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  3. Australia Free Trade Agreement (AUFTA)
  4. Australia Free Trade Agreement (AUFTA) Implementation Instructions

Australia Free Trade Agreement (AUFTA) Implementation Instructions


The U.S.-Australia Free Trade Agreement Implementation Act (Public Law 108-206, 118 Stat. 919 / H.R. 4759; 19 U.S.C. 3805 note) was signed into law on August 3, 2004.

Presidential Proclamation 7857, dated December 20, 2004 and published in the Federal Register on December 23, 2004, implements the U.S.-Australia Free Trade Agreement (AUFTA) for goods entered or withdrawn from warehouse for consumption on or after January 1, 2005.

The Proclamation incorporated, by reference, Publication 3722 of the United States International Trade Commission (USITC). Annex I of Publication 3722 of the USITC, modified the Harmonized Tariff Schedule of the United States (HTSUS) by adding General Note 28, the Australia Free Trade Agreement (AUFTA) and Subchapter XIII to Chapter 99, providing temporary AUFTA tariff rate quotas (TRQs).

Annex II of Publication 3722 modified the HTSUS to provide for immediate and staged tariff reductions. U.S. duties on all originating goods under the AUFTA will be eliminated effective January 1, 2022.

This document provides instruction on the filing and acceptance of claims for preferential treatment of goods made under the AUFTA. 

Rules of Origin

Section 203 of the AUFTA Implementation Act specifies the rules of origin used to determine if a good “originates” under the Agreement.  The HTSUS has been amended to include General Note 28, the rules of origin, definitions, and other related provisions.

The methodology to determine whether a good originates is similar to that found in our other post-NAFTA tariff-shift model free trade agreements such as the U.S.-Chile, U.S.-Singapore and U.S.-Korea Free Trade Agreements.  Like these agreements, the AUFTA is importer focused, meaning that the importer is responsible for demonstrating that goods originate.

Generally, under the AUFTA, a good is originating where:

  1. The good is wholly obtained or produced entirely in the territory of one or both of the Parties (no inputs from outside Australia or the U.S. anywhere in the supply chain); or
  2. The good is produced entirely in the territory of one or both of the Parties and
    1. Each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in General Note 28(n) (this is called a “tariff change rule” or “TCR”); or
    2. The good otherwise satisfies any applicable regional value content; or
    3. The good meets any other requirements specified in General Note 28(n), and all other applicable requirements are met; or
  3. The good is produced entirely in the territory of one or both of the Parties exclusively from originating materials; or
  4. The good otherwise qualifies as an originating good pursuant to the Agreement.

Regional Value Content (RVC) Calculation Methods

For most goods, the Agreement provides for two methods to calculate regional value content (RVC): (1) the build-up method, based on the value of originating materials; and (2) the build-down method, based on the value of non-originating materials. However, for certain automotive goods, the regional value content must be calculated using a third method, net cost. 

The following automotive goods require the net cost RVC method:

HTS General Description
8408.20     Diesel Engines for Vehicles
8407.31 through 8407.34 Engines
8409 Parts of Engines
8701 through 8708    Motor Vehicles, Chassis, Bodies and Parts
AUFTA Qualifying for Textiles and Apparel

De Minimis (Non-Textiles)

The AUFTA has a 10 percent de minimis provision for most goods, with exceptions for textiles in General Note (GN) 28(d) and other goods enumerated in GN 28(e)(ii). Under the non-textile de minimis rule, a good produced with non-originating materials that do not undergo the TCR specified in GN 28(n) may still originate if the value of all such non-originating materials does not exceed 10 percent of the adjusted value of the good. If the tariff-shift rule requires an RVC computation, then the value of de minimis materials is included in the total value of the non-originating materials.

Textile and Apparel

Textiles and apparel products must meet textile and apparel requirements to originate.

Below are some of the processes that enable basic textile products to originate.  Since these are only generalizations, you should look up your product in HTSUS General Note 28(n).

  1. Yarn—generally, the fiber must originate in Australia or the U.S. for the yarn to originate.
  2. Fabric—generally, the yarn must originate in Australia or the U.S. for the fabric to originate. However, cotton and man-made knit fabrics use more restrictive “fiber forward” rules.
  3. Apparel—generally, the yarn must originate in Australia or U.S. for the apparel to originate.

AUFTA Qualifying Based on a Tariff Preference Level (TPL)

The AUFTA does not have tariff preference levels (TPLs).

De Minimis (Textiles and Apparel Articles)

A textile or apparel good that would not originate because certain fibers or yarns, used in the component that determines the tariff classification of the good, do not undergo the TCR specified in General Note 28(n), may originate if the total weight of all such fibers or yarns, in that component, is not more than seven percent of the weight of that component.

Notwithstanding the preceding paragraph, a good containing elastomeric yarns, in the component that determines the tariff classification of the good, originates only if such yarns are wholly formed in the Australia or the U.S.

Textile Sets

Notwithstanding the TCR in General Note 28(n), textile or apparel goods classified under General Rule of Interpretation (GRI) 3 of the HTSUS, as goods put up in sets for retail sale, may originate as long as the non-originating goods do not exceed 10 percent of the adjusted value of the set.

Agricultural Tariff Rate Quotas (TRQ)

The AUFTA has 17 TRQs providing reduced duties on limited quantities of agricultural goods such as beef, cheese, dairy, avocados, peanuts, cotton, and tobacco. The TRQs are provided for in Chapter 99, Subchapter XIII, Notes 3 through 20, and the HTSUS numbers are 9913.02.05 through 9913.52.40. 

For TRQ importations, the Special Program Indicator (SPI) “AU” must preface the HTSUS 9913 on the CBP Form 7501 or equivalent electronic transmission at entry. The underlying Chapter 1-97 HTSUS number is also required. An export certificate is required to claim the in-quota rate for cheese and dairy products.  An export certificate is required to claim either the in-quota or over-quota beef rates.  The export certificate number is transmitted in the certificate field.

AUFTA TRQs are addressed in instructions issued in the form of quota book transmittals (QBTs) by CBP Quota Branch.  These instructions include the quota period, quota opening procedures, restraint limits, applicable HTSUS numbers, and any special processing instructions. A link to the Commodity Status Report with the weekly fill rate report, in addition to the QBTs is available at the AUFTA Commodity Status Report page.

Merchandise Processing Fees (MPF) Exemption

The AUFTA provides a Merchandise Processing Fee (MPF) exemption for originating goods. Unconditionally free goods with an AUFTA claim remain eligible for the MPF exemption and are subject to standard AUFTA verification requirements.

Certification and Other Information Requirements

The importer may make an AUFTA preference claim based on a written or electronic certification issued by the exporter or producer, or based on the importer’s knowledge, including a reasonable reliance on information in his possession. The importer must submit, upon request by CBP, the certification and other information substantiating the preference claim. The importer is responsible for providing the substantiating documentation to CBP upon request, including any information provided to CBP directly by the exporter or producer.

The certification need not be in a prescribed format, may be submitted electronically, and may cover a single importation or multiple importations of identical goods within a maximum 12-month period. The certification must include the data elements specified in Attachment A and may take the form of a certification of origin.

Irrespective of the source of the information submitted to CBP, the importer is responsible for exercising reasonable care and for its accuracy.

CBP will not request a certification or other information on importations valued at $2,500 or less, unless there is reason to believe that the importation is part of a series used to evade compliance or violates other U.S. laws or regulations.

Importers are required to maintain all records related to the importation for five years from the date of importation.

Origination Analysis and Certification when no Tariff Change Rule (TCR) Exists

AUFTA TCRs do not incorporate the 2012 or 2017 World Customs Organization (WCO) modifications. As such, goods assigned new HTSUS classification numbers in 2012 and 2017 will not find corresponding TCRs in GN 28(n).

  • Until revised TCRs are published, manufactures of affected goods should classify both the good and its materials in accordance with the 2011 or 2016 HTSUS when performing the TCR analysis.
  • Until revised TCRs are published, the certification should indicate both the current HTSUS number and the corresponding 2011 or 2016 HTSUS number used to perform the TCR analysis.

Correction of a False or Unsupported AUFTA Claim

An importer who has made a false or unsupported AUFTA claim must submit a correction within 30 days of discovery and pay all duties and the MPF. Penalties will not be assessed when the importer promptly and voluntarily corrects a claim and pays any duties owing.

Verification by CBP

Under the AUFTA, the importer is responsible for substantiating the preference claim.

Upon request by CBP, the importer shall provide the data elements or optional certification of origin. Importers should be prepared to substantiate the originating status of the goods with documentation such as, but not limited to, the following:

  • Flow charts, technical specifications and other documents explaining the manufacturing process;
  • An explanation of how the good meets the GN 28(b) rule of origin or the GN 28(n) TCR;
  • A bill of materials showing the classification number, origin, and cost (if the good is subject to a RVC calculation) of each material;
  • A certification of origin or affidavit for each originating material that would fail the prescribed TCR (if non-originating);
  • Purchase orders and proofs of payment to substantiate values;
  • Documentation pertaining to assists, inventory management methods, indirect materials, etc.;
  • Other documentation as necessary

Although the producer may elect to provide this documentation directly to CBP to protect business sensitive information, the importer remains responsible for its presentation.

CBP may verify the originating status of a good by means of a verification visit to the exporter or producer in accordance with procedures established by the Parties.

Issuance of a Determination

If the importer provides CBP with sufficient information to demonstrate that a good originates, CBP will notify the importer of the positive determination via a CBP Form 29, Notice of Action, Taken. The CBP Form 29 will include the HTSUS number, description of the good, and the rule of origin, as well as the legal authority/regulation.

If the importer fails to adequately substantiate the claim, CBP will issue a negative determination via a CBP Form 29, Proposed. The notice shall state why the documentation was insufficient or the good otherwise does not originate and allow an additional 20 days for the submission of documentation prior to the issuance of a CBP Form 29, Taken, rate advancing the good.

Impact of a Negative Determination on a Blanket Certification

A negative determination on a good covered by a blanket certification of origin may result in the denial of preference on all identical goods covered by that blanket.

Repeated False or Unsupported Claims (Pattern of Conduct)

Where repeated verifications reveal a pattern of false or unsupported representations of origination, CBP may suspend AUFTA preference on subsequently imported identical goods until the importer has adequately substantiated conformity with General Note 28.

Preference Claim at Entry Summary

The importer may make a claim for preferential tariff treatment at entry summary by prefacing the HTSUS number on the CBP Form 7501 or corresponding electronic transmission with the SPI “AU”.

Post-Importation Claims

The importer may make a post-importation claim on unliquidated entries in accordance with post summary correction (PSC) procedures, and on liquidated entries in accordance with 19 CFR 174 / 19 U.S.C. 1514.

Protest Rights

Importers may file a protest to contest a negative origin determination pursuant to 19 U.S.C 1514 within 180 days of liquidation of the entry. If approved, the protest will provide the importer with a refund of duties and MPF.

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