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Australia - New Zealand Closer Economic Relations Trade Agreement
Rules of origin
Proposed changes to ANZCERTA ROO
Overview
The Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), which came into effect on 1 January 1983, covers almost all aspects of the Australia - New Zealand trade and economic relationship.
As well as underpinning bilateral trade in goods and services, ANZCERTA is the umbrella for close collaboration across quarantine, customs, transport, regulatory and product standards and business law issues.
The ANZCERTA is one of the world’s most open and successful free trade agreements. Between 1983 and 2003, two-way trade in goods expanded at an average annual growth rate of 10 per cent.
Based on trade in goods and services, New Zealand is now Australia’s fifth largest market, taking 7 per cent of our exports and providing the seventh-largest source of imports.
Australia is New Zealand’s principal trading partner, providing 23 per cent of its merchandise imports and taking 21 per cent of its exports. In 2004, trans-Tasman merchandise trade was valued at $13.9 billion.
The final text of the agreement is available from the Australian Government's online guide to Free Trade Agreements
Rules of origin
The ANZCERTA provides for concessional (duty free) access for goods that would normally attract duty but meet the Rules of Origin (ROO) test which determine that a good has been made in either Australia or New Zealand. Most goods meet these rules.
To attain the preferential rate of tariff, exported goods must qualify under the 50 per cent rule, calculated at the last process in the manufacture of the goods.
Proposed changes to ANZCERTA ROO
At the annual CER Ministers’ Meeting, held on 11 December 2004, Australia and New Zealand agreed to reform the Rules of Origin under ANZCERTA. A Change of Tariff Classification (CTC) approach will be adopted, subject to final agreement on sensitive sectors.
Under this approach, imports are required to undergo a specified change in tariff classification. This usually occurs when a product is transformed from a collection of material and components into the finished good.
The CTC method is used in Australia’s FTAs with the US and Thailand.
It is anticipated that the changes will come into effect on 1 January 2007. The CTC model will simplify the administration of ROO and reduce compliance costs.
Adopting the CTC model in ANZCERTA also reflects an increasing global trend to use this type of ROO in bilateral free trade agreements. The resulting consistency would benefit export oriented industries in both countries.
The Government is not proposing to change the treatment of ‘wholly obtained goods’ (i.e. goods that are obtained or produced entirely in the country, such as minerals extracted there, vegetable goods harvested there, and live animals born and raised there).
To assist the transition to the CTC model, the existing 50 per cent value-added rule will continue to apply in parallel with the new rules for five years.