Using A-UKFTA to do business with the United Kingdom

The Australia-United Kingdom Free Trade Agreement (A-UKFTA) is a gold standard, comprehensive agreement that substantially liberalises trade between Australia and the United Kingdom of Great Britain and Northern Ireland.

The A-UKFTA’s commercially significant commitments will create export opportunities for business by eliminating tariffs on over 99 per cent of Australian goods exports to the UK and 98 per cent of UK imports to Australia.

On 31 May 2023 the A-UKFTA enters into force and the first tariff cuts occur. This step-by-step guide seeks to assist Australian exporters and importers to take advantage of preferential tariff treatment under A-UKFTA.

This guide will help you answer the following questions:

Step 1: What goods am I exporting/importing?

Identify the Harmonised System code for a good.

How are these goods treated under the A-UKFTA?

Identify the preferential tariff for a good. Most eligible goods will benefit from a preferential or lower tariff rate under the A-UKFTA.

Where are my goods produced?

Only goods that originate in Australia or the United Kingdom are eligible for preferential tariff treatment under the A-UKFTA. There are specific rules to determine eligibility.

My goods qualify for preferential treatment under the A-UKFTA, how do I ensure I get the lower tariff rate?

Claims for preferential treatment under the A-UKFTA must be accompanied by appropriate documentation, known as a declaration of origin.

Four steps to using the A-UKFTA
 

Step 1: Identify the tariff classification of your goods

In the A-UKFTA, goods are identified by reference to an internationally recognised system known as the harmonised commodity description and coding system, commonly referred to as the Harmonised System or HS.

The HS is a broad classification system of more than 5 000 six-digit product categories. Typically, each country further sub divides the six-digit HS product categories into eight digit or more tariff lines for greater specificity. Tariff codes beyond the HS six digit level are generally not comparable between countries.

Classification

Determining how the A-UKFTA treats a particular good depends on correctly identifying that good. There are multiple ways to find the HS code applicable to a good:

1. Use the FTA Portal, DFAT’s online tool. To find the HS code applicable to your good, type in the product and choose the eight-digit HS code that matches the description of the good.
2. Alternatively, you can manually check the full A-UKFTA schedules of tariff commitments which are available on the DFAT website:
   1. Schedule of Tariff Commitments of Australia [DOCX]
   2. Schedule of Tariff Commitments of the United Kingdom [PDF]
3. To be certain you have identified the correct tariff code for export or import, we recommend you consult the customs authority of the importing country:
   • For exports to the United Kingdom, use the United Kingdom integrated trade tariff database, to search for your product by name: Trade Tariff: look up commodity codes, duty and VAT rates
   • For imports to Australia, use the working tariff provided by the Australian Border Force (ABF) which lists all tariff classifications under Schedule 3 of the Customs TariffAct 1995 available at: Tariff Classification.

Advance rulings

If in doubt, you can seek an advance ruling from the importing customs administration. An advance ruling is a written ruling on the HS code of a good that is binding on the customs administration. Australia and the United Kingdom are required to provide written advance rulings on tariff classification and origin in response to requests by importers, exporters or producers in the exporting country.

Exporters

Australian exporters may seek formal advice from the United Kingdom Revenue and Customs Service on the tariff classification of the goods intended for export to the United Kingdom.

Importers

If you are importing goods into Australia and would like an advance ruling on a classification of a good, contact the ABF or a customs broker. See:

• Application for Advance Ruling (Tariff)
• Application for Advance Ruling (Origin)
• Application for Advance Ruling (Valuation)

Step 2: Understand how your goods will be treated under the A-UKFTA

Once you know the HS code, you can determine how your goods will be treated under the A-UKFTA. The United Kingdom and Australia have set out their commitments in tariff schedules based on the HS. The tariff schedules contain thousands of rows of tariff lines showing the base tariff rate to which reductions apply. In a separate column a code is used to indicate the tariff staging category.

Exporters

If you are exporting to the United Kingdom, you will need to check the UK’s tariff schedule. The staging category of each good indicates the agreed arrangements for tariff reduction and elimination. The UK’s staging categories are:

• EIF: Tariffs are eliminated on entry into force.
• B5: Tariffs are removed in equal instalments over five years, with the first reduction taking place on the date of entry into force and subsequent reductions taking place on 1 January each year.
• B6: Tariffs are removed in equal instalments over six years, with the first reduction taking place on the date of entry into force and subsequent reductions taking place on 1 January each year. Tariffs are eliminated on entry into force of the A-UKFTA
• B4 to B9: Tariffs are removed in equal instalments over the number of years corresponding to the number in the staging category (e.g. over four years for B4), with the first reduction taking place on the date the A-UKFTA enters into force and subsequent reductions taking place on 1 January each year until the tariff is eliminated.
• C11: Tariffs will remain at the base rate until 1 January of Year 11. On that date, tariffs are eliminated.
• E: Tariffs will remain at the base rate.

Further details are available in Chapter 2 Trade in Goods (Annex 2A, Section 2B) Part 2B-1 (Notes for the Schedule of the United Kingdom).

The UK has several tariff rates quotas (TRQ). Each TRQ (see page 5) allows a certain volume of a product to enter the UK tariff free each year, with a tariff applied to exports exceeding that quantity (the out-of-quota tariff).

Chapter 2 Trade in Goods (Annex 2A Section 2B), Part 2B-2 details the annual tariff free quantity for each TRQ. For all TRQs except long-grain rice, the A-UKFTA provides for reduction and elimination of out-of-quota tariffs by reference to one of the staging categories identified above.

Exporters require a TRQ certificate to obtain tariff free access under the quota. TRQ certificates are issued by Australia’s Department of Agriculture, Fisheries and Forestry (DAFF). Information on how to apply for a TRQ certificate is available on DAFF’s website.

For beef and sheep meat, product specific safeguards are in place for the five years following the end of the TRQs and elimination of out-of-quota tariffs. Meaning when the volume of annual exports in a certain year exceeds a trigger level, the UK can choose to increase the tariff to 20 per cent for the remainder of that year. The trigger levels for each year are set out in Chapter 2 Trade in Goods (Annex 2A, Section 2B), Part 2B-3 Product Specific Safeguard Measures.

United Kingdom Revenue and Customs publishes data on quota usage and availability for goods online at UK tariff rate quotas 2022.

Importers

If you are importing from the United Kingdom, you will need to check Australia’s tariff schedule, available in Chapter 2 Trade in Goods (Annex 2A, Section 2A) Part 2A-1 Notes for Schedule of Australia. Australian staging categories are:

• EIF: Tariffs are eliminated on entry into force.
• B5: Tariffs are removed in equal instalments over five years, with the first reduction taking place on the date of entry into force and subsequent reductions taking place on 1 January each year.
• B6: Tariffs are removed in equal instalments over six years, with the first reduction taking place on the date of entry into force and subsequent reductions taking place on 1 January each year.

What year has the A-UKFTA reached now?

• Year 1 (entry into force): 31 May 2023
• Year 2: 1 Jan 2024
• Year 3: 1 Jan 2025
• Year 4: 1 Jan 2026
• Year 5: 1 Jan 2027
• Year 6: 1 Jan 2028

TRQs are applicable for the following goods:

• Beef
• Sheep meat
• Milk, cream, yoghurt and whey
• Butter
• Cheese and curd
• Wheat and meslin
• Barley
• Long grain rice
• Broken rice
• Sugar

Reading the UK’s Tariff Schedule

For plums, the United Kingdom’s base rate is seasonal, at either six or 12 per cent (depending on the time of year). Plums fall into the staging category EIF, meaning the United Kingdom’s 6 and 12 per cent tariffs on plums will be eliminated immediately on the A-UKFTA’s entry into force. In the case of butter, the United Kingdom’s base tariff is £158 per 100kg. Butter falls into staging category B6, meaning tariffs will be removed in six equal instalments beginning on the date of entry into force of the A-UKFTA, and such goods shall be free of tariffs effective 1 January of year 6. Accordingly, the tariff reduction schedule on butter under the A-UKFTA is shown below.

Tariff on Australian butter (per 100kg):

• Year 1 (entry into force): £131.67
• Year 2: £105.34
• Year 3: £79.01
• Year 4: £52.67
• Year 5: £26.34
• Year 6: £0

Step 3: Determine whether your goods meet the rules of origin

Rules of origin (ROO) are agreed criteria used to determine the originating status of a good and its eligibility for preferential treatment under a free trade agreement.

Only goods that meet the A-UKFTA’s origin criteria receive the A-UKFTA’s preferential rate of customs duty set out in the tariff schedule. This prevents other countries from gaining preferential tariffs under the agreement.

Imports into the United Kingdom or Australia that do not comply with the ROO set out in Chapter 4 Rules of Origin and Origin Procedures and Annex 4B Product Specific Rules may be subject to the general tariff (most favoured nation or MFN) rate instead of the preferential rates available under the A-UKFTA. The rules of origin chapter can be found at Australia-UK FTA Chapter 4 Rules of Origin and Origin Procedures.

What is an originating good?

In general, a good will qualify as originating under the A-UKFTA if it is:

• wholly obtained or produced entirely in the United Kingdom or Australia (or both);
• produced entirely in the United Kingdom, Australia or both, from materials classified as originating under the ROO; or
• manufactured in the United Kingdom, Australia or both using inputs from other countries (non-originating materials) and satisfies all applicable requirements under the product specific rule (PSR) for that good.

What are non-originating goods?

Non-originating goods are those:

• imported from a country other than Australia or the United Kingdom;
• produced in the United Kingdom, Australia or both but which do not meet the rules of origin under the A-UKFTA; or
• for which origin cannot be determined.

Wholly obtained or produced goods

Wholly obtained goods are typically agricultural goods and natural resources. Box 1 on page 12 sets out the categories of goods the A-UKFTA treats as wholly obtained.

The A-UKFTA also treats goods that are made exclusively from wholly obtained goods as being wholly obtained. See Chapter 4 Rules of Origin and Origin Procedures, Article 4.3 (l).

Goods containing inputs from outside the United Kingdom or Australia

Goods made from inputs sourced from outside the United Kingdom or Australia may still qualify as originating if they have undergone a substantial transformation in the United Kingdom, Australia or both.

Understanding product specific rules (PSRs)

Goods that include some non-originating materials under the A-UKFTA may still qualify as originating, if the non-originating materials have undergone a substantial transformation in Australia or the United Kingdom.

The PSRs set out in Chapter 4 Rules of Origin and Origin Procedures (Annex 4-B Product Specific Rules) provide the rules by which UK and Australian customs authorities will determine whether a good has undergone a substantial transformation to become an originating good.

If your good contains inputs from outside Australia or the UK, you will need to check the applicable PSR to determine whether your good qualifies as originating.

The PSR methods used to measure substantial transformation under the A-UKFTA are:

• Change in Tariff Classification (CTC);
• Regional Value Content (RVC); or
• Product specific process rules.

Change in tariff classification (CTC)

Most PSRs in the A-UKFTA apply a change in tariff classification (CTC) approach. Different products may be subject to different CTC rules. There are three CTC rules which could apply:

• Change in Chapter (CC) – change in any of the first two digits (or ‘chapter’) of the HS code of non-originating materials once part of the finished product.
  • Such as importing oranges (HS Code 0805.10) and juicing them to create orange juice (HS code 2009.19).
• Change in tariff heading (CTH) – change in any of the first four digits of the HS code of non-originating materials once part of the finished product.
  • Such as changing pure gold (HS 7108.13) to gold jewellery (HS 7113.19).
• Change in tariff subheading (CTSH) – change in any of the six digits of the HS code of non-originating materials once part of the finished product.
  • Change in tariff subheading (CTSH) – change in any of the six digits of the HS code of non-originating materials once part of the finished product.

Pure gold (HS 7108.13) has a different classification to gold jewellery (HS 7113.19). In the process of being incorporated into jewellery, the tariff classification of pure gold changes at the heading level. This means that jewellery manufactured in Australia or the United Kingdom from imported gold would count as originating, regardless of which country the original gold came from.

Regional value content (RVC)

A CTC is not the only way to identify substantial transformations. Some PSRs require a product to have undergone a specific amount of value add in the United Kingdom or Australia, measured by the regional value content (RVC) of the good.

Some PSRs provide an RVC rule as an alternative to a CTC rule, others require an RVC in addition to a CTC rule.

An RVC approach stipulates that processes and manufacturing of that good must have occurred and must represent a specific proportion of the product’s final value. More information about calculating RVC is provided on page 13.

Product specific processing rules

Some PSRs allow for a good to become originating if the non-originating materials undergo a specific manufacturing or production process that fundamentally changes the nature of the input materials. For example, some UK PSRs require that the product be refined within Australia, the UK or both.

Other important ROOs

There are other important factors to consider in understanding whether your good qualifies as originating.

Accumulation (Article 4.9)

The rule of accumulation provides that goods which are originating in one country are considered originating in the other for the purposes of the A-UKFTA. Therefore, if Australian originating goods were incorporated into a product made in the United Kingdom, that input would be treated as if it originated in the United Kingdom.

Tolerance (Article 4.10)

Where a good fails to meet the PSR requirements, it may still be considered originating if the non-originating materials make up only a small amount of the total material inputs. If your good falls within chapters 25 to 49 and 64 to 97 of the HS, the value of all non originating materials must not exceed 10 per cent of the value of the good to use the tolerance rule.

For goods in chapters 1 to 24 and 50 to 63 of the HS, there are two options available to exporters:

• either the total weight of those materials does not exceed 10 per cent of the total weight of the good (not including the weight of any packaging); or
• the value of materials does not exceed 10 per cent of the value of the good.

How to find the PSR applicable to your product

Using the tariff classification from step 1, you can check Chapter 4 Rules of Origin and Origin Procedures
(Annex 4B Product Specific Rules).

PSRs are listed at the HS six-digit level. Using the first six digits of the relevant country-specific tariff code, identify the relevant entry in the PSR list. Once you have found the relevant entry, the third column will identify the PSR for that product, for example:

HS Code	Description	PSR
0710.90	Mixtures of vegetables	CC
2501.00	Salt	RVC40 or CTH

In the above example, non-originating inputs into mixtures of vegetables must undergo a change in chapter (CC) which is a change in the first two digits of the HS classification.

Salt, on the other hand, must either have all non-originating materials used in production undergo a change in the tariff heading (CTH) at the four-digit level or be made with RVC of at least 40 per cent.

Further information can be found in the headnotes to Chapter 4 Rules of Origin and Origin Procedures (Annex 4B Product Specific Rules) or by contacting your customs broker and/or authorised body as appropriate.

Fungible goods and materials (Article 4.11)

Fungible goods are those which are identical or interchangeable because they are of the same kind of commercial quality, possess the same technical and physical characteristics and, once mixed, cannot be readily distinguished. Examples include natural gas, grain, or simple parts such as rivets.

Specific accounting rules apply to exporters wishing to demonstrate that fungible goods are originating under the A-UKFTA.

Accessories, spare parts and tools (Article 4.12)

The origin of accessories, spare parts or tools is not considered when determining if a good has complied with applicable CTC PSRs, provided that they are customarily supplied with those finished goods, and they are not invoiced separately. The value of accessories, spare parts and tools can be considered when calculating an RVC rule.

Wine bottled in non-originating bottles for retail could not be considered wholly obtained, due to the non-originating bottles. The bottles would not be considered in assessing whether the wine complies with the relevant PSR. However, retail packaging materials are considered in assessing the value of non-originating materials in a good for the purposes of an RVC rule, where one applies.

Non-alteration (Article 4.17)

The customs authority of the importing Party may request that the importer provides evidence of compliance with the requirements set out in Article 4.17. This evidence may include, but is not limited to, the following:

• a certificate (known as a certificate of non-manipulation) issued by the customs authorities of the country of transit:

1. giving an exact description of the goods;
2. stating the dates of unloading and reloading of the goods and, where applicable, the names of the ships, or the other means of transport used; and
3. certifying the conditions under which the goods remained in the transit country;
   • contractual transport documents such as bills of lading
   • factual or concrete evidence based on the marking or numbering of packages;
   • any evidence relating to the good itself; and
   • any substantiating documents to the satisfaction of the customs authorities of the importing country.

Using rules of origin under the A-UKFTA

1. Is the good wholly obtained or produced?

Wholly obtained goods from the territory of one or both of the parties (see Article 4.3)

• Plants, plant goods or fungus , grown, cultivated, harvested, picked, or gathered
• live animals born and raised in Australia or the UK
• goods obtained from live animals in Australia or the UK
• an animal obtained by hunting, trapping, fishing, gathering, or capturing there but not beyond the outer limits of a party’s territorial sea
• a good obtained from aquaculture there but not beyond the outer limits of a party’s territorial sea
• minerals or subsoil beyond the outer limits , but within the territory of Australia or the UK by Australian or UK flagged vessels
• fish, shellfish, and other marine life taken from the sea, seabed, or subsoil beyond the outer limits of but within the territory of Australia or the UK by Australian or UK flagged vessels
• goods produced on board a factory ship that is registered, listed, or recorded and entitled to fly the Australian or UK flag
• a good other than fish, shellfish, and other marine life taken or extracted from the seabed or subsoil outside Australian territory and beyond areas over which non parties exercise jurisdiction provided that Australia or the UK has the right to exploit that seabed or subsoil in accordance with international law
• waste or scrap derived from production or from used goods collected there, provided that those goods are fit only for the recovery of raw materials or
• a good produced in Australian territory , exclusively from goods referred to above, or from their derivatives.

2 Does the good meet the relevant change in tariff classification rule?

Check the CTC rule applicable to the tariff classification for your goods at Australia-UK FTA Annex 4B (Product-Specific Rules).

• CC - do the non-originating inputs that went into the product now come under a different chapter as part of the finished product (change in any of the first two digits of the tariff classification)?
• CTH - do the non originating inputs that went into the good now come under a different tariff heading as part of the finished product (change in any of the first four digits of the tariff classification)?
• CTSH - do the non originating inputs that went into the product now come under a different tariff subheading as part of the finished product (change in any of the six digits of the tariff classification)?
• FF - has the good undergone a change from fabric that is constructed but not further prepared or finished if it is dyed or printed and undergoes at least one preparatory or finishing processes in the UK or Australia or both to render it directly usable?
• RVC - does the good have a regional value content as calculated under Article 4.4 of of not less than the percentage specified under the PSR for your HS code when when using the build up or build down method?

3 Does the good comply with the Regional Value Content rule?

The RVC percentage of a good can be assessed using either of the following two methods.

The build-down method, based on the value of non-originating materials:

RVC = ((VG - VNM) / VG) x 100

The build-up method, based on the value of originating materials:

RVC = (VOM / VG) x 100

• RVC is the regional value content, expressed as a percentage;
• VG is the adjusted value of the good, either:
  • the production value of the good or;
  • the price actually paid or payable for the good when sold for export or other value determined in accordance with the Customs Valuation Agreement, excluding any costs incurred in the international shipment of the good.

Generally, the value is the purchase price of the good plus any transaction costs like brokerage, packaging. Consult your customs broker if you think there may be an issue in identifying the value of your goods.

• VNM is the value of non-originating materials used in the production of the good.
• VOM is the value of originating materials used in the production of the good

Further information on calculating the VNM and VOM is available in Chapter 4 Rules of Origin and Origin Procedures (Article 4.4).

Step 4: Prepare a declaration of origin for your goods or claim importer's knowledge

Once you have gone through the first three steps and determined that your goods will qualify for preferential tariff treatment under the A-UKFTA, you will need to complete the appropriate documentation to demonstrate this, should you be asked to by the importing customs authority. This is done by using a Declaration of Origin (DOO) or on the basis of the importer's knowledge that a good is originating.

A DOO should be prepared by the exporter or the producer. This is known as self-certification. Australian exporters or importers also have the option of obtaining a DOO from an authorised body as outlined in Chapter 4 Rules of Origin and Origin Procedures (Article 4.19.4). This is either the Australian Chamber of Commerce and Industry (ACCI), the Australian Industry Group (Ai Group),  OzDocs or TradeWindow Origin (TWO). Contact details for these organisations can be found on page 15. Fees will apply for a DOO from these organisations.

DOOs must, as a minimum, include information under nine different headings to enable customs authorities to assess the goods. This includes what information is required if the exporter is not the producer of the good and that a DOO may be completed by the exporter on the basis of reasonable reliance on the producer’s information (Article 4.19). These requirements are set out in Chapter 4 Rules of Origin and Origin Procedures (Annex 4A Data Requirements).

DOOs remain valid for 12 months. They can apply to a single shipment, or multiple importations of the same description that occur while the DOO remains valid.

An importer may make a claim for preferential rates of customs duty without a DOO, if they possess importer’s knowledge that the goods are originating (Article 4.19). This claim must be made on the basis of either the importer having documentation that the good is originating, or reasonable reliance on supporting documentation provided by the exporter or producer that the good is originating (Article 4.19.3).

Exporters or producers must maintain all records necessary to demonstrate origin for four years after signing a DOO. Chapter 4 Rules of Origin and Origin Procedures (Article 4.23) provides further detail on record keeping requirements.

Waiver of declaration of origin (Article 4.21)

A DOO will not always be required. For certain goods, Australia or the United Kingdom have waived the requirement altogether.

Neither country will require a DOO for goods where the total customs value is less than $1 000 (for Australia) or the equivalent of £1 000 GBP (for the United Kingdom). You should check with the relevant importing customs authority for up-to-date information.

Verification (Article 4.24)

Customs authorities may occasionally need to verify the information contained in a DOO. Verification activities may involve:

• requests for information from the authorised body (ACCI, Ai Group or Ozdocs), the importer, the exporter, producer; or
• requests for information from the exporting customs administration.

Dispute settlement (Article 5.12)

If you are unhappy with a decision made by a customs administration in seeking preferential treatment under the A-UKFTA, you may be entitled to appeal that decision under Chapter 5 Customs Procedures and Trade Facilitation (Article 5.12). You should consult your customs broker and legal adviser if you wish to pursue an appeal.

Contacts for further information

Australia

Department of Foreign Affairs and Trade
For general questions concerning the A-UKFTA Phone: 02 6261 1111
Email: UKFTA@dfat.gov.au
Web: dfat.gov.au/aukfta

Australian Border Force
For all customs matters, advance rulings, questions about tariff classification, ROOs and DOOs
Email: origin@abf.gov.au
Web: https://www.abf.gov.au/importing-exporting-and-manufacturing/free-trade-agreements

Australian Trade and Investment Commission
For general questions regarding exports to the United Kingdom
Phone: 13 28 78
Email: london@austrade.gov.au
Web: austrade.gov.au/australian/export/free-trade-agreements/aukfta

Australian Chamber of Commerce and Industry
For questions regarding DOOs
Phone: 02 6270 8000
Email: info@acci.com.au
Web: acci.com.au

Australian Industry Group
For questions regarding DOOs
Phone: 1300 776 063
Email: trade.docs@aigroup.com.au
Web: aigroup.com.au/contact (for your nearest office in Australia)

Ozdocs
For questions regarding DOOs
Phone: 02 9899 2000
Email: info@ozdocs.com.au
Web: ozdocs.com.au

TradeWindow Origin
For questions regarding DOOs
Phone: 02 9098 5969
Email: originsupport@tradewindow.io
Web: https://tradewindow.io/origin/

United Kingdom

United Kingdom Customs Services
Web: customs.hmrc.gov.uk

Annex: Sample Declaration of Origin