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Summarised step-by-step guide to obtaining preferential tariff treatment when exporting or importing goods using the Peru-Australia Free Trade Agreement (PAFTA)
The following is a summarised step-by-step guide aiming to assist Australian exporters and importers to take advantage of preferential tariff treatment under PAFTA.
For more detailed information on claiming preferential tariff treatment under PAFTA:
- Refer to the DFAT publication titled a “Guide to obtaining preferential tariff treatment when exporting and importing goods using the Peru-Australia Free Trade Agreement (PAFTA)”
- the Department of Home Affairs publishes a guide and other information to assist importers. For more information, see the Australia Border Force — Free trade agreements
Users of this summarised step-by-step guide should note that where reference is made the DFAT website and FTA text and schedules, they should visit the Peru-Australia Free Trade Agreement and navigate to the relevant part of the text on the electronic version of the guide.
This summarised step-by-step guide is intended to provide guidance only, and is not to be read as legal advice or similar. DFAT does not guarantee, and accepts no liability whatsoever arising from or connected to, the accuracy, reliability, currency or completeness of any material in this summarised step-by-step guide or any linked Government or other website. Users of this should exercise their own skills and care with respect to the information and advice in this summarised step-by-step guide.
Step 1: Identify the tariff classification of your goods
The first step to determining whether a good receives preferential tariff treatment under PAFTA is to correctly identify that good. In PAFTA, goods are identified by reference to an internationally recognised system known as the Harmonized Commodity Description and Coding System, commonly referred to as the Harmonized System (HS). The HS is a common goods classification system of more than 5200 six‑digit product categories. It is arranged into 97 chapters covering all tradeable products. Each Chapter is divided into Headings, which can be divided into Subheadings.
Step 2: Understand how your goods will be treated under PAFTA
Once you have the tariff code, you can determine how your goods will be treated under PAFTA. Lists called Tariff Schedules (based on the Harmonized System) set out Australia’s and Peru’s commitments to reduce duty rates on goods.
The FTA Portal is a user-friendly Australian Government website that provides easy access to information for exporters, importers, and other stakeholders seeking to access the benefits from all of Australia’s free trade agreements (FTA). The FTA Portal is the easiest way to determine the preferential FTA tariff rate on your product. See the Free Trade Agreement Portal for more information. It is searchable by key word or HS code, and contains current and future tariff rates for both imports and exports. The FTA Portal also contains information about whether your product is likely to meet Rules of Origin (ROO) requirements.
When exporting to Peru, you will need to check Peru’s Tariff Schedule, including its General Notes, for an explanation of the specific staging categories. Staging categories deal with the timing and limitations of tariff elimination. They include EIF (indicating tariffs eliminated immediately from the date of entry into force), five and ten year staging (indicating gradual elimination of the tariff over time). In addition, there is a tariff rate quota (TRQ) category (indicating duty-free imports for TRQ products within a set quota, with out-of-quota products being exempt from tariff elimination) and a category X (where tariff elimination is not offered).
Some Australian products exported to Peru which would otherwise be subject to a tariff, may be imported duty free through a tariff rate quota (TRQ). Access to each TRQ under PAFTA is on a first-come, first-served basis. Further details of the tariff rates and volumes are listed in Peru’s General Notes. For more information, see Annex 2-B: Schedule of Peru — General Notes. Australian exporters should contact their Peruvian importer to ensure that their products are able to enter Peru under a TRQ.
If you are importing from Peru, you will need to check Australia’s Tariff Schedule, including its General Notes. Australian staging categories range from EIF, indicating tariffs immediately eliminated on entry into force of PAFTA, to specific staging categories where tariffs are eliminated over annual periods (three and four years on some products). Further information on Australia’s Tariff Schedule can be found at PAFTA text and associated documents.
Step 3: Determine whether your goods meet Rules of Origin (ROO) requirements
PAFTA Rules of Origin (ROO) are agreed criteria used to determine the originating status of a good and its eligibility for preferential treatment under the agreement. Only goods that meet the PAFTA origin criteria receive PAFTA preferential rates of customs duty set out in the importing Party’s Tariff Schedule. This prevents countries other than Australia and Peru from gaining preferential benefits under PAFTA.
Imports into Australia or Peru that do not comply with the ROO as set out in Chapter 3 (Rules of Origin and Origin Procedures) and Annex 3‑B (Product-Specific Rules of Origin) may be subject to the applied MFN rate of duty (or an applicable alternative FTA rate, such as under CPTPP), instead of the preferential rates available under PAFTA. Further information on the Rules of Origin chapter can be found at Chapter 3: Rules of Origin and Origin Procedures
A good may be considered to be PAFTA originating if it is:
- wholly obtained or produced entirely in the territory of one or both Parties as established in Article 3.3 (Wholly Obtained or Produced Goods); or
- produced entirely in the territory of one or both Parties, exclusively from originating materials; or
- produced entirely in the territory of one or both Parties using non‑originating materials, provided the good satisfies all applicable requirements of Annex 3‑B (Product‑Specific Rules of Origin).
Goods must also meet all other applicable requirements of Chapter 3. For example, goods transiting through countries other than Australia or Peru must comply with Article 3.16, which covers transport through non-Parties.
There are other important factors to take into account when determining whether your good qualifies as PAFTA originating, including: the de minimis rule; accumulation; indirect materials; transport through non-parties; fungible materials; and acc.essories, spare parts, tools and instructional materials
Step 4: Prepare a Certificate of Origin for your goods
Once you have gone through the first three steps and determined that your good will qualify for preferential tariff treatment under PAFTA, you will need to complete the appropriate documentation to demonstrate this to the importing customs authority. This is done by completing a Certificate of Origin.
Under PAFTA, an importer may make a claim for preferential tariff treatment based on a Certificate of Origin completed by:
- the exporter;
- the producer; or
- an authorised representative of the exporter or producer.
There is no requirement for third party certification under PAFTA. However, as noted above, exporters and producers may choose to have an authorised representative complete a Certificate of Origin. A Certificate of Origin under PAFTA does not need to follow a prescribed format.
A Certificate of Origin can be in English or Spanish. The importing Party may require the importer to submit a translation in the language of the importing Party. A Certificate of Origin can apply to a single shipment or multiple shipments of identical goods (within any period not exceeding one year). A Certificate of Origin is valid for one year after the date it was issued or for such longer period specified by the laws and regulations of the Importing Party.
Record keeping
Under PAFTA, an importer, exporter or producer who provides a Certificate of Origin must maintain documentation relating to the Certificate of Origin and all records necessary to demonstrate that the good is originating for a period of no less than five years from:
- the date of importation of the good in the case of an importer; and
- the date of issuance of the Certificate of Origin in the case of an exporter or producer.
Records can be retained in hard copy or electronic format, provided they can be promptly retrieved if required. PAFTA Chapter 3, Article 3.22 provides details on record keeping requirements.
Waiver of Certificate of Origin
A Certificate of Origin is not required when the customs value of the importation does not exceed AUD$1000 for Australia or US$800 for Peru, or any higher amount as the importing Party may establish. A party can also unilaterally waive the requirement for a Certificate of Origin.
Verification
Customs authorities of a PAFTA Party may need to verify that a good is originating and entitled to preferential tariff treatment. The approach they follow for such verification is outlined in PAFTA, Chapter 3, Article 3.23, and may involve:
- a written request for information from the importer of the good;
- a written request for information from the exporter or producer of the good;
- a verification visit to the premises of the exporter or producer of the good.
Refunds and claims for preferential tariff treatment after importation
Under PAFTA, importers may apply for preferential tariff treatment after the import has taken place. In that case, importers can seek a refund of any excess duties already paid, provided the good would have qualified for preferential tariff treatment at the time of importation. Importers have at least one year to apply for a refund.
As a condition of claiming preferential tariff treatment after import, the Importing Party may require that the importer:
- make a claim for preferential tariff treatment;
- provide a statement that the good was originating at the time of importation;
- provide a copy of the certificate of origin; and
- provide such other documentation relating to the import of the good as the Importing Party may require.
Advance rulings
If, after reviewing this summarised guide, you are still unsure how your product will be treated under PAFTA, you can seek an advance ruling from the Importing Party. Parties are obliged to provide written advance rulings on tariff classifications and origin in response to requests by importers, exporters or producers. Advance rulings are binding on the importing customs authority and give greater certainty, in advance of trade taking place, to businesses that wish to know how their product will be treated under PAFTA.
Australian exporters and producers may seek advance rulings from SUNAT. Your importer or your customs broker may be able to assist you with this process. Advance rulings for goods being imported into Australia may be obtained from the Australian Border Force.