EXPORTS - ChAFTA Certificates of Non Manipulation (CNM)

Freight & Trade Alliance representatives recently met in Canberra with representatives of the Department of Foreign Affairs and Trade (DFAT). An issue raised by DFAT was in terms of ChAFTA CNMs for exporting from Australia to China. Following our meeting, DFAT has prepared the following information for the reference our members and for dissemination to the National Committee on Trade Facilitation (NCTF).
 
DFAT has become aware that some exporters are being asked to source (and pay for) a certificate of non-manipulation (CNM) when using the China-Australia FTA (ChAFTA), if their exports are being transhipped through a third country on their way to China. However, as is made clear from the text of the FTA (excerpt below), to receive the benefit of lower ChAFTA tariffs, a CNM may not be required in every instance when goods are transhipped.
 
ChAFTA Article 3.13 (Direct Consignment), paragraph two, outlines the following conditions with regard to transhipment:
 
"…an originating good transported through one or more non-parties, with or without trans-shipment or temporary storage in such non-parties, shall retain its originating status, provided that:
 
(a)     the good remains under customs control in those non-parties;
 
(b)     the good does not undergo any operation there other than unloading and reloading, repacking, re-labelling for the purpose of satisfying the requirements of the importing Party, temporary storage or any operation required to keep them in good condition; and
 
(c)     in cases where the good is temporarily stored in the territory of a non-party, as provided in paragraph 2 of this Article, stay of the good in that non-party shall not exceed 12 months from the date of its entry."
 
The Chinese authorities have released implementing decrees to cover these issues. Unofficial translations of the relevant documents are available here: http://dfat.gov.au/trade/agreements/chafta/fact-sheets/Pages/guide-to-using-chafta-to-export-and-import-goods.aspx. These documents indicate that if the bill of lading shows – on the same page - an Australia port of departure and Chinese port of arrival, additional documentation from the Customs Authority of the third party/transit country will not be required.
 
While China customs is entitled to request further documentation if it believes more information is required to confirm that goods retain origin, this should not be the rule. Freight forwarders and exporters should give thought to whether it is worth incurring the cost of CNM as a matter of course when goods are transhipped to China via a third party.
 
Further information about ChAFTA is available on the Department of Foreign Affairs and Trade's ChAFTA website on our ChAFTA Frequently Asked Questions page, and as attachments to our Guide to Using ChAFTA to Export and Import. This last webpage has unofficial translations of specific Chinese/Hong Kong regulations pertaining to this issue.
 
DFAT short-form guide to using FTAs (helpful for clients and non-trade experts)
In our teleconference of 2 September 2016, DFAT noted their intention to produce a short-form guide on using FTAs/obtaining COOs, to seek to fill an information gap around this issue for clients of NCTF member organisations. I have attached a PDF copy and a link to the document. It may be that members can include it with the Shipping Letter of Instructions (or similar)to their customers. This will help to ensure that people understand the steps they need to take to benefit from the north Asia FTAs.
 
Tariff cuts occurring on 1 January 2016
As you would be aware, the next round of tariff cuts for ChAFTA and KAFTA will occur on 1 January 2017. We note this now as advising your clients may assist them to determine shipping decisions to take advantage of these cuts after 1 January.
 
If you have any queries in relation to these matters please contact Lorraine Hitch (02 6261 1809 or Lorraine.hitch@dfat.gov.au), Director of DFAT's FTA Outreach Unit.