The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11) is expected to enter into force by the 30th of December this year for certain countries. Australia is also among them. In a 42-page notice, the government presents more details on how it will take effect, primarily its reduction of duties.
For Australia’s logistics partners and organizations, this can be a welcome opportunity. However, here are some very important facts to consider before you dive in and determine exactly how the TPP will affect your supply chains.
- The classification of originating goods.
The TPP-11 specifically outlines its own category of originating goods and how these are further categorized according to the countries who will be the soonest to implement the TPP. Alongside Australia, here are the five other countries involved:
- New Zealand
Materials sourced from these countries will be classified as originating goods and subject to the preferential rates outlined in the trade partnership. Bear in mind that there are actually a total of 11 countries who have signed on, but materials sourced from the remaining signatory parties will only be considered originating goods once they have fully ratified. These remaining countries are:
On a special note, Vietnam has already ratified but the TPP will only enter into force for it starting January 14, 2019.
- Incremental reduction of preferential rates.
The reduction of preferential rates will be incremental, with the end result essentially making the customs duty ‘free’ for all goods covered in the TPP-11. This means that importers must still factor in a customs tariff schedule. Fortunately, you can find the entire schedule attached to the government notice.
- Originating goods still subject to rates.
The new schedule also outlined a list of goods that are still subject to rates and you can identify them using the code corresponding to their chapter in Schedule 3 of current tariff classification. Among the originating goods still affected by rates are (but not limited to):
- Alcoholic beverages
- Mineral fuels
If your organization is in the business of transporting the above materials (or others outlined in the new tariff schedule), please consult with your logistics partners and personnel to narrow down on the specific rates that still apply.
With the TPP-11 entering into force, Australia is set to participate in the third largest free trade area in the world. Despite the controversy of its inception during the last two years, there is still plenty of trade and sourcing opportunities for our organizations as more than half of the partnership’s signatories are already moving full steam ahead with it.