Customs Tariff Amendment (2017 Harmonized System Changes) Bill 2016

Mr HAWKE (Mitchell—Assistant Minister for Immigration and Border Protection) (10:44): I move:

That this bill be now read a second time.

The Customs Tariff Amendment (2017 Harmonized System Changes) Bill 2016 contains approximately 950 amendments to create, change and clarify tariff classifications in the Customs Tariff Act 1995.

These amendments give effect to changes resulting from the World Customs Organization's fifth review of the International Convention on the Harmonized Commodity Description and Coding System, commonly referred to as the Harmonized System. Australia provided significant input into the fifth review. Relevant Australian government agencies and industry groups were consulted during this review process.

Australia is a signatory to the Harmonized System, which has formed the basis of Australia's classifications for traded goods, both imports and exports, since 1988.

The Harmonized System is a hierarchical system that uniquely identifies all traded goods. Over 175 customs administrations use the Harmonized System.

Australia has implemented the Harmonized System domestically through the Customs Tariff Act 1995 for imports and the Australian Harmonized Export Commodity Classification for exports.

As a signatory to the Harmonized System, Australia is required by 1 January 2017 to give effect to the changes resulting from the fifth review.

Changes to the Harmonized System address new and emerging technologies, provide a clearer picture of trade patterns, facilitate the collection and comparison of trade data and assist the monitoring of trade in certain goods.

The 2017 Harmonized System amendments address environmental and social issues of global concern. This includes, for example, further enhancing the monitoring of trade in certain fish and tropical woods by the Food and Agriculture Organization of the United Nations. This will support food security objectives and management of endangered species.

The 2017 Harmonized System changes will create new tariff subheadings for specific chemicals. This will further enhance the monitoring, collection and comparison of data on the international movement of these chemicals, which are controlled under international conventions to which Australia is a signatory.

The bill will insert new subheadings, at the request of the International Narcotics Control Board, to monitor and control pharmaceutical preparations containing ephedrine, pseudoephedrine or norephedrine. This will enhance the monitoring and control of certain narcotic drugs and psychotropic substances.

The bill also clarifies texts to support the uniform application of the Harmonized System internationally.

The bill will amend schedules 5 to 12 of the Customs Tariff Act. These schedules give effect to the application of customs duty on certain imported goods in accordance with Australia's bilateral trade agreements with the United States of America, Thailand, Chile, Malaysia, the Republic of Korea, Japan and China and with Australia's regional agreement with the Association of Southeast Asian Nations and New Zealand.

Existing levels of industry protection and margins of tariff preference that apply to imported goods, including goods imported under free trade agreements, will be preserved.

One exception to this, however, is the classification of electronic integrated circuits, which will be expanded to include multicomponent integrated circuits, commonly known as MCOs. This means that a subset of these goods will have their duty rates reduced to free when imported into Australia.

Reducing the rate of duty to free for all MCOs is consistent with the Expanded Information Technology Agreement, to which Australia is a signatory.

This bill will provide certainty for Australia's importers by ensuring that Australia classifies its goods and commodities in accordance with the Harmonized System—and in a manner consistent with its major trading partners. The bill will also provide a more effective way of identifying goods as they come across the border.

To give effect to the Harmonized System changes, complementary amendments will also be made to the Customs Act 1901 by the Customs Amendment (2017 Harmonized System Changes) Bill 2016.