Australia

1
Australia

• Business Prospects Under the
• Australia - U.S. Free Trade Agreement

U.S. Commercial Service Australia www.buyusa.gov
/australia
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Outline

• Australian Basics
• The Australian Economy
• The AUSFTA
• Some Key Industries
• Construction
• Safety and Security
• Franchising
• Medical
• Your Next Steps

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This Country is a Continent
4
U.S. Population Density1 dot 7500 people
5
Australia Population Density
Australia is the 7th most urbanized country in
the world.
More than 80 of population in this ring
6
Australias Role in the World

• China as Consumer
• Free Trade Agreement with Thailand, Pursuing
  China FTA
• Cooperative Economic Relationship with New
  Zealand
• APEC Member
• Relationship with ASEAN countries

7
The Case for Australia

• Strong Domestic Economy
• Favorable Exchange Rate
• AUSFTA

8
The Fundamentals

• Stable, transparent
• 410 billion and growing!
• World class infrastructure
• Global orientation

9
Economic Performance

• High Growth / Low Inflation
• Rising Productivity and Incomes
• Australian and Imports Exports Healthy
• High Capacity Utilization and Investment

10
The Market Drivers

• Commodity Prices strong Asian demand keeps
  mineral prices high
• Buoyant domestic economy absorbs interest rate
  rise
• Major trading partner growth
• Agricultural rebound

11
Americas Strong Trade Position

• American exports to Australia 14 billion
• in 2004
• U.S. trade surplus with Australia approx US8
  billion
• U.S. is major foreign supplier15.2 of the
  import market

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Strong A Effects

• Drags export growth and revenue in F/X sensitive
  areas
• Increases U.S. exporter price advantage, Aussie
  purchasing power

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Australia-U.S. Free Trade Agreement

• Major Benefits for U.S. Companies
• Tariff Reduction (99 eliminated)
• Intellectual Property (strengthened protection)
• Access to Australian Government procurement
• Investment access improved
• Australia has eliminated all agricultural tariffs
  and distilled spirits tariffs. Australia used to
  have tariffs as high as 30 percent on certain
  dairy products and tariffs of 4 to 5 percent on
  fresh and processed fruits and vegetables,
  processed foods, some grains, oilseeds and other
  products.

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AUSFTA vs NAFTA

• Like NAFTA
• Uses rules of origin, de-minimis, and
  calculations for regional value
• Unlike NAFTA
• Onus on importer not exporter
• No prescribed certificate form

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Claiming Preferential Treatment

• Onus for making a claim rests with the importer.
   UNLIKE NAFTA where the onus is on the exporter.
• AUSFTA does not require that the importer provide
  a certificate of origin in support of a claim
  preference.   However, must be prepared to submit
  statement setting out the reasons the good
  qualifies.  
• Customs officials can require importers to
  maintain documents relating to purchases and
  costs for up to five years. Customs officials can
  also seek information from exporters to verify
  claims.

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Qualifying U.S. Goods

• To qualify as an originating good, product must
  be
• Wholly obtained or produced entirely in the
  United States (e.g vegetables harvested in U.S.)
  
• Produced in the United States wholly from other
  originating materials from either Australia or
  the United States or
• Produced in the United States partly from
  non-originating materials, but meeting the
  requirements of the origin rules in Annex 4-A to
  the Textiles and Apparel Chapter and for other
  goods, Annex 5-A General Notes and Product
  Specific Rules.
• Annexes define a level of content and/or type of
  physical transformation required in the
  production process to qualify as originating.

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Regional Value Content

• The RVC component can take the form of either an
  additional requirement to the specified change in
  tariff classification, or can provide an optional
  test, allowing the product to meet a lesser
  degree of tariff shift if the threshold is
  reached.   The Agreement provides for three
  formulas to determine the RVCs
• The Build-Down method, where the RVC threshold is
  determined by calculating the value of the final
  product after subtracting the cost of
  non-originating materials and comparing this to
  the value of the exported product. Article
  5.4.1(a)
• The Build-Up method, under which the RVC
  threshold is based on the proportion of the value
  of the final product represented by locally
  sourced materials. Article 5.4.1(b)
• A Net Cost method that is applied only to certain
  automotive products.   See Article 5.4.2.  

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Build Up/Build Down

• Build-down 45 Method
• RVC (AV VNM)/AV x 100
• Build-Up 35
• RVC (VOM/AV) x 100

• NOM Non Originating Material
• RVC Regional Value Content
• VOM Value of Materials
• AV Actual Value
• VNM Value of Non-Originating Materials

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Build Up Example

• Product A
• Value of Originating Materials 2,100
• Actual Value 3,000
• 2,100/3,000 0.70
• x 100
• 70 Regional Value
  Content

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Build Down Example

• Product B
• Actual Value 3,000
• Value of Non Originating Materials 500
• 3,000-500 2,500
• 2,500/ 3,000 0.83
• 
  x 100
• 83 RVC

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De Minimis Principle (Article 5.2)

• Very small amounts of non-originating inputs (in
  total less than 10) will not disqualify an
  export product from access to preferential
  treatment.
• Principle does not apply to dairy products,
  citrus fruit, certain animal or vegetable fats or
  sugars used in some food preparations, and some
  alcohol products
• Separate de minimis principle applies to products
  covered by the Textiles Chapter (see Textiles
  Chapter).

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Best Market Prospects

• Aircraft and Parts
• Automotive Parts and Accessories
• Construction Machinery
• Industrial Process Controls
• Information Technology Services
• Medical Equipment  

• Mining Equipment
• Oil Gas Equipment
• Pollution Control Equipment
• Safety and Security
• Telecommunications Equipment

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Standards and Approvals

• Few barriers, but must be considered
• Standards Australia (http//www.standards.org.au/
• Australian Quarantine Inspection Service
• Therapeutic Goods Administration (TGA)

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Contact Us

• U.S. Commercial Service
• U.S. Consulate General
• 19-29 Martin Place, 59 MLC Centre
• Sydney NSW 2000
• http//www.BuyUSA.gov/australia
• Tel. [phone]
• Fax. [phone]