Tariff Concession Orders: Proposed Changes to Criteria

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Tariff Concession Orders: Proposed Changes to Criteria

Hunt & Hunt together with the Freight & Trade Alliance (FTA) has made a joint submission to Customs regarding their proposed changes to the criteria for making tariff concession orders (TCO).

The changes proposed by Customs would make it harder for importers to obtain TCOs and easier for local manufacturers to seek revocation of existing TCOs.

Our previous update on the proposed change outlined the nature and likely impact of the change. Essentially, before a TCO can be made, it must be shown that there is no Australian producer of substitutable goods.

The current legislation requires that before goods will be classified as being produced in Australia at least 25% of the labour costs, factory overhead costs and material must be of Australian origin (25% test). A second test requires that there be a substantial process in the manufacture of the goods undertaken in Australia (Substantial Process Test).

Customs proposes to remove the 25% test as its experience is that if the Substantial Process Test is met, so too will the 25% test.

The Hunt & Hunt/FTA submission outlines:

  • Our experience showing that satisfying the Substantial Process Test does not always result in satisfaction of the 25% test
  • Our view that Customs should exercise caution before deeming that the 25% test is redundant
  • Methods to make administration of the 25% test less burdensome, such as allowing TCO applicants to nominate whether satisfaction of the 25% test is disputed
  • Our views as to other methods to improve the TCO system.