Rules of Origin
- Simple and objective tests apply to "rules of origin" for
manufactured products, which must be "substantially
transformed" in either Australia or the United States before
they can benefit from the Agreement's preferential
reductions in customs duty.
Any manufactured product that includes imported inputs must
be substantially transformed in Australia or the United States
before it can benefit from the Agreement. Technically,
the rules of origin for the Agreement mean that there must be a
change in tariff classification i.e. the inputs move the
product from one tariff code to another.
Where it is difficult to demonstrate that a product has been
"substantially transformed" through the tariff change rule, an
additional or alternative local content threshold test will be
applied, under which domestic materials and processes will need
to form a set proportion of the final value of the product.
Gains for Australia
The Rules of Origin agreed with the United States provide a
simple and objective test of origin which is easy to
administer. Manufacturers need only be aware of the
tariff codes for imported inputs and final products.
By largely removing regional value tests from the rules of
origin AUSFTA particularly benefits Australian manufacturers
who rely on imported petrochemical products and other goods
with fluctuating world prices.