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3. Barriers to trade
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3.1 Tariff and tariff administrative measures

Although the Australian government lowered import duties on components in passenger motor vehicles, textiles and clothing, and footwear, the tariff rates for these goods ranging from 5 percent to 7.5 percent are still on the high side. Such tariff peaks have adversely affected Chinese enterprises who export to Australia large quantities of textiles and clothing, footwear, and medical instruments every year.

3.2 Barriers to customs procedures

As of November 11, 2005, the Australian Customs Service has raised fee rates for air cargo import declaration (ID) and sea cargo ID services to A$14 per ID and A$ 7 per ID respectively, compared with the previous rate of A$6.5 per ID for both. According to the Government of Australia, the reason why the ID air fee has increased more than the ID sea fee is that the change in the ID threshold for air and sea cargo from A$250 to A$1000 has a greater impact on the provision of air cargo clearance by AQIS staff. The Chinese side doesn't think the statement well justified and remains concerned over the matter.

3.3 Sanitary and phytosanitary measures

3.3.1 IRAs

An import application shall be filed before animal and plant products from any country enter Australia. Based on the application, BA shall conduct an Import Risk Analysis. Goods can only be imported if the risk level after proper control is deemed acceptable by the Australian authority. Otherwise, import is banned if an application is not filed, or an IRA is not conducted, or the IRA isn't finished, or the risk level is deemed unacceptable. However, an IRA is usually time-consuming and involves too many technical standards. Besides, a separate IRA is required for goods of the same category from a different area of the same country.

On October 4, 2005, BA announced the Final Extension of Policy for the Importation of Pears from the People's Republic of China, granting approval for the importation of Pyrus bretschneideri from Shaanxi Province, Pyrus pyrifolia from Hebei and Shaanxi Provinces, and Pyrus sp. nr. communis from Xinjiang Uighur Autonomous Region, in addition to the previous import permit granted to fresh pear fruit including: 1.Pyrus bretschneideri (Hebei and Shandong Provinces only); 2.Pyrus pyrifolia (Shandong Province only); 3. Pyrus ussuriensis (Shandong Province only).While welcoming the new policy, the Chinese Government still believes it is too stringent a system to conduct an IRA on fresh pear fruit based on the place of origin rather than the country of origin.

The IRAs implemented by the Australian Government have in fact proved an obstacle to the entry of products of animal and plant origin from other countries into the Australian market. As far as China is concerned, other affected exports to Australia include fresh fruits, vegetables, and certain cash crops. Therefore, the Chinese Government shall remain concerned over the system.

3.3.2 Imported food (IF) inspection scheme

All food imported into Australia must in the first instance comply with the requirements of the Quarantine Act 1908 as applicable and then the requirements of the Imported Food Control Act 1992 for matters relating to food safety. Under IF operations, foods are classified into three inspection categories: 1. Risk Category food; 2. Active Surveillance Category Food; 3. Random Surveillance Category Food. For
Risk Category food, all producers will have their food inspected at the initial rate of 100 percent of consignments. Usually after five consecutive consignments have passed inspection, the food will be inspected at a less intense rate of one in four consignments on a random basis. Twenty passes must be achieved before the rate reduces to one in twenty on a random basis. Active Surveillance Category food is selected for inspection at a rate of approximately 10 per cent by country-of –origin. Food in the Random Surveillance Category is selected at the rate of 5 percent by tariff classification for inspection.

At the end of each year, AQIS conducts an annual review of the classification of the above three categories. In August 2004, AQIS reclassified Risk Category food and placed mushrooms (canned) and soy sauce under the Random Surveillance Category while sesame seeds and sesame seed products, formerly under the Active Surveillance Category, together with pistachios and any food that contains pistachios formerly under the Random Surveillance Category, were classified as Risk Category food. On December 1, 2005, AQIS conducted another review of the classification. However, no consideration was given to the above four types of food.

It is worth noting that the Australian government failed to produce any scientific reasons for classifying food into the above three categories, nor did the Government give justifiable explanations for frequent changes in the classification. While welcoming the classification of canned mushroom and soy sauce as Random Surveillance Food, the Chinese Government expresses concern over sesame and pistachios, which have been regrouped into the Risk Category.

3.3.3 Requirements for poultry hatching eggs

On November 17, 2005, Biosecurity Australia issued an emergency notice, amending the conditions for the importation of hatching eggs of poultry. The main changes to the conditions are: certification of country freedom from highly pathogenic notifiable avian influenza in poultry; and poultry source flocks must be tested for antibodies to Type A avian influenza virus with negative results. This requirement applies even when the exporting country certifies freedom from highly pathogenic notifiable avian influenza. These conditions take effect immediately the notice was announced. The Chinese side attaches close attention to the threshold raised by the Australian government for the importation of poultry hatching eggs, in particular the requirement for inspection irrespective of the avian influenza situation of the exporting country.

3.3.4 CTO verifications for imported airfreight perishable consignments such as nursery stock

As from 9 May 2005, AQIS has ceased CTO verifications for most imported airfreight perishable consignments. However, nine perishable airfreight commodities/countries pathways including nursery stock and cut flowers continue to require AQIS verification checks at CTOs. AQIS verifies whether the imported airfreight perishable consignments are properly packed prior to produce being moved from CTOs to AQIS inspection points. However, there are no specific verification standards regarding the process. Besides, AQIS charges will apply where verification checks are performed. Such process has added uncertainty as well as extra expenses to Chinese enterprises which export nursery stock to Australia.

3.3.5 Inspection on imported prawns by the number of batches

According the requirement of AQIS for imported prawns, documentation from the exporter, supplier or competent authority verifying the number of batches in the consignment must be provided to AQIS as each batch must be tested on arrival for white spot syndrome virus. A batch is defined as a processing run of a single lot of raw materials, or as one species of prawns caught during one continuous fishing period, or as prawns raised in the same pond of an aquaculture establishment. Prawns must be packed separately for inspection according to different batches. If the number of batches cannot be determined from documentation, a full unpack and inspect may be required in order to determine the number of batches. This inevitably has a great impact on China, which export in large quantities prawns of various kinds to Australia. Therefore, the Chinese side expresses concern over the matter.

3.4 Trade remedies

According to statistics, between 1982 and 2005, Australia launched 43 antidumping investigations against Chinese exports including chemicals, foodstuffs and produce, minerals and mining products, iron and steel products, involving an approximate value of US$110 million.

By the end of 2005, altogether 8 antidumping cases ended up with the Australian Government's decision to impose antidumping duties on Chinese exports, involving glass (clear float and plain float), steel shelving kits, sodium metabisulfite, Dichlorophenoxy-acetic acid (2,4-D), hot rolled steel plate, silicon, sodium hydrogen carbonate, and preserved mushrooms (on which a provisional duty is imposed). In 2005, Australia launched 2 antidumping investigations involving Chinese-made sodium hydrogen carbonate and preserved mushrooms.

Following the recognition of China's full market-economy status by Australia in April 2005, Australia amended Customs Act 1901 and Customs Regulations 1926 in May and October respectively, putting China under the list of countries and regions not subject to rules governing transitional economies. At the same time, the Australian government also made some amendments to the part of the customs manuals that deal with market economies. In addition, clarifications and interpretations were also made to the anti-dumping procedure, changes being focused on normal value. In the old edition of customs manuals, the Australian Customs Service required that only transforming economies be considered for possible government influence. However, according to the new edition of customs manuals, all countries are to be considered for possible government influence and substitute prices may be used irrespective of the country's economic status.

3.5 Subsidies

According to A New Tax System (Wine Equalisation Tax) Act 1999, the Australian Government imposes Wine Equalisation Tax (WET) on wholesale wine before GST is added. However, exports of wine are not subject to WET. Such practice is intended as an export incentive, which constitutes a de facto subsidy. Starting from the year 2000, the Australian Government has earmarked a great amount of grants to the domestic textiles, garments and footwear. From July 2004 to June 2005, grants under the Textile, Clothing, and Footwear Strategic Investment Programme (TCF Scheme). Scheme were given to the above industries by the Australian Government in order to promote equipment updating, R&D, and production in these industries. The budget outlay during the above period was A$142 million. The budget outlay for the 2005/06 financial year (from 1 July to 30 June) is A$214. The continuous subsidies granted by the Australian Government in large amount to these industries have weakened the competitiveness of Chinese textiles, garments and footwear in the Australian market, thereby adversely affecting the Chinese exports to Australia.

In 2005, the Australian Government continued to implement Automotive Competitiveness and Investment Scheme (ACIS) which is to promote competitiveness and encourage investment, R&D and innovation in the Australian automobile industry. ACIS, according to the Australian Government, shall remain effective until 2015. Under ACIS, participants of the Scheme, including motor vehicle producers (MVPs), automotive components producers, automotive machine tools and tooling producers or automotive service providers, may receive duty credits which can be used to pay customs duty on certain eligible imports. Duty credits are earned on the basis of a percentage of eligible production, eligible investments in plant and equipment, or eligible investments in R&D. Assistance provided in financial year 2004/05 (from 1 July to 30 June) was A$569 million. This has weakened the competitiveness of Chinese automotive exports to Australia, over which the Chinese side expresses concern.

3.6 Other barriers

Marketing for almost every kind of bulk goods in Australia is handled by State-owned trading corporations, which in fact monopolize the purchase and distribution of these goods. These corporations include AWB (International) Ltd, Australian Dairy Corporation (ADC), New South Wales Grains Board, The Rice Marketing Board for the State of New South Wales, and Queensland Sugar Limited (QSL). These corporations and agencies specialize in export only and enjoy monopolized trading rights by law. For some sens itive goods such as wheat and rice, there is no domestic market as these goods are mainly for export. Therefore, the State-owned corporations in charge of these goods enjoy a high degree of monopoly, for instance, AWB purchases 86 percent of domestic-produced wheat while The Rice Marketing Board purchases 100 percent of domestic rice production.

Such trading system implemented by Australia on bulk goods, to a certain extent, has distorted the export market, and is by nature a disguised protection to its agricultural exports. The system has had an adverse effect on the interests of Chinese importers as each year China imports large quantities of bulk products like wheat and barley from Australia. Therefore, the Chinese Government shows concern over the system.

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