Using FTAs to reduce the landed cost of your exports for your overseas customer
Did you know getting lower tariffs under an FTA is not automatic?
What you need to do
Free Trade Agreements (FTAs) cut tariffs, which are taxes or duties to be paid on traded goods.
Australia's FTAs with China, Japan and Korea have opened up new and exciting opportunities for Australian exporters across a wide range of sectors. But the tariff-cutting benefits of FTAs, which result in lower landed costs, do not automatically happen. If you want to get these benefits, there are steps you must actively take.
Why is this the case? The basic idea of an FTA is to provide a tariff preference to the FTA partner country – and only to them. So, countries want to confirm the good being exported genuinely originates from the FTA partner. This is why North Asia FTAs establish 'rules of origin' requirements. Documentation certifying your product meets these requirements must cover your exports.
The following explains the steps involved, and where to go for more information and assistance.
Step 1: Determine if your product benefits from the North Asia FTA tariff cuts on offer
A lot of international trade already occurs without tariffs being applied, so you should first determine if these FTAs cut the tariff that usually applies to your product. Traded products are classified using an internationally-recognised system known as the Harmonised Commodity Description and Coding system, or 'HS code'.
Using DFAT's FTA Portal - ftaportal.dfat.gov.au - type in key words about your product (or HS code if you already know it) and the North Asia FTA partner country to which you are exporting. The Portal will provide guidance on the likely applicable tariff rate under the FTA you've selected.
Note: the FTA Portal is intended as a guide only. Ultimately, the decision around the HS classification of the good and the tariff rate that will apply is made by the importing country's customs authority.
Step 2: Assess if your product meets the FTA's Rules of Origin
Once you've searched and found your product on the Portal, click on the 'rules of origin' tab. This will take you through a step-by-step process to assess if your product is likely to meet the rules of origin requirements of the FTA you're planning to export under.
Step 3: Obtain an FTA-specific Certificate/Declaration of Origin to accompany your exports
Once your assessment is complete, click on the 'certify' tab of the Portal. You need to get an FTA-specific Certificate/Declaration of Origin (COO/DOO). This document will identify the goods you are exporting and certify that they meet the FTA's rules of origin requirements. It will be used (when the good arrives) by the importing country's customs authority to determine eligibility for preferential tariff treatment.
Different FTAs require different processes for obtaining a COO/DOO. Most commonly, businesses obtain certification through an authorised certifying body (COO); some FTAs also allow you to self-certify (DOO).
The authorised bodies that issue FTA COOs are:
- Ai Group
Ph: 03 9867 0132
- Australian Chamber of Commerce and Industry
Ph: 02 6273 2311
- Australian Grape and Wine Authority (AGWA)
(ChAFTA wine FTA COOS only)
Ph: 08 8228 2000