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ANSWERS TO QUESTIONS FROM THE GOVERNMENT OF CHINA
Report by the Secretariat WT/TPR/S/312
Page 12, Para 1.1
The economy has now entered a transition period towards mining production and export as well as to broader-based drivers of activity in non-resources sectors.
Question 1
Please specify the non-resources sectors that the government aims to promote in this economic restructuring?
Answer
The Australian Government is aware of the challenges faced by the economy as it continues the transition to broader based non resources drivers of growth over the short-to-medium term.
While the Australian Government does not aim to promote any individual sector of the economy, it does, however, aim to facilitate structural adjustment through policies that enhance the flexibility and competitiveness of the economy more broadly.
Page 14, Para 1.2
A seemingly overvalued exchange rate, i.e. above most estimates of its fundamental value, presents, to some extent, a source of uncertainty for both economic activity and inflation; it remains subject to a number of downside risks, including changes in prices of key commodities exports, as well as future relative international interest rate movements. Tough reform seems required to avoid falling living standards. The main external risks include the pace of growth in China over the medium term, commodity price developments, and surges in global financial market volatility.
Questions 2 & 3
• Has the overvalued exchange rate affected the overall economy and trading environment of Australia? Please give examples.
• What measures has Australia taken or will it take to deal with or avoid problems arising from the overvalued exchange rate?
Answers
A stronger dollar helped the economy adjust to rising commodity prices during the mining investment boom without sparking inflationary pressures, just as a weaker dollar will assist the transition to growth in other sectors as commodity prices and resources investment ease from recent highs.
A high Australian dollar presents challenges for Australian businesses exposed to international competition. However, a high dollar also brings benefits for businesses and households. Australian businesses can purchase cheaper imported intermediate inputs, and take the opportunity to invest in imported machinery and equipment to lift future productivity and competitiveness. Benefits also flow to consumers, who can purchase cheaper imported goods and services.
Since it was floated in 1983, the value of the Australian dollar has been determined by market factors. The floating exchange rate acts as a shock absorber for the Australian economy, helping to moderate changes in the global economy and facilitating a smoother course for the Australian economy when patterns of production and growth change at home.
The most important contribution the Government can make is to run disciplined and prudent fiscal policy, to relieve upward pressure on interest rates and the exchange rate.
Page 19, Para 1.12
To ease the tax burden on businesses and on SMEs in particular, simplified and more generous amortisation rules allowing "carry back" losses to offset past taxable income have been in place since July 2012. According to the OECD, the tax structure is relatively inefficient; the general consumption tax burden is relatively low (below OECD average) while headline corporate income tax is comparatively high (above OECD average) for a capital-importing country like Australia (section 3.4.1.2).
Question 4
How will Australia further relieve the tax burden of SMEs? What measures will be taken to better safeguard the interests and reduce the tax burden of foreign-invested SMEs in Australia?
Answer
Australia is keenly aware of the burden that the tax system places on small and medium enterprises, particularly with respect to compliance and complexity. The Government's objective is to achieve a better tax system that delivers taxes that are lower, simpler and fairer, including for SMEs. To achieve this we have commenced a discussion and review process which will ultimately deliver a white paper on tax reform. This process will promote a community-wide conversation on how we can create a tax system that supports higher economic growth and living standards, improves our international competiveness and adjusts to a changing economy and new opportunities."
Page 26, Para 2.3
However, higher screening thresholds for non-sensitive sectors are increasingly being incorporated into RTAs. As at the time of Australia's previous Review, proposed investments are almost always allowed, but conditions are often attached, particularly in the real estate sector.
Questions 5 & 6
• What are the departments involved in the review of foreign investment in Australia?
• Which RTAs have incorporated "higher screening threshold"? Specifically which investment areas have been covered?
Answers
The Foreign Investment Review Board is a non-statutory body to advise the Treasurer on Australia's Foreign Investment Policy and its administration. The Board's functions are advisory only. The Treasury provides secretariat services to the Board and is responsible for the day to day administration of the arrangements. As part of the assessment process, Treasury consults with relevant government agencies when reviewing foreign investment proposals.
Responsibility for making decisions rests with the Treasurer.
Australia's regime for foreign investment screening with Free Trade Agreement (FTA) partners has been developed in the context of each individual negotiation.
The general screening thresholds are listed below:
• Acquisitions of 15 per cent or more in Australian businesses valued above $252 million;
• Acquisitions of rural land where the cumulative value of rural land that the foreign person already holds exceeds, or immediately following the proposed acquisition is likely to exceed, $15 million;
• All direct investments, establishment of new businesses and land acquisitions by foreign government investors.
• The FTAs that are currently in force where Australia has made investment commitments include:
• Australia New Zealand Closer Economic Relations 1983
• Singapore Australia Free Trade Agreement 2003
• Thailand Australia Free Trade Agreement 2005
• Australia United States Free Trade Agreement 2005
• Australia Chile Free Trade Agreement 2009
• Korea Australia Free Trade Agreement 2014
• Japan Australia Economic Partnership 2015
The thresholds listed below apply instead of the general screening thresholds above.
|Country |Foreign investment screening regime commitments |
|Chile |$1,094 million (indexed annually) for most business acquisitions and developed commercial real estate (including|
| |agriculture). $252 million for business acquisitions in prescribed sensitive sectors. |
|Japan |$1,094 million (indexed annually) for most business acquisitions and developed commercial real estate. |
| |$252 million for business acquisitions in prescribed sensitive sectors. $15 million (cumulative) threshold for |
| |investments in agricultural land and the provision has been made to apply a $53 million threshold for |
| |agribusiness investments. |
|Korea |$1,094 million (indexed annually) for most business acquisitions and developed commercial real estate. |
| |$252 million for business acquisitions in prescribed sensitive sectors. $15 million (cumulative) threshold for |
| |investments in agricultural land and the provision has been made to apply a $53 million threshold for |
| |agribusiness investments. |
|New Zealand |$1,094 million (indexed annually) for most business acquisitions and developed commercial real estate (including|
| |agriculture). $252 million for business acquisitions in prescribed sensitive sectors. |
|Singapore |$50 million for primary production businesses. |
|Thailand |$50 million for primary production businesses. |
|United States |$1,094 million (indexed annually) for most business acquisitions and developed commercial real estate (including|
| |agriculture). $252 million for business acquisitions in prescribed sensitive sectors. |
Note: China will receive the same thresholds as Japan and Korea when the China-Australia FTA enters into force.
Page 28, Para 2.12
Current procedures do not provide for an independent and transparent analysis of the final text of a proposed agreement after negotiation but before signing. Although it is not a constitutional requirement, treaties are in practice put before Parliament's Joint Standing Committee on Treaties post signature, but pre-ratification, allowing for review by this body.…… A tabled treaty is accompanied by a National Interest Analysis (NIA) and a Regulatory Impact Statement (RIS), if it affects business or restricts competition.
Questions 7 & 8
• A trade (investment) agreement is subject to the review of Australian Parliament and accompanied by the NIA and the RIS post-signature but pre-ratification. How will the problems identified in this process be addressed, if any?
• Does Australia have any plan to adjust and modify the current procedures to make it more independent and transparent?
Answers
Committees of the Australian Parliament have oversight and the ability to review all of Australia's FTAs, and to report to the Australian Parliament including prior to entry into force. The Government thoroughly considers all findings and recommendations of the Committees, in light of the public interest, and may seek to rectify any concerns that may be identified prior to ratification. Australia's FTAs can be further amended, and reviewed as they are implemented including through "built-in agendas" in many cases. The Government continues to consult closely on Australia's FTAs, and as part of this ongoing engagement is always looking at ways to make the current procedures more transparent, without compromising the confidence required in negotiating FTAs.
Page 32, Para 2.28
Concerns have been expressed by the business community about the relatively high cost of labour in Australia and the need for a more flexible approach to granting visas so as to engage skilled and semi-skilled foreign workers where needed. Concerns have also been raised regarding high levels of regulatory burden, particularly in the areas of industrial relations, employment, occupational health and safety, and compliance with various tax payment requirements. Transport costs and shortcomings have also been identified as an impediment to trade and the operational efficiency of businesses.
Question 9, 10 & 11
• What specific measures has the Australian Government taken to introduce skilled foreign workers? How the effective are these measures? In addition to safety factors, what elements are considered by Australia in granting visas to skilled workers?
• What measures has Australia taken or will it take to reduce the regulatory burden that is prevalent in the country?
• What measures has Australia taken or will it take to improve transport conditions in Australia?
Answers
The Temporary Work (Skilled) visa (subclass 457) programme is Australia's temporary skilled migration programme. The programme allows employers to address labour shortages by enabling businesses to sponsor skilled workers from outside Australia when an equivalently skilled and experienced Australian cannot be found. It is uncapped, demand driven and designed to be responsive to immediate business needs. The Australian Government is committed to ensuring the 457 programme remains flexible and responsive to the economic cycle in line with employer demand.
Businesses operating in Australia can sponsor skilled overseas employees under the 457 programme through:
• the standard business sponsorship arrangement; or
• a labour agreement, resource sector labour agreement, designated area migration agreement, enterprise migration agreement.
International businesses that have a contractual obligation to perform work for, or provide services to, an Australian business, can sponsor skilled overseas employees under the 457 programme through an overseas business sponsorship.
To be eligible for a 457 visa, workers must meet visa application requirements, such as demonstrating a good level of English proficiency and holding the requisite skills necessary to perform the nominated occupation.
Further information is available from the Department of Immigration and Border Protection's website at: .
While well designed and targeted regulation can contribute to economic growth and minimise risks for the community, removing unnecessary regulation can help increase Australia's productivity.
To reduce the stock of existing regulations, the Government has a red tape reduction target of $1 billion per year for businesses, individuals and community organisations. Since the 2013 election, the Government has announced more than $2.45 billion in red tape savings. To stem the flow of new regulation, all regulatory proposals must be accompanied by a Regulation Impact Statement and regulatory burden costing, and any burden imposed by a new regulation must be offset.
The way regulators engage with people is just as important as what the regulations themselves impose. To review regulator behaviour, the Government has developed a Regulator Performance Framework that will apply from 1 July 2015.
In relation to the issues raised in the pre-amble to this question, the recent Productivity Commission inquiry into Public Infrastructure (the Inquiry) found that there was limited evidence of large cost differentials in infrastructure between Australia and comparable countries. In particular, the Inquiry concluded that skills shortages were unlikely to be a major cost driver for large infrastructure projects in Australia. However, the Inquiry did identify a need for reforms to achieve better labour and construction markets.
In response to these issues, the Australian Government has committed to acting to improve workplace relations in the construction industry through the re-establishment of the Australian Building and Construction Commission, a specialist regulator with increased powers to address unlawful industrial action, unlawful picketing, coercion and discrimination.
Additionally, the Australian Government has undertaken reforms to the Australian Government Building and Construction OHS Accreditation Scheme (the Scheme), which came into effect on 1 January 2015. These changes to the Scheme are designed to cut regulatory burdens on builders, boost competition and ensure that safety standards are enhanced. Arrangements now exist under the scheme that allow both international and domestic builders who have not yet been accredited under the Scheme to participate in Australian Government-funded construction, if participating in joint ventures with accredited builders. The Federal Safety Commissioner, who is tasked with the enforcement of the Scheme, will also undertake consultations to identify further opportunities to improve access for international firms in order to increase competition and utilisation of international expertise, while ensuring competitive neutrality for domestic firms.
Australia's large land mass and dispersed population centres mean that transportation costs can be significant. The Australian Government is committed to improving the productivity of the transport sector, including though: investments - a record AUD $50 billion investment in infrastructure and better project prioritisation and selection, supported by a national infrastructure audit and 15-year plan; deregulation – removal of inefficient and unnecessary transport regulations, and a nationally consistent approach for rail, maritime and heavy vehicle regulation; coastal shipping - review of options to improve the competitiveness and efficiency of domestic shipping; and foreign investment - the Government is actively seeking to attract and retain foreign investment for infrastructure to build Australia's infrastructure capabilities.
Page 32, Para 2.31
Australia has also implemented reforms to its Regulatory Impact Analysis (RIA) Framework in order to limit the flow of new regulations. For several years, policy-makers have been required under this Framework to draw up a Regulation Impact Statement (RIS) before a decision is taken either to introduce or abolish a regulation. In March 2014, the Commonwealth Government made changes to RIS requirements designed to support the Government's red tape reduction target (see above). Key changes introduced were that all Cabinet Submissions now require a RIS and all RISs must quantify the regulatory costs to business, community organizations and/or individuals of new regulations and identify offsetting regulatory costs. Agencies are encouraged to issue an early RIS assessment to assist consultation. The Office of Best Practice Regulation (OBPR) is charged with administering the RIA requirements.
Question 12
According to the new RIS requirements, all RIS must quantify the regulatory costs to business, community organizations and individuals before deciding on introducing or abolishing a regulation. Please introduce the main contents of the RIS and its effects in the society?
Answer
The content of a RIS depends on the type of Regulation Impact Statement (RIS) prepared.
A long form RIS contains answers to all seven RIS questions, analysis of genuine and practical policy options, analysis of the likely regulatory impact, evidence of appropriate public consultation, a formal cost-benefit analysis; and a detailed presentation of regulatory costings and offsets.
A standard form RIS contains answers to all seven RIS questions, analysis of genuine and practical policy options, analysis of the likely regulatory impact, evidence of appropriate public consultation, and a detailed presentation of regulatory costings and offsets.
A short form RIS contains a summary of the proposed policy and any options considered, an overview of the likely impacts and an outline of regulatory costs and cost offsets.
The seven RIS questions are:
• What is the policy problem you are trying to solve?
• Why is government action needed?
• What policy options are you considering?
• What is the likely net benefit of each option?
• Who will you consult about these options and how will you consult them?
• What is the best option from those you have considered?
• How will you implement and evaluate your chosen option?
Further information on the content of RISs can be obtained at ris..au
The Australian Government Guide to Regulation sets out ten principles for Australian Government policy makers. The first principle is that regulation should not be the default option for policy makers: the policy option offering the greatest net benefit should always be the recommended option. The second principle is that regulation should only be imposed when it can be shown to offer an overall net benefit.
Page 33, Para 2.33
Under the Australian Jobs Act 2013 (which entered into force on 27 December 2013) and its accompanying Australian Jobs (Australian Industry Participation) Rule 2014, proponents of major projects in Australia with a capital expenditure of $A 500 million or more, are required to prepare and implement an Australian Industry Participation (AIP) plan. This should outline how such projects will provide full, fair and reasonable opportunities for Australian industry to supply goods and services
Question 13
According to Australian Jobs Act 2013 and its accompanying Rule 2014, AIP needs to be provided for major investment projects. What impact will this policy have on the investment of foreign companies?
Answer
The Australian Industry Participation plan requirement is not expected to have any impact on foreign investment.
Page 35, Para 2.39
In its report, released in November 2014, the Committee noted shortcomings both in terms of data collection and monitoring of compliance with policy requirements. It recommended that the current framework for foreign investment in residential real estate should be maintained and supplemented by new data collection, audit, compliance, and enforcement processes, financed by administrative fees.
Question 14
Has Australia adopted the recommendations of the Committee and begun to take relevant measures?
Answer
The Australian Government has recently consulted on a number of changes to improve compliance and enforcement of the rules for foreign investment in residential real estate and agricultural investments as part of the response to the recommendations of the House of Representatives Standing Committee on Economics report.
The proposals include creating a specialised compliance and enforcement area in the Australian Taxation Office to identify and investigate breaches of the foreign investment rules, new civil and increased criminal penalties for foreign investors and third parties who breach the foreign investment rules, introducing an application fee on all foreign investment proposals to fund the strengthened foreign investment framework, increased scrutiny around foreign investment in agriculture, increased transparency on the levels of foreign ownership in Australia through a comprehensive land register and a more modern and simpler foreign investment framework.
The Government will move quickly to implement the reforms, taking into account the views provided through the consultation process.
Page 37, Para 3.2
In line with long-standing, though decreasing, sectoral support to textiles, clothing and footwear (TCF) and passenger motor vehicles (PMV) products, the applied MFN tariff rates on the latter remain considerably higher than the average.
Question 15
Does Australia plan to reduce the level of high tariff rates for related products?
Answer
Australia's tariff rates are already very low with more than 99% of tariff lines having a Most Favoured Nation rate between 0% and 5%. In addition, over 47% of tariff lines are duty free. In 2015 Australia reduced tariffs on textiles, clothing and footwear to 5%.
Page 38, Para 3.6
Efforts to streamline state participation in areas where Commonwealth Government involvement is necessary included "bonus" payments to state governments that sell public assets and use the proceeds for infrastructure projects.
Question 16
What is the coverage of the "bonus" payments?
Answer
The incentive payments are made from the Commonwealth Government to state/territory governments. States/territories are eligible for an incentive payment if they agree to sell an existing state-owned asset and invest the proceeds into additional infrastructure. This is no limit on the range of asset sales, but the additional infrastructure must meet specified criteria. This scheme is referred to as the "Asset Recycling Initiative".
Further details on the Initiative is available from: (without%20Att%20A).pdf.
Page 38, Para 3.8
The Integrated Cargo System (ICS), a single window for the vast majority of international trade related transactions, continues to provide an interface for industry to connect electronically for coordinated customs and quarantine clearance.
Question 17
Please introduce the basic processes and implementing effects of the coordinated customs and quarantine clearance in Australia.
Answer
The Integrated Cargo System (ICS) is an integrated software application that replaced previous import and export reporting and processing procedures with a single, integrated IT system. It is the only method of electronically reporting the legitimate movement of goods across Australia's borders. To communicate with the Australian Customs and Border Protection Service (ACBPS) via the ICS, a digital certificate is required.
ACBPS uses the ICS for the efficient management of all import and export functions including:
• the collection of duties
• effective cargo risk assessment
• to establish and maintain a comprehensive register of client information and roles
• to track the movement of cargo, and
• to interact with clients and other agencies both Government and non-Government.
For example, an import declaration contains information that relates to the goods being imported, including:
• importer/broker details
• value of the goods
• transport details of how the goods arrived in Australia
• tariff classification of the goods, including instrument, dumping, preference and valuation details
• additional tax associated with the goods
• quarantine processing information, including types/codes, permits, container details, document and package details
• community protection information associated with the goods
• lodgement declarations.
In order for any shipment to receive a CLEAR status from the ICS, linking fields must be reported correctly and consistently between documents relating to that line of cargo (e.g. impending arrival, cargo report, import declaration). Goods are available to importers once payment of applicable duty, taxes and charges has been made and an Authority to Deal (ATD) has been issued. An ATD is generated by the ICS when the status of both the import declaration and the cargo report are set to CLEAR by Quarantine and ACBPS.
Please refer to the diagram on page 6 of Import Declarations Overview: . It shows the process flow for saving, submitting and lodging an import declaration
Page 42, Para 3.18
Tariff escalation is a potential impediment to the efficient allocation of resources; it also constitutes an obstacle to local processing of primary and semi-finished goods produced in exporting countries, thereby impeding the industrialization of these developing countries whose exports are not eligible for preferential duty free access to Australia's market.
Question 18
Will the implementation of Australian tariff escalation result in discrimination against developing countries? If yes, what measures will be taken to eliminate the possible discrimination and impacts?
Answer
Australia's tariff rates are already very low with more than 99% of tariff lines having a Most Favoured Nation rate between 0% and 5%. Given the low level of tariffs, any differences that exist between tariff rates are unlikely to discriminate against developing countries.
Page 48, Para 3.33
In April 2013, the Australian Customs and Border Protection Service (Customs) issued an update of its Transfer Pricing Policy Practice Statement. This Statement outlines Customs policies in relation to transfer pricing and provides procedural guidelines for applicants seeking a prospective transfer pricing valuation advice (VA), including advice on how importers can support their transfer pricing valuation advice applications and demonstrate that related party dealings have not influenced the price of imported goods.
Question 19
Please elaborate on the relevant stipulations and specific practices of the Australian Customs regarding transfer pricing. Has the Australian Customs established a mechanism for coordination with enterprises and domestic tax authorities, so as to promptly and effectively solve the related problems caused by transfer pricing arrangements?
Answer
Australian Customs and Border Protection Service have a mechanism in place that allows for the exchange of information between the Australian Customs and Border Protection Service and the Australian Tax Office, and vice-versa.
Page 48, Para 3.35
According to a 2014 Productivity Commission report, the most frequent rules for determining origin are now based on a CTC test but there is considerable variability in how such rules are combined with other product-specific/individual rules and how they are applied. The range and variable application of rules adds to the compliance costs for firms engaging in trade. Recent studies suggest that the costs associated with these requirements could be as high as 25% of the value of goods traded within ASEAN. It appears that the authorities' views in this area differ from the findings of the Productivity Commission report.
Question 20
According to the Report, both the range and variable application of rules increase the compliance costs for firms. Please provide more details on the calculation of the ratio of the legal business costs of a firm complying with the Rules of Origin vs. the trade value?
Answer
The Commission did not calculate the 25% figure referred to in paragraph 48. The Commission sourced it for its 2014 report (Trade and Assistance Review 2-12 13, p.118) from:
APEC (Asia Pacific Economic Cooperation) 2009, APEC Elements for Simplifying Customs Documents and Procedures Relating to Rules of Origin, .
(accessed 11 November 2013).
Page 57, Para 3.57
All dealings involving release (DIR) of a GMO into the environment must be licensed by the Gene Technology Regulator, an independent statutory office holder, unless otherwise authorized under the Act. All licence applications are subject to case by case scientific risk assessment and risk management.
Questions 21 & 22
• Please introduce in detail the requirement of licensing application for releasing GMO (Genetically modified organisms) into the environment. For instance, which department is in charge of issuance of the licenses? Are there any opportunities available for the public to make comments? What materials and processes are required for licensing application?
• What methods has Australia adopted to assess the licensing application? Who takes the lead in assessing the environmental risks for releasing GMO into the environment?
Answers
Requirements for licence applications and a description of the assessment process for releasing GMOs into the environment are outlined on the Office of the Gene Technology Regulator (OGTR) website at .
Application forms detail information requirements and the Regulator may seek additional information necessary to inform the assessment. Licences are issued by the Gene Technology Regulator (the Regulator), the independent decision maker under the Gene Technology Act 2000. The Regulator is supported by the OGTR (with staff provided by the Health Department).
In considering a licence application, the Regulator must prepare a risk assessment and risk management plan (RARMP) and, as part of this process, written submissions are invited from the public.
The Australian Gene Technology Regulations 2001 list matters to be taken into account for risk assessment. A full list is found at Reg 10(1)(b) (Risk Assessment – Matters to be taken into account) and includes the potential of a GMO to adversely affect ecosystems, to transfer genetic material to other organisms, or to be toxic to other organisms.
A key document that informs the approach adopted by the Regulator in undertaking risk analyses, and arriving at risk management decisions and licence conditions, is the Risk Analysis Framework (RAF). The risk assessment approach is detailed in RARMPs, and provides case by case assessment with focus on credible pathways to harm from the genetic modification. The RAF was developed within the OGTR and is available at the OGTR website: .
The Risk Analysis Framework is most closely aligned with AS/NZS ISO 31000:2009 Risk Management—Principles and guidelines. However, a number of relevant international standards were also considered; thus, the RAF is consistent with OECD guidance and Annex III of the Cartagena Protocol on Biosafety.
In addition, Australia's post-border weed risk assessment methodology (PBWRM) is a valuable tool used in risk assessment of GM plants conducted by the Regulator. Australia's PBWRM has also been adopted for use by the FAO .
The Regulator has the lead role in assessing environmental risks for releasing GMOs in the environment. The Regulator must also seek advice from the Environment Minister, other government bodies and experts, and the final risk assessment must take this advice into account. Other aspects of environmental risk assessment may be considered by the Department of Agriculture (biosecurity/quarantine) or the Australian Pesticides and Veterinary Medicines Authority (safety and efficacy of agricultural and veterinary chemicals).
Page 58, Para 3.59
During the review period, Australia conducted science-based risk assessments, including IRAs, under a regulated process involving a specified timeframe for completion of an assessment (within either 24 months or 30 months).
Question 23
Please elaborate on the concrete basis, methods and processes for import risk assessment in the context of specific products, for the sake of transparency and predictability of the system.
Answer
The Australian Government Department of Agriculture undertakes a range of risk assessments in response to market access requests from other countries and from Australian businesses to import animals, plants and/or other goods into Australia, where the plants, animal or goods have not been imported into Australia before, or have not been imported into Australia from a particular country or region.
The department uses risk assessments as a tool to assist in considering the level of biosecurity risk that may be associated with the importation of a good, and to identify ways to manage these risks.
There are two types of risk assessments used by the department; an import risk analysis (IRA) which is conducted through a regulated process provided for in the Quarantine Regulations 2000 and non-regulated risk assessments (such as scientific reviews of existing policy or technical advice from within the department).
In prioritising import risk assessments, the department takes the following criteria into account (where relevant):
• National interest
• Alignment with the department's objectives
• Expected benefits
• Challenges
• Practical considerations.
The time taken to initiate a risk assessment is dependent upon the assignment of a priority based on these criteria.
A risk assessment which does not meet the criteria for an IRA is undertaken as a non-regulated risk assessment. The department undertakes a range of non-regulated risk assessments when assessing proposals to import animals, plants or other goods into Australia or reviewing import conditions for goods already entering Australia.
Risk assessments are undertaken through an administrative process and must also meet Australia's international obligations. The department has separate, formally agreed processes for undertaking weed risk assessments and biological control agent risk assessments, both of which are available on the department's website .
The department uses a formal methodology to assess biosecurity risk. The method used by Australia follows internationally agreed principles outlined by the SPS Agreement and the OIE and IPPC codes and standards relating to import and pest risk analyses.
Page 65, Para 3.85
During the review period, Australia has not made any notifications of TRIMs under the WTO Agreement on Trade-Related Investment Measures, thereby indicating the absence of such measures.
Question 24
Does Australia have any plan to improve the relevant measures?
Answer
Australia notifies of relevant measures under the WTO Agreement on Trade-Related Investment Measures where necessary.
Page 68, Para 3.98
The level of official support depends on the degree of local/national content ("Australian activity" or "Australian content") involved: export contracts with over 50% local content may receive support for up to 85% of the eligible contract value (ECV) (sum of the imported components into the buyer's country, i.e. Australian plus third country activities plus the local cost which must be the lower of 30% of ECV or the local cost amount).
Question 25
The proportion of local/national content is closely connected to the ceiling of EFIC support. In determining the proportion of local/national content, are there any specific criteria to judge "Australia activity" and "Australia content" as mentioned in this Para? If yes, which organization is authorized to make the judgment, EFIC or a third party?
Answer
The amount of export finance EFIC will consider for a contract reflects the value of the Australian content in that contract plus any foreign content that EFIC also deems eligible for finance. The following is used as a guide only as EFIC has the discretion to vary the policy according to the circumstances.
Australian content represents the export from Australia of goods or services that are produced or manufactured wholly or substantially in Australia.
EFIC will consider support for foreign goods and services if;
• they are essential to the contract;
• they cannot be sourced competitively within Australia; and
• it is impractical to finance the foreign goods and services elsewhere.
The foreign goods and services must usually be incorporated into the contract in Australia.
In cases where an Australian export has significant foreign content, it is usual for the Export Credit Agency of the country from where the foreign content is sourced to provide finance or insurance for that portion of the transaction.
Page 75, Para 3.118
The Australian Competition and Consumer Commission (ACCC), an independent statutory authority, is charged, inter alia, with administering the Competition and Consumer Act 2010 (CCA) (section 3.4.3.1.2); the ACCC and the Australian Energy Regulator (AER) are responsible for regulating the electricity and gas, and the telecommunications and transport sectors, respectively.
Question 26
How does ACCC coordinate and cooperate with competent authorities in the specific antitrust cases occurring in the relevant industries?
Answer
The AER does not have responsibility for anti-trust enforcement. Coordination and cooperation with other competent authorities on anti-trust matters is conducted by the ACCC.
The ACCC may seek assistance from the AER in understanding the relevant regulatory framework and how that framework impacts on market structure or competition.
Page 76, Para 3.121
The CCA covers virtually all business activities, including government business; nevertheless, a long list of special regimes and exemptions derogating the CCA is maintained.
Question 27
What regulations regarding exclusion and exception, block exemption and individual exemption has Australia promulgated? What considerations are behind their introduction? Is the parallel exemption principle applicable between the CCA and local antitrust laws?
Answer
Subsection 51(1) of the Competition and Consumer Act 2010 provides that all jurisdictions can exempt specific conduct from competition laws by way of regulations or legislation. The Acts and Regulations that contain these exemptions are listed on the ACCC's website. ACCC 2015, Exceptions under commonwealth, state & territory legislation, viewed 10 April 2015, .
Conduct exempt from competition laws by way of regulations or legislation is subject to a range of conditions, and must go through a particular procedure.
The Harper Review has recommended that restrictions in Australia on parallel imports should be removed unless it can be shown that: the benefits of the restrictions to the community as a whole outweigh the costs; and the objectives of the restrictions can only be achieved by restricting competition.
The Government is currently considering the 56 recommendations in the Final Report and undertaking public consultation on the recommendations before announcing next steps. This input will inform the Government's response to the report later in the year.
Page 77, Para 3.125
Certain prohibited anti-competitive practices in industries and professions can be authorized when public benefits are deemed to exceed detriments.
Question 28
What is the connotation of public benefits? What specific criteria are cited by the competition authorities in determining whether the public benefits exceed detriments?
Answer
The authorisation provisions of the CCA recognise that in certain circumstances arrangements which restrict competition can nonetheless be in the public interest, for example, where there is market failure or impediments to competition and addressing that market failure or those impediments can encourage economic efficiency and thus enhance welfare.
The ACCC's Authorisation Guidelines explain the legal and analytical framework.
What constitutes a public benefit or public detriment is not defined in the CCA and the ACCC adopts a broad approach based on the particular circumstances relevant to the application. A public consultation process informs the ACCC's decision to grant or dismiss authorisation, and the ACCC utilises the principles of economic analysis in its assessment.
Page 77, Para 3.127
In 2013/14, the ACCC considered 297 (377 in 2010/11) matters for compliance with the merger and acquisitions section of the CCA. Of these, 242 (236 in 2010/11) were assessed as not requiring a public review (pre-assessed).The ACCC held a public or confidential review of 55 mergers (141 in 2010/11).
Question 29
Does the "public review" refer to a detailed review of the case? What are the conditions and procedures for launching such a review? Under what circumstances will the review be or not be open to the public?
Answer
Acquisitions that are in the public domain and that the ACCC has determined cannot be pre-assessed undergo a public merger review. Of the mergers that undergo a public review, a proportion of these may proceed to the ACCC publishing a Statement of Issues where the ACCC has come to a preliminary view that a merger raises competition concerns that require further investigation or a more detailed review.
For each merger, the ACCC will make an initial assessment based on the information available to determine whether a public review will be required. Where the ACCC is satisfied, based on the information provided, that there is a low risk of a merger substantially lessening competition, the ACCC may decide that it is not necessary to conduct a public review of that merger. These mergers are described as being 'pre-assessed'.
Both public and confidential mergers can be pre-assessed and are done so on the basis of the information provided by the parties and other information the ACCC has before it.
A decision to pre-assess a merger without market inquiries is not taken lightly and is dependent on the ACCC's familiarity with the relevant industry and the adequacy of the information provided by the merger parties to support such a finding, including supporting evidence. For example, claims of ease of entry are given greater weight when supported by examples of recent new entry or expansion.
Page 78, Para 3.128
In 2012/13, six cartel litigations involving air cargo companies and a cable supplier were concluded securing over $A 41 million in fines; litigation was under way in four alleged cartel conduct cases (air cargo, cable, forklift gas, wire harnesses), two alleged misuse of market power (flyash, dynamic currency conversion services), and two alleged anti-competitive agreements cases.
Question 30
What are the respective illegal decision principles for a cartel and a misuse of market power in the CCA?
Answer
The CCA not only prohibits cartels under civil law, but makes it a criminal offence for businesses and individuals to participate in a cartel. Unlawful cartel conduct under the CCA includes:
• price fixing, when competitors agree on a pricing structure rather than competing against each other
• sharing markets, when competitors agree to divide a market so participants are sheltered from competition
• rigging bids, when suppliers communicate before lodging their bids and agree among themselves who will win and at what price
• controlling the output or limiting the amount of goods and services available to buyers.
Misuse of market power occurs where a business with a substantial degree of power in a market uses this power for the purpose of eliminating or substantially damaging a competitor or to prevent a business from entering into a market.
Page 79, Para 3.131
Competition (and consumer protection) legislation is contained in the Competition and Consumer Act 2010 (CCA)……As indicated, the ACCC conducts formal price surveillance on aviation and airport services and facilities, fuel, electricity, telecommunications, postal services, and container stevedoring.
Question 31
Please detail the price regulatory approach of the Australian government for air transportation as well as airport services and facilities. Does an airline or airport have independent pricing power for the services it provides?
Answer
Australian regular passenger transport (RPT) air transportation services are not price-regulated. Airlines and airports independently have responsibility for setting the prices of their aeronautical, aviation, airport-related and other services.
Airservices Australia (an Australian Government Business Enterprise) is required to seek approval from the Australian Competition and Consumer Commission (ACCC) for proposed increases to prices for certain monopoly services.
The ACCC has responsibility for:
• monitoring prices, costs and profits and quality of aeronautical services and car parking at Brisbane, Melbourne, Perth and Sydney airports;
• assessing notifications of proposed price increases from Sydney Airport in relation to regional air services; and
• assessing notifications of proposed price increases from Airservices Australia, which provides air traffic control and aviation fire-fighting and rescue services to airports and airlines.
Page 82, Para 3.142
To improve the robustness of its IP laws and system, Australia passed the IP Laws Amendment (Raising the Bar) Act 2012, its biggest IP system overhaul in twenty years that came into full effect on 15 April 2013. The changes included updates to the Patents Act 1990, Trade Marks Act 1995, Designs Act 2003, Plant Breeder's Rights Act 1994, and Copyright Act 1968. The amendments address the following key areas: raising the quality of granted patents; free access to patented inventions for regulatory approvals and research; reducing delays in the resolution of patent and trade mark applications; assisting the operations of the IP profession; improving mechanisms for trade mark and copyright enforcement; and simplifying the IP system.
Question 32 & 33
• Please elaborate on the main amendments of IP Laws Amendment Act 2012 to Copyright Act 1968, especially those involving copyright enforcement.
• Please introduce the measures taken by the Australian government to fight online copyright infringement.
Answer
The IP Laws Amendment Act (Raising the Bar) Act 2012 introduced new mechanisms to improve copyright border enforcement measures, particularly improving the system for confiscating imported infringing copyright goods (the 'notice of objection' scheme).
The amendments were designed to address pre-existing loopholes that enabled importers of infringing goods to retain the goods and avoid prosecution, as well as difficulties faced by copyright owners in obtaining the information necessary to determine if they should institute infringement proceedings.
Specifically the amendments:
• enabled the Customs Chief Executive Officer (CEO) to provide the copyright owner with information regarding the exporter as well as the importer so that copyright owners could address infringement at its source;
• enabled the Customs CEO to provide the copyright owner with access to multiple samples of the seized copies. Previously, the copyright owner could only access a single sample, which was problematic for the purposes of determining whether the consignment contained infringing copies;
• revised the previous scheme for dealing with seized copies. Previously, seized copies needed to be returned to the importer within a certain time period if the copyright owner did not institute infringement proceedings, but the importer could frustrate attempts to institute proceedings by being uncontactable within this timeframe. As a result of the amendments, the importer could only reclaim the copies by submitting a claim for release in which they provide sufficient information to be contactable;
• enabled the Customs CEO to deal with forfeited copies by disposing of them, and to compensate importers of non-infringing goods that are disposed of and subsequently found by a court to be non-infringing; and
• provided that decisions made by the Customs CEO could be reviewed on their merits by the Administrative Appeals Tribunal.
On 10 December 2014, the Attorney-General and the Minister for Communications announced new measures to tackle online copyright infringement:
• an industry code to be developed by Internet Service Providerss and rights holders, under the Telecommunications Act 1997, to be submitted to the Australian Communications and Media Authority by 8 April 2015, for the development of an education and warning notice scheme, and
• a new legislative measure which enables rights holders to apply to a court for an order requiring an Internet Service Provider to block access to a website located outside Australia that facilitates access to infringing copyright material.
The Copyright Amendment (Online Infringement) Bill 2015 was introduced into Parliament on 26 March 2015 to implement the second measure. If passed, this Bill would enable a copyright owner to apply to the Federal Court of Australia for an order requiring a Carriage Service Provider (CSP) to block access to an online location (e.g. a website) that has the primary purpose of infringing or facilitating infringement of copyright.
Page 87, Para 3.159
The Circuit Layout Amendment Regulations 2003 contain the list of eligible countries to which Australia extends reciprocal protection of circuit layouts designs; they were last amended in 2008 to ensure that eligible foreign countries are Members of the WTO. This mechanism enables the Regulations to self-update each time a new Member joins the WTO.
Question 34
Please enumerate the "eligible countries". What are the criteria for their eligibility?
Answer
Under Regulation 3 of the Circuit Layouts Regulations 1990, an 'eligible foreign country' includes:
• a member of the World Trade Organization; or
• a separate customs territory that is a member of the World Trade Organization; or
• a territory (however described) of a member of the World Trade Organization whose membership is extended, in accordance with international law, to include the territory.
Page 89, Para 4.1
In addition, a number of activities, including cargo-liner shipping conferences and essential infrastructure facilities (some of which are considered to be "natural monopolies"), such as electricity networks, rail tracks, natural gas pipelines, water, communications networks, and post, continue to benefit from special regimes or exemptions that restrict competition.
Question 35
Please provide details on the price regulation in the electricity, natural gas and other energy pipeline networks, e.g. institutional arrangement, staffing, working mechanism, approval of costs, and the decision-making process, etc.
Answer
The Australian Energy Regulator (AER) is Australia's national energy market regulator. The AER has an independent Board, with its staff, resources and facilities provided by the Australian Competition and Consumer Commission. The AER's functions primarily relate to electricity and gas markets in eastern and southern Australia.
The AER works to promote efficient investment in, and efficient operation and use of, energy services in the long term interests of consumers. It does this through setting network prices that are efficient, ensuring wholesale energy markets operate competitively, and by educating and protecting consumers.
The AER regulates the electricity and gas industries, determining the revenue that energy network businesses can recover from customers for providing the electricity poles and wires and gas pipelines that transport energy and monitoring the wholesale electricity and gas markets to ensure suppliers comply with the National Electricity Law and Rules and the National Gas Law and Rules.
Since assuming responsibility for the regulation of the retail energy markets in some jurisdictions, the AER has further monitoring and enforcement roles and functions under the National Energy Retail Law and the National Energy Retail Rules. These functions include authorising retailers to sell energy and administering the national retailer of last resort scheme aimed at protecting customers and the market in the event of a retail business failure.
Formal decisions of the AER are made through its Board. The AER Board has one Commonwealth member and two state/territory members. These members are Government appointees.
Page 89, Para 4.1
Australia has maintained its relatively open trade regime since its last Review. At the same time, however, despite certain policy changes, it has continued to provide general and industry specific support in different forms to virtually the same sectors.……The fact that some activities remain protected or otherwise assisted more than others (e.g. manufacturing compared to agriculture) continues to constitute a potential impediment to efficient reallocation of resources in the economy as a whole.
Page 90, Para 4.5
Industry-specific support for the textiles, clothing, footwear and leather industries was drastically cut and the elimination of two remaining programmes is under consideration.
Page 107, Para 4.56
Question 36
The Australian government has given considerable support to manufacturing in both financial and policy terms to improve labour productivity and guarantee employment in the sector. Has Australia taken any other measures in addition to these to promote the development of its manufacturing?
Answer
The Australian Government does provide support for structural adjustment in manufacturing through regional Innovation and Investment Funds, which emphasise new business development that leads to sustainable job creation. However, other Australian Government support for manufacturing does not guarantee employment in the manufacturing sector. Rather, this support, e.g. the Manufacturing Transition Programme, aims to assist Australian manufacturing firms undertake new business development projects that build innovative capabilities and lead to higher value manufacturing activity, including development and adoption of new technologies and processes. Manufacturing support emphasises transition by manufacturing firms to higher-value added activities through new capital investments, investments in innovation, worker upskilling or reskilling and R&D, and expansion into new markets. Such support also assists the manufacturing sector to adapt to increasing competition through the reduction or phasing out of tariffs and other trade barriers. It is through the production of goods and related services for which there is market demand that jobs can either be created or sustained.
There are measures that indirectly support manufacturing the funding of the research activities by public research organisations including CSIRO, AIMS, or the Rural Industries Research and Development Corporation. These measures assist manufacturing sectors through knowledge transfer of industry relevant research and not through direct financial support. The Australian Government's Industry Growth Centres Initiative (the Initiative) is an initiative in the Government's Industry Innovation and Competitiveness Agenda and aims to lift competitiveness and productivity by focusing on areas of competitive strength and to help Australia transition into smart, high value and export focused industries. The $188.5 million Initiative is a key element of the government's new industry policy direction. It will identify opportunities to reduce regulatory burden, increase collaboration and commercialisation, improve capabilities to engage with international markets and global supply chains, and enhance management and workforce skills. Initially, five Industry Growth Centres (Growth Centres) will be established in key growth sectors of the Australian economy within the Industry Portfolio: Advanced Manufacturing; Food and Agribusiness; Medical Technologies and Pharmaceuticals; Mining Equipment, Technology and Services; and Oil, Gas and Energy Resources.
A key activity of each Growth Centre will be to set a long-term strategy for their sector. This will be outlined in the Sector Competiveness Plan, which will describe how to lift the capability of the sector, boost productivity, skills, create jobs, and engage with international opportunities. Initially Chairs, in consultation with their sectors, will lead the development of a Growth Centre proposal for the Minister's consideration. During this phase Chairs will focus on the strategic intent of the Growth Centre, initial activities, the expected governance arrangements and locations of the Growth Centre, and generating momentum.
Growth Centres will develop national networks between business, research and government to deliver tangible benefits to business. They will work with business, researchers and government on practical ways to grow the sectors, boost productivity and create jobs.
It is expected that the Advanced Manufacturing; Food and Agribusiness; and Mining Equipment, Technology and Services Growth Centres will start operating from the middle of the year.
Page 95, Para 4.22
In line with its commitment to repeal the Carbon Tax (section 3.4.1.3 and 3.4.3.2), the Commonwealth Government has reviewed funding arrangements related to the Carbon Tax, made the necessary adjustments to associated programmes and did not proceed with any new projects under the Carbon Farming Futures programme. Through its Direct Action Plan, the Government will introduce a mix of new policies, including the Emissions Reduction Fund to provide ongoing opportunities for farmers and land-managers to participate in emission reduction projects with a bill on the Emissions Reduction Fund being introduced in June 2014.
Question 37
Implementation of a carbon tax once made Australia one of the most forceful countries outside the European in limiting carbon emissions. As the Carbon Tax was repealed after over two years' implementation, the plan for gradually establishing a carbon emissions trading scheme from 2015 was also cancelled, which made Australia the first developed country to abolish the carbon tax related law. What assessment has the Australian Government made in implementing and repealing the carbon tax? What burden has the carbon tax imposed on businesses and individuals? What effects has it had on improving the environment?
Answer
The Australian Treasury has estimated that the repeal of the carbon tax will see household costs fall by around AUD$550 per year, on average across all Australian households, compared to what they would have been with a carbon tax (which was fixed at AUD$25.40 per tonne of emissions in 2014 15).
Total revenue collected through the carbon tax over two years was AUD$15.4 billion. In addition to this, administrative and compliance costs were estimated to be AUD $85 million per year.
Australia's total annual greenhouse gas emissions fell by 2 %, or 12 million tonnes, during the two years of the carbon tax (July 2012 to June 2014). However the Australian Government is not readily able to attribute any particular amount of an observed movement in emissions to the impact of specific factors – whether that is the carbon tax or any other factor.
One factor that is likely to have played a significant part in that fall in emissions was an unsustainably high level of hydroelectric generation during the two years of the carbon tax that saw dam water storage levels fall to below-average levels.
Page 100, Para 4.36
The Plan is accompanied by proposals to provide significant levels of financial support for innovation in clean energy technologies, including through: ……as well as the creation of a new institution, the Australian Renewable Energy Agency (ARENA), which would separately administer $A 3.2 billion in government funding for existing research and development, demonstration and commercialisation of renewable energy.
Question 38
Please explain how the ARENA management fund among other subsidy funds is operated under the "Climate Change Program". Are there any specific implementation plans? Do such government-funded subsidies customized for the clean energy industry constitute actionable subsidies under the WTO law? Are domestic and foreign new energy companies treated equal in the granting of these subsidies?
Answer
The Australian Renewable Energy Agency (ARENA) is established, and operates, under the Australian Renewable Energy Agency Act 2011 (Cth). This Act is available on .au.
ARENA has two objectives: to improve the competitiveness of renewable energy technologies, and to increase the supply of renewable energy in Australia.
ARENA is supportive of all renewable energy technologies and projects across the various stages of the innovation chain – from research in the laboratory to large scale technology projects.
Further information on how ARENA operates is set out in ARENA's General Funding Strategy and Investment Plan. Both of these documents are available on ARENA's website, .
ARENA has a number of funding programmes. The framework for implementing these programmes is set out in programme guidelines and information manuals.
Further information on ARENA's current programmes including relevant guidelines and information manuals can be found at .
Domestic and foreign companies are treated equal in the granting of these subsidies.
Generally speaking, ARENA's programmes require that applicants for funding must be an entity able to contract with ARENA within its constitutional limits as defined in the Australian Renewable Energy Agency Act 2011 (Cth), such as the corporations power in the Constitution (which relates to foreign corporations, and trading or financial corporations formed within Australia). Incorporation in Australia also assists in contracting and administration, and is not considered a barrier to foreign entities who wish to apply to ARENA for funding.
Page 110, Para 4.60
Between December 2012 and October 2013, an automotive industry advocate was to develop, inter alia, an action plan to increase the purchase of Australian-made vehicles by public sector fleets.
Question 39
Is this plan still in implementation or will it continue to be implemented? Will Australia further strengthen financial support to its automobile industry?
Answer
As per the Australian Government's response to the Productivity Commission's Report on Australia's Automotive Manufacturing Industry, the Australian Government will be removing the fleet procurement policy that requires government agencies to purchase vehicles manufactured in Australia, in light of the closure announcements by local vehicle producers.
The three motor vehicle producers currently active in Australia have all announced that they will cease manufacturing in Australia by the end of 2017. As such, the Automotive Transformation Scheme (ATS) will come to a natural close at the end of 2017. The Government currently has a number of programmes in place to continue to provide support to the Australian automotive industry through this transition.
Page 110, Para 4.61
It was mainly delivered through the industry-specific components of the New Car Plan for a Greener Future (i.e. the Automotive Transformation Scheme, the Green Car Innovation Fund), and general export support from Tradex.
Question 40
Do the subsidies given to the automobile industry mentioned in the Report violate WTO rules on subsidies? Please describe in detail various subsidies outlined in paragraph 4.61, including the standards for granting subsidies and the list of recipient enterprises of such subsidies.
Answer
To ensure the assistance available under the Automotive Transformation Scheme (ATS) is consistent with Australia's international trade obligations, the ATS includes a sales-based cap for payment of assistance.
Subregulation 3.11(1) of the ATS requires assistance paid to an ATS participant (other than an ATS participant carrying on business for the first time in the automotive industry) must not exceed five per cent of the annual sales values of an ATS participant's goods and services for the previous year.
Subregulation 3.11(2) of the ATS also requires participants who are carrying on business as a motor vehicle producer (MVP), automotive component producer (ACP), automotive machine tools producer (AMTP) or automotive service provider (ASP) for the first time must not exceed 15 per cent of the participant's eligible start-up investment amount. Eligible start-up investment amounts include expenditure on land, buildings, structure, plant, equipment, materials or other assets.
New Car Plan for a Greener Future
The New Car Plan for a Greener Future provided $6.2 billion, in programs and funding, to make the automotive industry more economically and environmentally sustainable by 2020.
The plan implemented the recommendations of the Review of the automotive industry, including a reformed Automotive Transformation Scheme, an expanded Green Car Innovation Fund, and measures to promote industry competitiveness.
Automotive Transformation Scheme
The Automotive Transformation Scheme (ATS) provides $1.6 billion in capped, and approximately $A 348 million in uncapped, assistance to the automotive industry between 1 January 2011 and 31 December 2017.
The ATS provides assistance in the form of cash payments to eligible participants for production of motor vehicles, investment in R&D to a maximum rate of 50%, and investment in plant and equipment to a maximum rate of 15%. The ATS covers motor vehicle producers, automotive component producers, automotive machine tool and automotive tooling producers, and automotive service providers. Certain segments of the industry including the truck and bus assembling and many firms in the aftermarket parts segments, operate without the benefit of the ATS.
Green Car Innovation Fund (GCIF)
The GCIF provided $1.3 billion in assistance to Australian companies for projects that enhance the research and development and commercialisation of Australian technologies that significantly reduce fuel consumption and/or greenhouse gas emissions of passenger motor vehicles.
Under the GCIF, the Australian Government matched industry investment in green cars on a $1 dollar to $3 dollar basis over a ten year period from 2009.
The GCIF was closed in 2011, as part of the Australian Government's saving measures to support the rebuilding of infrastructure damaged by the floods over large areas of eastern Australia.
General export support from Tradex
The Tradex Scheme allows an importer to gain an up-front exemption from Customs duty and GST on eligible imported goods that are intended for export.
Automotive Industry Structural Adjustment Program (AISAP)
The Government has extended the AISAP to 30 June 2018 to provide intensive tailored employment assistance to help displaced automotive workers find new employment. The AISAP has been extended to ensure assistance is available to workers as they are displaced, including following the closure of motor vehicle manufacturing at the end of 2017.
Automotive Supply Chain Programme (ASCP)
Support for the Australian automotive supply chain to diversify is now being provided though the Automotive Diversification Programme (ADP).
The ADP is a $20 programme established to support employees, businesses and regions affected by the closure of Australia's car manufacturing industry by 2017.
The programme provides grants to assist Australian automotive supply chain companies to diversify out of the domestic automotive manufacturing sector, and retain manufacturing capability in Australia.
List of recipient enterprises of such subsidies
Consistent with the Commonwealth Grants Rules and Guidelines, lists of recipient enterprises are available on individual program websites. However, these lists may no longer be publicly available for closed programs. Some details may also be withheld where information was considered commercial in confidence.
Page 111, Para 4.62
The Growth Fund, which forms part of the Industry Investment and Competitiveness Agenda (section 4.4), is to help generate future jobs and supply chain business opportunities in Victoria and South Australia affected by the closures.
Question 41
What is the source of the relevant funds? Which industries are granted these funds? What are the requirements and restrictions for the enterprises to apply for these funds?
Answer
The Growth Fund includes a number of programmes and initiatives, the $60 million Next Generation Manufacturing and Investment Programme, the $30 million Regional Infrastructure Programme, the $20 million Automotive Diversification Programme, the $30 million Skills and Training Initiative, and a $15 million increase in funding to extend the Automotive Industry Structural Adjustment Programme.
The programmes and initiatives which come under the Growth Fund have different funding sources and different eligibility and merit criteria:
• The Next Generation Manufacturing Investment Programme (NGMIP) is funded by the Australian Government, which has contributed $36 million and the South Australian and Victorian Governments which have contributed $12 million each.
• The NGMIP does not specifically require a business applicant to belong to a particular industry to be eligible, though eligible projects must take place in Victoria or South Australia, and be manufacturing related. The NGMIP is a merit based, competitive grants programme, which requires eligible applicants to be competitive against several merit criteria.
• For applicants to be eligible, they must meet a number of eligibility criteria, including the requirement that they be a trading corporation (within the meaning of section 51(xx) of the Australian Constitution), incorporated in Australia, that is non‐income tax exempt and registered for the Goods and Services Tax (GST). Further details on eligibility are available from the Programme Guidelines: .
• The Regional Infrastructure Programme is funded by the Australian Government, which has contributed $30 million. Programme delivery arrangements are currently under development.
• The Automotive Diversification Programme (ADP) is a $20 million programme, which includes $17 million for competitive merit based grants. The programme is entirely funded by the Australian Government.
• The ADP is open to Australian producers of automotive components, machine tools and tooling, and providers of automotive services, which are currently supplying an Australian original equipment manufacturer. Note: Australian motor vehicle producers are not eligible to apply under the ADP.
• For applicants to be eligible, they must meet a number of eligibility criteria, including the requirement that they be a trading corporation (within the meaning of section 51(xx) of the Australian Constitution), incorporated in Australia, that is non‐income tax exempt and registered for the Goods and Services Tax (GST). Further details on eligibility are available from the Programme Guidelines: . The ADP is a competitive, merit-based programme. As such, eligible applicants also need to be competitive against several merit criteria.
• The Skills and Training Initiative is funded by Holden and Toyota, who have contributed $15 million each.
• The Skills and Training Initiative is designed to help workers from Holden and Toyota transition to new jobs in other industries and/or regions as the car manufacturing industry winds down in Australia. The initiative will help workers build on existing skills and gain new skills that are transferable to other sectors, such as health services, tourism, education, food and agriculture and advanced manufacturing.
• Holden and Toyota will deliver the majority of the agreed services to their workers while they are still in their current job. Some services will continue to be available to workers after they leave their jobs. The Skills and Training Initiative for Holden and Toyota workers complements state government programmes for eligible component manufacturing supply chain workers to help their workers become job ready.
• The $15 million extension to the Automotive Industry Structural Adjustment Programme (AISAP) is entirely funded by the Australian Government.
• The AISAP is not open to businesses. It is open to eligible workers from an eligible company in the automotive manufacturing industry (including component suppliers).
• Supply chain companies are assessed on a case by case basis for eligibility. Employees can register for AISAP three months prior to retrenchment and must register to AISAP no later than six months after retrenchment. They also need to provide a letter of retrenchment with a retrenchment date.
Page 114, Para 4.70
Australia's regional trade agreements (RTAs) with ASEAN (and New Zealand), Chile, the Republic of Korea, Malaysia, New Zealand, Singapore, Thailand, and the United States include provisions on services. Some use a negative-list approach to scheduling services commitments, while others use positive list modalities. … As noted in Australia's previous Review, the levels of commitments undertaken by Australia vary from one FTA to the other and often go significantly beyond GATS commitments.
Question 42 & 43
• How does Australia choose between the positive-list and the negative-list
• What GATS plus commitments has Australia made in the opening of its financial service? What impacts have these commitments had on its domestic finance industry?
Answer
While Australia is able to negotiate modalities for trade in services agreements on a case-by-case basis, Australia has a strong policy preference to negotiate services commitments in FTAs on a negative list basis. Australia considers that negative list commitments tend to have a more liberalising effect on trade in services over time. In a positive list, agreed disciplines will only apply to scheduled sectors, whereas they apply across-the-board in negative list agreements (other than where reservations are taken). Australia has provided our most ambitious commitments through negative lists.
Australia undertakes its specific commitments on financial services in accordance with the "WTO Understanding on Commitments in Financial Services" (hereinafter referred to as the "Understanding").
The obligations under the Understanding are addressed additionally to those covered by the provisions of Part III of the General Agreement on Trade in Services and the Annex on Financial Services. These specific commitments on financial services are subject to the general limitations contained in the "Horizontal Commitments" section of Australia's GATS Schedule.
Our financial services commitments in many of our Free Trade Agreements reflect many of the core elements of the Understanding. Further information on our specific financial services commitments in recent FTAs can be found on the DFAT website .
The available statistics do not identify the impacts of these commitments on the domestic financial industry. However in overall terms, the gross value added of the financial and insurance industry to the Australian economy (in volume terms) has increased from $87.2 bn in 2004 (7.8 per cent of Australia's total GDP at basic prices) to $134 bn in 2014 (9.1 per cent of Australia's total GDP).
Australian exports of financial services rose from $A1.2 bn to $A3.3bn from 2004 to 2014. Insurance exports rose from $A404m to $539m over the same period.
Page 113-114, Para 4.72
The financial system remains supervised by three institutions: the Reserve Bank of Australia (RBA), Australia's central bank; the Australian Prudential Regulation Authority (APRA) (deposit taking institutions, general and life insurance companies, and superannuation funds (i.e. pension funds); and the Australian Securities and Investments Commission (ASIC) (overall market conduct, consumer protection, and competition in financial services). The Council of Financial Regulators ensures coordination between these bodies.
Table 4.4 Structure of the financial system assets, June 2009 to June 2013
Question 44
According to Table 4.4, "the Australian Securities and Investments Commission (ASIC)" regulates the securitization vehicles". What do the "securitization vehicles" cover?
Answer
Securitisation involves a loan originator selling a portfolio of loans to a special purpose vehicle (SPV). The SPV raises the funds to purchase these loans by issuing debt securities (bonds or commercial paper) to investors. The cash flow from the loans is used to meet the principal and interest repayments on the securities. ASIC regulates these SPVs.
Page 114, Para 4.73
The Treasurer reviews whether applications are in the national interest on a case-by-case basis, taking into account all relevant considerations, such as prudential requirements and the impact on the economy and competition
Question 45 & 46
• What are the prudence considerations for Australia to turn down an application in the financial sector? Please provide three actual cases.
• What key prudence measures has Australia taken in the financial sector, especially related to Securities?
Answers
There is no statutory definition of what is in the 'national interest', however the following factors have typically been taken into account in determining whether a proposed acquisition is in the 'national interest':
• whether the proposed acquisition is likely to adversely affect the prudent conduct of the affairs of the company;
• whether the proposed acquisition is likely to result in an unsuitable person being in a position of influence over the company;
• whether the proposed acquisition is likely to substantially lessen competition and whether it is likely to result in an undue concentration of power in the Australian financial system; and
• whether the proposed acquisition is expected to create a more efficient and effective corporate structure which will benefit shareholders and customers.
Any approval given under the Financial Sector (Shareholdings) Act 1998 can be made subject to any conditions that the Treasurer considers appropriate.
Australia has not made significant changes to its prudential framework for securities regulation following the global financial crisis.
Page 115, Para 4.75
The Commonwealth Government is supportive of the development of an Asia Region Funds Passport which will provide the regulatory framework for the cross-border offer of collective investment schemes in participating economies.
Question 47
Please share the progress of "Asia Region Funds Passport". Have related products been issued? Please elaborate on the issuance of main products, if any.
Answer
The latest development in advancing implementation of the Asia Region Funds Passport was the release on 27 February 2015 of the proposed rules and arrangements for public consultation. The deadline for submissions is 10 April 2015.
Formal consultations are expected to occur in the six working group countries: Australia, Korea, New Zealand, the Philippines, Singapore and Thailand.
Securities regulators in some other regional countries may choose to consult their industry on the arrangements and/or make a submission.
Following completion of the public consultations, the working group will consider feedback received and decide on any amendments to the arrangements.
The Asia Region Funds Passport is expected to commence during 2016.
Following the signing of the ministerial statement of understanding at the APEC Finance Ministers' Meeting in September 2015 and the multilateral memorandum of understanding at an IOSCO meeting in September 2015 , each signatory will take the steps necessary in their domestic regulatory frameworks to implement the Asia Region Funds Passport throughout the remainder of 2015 and into 2016.
The Asia Region Funds Passport can commence when two economies have completed those steps.
Membership will remain open to eligible countries.
Further information can be obtained from .
Page 117, Para 4.81
Concurrently, the RBA will establish a Committed Liquidity Facility (CLF) allowing participating ADIs to have access to sufficient liquidity in the event of an acute stress scenario.
Question 48
Please provide operational details of CLF. For instance, under what criteria and circumstances can an institution apply for CLF?
Answer
See for the CLF Terms and Conditions; and CLF Operational Notes.
Page 117, Para 4.83
In the 2013 Economic Statement, the previous Government announced the creation of a Financial Stability Fund, to be funded by a levy on bank deposits covered by the Financial Claims Scheme (FCS); its target size was to be 0.5% of total deposits protected by the FCS.
Question 49
Please give some details regarding this Financial Stability Fund, such as its function, working mechanism and objective.
Answer
The Government, as part of its response to the Financial System Inquiry, is still working out the details of the Financial Stability Fund.
Page 119, Para 4.94
Aggregate foreign equity ownership of Telstra is capped at 35%; individual foreign investors are permitted to own only up to 5%.
Question 50
The footnote to the last sentence is Australian "Productivity Commission". The Commission is said as one of affiliated institutions of the Australian Department of Finance, and a famous think-tank in Australia. Are the investment caps developed by it?
Answer
The investment caps are not developed by the Productivity Commission.
Page 119, Para 4.97
The ACCC remains in charge of enforcing competition rules under the CCA. It sets wholesale prices and wholesale terms of access for "declared" services…
Question 51
What does the "declared service" refer to?
Answer
In relation to Australian telecommunications services, the ACCC may declare services, with the consequence that the provider of the declared service must provide access on agreed terms, or if no agreement can be reached, terms arbitrated by the ACCC.
Where a service is declared the ACCC determines pricing principles relating to that service, to which the ACCC must have regard when arbitrating an access dispute.
Page 120, Para 4.100
The national broadband network operates on a wholesale-only, non-discriminatory basis; full completion is expected by 2020.In its 2012-15 Corporate Plan, NBN Co. indicated it was seeking to maximise local content as part of its procurement processes; by mid 2012, local content level achieved was 51% of contract value.
Question 52
According to this paragraph, "NBN Co. indicated it was seeking to maximize local content as part of its procurement processes in its 2012-15 Corporate Plan". Is this provision of compulsory nature? What's coverage of "local content"? Can the "non-discrimination basis" be upheld in the tender of equipment procurement?
Answer
Projects in Australia involving a capital expenditure of $500 million or more need to prepare and implement an Australian Industry Participation (AIP) plan. An AIP plan outlines how a project proponent or proponents of a major project will provide full, fair and reasonable opportunity to Australian industry to supply goods and services to the project. An AIP plan does not prescribe local content requirements. Local content is not compulsory. NBN Co's key objective in procuring goods and services is in getting the best value for money possible. The reference to 'non-discrimination' that is quoted refers to NBN Co's supply of services to its customers. Procurement is separate and a matter for the company subject to the arrangements described above. The reference to NBN Co achieving 51% local content in its Corporate Plan was intended as a statement of fact, reflecting, amongst other things, the inherently local nature of a construction project, rather than a report against any mandatory requirement or target.
Page 125, Para 4.127
Limited exemptions from the anti-competitive conduct provisions of the CCA are available to shipping lines allowing them to enter into agreements to supply shipping services to Australian exporters and importers.
Question 53
Please introduce the provisions on protecting fair competition in CCA. Are other departments invited for the review of liner shipping alliance? What is the review process? Please illustrate under what circumstances a liner shipping alliance would be denied. When fixed routes, capacity, schedules and rates are allowed in the liner alliance agreement, what specific regulatory measures can be taken to prevent exclusion and limited competition in the market, in a bid to earnestly safeguard the market order of fair competition.
Answer
The CCA currently contains provisions for protecting fair competition. Part X of the Act is meant to specifically consider exemptions for liner shipping companies. Liner shipping exemptions are granted on a case by case basis by the Registrar of Liner Shipping and the Australian Competition and Consumer Commission are notified whenever an exemption is granted. The review process involves three stages a preliminary assessment which provides provisional registration (this does not allow shipping services to commence), a second stage for negotiations between the liner shipping companies and peak shipping bodies (importers and exporters) and a final third stage (shipping services under the agreement can only commence 30 days after final registration is granted). The entire process from provisional to final registration can take approximately 25 to 45 days.
The exemptions for liner shipping are currently under review by the Australian Government. The final review report is available online on at the following address .
Page 126, Para 4.129
State/territory land use controls apply to port development and their adjacent land areas, including road and rail access. Commonwealth port related activities include: environmental assessments on port developments
Question 54
Please introduce in detail the Australian environmental assessment on port development, such as the methods and subject for assessment, and the measures taken.
Answer
Activities relating to land use controls for Ports and the surrounding land are generally managed by State Governments, including road and rail access. However, certain activities relating to activities on Port land may require approval by the Australian Government.
In particular, the Australian Government regulates activities that are likely to have a significant impact on matters of national environment significance under the Environment Protection and Biodiversity Conservation Act 1999. An outline of the matters that are assessed and the assessment process can be found at: .
Port activities that would generally require Australian Government approval under the EPBC Act would involve greenfield developments or developments in sensitive marine environments, such as the Great Barrier Reef.
The Australian Government also regulates dredging requirements of most Ports that require disposal of dredged material offshore under the Environment Protection (Sea Dumping) Act 1981. Australia fulfils its international obligations under the London Protocol to prevent marine pollution by controlling dumping of dredged material under that Act.
An outline of the process for assessing dredging activities can be found at: .
Australia reports to the International Maritime Organisation on permits given to dispose of dredged material at sea every year.
The assessment process, methods and measures for matters of national environmental significance apply equally to domestic and foreign resident proponents.
Further published information is provided by the EPBC weblink and sea dumping guidelines listed above.
Page 127, Para 4.134
There are five major airlines registered in Australia: Qantas Airways Ltd., Virgin Australia Holdings Ltd., Jetstar Airways, Regional Express Airlines and Tigerair Australia.
Question 55 & 56
What's the Australian policy for the allocation of international airline traffic rights?
Is there any tailor-made regulation for Low Cost Carrier?
Answer
Capacity available to Australian airlines under relevant bilateral air services arrangements is allocated by the International Air Services Commission (IASC). The IASC can allocate capacity for passenger and freight services, as well as for joint services where such capacity is limited under the relevant arrangements. Where capacity is contested on a particular route the IASC can assess the relevant applications against public benefit criteria, such as the expected benefits to competition, tourism, trade, industry and the travelling public.
Australia does not allocate commercial entitlements to foreign airlines to operate services to Australia; this is a matter for foreign governments to consider.
There are no tailor-made regulations for low-cost carriers.
Page 127, Para 4.135
Aggregate foreign investment in Australia's international airlines is limited to 49%……
Question 57 & 58
• In Australia, foreign investment is subject to different equity ratio for "international airlines" and "domestic airlines". What is the reason for that? How are the respective equity ratios determined? Does Australia plan to further relax such limitation on foreign investment?
• Does Australia impose any restrictions on foreign investment in general aviation, airports, air traffic control, as well as aircraft maintenance, air cargo warehousing, aviation sales agents, aviation fuel, computer ticket-reservation systems and other auxiliary activities besides the public air transport enterprise? What are the specific restrictions, if any?
Answers
The Australian Government reviews foreign investment proposals on a case-by-case basis to ensure they are not contrary to the national interest.
In general, proposals to acquire an interest of 15 per cent or more in any business valued at over $252 million (or the higher threshold of $1,094 million for countries where Australia has given preferential treatment through free trade agreements) are subject to approval.
However, transport (including airports, port facilities, rail infrastructure, international and domestic aviation and shipping services provided within, or to and from, Australia) is one of the prescribed sensitive sectors, where the higher screening threshold of $1,094 million does not apply to investors from free trade agreement countries.
Page 127, Para 4.136-4.137
In August 2014, a total of 51 airlines operated international scheduled flights (passenger and freight) to and/or from Australia … All international flights operate under bilateral Air Services Agreements (ASAs) which are negotiated by the Department of Infrastructure and Regional Development's Air Services Negotiations Team.
Question 59, 60, 61, 62 & 63
• Please introduce the provisions and procedures for Australia to grant operating license to foreign airlines.
• How are the violations by foreign airlines penalized by Australia? Is a deposit required to be paid?
• Can non-designated enterprises of foreign airlines conduct sales in Australia? What are the conditions if they are allowed? Are offices required to be registered in advance?
• What provisions and procedures does Australia follow in approving code-sharing in Australia between the public airlines from China and Australia, and between those from China and a third country?
• Please introduce the provisions and procedures for Australia to approve foreign airlines to use aircrafts wet-leased from a third country to fly Australian routes.
Answers
An International Airline Licence (IAL) issued by the Australian Department of Infrastructure and Regional Development is required for all scheduled international services to/from Australia by both foreign and Australian airlines. In order to receive and maintain a valid IAL, airlines are required to show they satisfy, and continue to satisfy, several conditions, including: maintaining a designation by their home government; holding a valid certificate of insurance; holding an Air Operators Certificate and Transport Security Program respectively issued by Australia's safety and security regulatory authorities; having a published Australian phone number and – where necessary for Australian carriers – holding an allocation of capacity from the International Air Services Commission on the relevant route/s. IALs are subject to periodic review by the Department of Infrastructure and Regional Development.
There are provisions at Reg 24 of the Air Navigation Regulations 1947 allowing for the penalty of airlines for offences relating to timetables, such as operating an unapproved service, selling without Government approval without mentioning said fact etc.
We understand that this question refers to airlines which commence ticket sales for scheduled services before regulatory approval has been granted by Australian agencies.
In addition to the allocation of air traffic rights under bilateral air services agreements, airlines must also obtain other regulatory approvals, including safety and security approvals, prior to operating a service.
Airlines are permitted to sell tickets for a service prior to obtaining all relevant approvals but must include the caveat 'subject to regulatory approval'.
Provisions for code share by Australian and Chinese airlines is provided for in the Australia-China air services arrangements. From an economic regulatory perspective, the marketing carrier is required to hold the traffic rights on which it is intending to offer services. In offering a code share service on a specified route, the carrier operating the service is required to hold operating authorisations, such as safety or security approvals. Both the operating and marketing carrier are required to submit a timetable for approval to the Department of Infrastructure and Regional Development for all relevant services.
Australia's approach to regulation of wet-leasing arrangements requires that only the operator need hold the relevant authorisations from Australia's safety and security regulatory authorities – the Civil Aviation Safety Authority and the Office of Transport Security. Economic approval is required from the Department of Infrastructure and Regional Development through the process for approving and amending timetables, under the Air Navigation Act 1920.
Page 128, Para 4.139
Australia operates a Regional Aviation Access Programme (RAAP) under which it subsidizes regular non-commercial air services (for both passengers and goods) to 363 remote communities and cattle stations as well as providing funding for works to assist access and safety at these airstrips.
Question 64
Please introduce the contents and funding source of RAAP. Does Australia have a subsidy program for commercial air services? Please give a brief introduction if so.
The Australian Government provides targeted support for air services and some aerodrome infrastructure in remote areas where they are not commercially viable. This funding is provided through the Regional Aviation Access Programme (RAAP).
The Funding Components of the RAAP are:
• the Remote Air Services Subsidy (RASS) Scheme;
• the Remote Aerodrome Upgrade (RAU) Programme; and
• the Remote Aerodrome Inspection (RAI) Programme.
The RASS Scheme provides some 260 communities in remote and isolated areas of Australia with improved access through the subsidy of a regular air transport service where it is not commercially viable. The 260 directly serviced locations include 86 Indigenous communities. The service is typically weekly utilising light aircraft, for the carriage of passengers and goods including fresh food, educational materials, medicines and other urgent supplies. Mail is also delivered via RASS flights, which is managed through separate contractual arrangements between Australia Post and the air operator. During the 2013-14 financial year, the Scheme carried 7,061 passengers and 233,988 kilograms of mail and other freight.
Commercial air operators are contracted directly by the Department of Infrastructure and Regional Development to conduct the subsidised air service. Contract periods vary and can be from 1 to 4 years. The Department conducts periodic open tender processes to renew air operator arrangements across ten geographical regions.
RAU assists remote communities by enhancing safety and access at their aerodromes. RAU is a competitive, merit-based programme providing one-off grant funding assistance for approved aerodrome upgrade works, generally up to 50 per cent of the cost. The programme excludes running costs, general maintenance, staffing costs and landside infrastructure.
RAI provides aerodrome technical safety inspections to 59 remote Indigenous communities across northern Australia. The technical advice from the reports assists these communities comply with aviation safety requirements and to maintain essential air access. The department conducts open procurement to identify and contract inspection services.
The Australian Government's Airservices Australia Enroute Charges Payment Scheme provides funding assistance for eligible services to regional and remote areas including scheduled commercial passenger services and aeromedical services. The funding assistance offsets all or part of the Enroute air navigation charge levied by Airservices Australia. Eligible commercial flights can obtain assistance of up to 60 per cent of the enroute charge; with up to 100 per cent offset provided for new routes for a period of up to three years. Aeromedical flights can receive assistance of 100 per cent of the charge. The Scheme has an annual budget allocation of $2 million.
Eligibility criteria for a route to receive assistance include:
• that services are regular scheduled passenger services open to the public;
• that the route is to/from a Regional or Remote location;
• that the route has a single airline operator;
• that the route has no more than 15,000 passenger movements per annum; and
• that aircraft used on the route have a maximum take-off weight of 15,000Kg or less; and
• that the route is shown to have an economic and/or social impact on the community.
Under the Australian Constitution, intra-state travel is the responsibility of the relevant State or Territory Government. Two States, Queensland and West Australia subsidise a number of regular passenger transport air services to regional areas.
Page 128, Para 4.141
Twenty-one airports are owned by the Federal government, all of which are operated by private sector entities under leases with the Government, under the conditions set out in the Airports Act 1996.
Question 65
Does "leases" of airports mean service outsourcing or franchising? How does the government manage the airports not owned by the Federal government?
Answer
The major airports in Australia are leased to private companies which are responsible for the full operation and development of the airports. The government's interests are managed through the provisions of the lease document and the Airports Act 1996.
Where airports are not owned by governments, they are required to be compliant with provisions for safety and security set by regulators such as the Civil Aviation Safety Authority and the Office of Transport Security and meet planning and development standards as set by the local or state governments.
Australian policy statement WT/TPR/G/312
Page 4, Para 1.4
In seeking enhanced international opportunities across all sectors, Australia has entered into, or is negotiating, several bilateral, regional, and plurilateral trade agreements to complement its multilateral endeavours. Australia continues to undertake unilateral and negotiated tariff reductions.
Question 66
What does "undertake unilateral tariff reductions" refer to? Which members have benefited from such unilateral tariff reductions?
Answer
The most significant reforms to the Australian economy have occurred when the Australian Government undertakes unilateral action to remove the barriers to Australia's trade and investment without the agreement of others to do likewise. It is widely acknowledged that unilateral tariff reduction can be a powerful contributor to productivity raising economic reform. Over the past 30 years Australia has gradually reduced its once high tariff rates. The last phase of Australia's tariff reduction program is for textiles, clothing and footwear products, with clothing and certain other textile lines reduced from 10 to 5 percent in 2015.
All importers into the Australian market can benefit from unilateral lowering of tariffs.
Page 11, Para 3.2
Global trade reform in agriculture, manufacturing, environmental goods, services, intellectual property, energy and resources, investment and tourism are all priorities for the Australian Government.
Page 16, Para3.40
Australia's objectives in negotiations on trade and environment issues are to liberalize international trade in environmental goods and services, recognizing the important role that trade can play in addressing climate change and pursuing other environmental goals.
Question 67
What concrete actions has Australia taken in the liberalization of environmental services? What plans does Australia have next?
Answer
Australia is seeking to liberalise environmental services through the pursuit of meaningful outcomes on environmental services as part of trade negotiations, including the Trade in Services Agreement.
Page 12, Para3.5
Australia's major agricultural exports are wheat, beef, wool, dairy products, cotton and wine. Around 60% of Australia's agricultural production is exported. Wheat, beef and veal, and wool are the three largest agricultural exports by value. These exports have almost tripled in value (real terms) since the mid-1970s. In many rural and regional parts of Australia the agriculture sector makes a vital economic contribution and is a significant employer. Over the last 20 years there has been a shift in emphasis from European to Asian markets and this trend is expected to continue.
Questions 68 & 69
Please provide the number of labor force by product type engaging in the planting and cultivation of wheat, barley, sorghum, cotton, sugar, wool, dairy products, cattle and sheep, grapes and other products.
Please describe the cost-benefit situation of the above products by product type.
Answers
The number of persons employed within various agricultural sectors in Australia in 2011 is provided in the table below:
|INDP - 4 digit level |Australia |
|Sheep Farming (Specialised) |18,726 |
|Beef Cattle Farming (Specialised) |44,851 |
|Beef Cattle Feedlots (Specialised) |556 |
|Sheep-Beef Cattle Farming |10,545 |
|Grain-Sheep or Grain-Beef Cattle Farming |26,290 |
|Rice Growing |24 |
|Other Grain Growing |18,181 |
|Sheep, Beef Cattle and Grain Farming, n.f.d.* |978 |
|Sugar Cane Growing |5,184 |
|Cotton Growing |1,760 |
|Dairy Cattle Farming |18,727 |
|Grape Growing |7,568 |
|Other |65,879 |
|Total agriculture |219,269 |
* n.f.d. = not further defined.
Source: 2011 Census of Population and Housing.
The financial performance of Australian broadacre farms is discussed in the following publications:
Australian farm survey results 2012-13 to 2014-15:
Australian grains: financial performance of grain producing farms 2011-12 to 2013-14:
Australian lamb: financial performance of slaughter lamb producing farms, 2011-12 to 2013-14:
Australian beef: Financial performance of beef cattle producing farms, 2011-12 to 2013-14:
Australian lamb: financial performance of slaughter lamb producing farms, 2011-12 to 2013-14:
Page 13, Para 3.13
The Manufacturing Transition Programme provides grants to firms to assist them to move away from low-tech commodity style production that may not be globally competitive, to advanced manufacturing where specialised knowledge and skills gives Australia an advantage.
Question 70
Which companies have received grants under the "Manufacturing Transition Program"?
Answer
Successful applicants of the Manufacturing Transition Programme are yet to be announced.
Page 14, Para 3.25
A number of intellectual-property related legislative developments have occurred since Australia's last WTO Trade Policy Review:
• The Therapeutic Goods Legislation Amendment (Copyright) Act 2011 amended the Copyright Act 1968 to provide that copyright in product information for particular medicines would not be infringed by actions required under the Therapeutic Goods Act 1989.
• Australia approved the Protocol Amending the TRIPS Agreement in 2007. Australia is currently progressing legislation to implement this Protocol. This would enable Australian medicine producers to manufacture and export patented pharmaceuticals to countries experiencing health crises, under a compulsory licence from the Federal Court.
Question 71 & 72
• What progress has Australia made in building the legal system for the manufacturing and import of traditional Chinese medicine (TCM) products since TCM was written into Australian law in 2012?
• In its thousands years of practices, it is found that some TCM is toxic when used alone. However, their toxicity is decreased when used combined with other TCM. The toxic TCM, when reasonably used, has benefited the Chinese people over long period of time. However, the Australian government prohibits the use of this kind of TCM. Does the Australia government plan to establish a set of norms to recognize eligible TCM practitioners, and certify them to prescribe this kind of TCM, so as to bring maximum benefit of TCM products to the local people?
Answers
The Therapeutic Goods Administration (TGA) regulates therapeutic goods. It does not regulate health practitioners. The national regulatory framework for therapeutic goods in Australia is set out in the Therapeutic Goods Act 1989 (the Therapeutic Goods Act). The Australian Health Practitioner Regulation Agency (AHPRA) administers the National Registration and Accreditation Scheme of practitioners across Australia. In July 2012, national registration of Chinese medicine practitioners and Chinese herbal dispensers was implemented; however, this does not affect the status of Traditional Chinese Medicine (TCM) products within the therapeutic goods framework.
TCM medicines are regulated like all other medicines under the national framework for therapeutic goods in Australia. Generally, all medicines must be included on the Australian Register of Therapeutic Goods (ARTG) before they can be legally imported, exported, manufactured or supplied in Australia. The TGA has a risk-based approach to regulating medicines, with lower risk medicines being listed, rather than registered, on the ARTG. In Australia, most complementary medicines, including TCM, that are available for general consumer use, are listed medicines. Consistent with a risk-based approach to regulation, listed medicines may only include well-known, low risk, ingredients which have been pre-approved by the TGA.
Although the TGA does not regulate practitioners, there are a number of specific provisions in the Act which provide exemptions for health practitioners, including: medicines that practitioners make up for their individual patients are exempt from being included on the ARTG [Schedule 5, Item 6 of the Therapeutic Goods Regulations 1990] and from being made in a licensed premises by a licensed manufacturer applying the principles of Good Manufacturing Practice [Schedule 8, Item (4) of the Therapeutic Goods Regulations].
Importation of some goods to Australia is subject to restrictions, for example: those Schedule 4 or 8 of the Poisons Standard or in the Prohibited Imports List under the Customs (Prohibited Imports) Regulations 1956. The Poisons Standards, an instrument made under Part 6-3 of the Therapeutic Goods Act, provides the basis for a uniform system of access controls for goods containing scheduled substances. The scheduling of substances allows restrictions to be placed on their supply to the public, in the interests of public health and safety. These requirements are implemented by State and Territory governments within Australia. Additional requirements from other State and Territories legislation and authorisation requirements may also be applicable.
There are a number of specific provisions in the Therapeutic Goods Act 1989 which exempt medicines from the requirement to be included in the Australian Register of Therapeutic Goods. This includes medicines (other than medicines used for gene therapy) that are dispensed, or extemporaneously compounded, for a particular person for therapeutic application to that person (Schedule 5, Item 6 of the Therapeutic Goods Regulations 1990).This exemption allows TCM practitioners to prepare medicines for individual patients that do not need to be assessed or evaluated by the TGA for quality, safety or efficacy.
Most herbal ingredients may be used for preparing medicines that are dispensed or extemporaneously compounded by a practitioner. However, some ingredients are subject to TGA regulation and access to some medicinal ingredients is restricted by State and Territory drug and poisons legislation. Some ingredients, such as ingredients included in Schedule 4 of the Standard for the Uniform Scheduling of Medicines and Poisons (Poisons Standard), are not available for dispensing or extemporaneous compounding by many health practitioners.
Under the Poisons Standard, Schedule 4 is for "substances, the use or supply of which should be by or on the order of persons permitted by State or Territory legislation to prescribe and should be available from a pharmacist on prescription." Therefore, it is the responsibility of the individual Australian States and Territories to determine who is an authorised person to prescribe such substances. Following national registration of TCM practitioners in 2012, the State of Victoria made amendments to the Drugs, Poisons and Controlled Substances Act 1981 to provide a pathway for legitimate access to otherwise unavailable Chinese medicines. This was by using Schedule 1 of the Victoria Poisons Code to list traditional Chinese medicines available only to persons registered by the Chinese Medicine Registration Board of Victoria.
In 2012, the Chinese Medicine Board of Australia proposed a national process to enable Australian registered TCM practitioners and endorsed dispensers to access Chinese medicines included in the Poisons Standard. No changes to specifically account for TCM under the poisons scheduling framework for national scheduling, nor in the therapeutics goods framework, has been progressed. As discussed, TCMs are treated like other medicines under the national therapeutic goods regime in Australia.
Page 16, Para3.41
Three of Australia's finalised FTAs also contain specific chapters on the environment: Australia-United States Free Trade Agreement (AUSFTA), the Australia-Chile Free Trade Agreement (ACI-FTA) and the Australia-Korea Free Trade Agreement (KAFTA).
Question 73 & 74
• How does Australia decide on whether to have a separate environment chapter in its FTA negotiations? What is the consideration behind such decisions?
• What is the environment chapter of Australia FTAs mainly covered? Why are these contents incorporated in the agreements?
Answers
Successive Australian Governments have sought to consider environment provisions in FTA negotiations on a case–by–case basis. A mutual desire by parties to include environment provisions is necessary.
Australia has included provisions on environment in three of our FTAs: with Chile, Korea and the Australia United States FTA (AUSFTA).
The environment chapters of Australia's FTAs, where included, mainly cover clauses that;
• Recognise the right of each party to establish its own levels of environmental protection and encourage high levels of environmental protection;
• Promote public awareness of environment laws;
• Recognise that flexible, voluntary and market based mechanisms can contribute to the achievement and maintenance of high levels of environmental protection and encourage the development of such mechanisms;
• Recognise the importance of strengthening capacity to protect the environment and to promote sustainable development in concert with strengthening bilateral trade and
• investment relations;
• Acknowledge the importance of ongoing joint, regional and multilateral environment activities;
• Recognise the importance of implementing multilateral environmental agreements and acknowledging their role in protecting the environment globally and domestically, including through the World Trade Organization.
These contents are included in Australia's agreements to enhance cooperation on trade and environment matters of mutual interest, and to actively discourage the misuse of environmental issues for trade protection purposes.
Page 19, Para3.61
Australia is the current chair of the negotiations, which commenced in July 2014.
Question 75
As the Chair for EGA negotiations, how does Australia plan to further promote the talks?
Answer
The negotiations towards an Environmental Goods Agreement (EGA) are open to other WTO Members similarly committed to liberalization. Three new members joined in early 2015. Current members of the EGA have briefed the Committee on Trade and Environment on progress in the EGA and are readily available to consult with anyone interested in the negotiations, as is the chair of our negotiating group. EGA members will continue to provide further updates as the negotiations move forward.
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