agreement that would allow investors to arbitrate disputes with governments.
Under the Agreement, U.S. suppliers are granted non-discriminatory rights to bid on contracts to supply Australian Government entities, including all major procuring entities and administrative and public bodies. Commonwealth (federal), state and territory government agencies are included. The Australian Government will eliminate its industry development programs, under which suppliers have had to meet various types of local content or local manufacturing requirements as conditions of their contracts. The Australian Government also will restrict its use of selective tendering, which will ensure that U.S. suppliers have a fair opportunity to compete for government contracts.
The Customs authority of Australia will issue "advance rulings" at the written request of the importer, exporter, or producer on questions of tariff classification, customs valuation, country of origin, and whether the good qualifies as originating under the FTA. Extensive information regarding the facts and circumstances of the inquiry will be required by the Customs authority prior to issuing such a ruling.
Prepared by the Trade Information Center