The U.S. - Australia Free Trade Agreement (AUSFTA)
The Free Trade Agreement between the United States and Australia (AUSFTA) came into effect on January 1, 2005. AUSFTA eliminated import tariffs on 99% of U.S. manufactured industrial and consumer goods, and 100% of U.S. agricultural products. This has continued to create export opportunities for U.S. manufacturers and farmers. Tariffs on non-U.S. products average 5% or less, with a few exceptions, such as motor vehicles, clothing, and footwear. In Australia, value-added and skilled manufacturing processes have become more competitive in domestic and international markets. The remaining industry protection will phase out by 2010, with the aim to bring these protected industries into line with other industries, and in line with the goals of the Asia Pacific Economic Cooperation forum (APEC).
Rules of Origin
Goods are classified according to the Harmonized System (HS) for the purposes of tariff categorization. To be eligible for preferential tariff treatment under AUSFTA, products must originate in the United States, that is, be wholly obtained or produced in the United States, or produced in the United States wholly from other originating materials from either Australia or the United States. Goods may also be produced in the United States partly from non-originating materials. The non-originating materials must meet the requirements of rules of origin, which determine the level of source content, and/or the sort of physical transformation required in the production process for the goods. Before claiming preference, local importers are required to ensure that the goods meet the required rules of origin. Australian importers, U.S. exporters, and U.S. producers of goods may obtain advance rulings from Australian Customs regarding importations of goods into Australia. Customs will provide written advice on origin matters through the provision of an Origin Advice (OA). The OA exists to advise Australian importers, U.S. exporters, and U.S. producers on specific issues relating to the origin of their goods for the purposes of determining eligibility for preferential duty rates for goods that Australia imports.
In addition to the elimination of tariffs, AUSFTA provides a range of other benefits such as: certain services markets are now open, intellectual property receives better protection, predictable access facilitates investments, and U.S. firms can compete in Australia for government tenders on a nondiscriminatory basis. Some of these relaxations have not yet come into effect. Until such time, existing impediments to a free flow of trade will remain. The agreement does not exclude provisions for local broadcasting content and local content in major defense contracts.