The US-Australia Free Trade Agreement (FTA) is a bilateral trade agreement between the United States and Australia that came into effect in 2005. The agreement aims to reduce barriers to trade and investment between the two countries, promote economic growth, and strengthen the economic relationship. Among the features of the agreement are the preference criteria, which determine how goods can qualify for preferential treatment under the agreement. In this article, we will delve into the preference criteria of the US-Australia Free Trade Agreement.
The preference criteria of the US-Australia Free Trade Agreement are designed to ensure that the benefits of the agreement accrue to the parties involved. It is important to note that not all products qualify for preferential treatment under the agreement. To qualify, products must meet certain criteria, such as being of origin from either the United States or Australia. The preference criteria include:
1. Tariff preference level (TPL)
Tariff preference levels are the amount of goods that can be imported into a country at a reduced or zero tariff rate. Under the US-Australia Free Trade Agreement, each party has a designated TPL for certain products. The TPL allows specific goods to enter a country at a reduced or zero tariff rate, making them more competitive.
2. Origin of goods
For goods to qualify for preferential treatment under the agreement, they must meet the origin criteria. The goods must be wholly obtained or produced in either the United States or Australia or undergo substantial transformation in either country.
3. Rules of origin
To determine the origin of goods, the agreement provides rules of origin that stipulate the percentage of value-added content that must be produced in either the United States or Australia. For example, if a product is made up of materials from different countries, the rules of origin help to identify the country that contributed the most significant part of the product`s value.
4. Customs procedures
Goods must be accompanied by a certificate of origin that confirms the eligibility for preferential treatment under the agreement. The certificate of origin must meet specific criteria and be completed accurately and honestly.
In summary, the preference criteria of the US-Australia Free Trade Agreement play a crucial role in determining which goods qualify for preferential treatment. Tariff preference levels, origin of goods, rules of origin, and customs procedures are some of the factors that determine whether a product is eligible for preferential treatment under the agreement. By understanding these preference criteria, businesses can take advantage of the trade agreement and strengthen their economic ties between the United States and Australia.