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2.1 Legislation on trade and investment

2.1.1 Legislation on trade administration

Major trade-related legislation in Australia consists of Customs Act 1901, Trade Practices Act 1974, Customs Tariff Act 1995, Excise Tariff Act 1921, Excise Act 1901, A New Tax System (Goods and Services Tax) Act 1999 and other relevant decrees and regulations. Among the aforementioned six laws, four were amended in 2005, except the Excise Tariff Act and Excise Act. Amendments were also made to Trade Marks Act 1995, Copyright Act 1968, Customs Regulation 1926, Customs (Prohibited Imports) Regulations 1956, Customs (Prohibited Exports) Regulations 1958, Australian Meat and Live-stock Industry (Export Licensing) Regulations 1998, and Imported Food Control Regulations 1993.

2.1.2 Legislation on investment administration

Major legislation governing foreign investment includes Foreign Acquisitions and Takeovers Act 1975, Foreign Acquisitions and Takeovers Regulations1989, Foreign Acquisitions and Takeovers (Notices) Regulations. Amendments were made to the former two laws and regulations in 2005. In addition, two new laws were made, that is, Australian Communications and Media Authority Act 2005 and Film Licensed Investment Company Act 2005.

2.2 Trade administration

2.2.1 Tariff system

2.2.1.1 Average tariff level and its trend of development

Though the overall tariff level in Australia is fairly low with average tariff rates ranging from 0 to 5 percent, tariff rates for such products as parts and components of automobiles, textiles and clothing, and footwear, despite the reduction in 2005, remain on the high side between 5 percent and 17.5 percent. They are expected to drop to the terminal tariff rate by 2010, with the exception of those on certain items of clothing, to which terminal tariff rate shall apply by 2015. While the majority of the exports to Australia are subject to ad valorem duty, specific duty is levied on such products as cheese, biodiesel, fruit juices, beverages, spirits and vinegar, tobacco, petroleum oils, and certain chemical products.

2.2.1.2 Tariff administration

In Australia, tariff rates are listed in the Customs Tariff Act. They are subject to change by the Federal Government based on the merits of the situation. As to import tariffs, MFN rate and preferential rate are adopted. Countries to which preferential rate is applied are classified into 9 categories, each of which is subject to different rates. China falls under the category of Developing Country specified in Part 4 of Schedule 1 of Customs Tariff Act 1995. For countries and regions which do not fall within the abovementioned 9 categories, MFN rate shall apply.

Besides, Australia adopts tariff concession system for imports, where concessions are allowed to be made on certain imports provided that non substitutable goods were produced in Australia in the ordinary course of business. Tariff concessions are listed in Schedule 4 of Customs Tariff Act 1995.

With regard to export, no duties are levied except on coal and uranium. In cases where imported products are re-exported, one may ask for a refund of import duties and excise. The same shall apply to the export of new and unused imported goods, manufactured goods which contain imported components, or the import of products for the purpose of processing.

2.2.2 Import prohibition and restriction system

The Australian Government controls the importation of certain goods into Australia. The controls either take the form of an absolute prohibition or a restriction. The importation of 4 categories of goods, namely, dangerous breeds of dogs, human embryos, suicide devices, and rough diamonds from Liberia is prohibited while the importation of 41 items including antibiotics, pencils and paintbrushes with a coating that contains excess amounts of toxic compounds is restricted. According to the amendments made by the Australian Government in 2005 to the Customs (Prohibited Imports) Regulations, two more items are listed as restricted imports, including crossbows that are capable of causing damage to property or bodily harm, and ammonium nitrate. Importation of the abovementioned restricted items is only allowed upon the approval of competent authorities.

2.2.3 Export prohibition and restriction system

The Australian Government controls the exportation of certain goods from Australia. The controls either take the form of an absolute prohibition or a restriction. Prohibited exports include suicide devices and the exportation of acetic anhydride to Afghanistan while restricted exports consist of 28 items, such as wine and brandy, narcotic drugs, and human embryos. According to the amendments made by the Australian Government in 2005 to the Customs (Prohibited Exports) Regulations, ammonium nitrate is included in the list of restricted exports. Exportation of the abovementioned restricted items is only allowed upon the approval of competent authorities. According to the Australian Meat and Live-stock Industry (Export Licensing) Regulations 1998, the Australian Government exercises licensing control over the exportation of domestic meat and livestock.

2.2.4 Import risk analyses (IRAs) for products of plant and animal origin

An IRA is often required by Biosecurity Australia (BA) for products of plant and animal origin where there is no quarantine policy or a significant change in existing quarantine policy is to be considered. Specific processes of an IRA are set out in The Import Risk Analysis Process Handbook. For instance, an IRA would be conducted for new commodities that have not previously been imported into Australia and commodities that are already imported but the import request is from a different country/area with a significantly different pest and disease status so as to identify the possible quarantine risks.

2.3 Investment administration

The Australian Government encourages foreign direct investment but still maintains a system of examination on foreign investment. The types of proposals by foreign interests to invest in Australia, which require prior approval and therefore should be notified to the Government, include: (1) acquisitions of substantial interests in existing Australian businesses, the value of whose assets exceeds A$50 million or where the proposal values the business at over A$50 million; (2) proposals to establish ne w businesses involving a total investment of A$10 million or more; (3) takeovers of offshore companies whose Australian subsidiaries or assets exceed A$50 million; (4) direct investments by foreign governments and their agencies irrespective of size; (5) acquisitions of interests in urban land including interests that arise via leases, financing and profit sharing arrangements and the acquisition of interests in urban land corporations and trusts.

In the majority of industry sectors, smaller proposals are exempt from notification and large proposals are approved unless judged contrary to the national interest of Australia.

2.4 Competent authorities

The Australian Department of Foreign Affairs and Trade (DFAT) has three subordinate agencies that deal with foreign trade promotion and administration.

Australian Trade Commission (Austrade) is in charge of trade promotion and market development; Australian Agency for International Development is responsible for managing the Australian Government's official overseas aid program; Export Finance and Insurance Corporation (EFIC) provides finance and insurance services to Australian enterprises investing in new projects overseas.

The Australian Customs Service (ACS) under the Attorney-General's portfolio is in charge of supervision of imports and exports, import and export statistics and anti-dumping investigations.

Two agencies under the Australian Government Department of Agriculture, Fisheries and Forestry (DAFF) are involved in the import and export inspection and quarantine. Biosecurity Australia is responsible for conducting IRAs, gathering scientists and technical specialists to develop a new quarantine policy, and provides scientific and technical advice and support to enhance Australia's access to international animal and plant related markets. Australian Quarantine and Inspection Service (AQIS) inspects incoming luggage, cargo, mail, animals and plants and their products, and provides inspection and certification for a range of exports.

Food Standards Australia New Zealand (FSANZ), established according to the 2002 amendment to Food Standards Australia New Zealand Act, is a bi-national independent statutory authority that develops food standards for composition, labeling and contaminants, including microbiological limits, that apply to all foods produced or imported for sale in Australia and New Zealand.

AQIS and FSANZ jointly run the Imported Food Inspection Scheme. While FSANZ develops food risk assessment policy, AQIS has operational responsibility for inspection and sampling.

The Foreign Investment Review Board under the Australian Government Department of Treasury examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Government on whether those proposals are suitable for approval under the Government's policy. At the same time, the Board provides guidance to foreign investors, but its functions are advisory only. 

Investment Australia, co-established by the Department of Industry, Tourism and Resources (ITR) and Austrade, is in charge of attracting and promoting foreign investment. Its mandate is to showcase the sound investment environment of Australia, promote the progress of large-scale investment projects, and provide consulting services for companies investing in Australia. So far, Investment Australia has 15 operations around the world.