Free Trade Agreements
Summary of the U.S. - Australia Free Trade Agreement
Status: Entered into force on January 1, 2005.
**The information presented on this website is meant to serve as a guide.
Only the agreement text and the customs regulations issued to implement the agreement
are definitive. For complex issues or where interpretation is required, U.S. exporters should seek legal assistance or an advanced ruling from the customs administration in the country to which they are exporting.**
If you have any questions about this Agreement, please contact Maria D'Andrea-Yothers
at the U.S. Department of Commerce Office of Textiles and Apparel at 202-482-1550 or by email.
How U.S. Textile and Apparel Companies Benefit
Through duty elimination, the U.S.-Australia FTA allows U.S. textile and apparel exporters to be more price-competitive in the Australian market when competing with domestic suppliers and with third country suppliers that do not have duty benefits. Through the elimination of a variety of non-tariff barriers, the FTA further opens the Australian market to U.S. products. The FTA affords substantial benefits in a broad range of service sectors; enhances the protection of intellectual property; and facilitates U.S. investments through predictable access and a stable business environment. For the first time in many sectors, U.S. firms will be allowed to compete for Australia's government purchases on a nondiscriminatory basis.
Under the FTA, duties on qualifying U.S. textile and apparel products entering into Australia have been eliminated or will be eliminated through staged reductions over a set period of time, on or before January 1, 2015. All qualifying travel goods are duty-free and all qualifying footwear from Australia are duty-free except for the 17 specific rubber/fabric and plastic/protective footwear items listed below. Duties on footwear categorized in the following 17 footwear HS numbers will be phased-out in equal increments over a 10-year period, becoming duty-free on January 1, 2014: 6401.10.00, 6401.91.00, 6401.92.90, 6401.99.30, 6401.99.60, 6401.99.90, 6402.30.50, 6402.30.70, 6402.30.80, 6402.91.50, 6402.91.80, 6402.91.90, 6402.99.20, 6402.99.80, 6402.99.90, 6404.11.90 and 6404.19.20.
The duty-free status and/or staged tariff rates are listed by HS number in the Australia FTA tariff schedule. Each line item of the FTA tariff schedules is assigned a letter code that indicates the staging by which the duty for each product is reduced and ultimately eliminated. The staging categories listed below generally apply to textile, apparel, footwear and travel goods products.
- Category A: Duties were eliminated immediately upon the date that the FTA entered into force, i.e., January 1, 2005.
- Category B: Duties were eliminated in four equal annual stages beginning January 1, 2005, and products are duty-free effective January 1, 2008.
- Category C: Duties will be eliminated in eight equal annual stages beginning on January 1, 2005, and products are duty-free effective January 1, 2012.
- Category D: Duties will be eliminated in ten equal annual stages beginning on January 1, 2005, and products shall be duty-free effective January 1, 2014.
- Category E: Goods previously receiving duty-free treatment shall continue to receive duty-free treatment under the FTA.
- Category T1: Duties for products in this category were reduced to 3 percent on January 1, 2005, and products are duty-free effective January 1, 2010.
- Category Tx: Duties for products in this category were reduced to 5.5 percent on January 1, 2005. From January 1, 2010 through December 31, 2014 duties will be 3 percent. Beginning January 1, 2015 duties will be zero.
- Category T2: Duties for products in this category were reduced to 8 percent on January 1, 2005. From January 1, 2010 through December 31, 2014 duties will be 3 percent. Beginning January 1, 2015 duties will be zero.
- Category T3: Duties for products in this category were reduced to 15.5 percent on January 1, 2005. From January 1, 2010 through December 31, 2014 duties will be 8 percent. Beginning January 1, 2015 duties will be zero.
- Category L: Duties will be eliminated in equal annual stages beginning on January 1, 2005, and products are duty-free effective January 1, 2010.
The complete harmonized tariff schedule and more detailed information may be found on the Australian Customs Service Website--Click on "Working Tariff Page", use “Schedule 5" for preferential rates applied to US-origin goods under the US-Australia FTA. "Schedule 3" lists General (non-preferential) rates for products that do not qualify under the FTA.
The U.S.-Australia FTA is a reciprocal tariff elimination agreement, meaning that qualifying textile, apparel, footwear and travel goods products imported into the U.S. from Australia are subject to the same duty rates as those described above for qualifying U.S. exports to Australia. For importing goods from Australia to the United States, see the U.S. FTA tariff schedule.
Also see ITA's FTA Tariff Tool to determine current and future tariffs for qualifying products, as well as the date on which products are duty-free.
Qualifying Products/Rules of Origin
In order to take advantage of the duty reduction/elimination, products must qualify as "originating" goods under the terms of the Agreement. In general, the product must have sufficient U.S. or Australian content or processing to meet the criteria.
Rules of Origin for Textile and Apparel Products:
Goods containing only U.S. or Australian inputs qualify. Goods containing inputs from other countries still might qualify if they meet specific criteria set out in the rules of origin of the Agreement. Textile and apparel products are subject to specific rules, based on tariff classification (see Annex 4-A Textiles or Apparel Specific Rules of Origin). The rules for textile and apparel products are generally referred to as "yarn forward," which requires that the yarn production and all operations forward occur in either Australia or the United States, but the fiber may be from anywhere. There are some exceptions in the rules requiring "fiber forward," and some requiring "fabric forward." For more details, see Article 4.2: Rules of Origin and Related Matters in the Textiles and Apparel chapter.
If a good does not meet the rule of origin requirements as set out above, a textile or apparel product might be considered originating if all non-originating fibers and yarns make up less than a "de minimis" seven percent of the total weight of the product. Special provisions also apply to textile and apparel goods put up in sets for retail sale. To see more details on these provisions, see Article 4.2 of the Textiles and Apparel chapter.
Rules of Origin for Footwear:
There are two different rules of origin that cover footwear in the U.S.-Australia Free Trade Agreement:
- This Rule Applies to All Footwear Except for the 17 Specific Rubber/Fabric & Plastic/Protective Footwear Items Listed Under #2 below--A change to headings 6401 through 6405 from any heading outside that group, provided there is a regional value content of not less than 35 percent of the adjusted value of the product. There are no restrictions on the use of imported uppers. Also, the article must be substantially transformed such that it is a new or different article.
- This rule applies to the following 17 specific rubber/fabric and plastic/protective footwear items: 6401.10.00, 6401.91.00, 6401.92.90, 6401.99.30, 6401.99.60, 6401.99.90, 6402.30.50, 6402.30.70, 6402.30.80, 6402.91.50, 6402.91.80, 6402.91.90, 6402.99.20, 6402.99.80, 6402.99.90, 6404.11.90 and 6404.19.20--A change to headings 6401 through 6405 from any heading outside that group, except from subheading 6406.10, provided there is a regional value content of not less than 55 percent of the adjusted value of the product. Under this rule of origin, to qualify for the duty benefits, uppers can only be made in the United States or Australia.
Note: Textile footwear and footwear parts (HS numbers: 6405.20, 6406.10 and 6406.99) are covered under the Textile and Apparel rules of origin.
Rules of Origin for Non-Textile Travel Goods
Non-textile travel goods are subject to the following tariff shift rules of origin (see Annex 5-A-
Specific Rules of Origin):
- 4202.11 A change to subheading 4202.11 from any other chapter.
- 4202.19 - 4202.21 A change to subheading 4202.19 through 4202.21 from any other chapter.
- 4202.29 - 4202.31 A change to subheading 4202.29 through 4202.31 from any other chapter.
- 4202.39 - 4202.91 A change to subheading 4202.39 through 4202.91 from any other chapter.
- 4202.99 A change to subheading 4202.99 from any other chapter.
Note: Textile travel goods (HS numbers: 4202.12, 4202.22, 4202.32, and 4202.92) are covered under the Textile and Apparel rules of origin.
See the Australian Customs Service website for more information on how determinations of origin are made. Also, see their publication, A Guide to Determining the Origin of Goods Using the "Change in Tariff Classification Method". The Customs authority of Australia will issue "advance rulings" at the written request of the importer, exporter, or producer on questions of tariff classification, customs valuation, country of origin, and whether the good qualifies as originating under the FTA. Customs will provide written advice on origin matters through an Origin Advice (OA). The OA advises Australian importers, US producers and US exporters on specific issues relating to the origin of their goods for the purposes of determining eligibility for preferential duty rates for goods imported into Australia. Extensive information regarding the facts and circumstances of the inquiry will be required by the Customs authority prior to issuing such a ruling.
Australian Customs Service
Customs Information Centre
Canberra ACT 2600
Tel: 1300 363 263 (in Australia); +61 2 6275 6666 (outside Australia)
Fax: 61-3-9244-8200 or 61-2-6275-6999
For more information, see the U.S. Customs and Border Protection presentation--How do I Read Tariff Shift Rules.
For qualifying good, in which U.S.-Australia FTA duty benefits are requested, the importer must make a claim of preference. The Agreement does not require that the importer provide a certificate of origin in support of the claim of preference. However, it is the importer’s responsibility to declare in writing in the importation document that a good qualifies as originating. According to the Australian Customs Authority, when importing into Australia and claiming a preferential rate of customs duty for a U.S. originating good, the importer must use the preference code “U” in the preference indicator field on the import entry.
The importer may ask the exporter for information regarding why the goods qualify as "originating," to support a claim of preferential treatment. The information required should confirm that the goods are:
- wholly obtained or produced entirely in the United States; or
- 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 such non-originating materials undergo processing so that the good meets the requirements of the rules of origin in Annex 4-A to the Textiles and Apparel Chapter; or
- otherwise qualify as originating under the rules of origin in the U.S.-Australia FTA.
Australian Customs officials may verify a claim of preferential treatment up to five years after the date of importation. Therefore, it is recommended that exporters and importers maintain documents relating to the importation of the good and all supporting documentation for at least five years. Records should include information on:
- the purchase, cost and value of, and payment for, the good;
- the purchase, cost, and value of, and payment for, all materials, including indirect materials, used in the production of the goods (if value is relevant to the claim of origin); and
- the production of the good in the form in which the good was exported.
Although no particular format is specified in the Agreement, the Australian Customs Authority website provides sample statements for U.S. exporters/producers reference when generating documentation in support of a claim of preferential treatment. The statements should be completed by the U.S. manufacturer/producer of the goods or an entity that can demonstrate that the information contained in the statement has been obtained from the U.S. manufacturer/producer. It should be made clear that the sample statements are designed as a guide only and are not required.
It is also recommended that the U.S. exporter declare on the commercial invoice “the goods are of U.S. manufacture and comply with the USAFTA”.
For information on common export documents, such as transportation documents, export compliance documents, certificates of origin, certificates for shipments of specific goods, temporary shipment documents, and other export-related documents, see the Export.gov webpage on Common Export Documents.
Measures to Prevent Circumvention of the Agreement’s Rule of Origin
The U.S.-Australia FTA, as with other recent free trade agreements signed by the United States, contains additional measures to ensure that textile and apparel goods are not subject to fraud, such as transshipment. The parties agree that the exporting Party, at the request of the importer Party, shall conduct verification procedures to determine that a claim for origin of a textile and apparel good is accurate, allows the exchange of information between parties when suspicion occurs, and permits the importing party to suspend preferential tariff treatment to the textile and apparel good under suspicion or any textile and apparel good produced or exported by a specific company. For more information on this provision, please see Article 4.3: Customs Cooperation of the Textiles and Apparel chapter).
Measures to Prevent Serious Damage, or Actual Threat Thereof, to the Domestic Industry
Article 4.1 of the Agreement - Bilateral Emergency Actions provided that either the U.S. or Australia could take certain actions if imports of a textile or apparel goods benefiting from the reduction or elimination of duty under FTA are found to be causing serious damage to the domestic industry producing a like or directly competitive good. This provision expired on January 1, 2015.
Selling to the Government:
Under the U.S.-Australia FTA, U.S. suppliers are granted non-discriminatory rights to bid on contracts to supply Australian Government entities, including all major procuring entities and administrative and public bodies. Commonwealth (federal), state and territory government agencies are included. The Australian Government will eliminate its industry development programs, under which suppliers have had to meet various types of local content or local manufacturing requirements as conditions of their contracts. The Australian Government also will restrict its use of selective tendering, which will ensure that U.S. suppliers have a fair opportunity to compete for government contracts. For more information, see Chapter 15 - Government Procurement.
Intellectual Property Rights:
As a result of commitments it made in the FTA, Australia now provides copyright protection for the life of the author plus 70 years (where the term of protection is measured by a person's life), or 70 years (where the term of protection is not measured by a person’s life, i.e., for corporate works). It also clarified that the right to reproduce artistic works. Unlike for patents, registered trademarks, and designs, where registration is a precondition for protection, copyright is granted automatically where the substantive requirements are fulfilled.
The trademark and geographical indication provisions of the FTA established that trademarks must include marks in respect of goods and services, collective marks, and certification marks. Geographical indications are eligible for protection as marks. Australia is implementing its commitment to provide protection for marks and geographical indications, as well as to provide efficient and transparent procedures governing the application for protection of marks and geographical indications.
Under the patent provisions of the FTA, Australia confirmed that its law makes patents available for any invention, subject to limited exclusions, and confirms the availability of patents for new uses or methods of using a known product. To guard against arbitrary revocation, Australia limits the grounds for revoking a patent to those that would have justified a refusal to grant the patent. Fraud is also grounds for revocation. Under the FTA, Australia also committed to patent term adjustments to compensate patent owners for unreasonable delays in the issuance of patents.
Any claim for preferential treatment under the U.S.-Australia FTA is a declaration whose truthfulness may be verified or audited by Australian customs. If a preference has been claimed and the goods are found not to qualify, the duty benefit will be lost and penalties may be assessed. Declarations that are found after the fact to be deliberately false may result in significant penalties.