This will provide the benefit of two rounds of tariff reductions for importers and exporters in the first half of next year, the first on 15 January 2015 and the second on 1 April 2015.
This follows the commencement of the Korea Australia FTA on 12 December 2014, with another round of tariff reductions to occur on January 1 2015.
We detail below what you need to do to prepare for 15 January 2015.
DO YOU NEED A CERTIFICATE OF ORIGIN?
Australian and Japanese importers, exporters and producers of goods can self-certify origin through completing an Origin Certification Document (OCD).
Exporters and producers also have the option of making a claim for preferential tariff treatment on the basis of a Certificate of Origin (COO) issued by an authorised body.
Remember that if you are an importer, you will be claiming the benefit of the preferential treatment and Customs will take action against you for either underpaid duty or regarding the incorrect statement made, in the event that the claim of origin was incorrect. It is therefore critical, as well as having an OCD or COO, that you undertake appropriate due diligence and satisfy yourself about the claims being made.
DO YOU NEED THE COO OR OCD TO CLAIM PREFERENTIAL RATES OF DUTY?
To claim the preferential rate of duty, an importer must have valid COO or OCD, or a copy of one, at the time the goods were imported.
CAN YOU MAKE A CLAIM POST-IMPORTANT FOR PREFERENTIAL TARIFF TREATMENT?
Yes, provided certain conditions are met and the goods would otherwise be qualifying, post-importation claims for preferential tariff treatment can be made.
It is important to note that, at the time the refund is sought, an importer must hold a COO or OCD, or a copy of one.
GOODS EXPORTED PRIOR TO 15 JANUARY 2015
As with other FTA's, the JAEPA will only apply to goods if the 'time for working out the rate of duty on the goods' is on or after 15 January 2015. While each case should be individually assessed, the general rule is that the time for working out the rate of duty on the goods is:
- Where an import declaration is not lodged prior to the arrival of the vessel carrying the goods at an Australian port, the time the import declaration is lodged.
- Where an import declaration is lodged in advance of arrival, the time of first arrival of the vessel at an Australian port (even if it is not the port of discharge).
MANAGING PRE-ARRIVAL LODGEMENT OF IMPORT DECLARATIONS
If an importer wishes to take advantage of the FTA preference rate and there is some risk that the vessel will arrive in Australia prior to 15 January 2015, you need to avoid pre-arrival lodgement of the import declaration. Remember that it is the first port of arrival in Australia that is important and not the port where your goods will be discharged.
WAREHOUSING GOODS MAY ALLOW YOU TO CLAIM THE PREFERENTIAL DUTY RATE
If there are significant duty savings to be achieved if qualifying goods do not enter into Australia before the JAEPA commences, you may wish to manage when 'the time for working out the rate of duty' occurs by delaying when an important declaration is lodged.
If goods are warehoused and only entered for home consumption after 15 January 2015, then the FTA can apply.
TRANSHIPMENT OF JAPAN ORIGINATING GOODS
Goods will not be able to claim originating status if they are transhipped via a third country and the goods:
- Undergo subsequent production or any other operation, other than repacking and relabelling for the purpose of satisfying the requirements of the importing country, splitting up the consignment, unloading, reloading, storing or any other operation necessary to preserve it in good condition or to transport the good to Australia (or Japan) during its transhipment and temporary storage; or
- Do not remain under customs control while it is in the transhipment country. This means that the goods must not be cleared through Customs in the transhipment country and must only be stored in a customs controlled area (e.g. bonded warehouse).
REVIEW YOUR TERMS AND CONDITIONS WITH SUPPLIERS
We recommend reviewing your terms and conditions with suppliers to:
- Ensure your contracts include warranties that the information they provide regarding the origin of the goods is correct
- Include contractual terms requiring suppliers to provide an indemnity for any amounts payable as a result of representations as to origin being incorrect
- Require your suppliers to provide reasonable assistance to ensure that the preferential rate of duty can be claimed.
There is only a short time to prepare, given the Christmas and New Year shut down period for many businesses. But you can achieve competitive advantage if you take the right steps now.
Disclaimer: The information contained in this e-alert/update is not advice and should not be relied upon as legal advice. Hunt & Hunt recommends that if you have a matter that is legal, or has legal implications, you consult with your legal adviser.