Trade Policy of Australia
Australia’s trade policy continues to be based on the premise that trade openness, economic growth and improved living standards are strongly linked; emphasis is placed on improving international competitiveness and market access overseas. Australia pursues a combined multilateral, regional, bilateral and unilateral approach to trade policy, and is exemplary in the transparency of its trade regime.
Australia is an active Member of the WTO and contributes a significant amount of its official development assistance to aid for trade funding. Though Australia is fully committed to WTO process, the deepening competition has created a necessity to develop bilateral and regional associations to expand Australia’s market and strengthen its economy.
Australia’s Trade with World
The purchasing power of 24 Million Australian population is high compared to the countries in the region; hence Australia is an important market for foreign products. In 2016 the value of Australia’s total import was US $184.3 billion. Australia is dependent on imports of number of goods and services including apparel products, food items, professional services, medicaments, motor vehicles, furniture, mattresses and cushions, plastic articles, rubber based products, coir products etc..
Australia is the 21st largest export economy in the world. The top exports of Australia include iron ore and gold, agricultural products, liquefied natural gas and coal, education related travel services, crude petroleum etc..
Australia’s major imports are petroleum, passenger motor vehicles, telecom equipment & parts, medicaments, computers, cooling and heating equipment & parts, furniture and mattresses, electrical machinery and parts etc..
Australia’s top 10 Trading Partners
China, Japan, United State, Republic of Korea, Singapore, New Zealand, United Kingdom, Malaysia, Thailand and Germany.
Import Duty and Taxes in Australia.
Import duty and taxes are applied when importing goods into Australia whether by a private individual or a commercial entity. The valuation method is FOB (Free on Board). In addition to duty, imports are subject to other taxes and charges such as sales tax (GST) and Customs Service Fee.
Tariff rates in Australia vary from 0% to 10%, with an average duty rate of 4.6%. Some goods do not attract customs duty (e.g. food items, laptops, electronic products etc).
GST applies to most imported goods, with a few exemptions. The main exemptions are for certain foodstuffs, some medical aids and imports that qualify for certain duty concessions. GST is applied at 10% of the Value of the Taxable Importation (VoTI), which is the sum of the customs value (CV), any duty payable, the cost of freight and insurance, and any Wine Equalisation Tax (if applicable).
Import Tariff Concession System of Australia
Customs duty and Commonwealth taxes are imposed on certain goods when they are imported into Australia, with the rate of duty payable determined by the tariff classification of the goods. Imposing duty on certain imported goods is designed to influence the flow of trade by regulating their value to protect Australia’s local economy and industry. There are, however, a number of ways that importers can obtain duty‐free entry of imported goods into Australia, including through accessing Free Trade Agreements and through the use of duty concession schemes, such as the Tariff Concession System (TCS).
What is the Tariff Concession System (TCS)?
The TCS is designed to help industry become more internationally competitive. The system reduces costs to the general community by allowing duty-free entry for certain goods where there is no local industry that produces those goods. Certain classes of goods including foodstuffs, clothing and passenger motor vehicles are ineligible (‘excluded goods’).
Australia’s preferential tariff schemes can be grouped into four categories, by order of the size in terms of trade flows: developing country preferences, special rates for specific countries, Forum Island Country (FIC) preferences, and preferences applicable mainly to Least Developed Countries (LDCs). Among the Australian preferential measures, the Developing Country tariff is the broadest preference in terms of the number of economies that are eligible. Sri Lanka is eligible for tariff preferences for certain product export to Australia under the Developing Country Tariff Preferences.
How does the Tariff Concession System work?
A Tariff Concession Order (TCO) will be granted on imported goods if substitutable goods are not produced in Australia. Substitutable goods are Australian-made goods which have a use corresponding to a use of the imported goods.
Sri Lanka’s Bilateral Trade with Australia
Australia is an important trading partner for Sri Lanka both as a significant market for exports and supply of raw material and intermediate goods. There has been a significant increase in the total trade turnover between the two countries over the past few years while the balance of trade continues to be in favour of Australia.
Sri Lanka’s total exports to Australia registered an increasing trend from US $ 159.5 Million in 2015 to US $ 164.9 Million in 2016.