09 December 2010

China Free Trade Mess

New Zealand signed a trade agreement with China. From 1 January 2011, some duty rates will be marginally lower for goods of Chinese origin, when imported direct from China. The implementation, sadly, is a mess.

The reductions are not as simple as "10% becomes 8.1%". Officials decided instead to create separate tariffs for different items. For example, men's cotton shirts not exceeding 81 cm chest measurement will pay 8.1%, but other sizes will pay 10%, unless they are not made of cotton or man-made fibres, in which case they will pay 8.1%.

Confused? You should be. This appears to us to be a make-work scheme for Customs officials. It is not clear what will happen to goods from Southern China coming out of Hong Kong. There is even talk of going back to the archaic system of obtaining hard-copy certificates of origin for Hong Kong goods, a bureaucratic nightmare that we discarded years ago.

This means that we will need to know, for each garment imported, the following four items:

1. Garment type: shirts, blouses, etc. (but not general descriptions, such as "tops")
2. Gender: men's / women's / unisex
3. Predominant fibre: cotton / wool / man-made fibres / other
4. Method of construction: woven / knitted / other

Importers wanting to find out what duty rate will apply to their products, will need to go and inquire individually for each tariff item, using this website: http://www.chinafta.govt.nz/2-For-businesses/2-Tools-and-resources/3-Tariff-finder/index.php.

To try to make it a little easier for apparel importers, we have put together a spreadsheet, which lists the duty reduction calendar for all tariff items in Chapters 61 and 62 of the tariff. Please contact our Customs brokers if you require assistance with finding what tariffs will apply to your goods from 1 January.

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