Opportunities for Military Textiles in the U'S' Australia Free Trade Agreement

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Opportunities for Military Textiles in the U.S.
Australia Free Trade Agreement

• Presentation by
• Caroyl Miller
• Deputy Textile Negotiator
• Office of the U.S. Trade Representative
• Washington, D.C.
• October 21, 2008

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U.S. Exports of Textile Mill Products to Australia
3
Australias Imports of Textile Mill Products,
2007(Million US)
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U.S. Exports to and Imports From Australiaof
Textile Mill Products
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U.S. Australia Free Trade Agreement (USAFTA)

• President notified Congress of his intent to
  negotiate, November 2002
• Negotiations concluded, February 2004
• Implementing legislation passed by House and
  Senate, July 2004
• Agreement implemented, January 1, 2005.

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Textile ProvisionsUSAFTA

• Duties on qualifying textile and apparel products
  will be fully eliminated by January 1, 2015 on a
  reciprocal basis.
• Qualifying textile products those that meet the
  rules of origin for preferential tariff treatment
  (originating goods). General rule
  yarn-forward manufacturing in either U.S. or
  Australia. Short supply exceptions.
• Customs cooperation, verification procedures.
• Textile safeguard.

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Preferential Tariff Treatment

• All originating goods receive a tariff preference
  from day one.
• MM fiber and yarn tariffs, 2008, generally 3
  percent and duty free on 1/1/2010.
• Fabric tariffs, 2008, generally 8 percent,
  reduced to 3 percent on 1/1/2010 and duty free on
  1/1/2015.
• Tariffs on made up articles, 2008, are generally
  either 5.5 percent, 8 percent or 15.5 percent,
  reduced again on 1/1/2010 and duty free on
  1/1/2015.
• Tariffs not on a linear elimination schedule, but
  a step down schedule. Rates reduced to x
  percent, and stay at x percent for a specified
  period, then reduced again to y percent and stay
  at y percent until final elimination.
• Tariff Concession

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Rules of Origin

• Goods containing U.S. and/or Australian content
  are originiating goods.
• Also, if goods meet the Agreements tariff shift
  rule, they are originating. Tariff shift
  requirements are modeled on the yarn forward
  standard, but exceptions apply. Consultation
  process to address changes in availability of
  inputs.
• De minimis threshold of 7 percent by weight.

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Customs Cooperation

• Textile-specific provisions
• Cooperation in the implementation of FTA benefits
  as well as more generally to enforce laws of
  either Party pertaining to textiles and apparel.
  
• Included are rights to exchange information and
  documents, conduct verifications, including
  through visits by Customs authorities, and rights
  to deny entry or to deny preferences, as the case
  may be, if origin cannot be established.

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Textile Safeguard

• Safeguard mechanism allows duties to be
  re-instated if imports from the other Party are
  causing or threatening serious damage to domestic
  production.
• Duties can be re-instated for a period of two
  years, with a possible extension for an
  additional two years.
• Relief is available for ten years after tariffs
  have been eliminated.
• Provisional relief in critical circumstances, a
  Party may apply safeguard measures prior to the
  completion of an investigation for up to 200
  days. If the investigation later results in a
  finding that serious damage does not exist, the
  increased duties will be refunded.
• Requirement for compensation (as do similar
  mechanisms in all our other FTAs).

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Government Procurement

• U.S. suppliers have rights to bid on contracts to
  supply Australian government at the national and
  sub-central level.
• Requires the use of tendering procedures that
  will ensure that procurements are conducted in a
  transparent, predictable and fair manner.
• Australian central government eliminates its
  industry development programs, under which
  suppliers had to provide various types of
  offsets, e.g., local content or local
  manufacturing requirements, as a condition of
  their contracts.
• Restricts Australias use of selective tendering
  to ensure that U.S. suppliers have a fair
  opportunity to compete for government contracts.

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Annex 15 A, USAFTA

• Listing of agencies, ministries and departments
  and other entities that are subject to the
  Government Procurement Chapter.
• Procurements over a certain threshold (A87,000
  in 2008 for goods for central government
  A679,000 for goods for regional government
  procurements)

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Covered Agencies

• Central Government
• Department of Defence (with exceptions)
• Defence Materiel Organisation
• Regional Governments
• Eg, Police and fire services

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Government Procurement Chapter

• Australias regular rules of origin (i.e.,
  non-preferential)
• Australias regular MFN tariffs

15
http//www.finance.gov.au/publications/selling-to-
the-australian-government/index.html
16
http//www.finance.gov.au/Publications/fmg-series/
15-guidance-on-procurement-publishing.html
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Resources

• U.S. Government
• http//www.ustr.gov/Trade_Agreements/Bilateral/Aus
  tralia_FTA/Section_Index.html
• http//web.ita.doc.gov/tacgi/fta.nsf/FTA/Australia
  ?opendocumentcountryAustralia
• Australian Government
• http//www.usa.embassy.gov.au/
• http//www.customs.gov.au/site/page.cfm?u5663
• http//www.dfat.gov.au/trade/
• https//www.tenders.gov.au/
• http//www.defence.gov.au/
• http//www.defence.gov.au/dmo/
• Australian Industry
• http//www.tfia.com.au/

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Going Forward

• Recommentation 11 Australian Government
  procurement policy should encompass capability
  building for Australian TCF firms and
  organisations so that they are in a better
  position to tender successfully for contracts
  both individually and in broader networks. In
  addition, consideration of value for money in
  tendering should take account of labour and
  environmental standards, as evidenced by the
  Australian Ethical Quality Mark. The Review
  notes and supports concern expressed about the US
  Berry Amendment, which excludes Australian TCF
  firms from the US defence apparel procurement
  market.
• Building Innovative Capability Review of the
  Australian Textile, Clothing and Footwear
  Industries, August 2008.