China Free Trade Agreement Import Duty: What You Need to Know
As a global economic powerhouse, China is a top destination for businesses looking to import goods. However, navigating the import duty landscape can be challenging. That`s where the China Free Trade Agreement (FTA) comes in. In this article, we`ll explore what the China FTA is, how it affects import duties, and how businesses can take advantage of it.
What is the China Free Trade Agreement?
The China FTA is a free trade agreement signed in 2015 between China and Australia. It is designed to reduce trade barriers and increase economic cooperation between the two countries. The agreement covers a wide range of areas, including trade in goods and services, investment, and intellectual property.
One of the key goals of the China FTA is to eliminate or reduce import duties on a wide range of products traded between the two countries. This has significant implications for businesses importing goods from China into Australia.
How does the China FTA affect import duties?
Under the China FTA, over 95% of Australian goods exported to China will be duty-free. This includes a range of products, from beef and wine to pharmaceuticals and chemicals. These tariff reductions will be phased in over time, with the final reductions taking effect in 2029.
On the other hand, the China FTA also reduces the import duties that Australian businesses need to pay on goods imported from China. This can be a significant cost savings for businesses, especially those that rely heavily on imported goods.
For example, before the China FTA, Australian businesses importing clothing from China were subject to a 10% import duty. Under the FTA, this duty has been reduced to just 5% and will be eliminated entirely by 2022.
How can businesses take advantage of the China FTA?
To take advantage of the China FTA, businesses need to ensure that their products meet the rules of origin requirements stipulated in the agreement. These rules determine whether a product is considered “Australian” or “Chinese” and are based on the country of origin of the materials used to make the product.
To claim a preferential rate of duty under the China FTA, businesses must provide a certificate of origin that demonstrates that their product meets the rules of origin requirements. This document must be provided to the Australian Border Force when the goods enter Australia.
It`s also important for businesses to stay up to date with changes to the China FTA. As tariffs are phased out over time, businesses may need to adjust their pricing and sourcing strategies to take advantage of the reduced duties.
In conclusion, the China FTA has opened up new opportunities for Australian businesses looking to import goods from China. By understanding the rules of origin requirements and staying up to date with changes to the agreement, businesses can take advantage of reduced import duties and improve their bottom line.