DO MACADAMIAS BENEFIT FROM KAFTA?

Macadamia nuts grown in Australia qualify for preferential treatment under the KAFTA. They must be supported by a Certificate of Origin (COO) to qualify for preferential treatment (See What documents do I need to export?). Claims for treatment must be made at the time of importation.

HAVE TARIFFS BEEN REDUCED?

Under KAFTA the tariff on Australian exports of (in-shell and shelled) macadamia nuts to Korea has been reduced. It will be eliminated gradually over time.

Prior to the KAFTA, exports of macadamia nuts (in-shell and shelled) faced a tariff of 30%. Under KAFTA, the 30% tariff will be eliminated within 5 years. The reduction will be staged annually, falling by 6% each year. The first 6% was removed at entry into force of the FTA. By 1 January 2018 the tariff will be zero.

The rates are as follows:

  • 12 December 2014: 24%
  • 1 January 2015: 18%
  • 1 January 2016: 12%
  • 1 January 2017: 6%
  • 1 January 2018: 0%

Tariff rates agreed under KAFTA may not be increased. Any subsequent (better) tariff reductions which Korea grants to all other WTO members will automatically apply under the KAFTA.

WHAT TARIFFS ARE PAYABLE?

The current (2015) tariff on exports of (in-shell and shelled) macadamia nuts to Korea under KAFTA is 18%.

This is lower than the tariff applied to macadamia nut exports of other countries,*which is 30%.

WHAT DOCUMENTATION DO I NEED?

A Certificate of Origin (COO) is required to qualify for preferential treatment under the Korea-Australia Free Trade Agreement (KAFTA). The COO should be prepared by the exporter or the producer (self-certification). Australian exporters also have the option of obtaining a COO from an authorised body; the Australian Chamber of Commerce and Industry (ACCI) or the Australian Industry Group (Ai Group).

The COO requires the exporter to provide the following information:

  1. Issuing number;
  2. Exporter, including contact details;
  3. Blanket period for multiple shipments;
  4. Producer, including contact details (optional);
  5. Importer, including contact details (optional);
  6. Description of good(s);
  7. Harmonized System code (six digits);
  8. Preference criterion;
  9. Observations (optional);
  10. Declaration; and
  11. Name, signature, company or authorised body and contact details of person completing the Certificate of Origin (COO); and date of issue.

The following is required prior to export of plant products to Korea, including macadamia nuts:

  1. A Notice of Intention to Export Prescribed Goods or Request For Permit. The Notice must be submitted to the Australian Department of Agriculture (DAFF).
  2. A Certificate of Registration that the macadamia nuts have been prepared and inspected in a registered Australian establishment. To be registered the premises must be constructed, equipped and operate in an effective and hygienic manner. The exporter mustsubmit an Export Registration form to the local DAFF office. Once the application is approved and the establishment has passed inspection, the premises will be registered.
  3. An Export Permit that has been signed and stamped by a DAFF Authorized Officer. This will occur after the officer has inspected the goods and is satisfied that they meet the requirements of Australian export legislation and Korean requirements. All prescribed goods shipments over 10 kilograms require an export permit. An export permit is valid for 28 days once it is issued.
  4. Pro-forma invoices may be required in order for importers to conveniently open a letter of credit.
  5. A Commercial invoice issued and signed by the seller which shows the unit cost of each article and if necessary other costs. These invoices should also be sent under separate cover to the consignee. No special forms of invoices are prescribed in Korea.
  6. A Bill of Lading/Airway bill made out to the Order of Letter of Credit (L/C) Opening Bank. The bills could be required to bear the name and address of the consignee.
  7. A minimum of four copies of the packing list; one copy to be included in the relative package, one copy to be sent to the negotiating bank, and one copy each for the exporter and importer. It must also contain a full description of the contents of the shipment.
  8. An Organic Certificate, for foods labelled as organic. See labelling and marketing requirements below.
  9. The Insurance Contract. In the case of a Cost, Insurance and Freight (CIF) contract (Incoterms 1990), the policy must cover 110% of the invoice value, be endorsed by the exporters and expressly state that claims are payable in the currency of the draft. The policy should name an insurance agent as the correspondent in Korea for the settlement of any claims.

Under KAFTA an Australian exporter, or its Korean importer, can request an advance ruling from Korean Customs Service prior to the export of the good concerning its tariff classification, the applicable customs valuation criteria, whether the good is originating or not, and other matters.

WHAT OTHER REQUIREMENTS ARE THERE?

Exports of macadamia’s (fresh or dried) to Korea must satisfy procedures according to Korea’s Plant Quarantine Act and the Food Sanitation Act.

Phytosanitary certificate

Australian exporters must obtain a Phytosanitary certificate issued by the Australian Department of Agriculture to export macadamia nuts (shelled and non-shelled) to Korea.

This Phytosanitary certificate certifies that consignments of macadamia nuts (in-shell or shelled) from Australia have been inspected according to appropriate procedures and are considered free from pests, soil, weed seeds and extraneous material.

In order to obtain a Phytosanitary certificate, the macadamia nuts must be prepared and inspected in a (DAFF) registered establishment.

For sea freight shipments, both the container and the seal numbers must be recorded on the phytosanitary certificate.

ARE THERE TECHNICAL STANDARDS?

All imported food products are required to carry legible Korean language labels. Stickers may be used, but should not be easily removable nor should they cover the original label. Labels must include the product name, producer name, manufacture date (packing date or package year), net quantity of contents, and storage and handling instructions.

Korean language labels, except for country of origin markings that must be shown at the time of customs clearance, can be attached locally on products in the bonded area, either before or after customs clearance.

Korea requires an Organic Certificate issued by Korea’s certifying agents for all imported foods (including unprocessed) labelled as organic. The certification for organic produce is classified into two categories: organic and no-pesticide. Australian Certified Organic (ACO) is currently the only certification body that has been accredited by the Korean government bodies for the inspection and certification according to Korean organic standards. The exporter must apply for organic certification from the ACO. The exporter should also keep the Korean importer informed on their ACO application so that the importer can seek Korean certification co-currently.

Exporters must obtain an Organic Certificate prior to the consignment departing Australia. Australia prohibits the export of organic produce unless an Organic Produce Certificate has been issued by the recognised authority in Australia.

ARE THERE OTHER CHARGES?

An export charge is payable on macadamia nuts which are produced in and exported from Australia. The levy and export charge funds Horticulture Innovation Australia Limited (HIAL) macadamia research and development (R&D) and marketing and National Residue Survey (NRS) testing

The producer, (the person who owns the product at the time of export from Australia) or the producer’s agent must pay the charge, to the Levies Revenue Service (LRS).

As of 1 October 2013, the rate of domestic levy and export charge on dried kernel of macadamia nuts was 25.21 cents per kilogram.

HOW ELSE IS KAFTA IMPROVING ACCESS?

The KAFTA creates an institutional framework for both countries to accelerate tariff reductions, address non-tariff barriers affecting trade and cooperate on agricultural trade.

Accelerate tariff reductions

  • KAFTA creates a mechanism for Australia and Korea to consider accelerating tariff reductions which have been agreed under the agreement. A Committee on Trade in Goods is established under the agreement and part of its mandate is to conduct consultations on accelerating tariff elimination.

Review barriers of concern

  • Non-tariff barriers of concern to Australia can also be reviewed under the KAFTA to improve trade. The Committee on Trade in Goods can review specific non-tariff barriers which are identified by Australia. The Committee will consider approaches to facilitate trade and make recommendations to the parties to address the barriers. The recommendations can then be considered by high level officials from Korea under the Joint Committee of the Agreement, which oversees its general implementation.

Cooperate with Korean farmers and regulators

  • KAFTA encourages cooperation on agriculture by both public and private entities in Korea and Australia. Cooperative activities on any agricultural matter can be undertaken to promote cooperative relationships between Korean and Australian farmers.
    Recommendations for cooperative activities are made by a Committee on Agricultural Cooperation under the agreement. It is comprised of officials from both Australian and Korean Agricultural, Fisheries and Forestry Ministries and meets annually. The Australian Government Department of Agriculture is the designated contact point for overseeing and coordinating agricultural cooperation activities.
  • The KAFTA supports cooperation between Australia and Korea to promote trade on technical standards, including through the development of bilateral initiatives on standards, testing procedures and technical regulation. Sector specific proposals for cooperation can be raised by either country and must be considered by the other.
    The Technical Barriers to Trade (TBT) Coordinator under the Agreement (for Australia the Department of Industry and for Korea the Korean Agency for Technology and Standards) will consider specific proposals for cooperation as well as facilitate mutual recognition agreements. Further issues can be considered under an Ad Hoc Working Group. Similarly, there is agreement to cooperation on quarantine issues including detection of pathogens and plant pest control, among other issues.
WHERE CAN I GET MORE ADVICE?
DOES KAFTA MAKE EXPORTING EASIER?

KAFTA sets out disciplines to ensure that technical standards, such as marking and labelling, do not create barriers to trade. It affirms and builds on WTO commitments. KAFTA:

  • Encourages the use labelling and marking only for the purpose of providing information which is relevant to consumers;
  • Requires that identification numbers for Australian economic operators are issued without delay and on the same basis as for Korean operators;
  • Makes provision for the use of both English and Korean language labels on products;
  • Encourages the acceptance of detachable labels, and the use of marking and labelling in documentation accompanying the product rather than being attached to it.

KAFTA supports recognition and acceptance of product testing results conducted by Australia in Korea. Korean authorities must explain reasons in the event the testing results of Australia are not accepted, and must consider requests by Australia to negotiate agreements for recognition of product testing.

KAFTA also encourages greater transparency in the development of standards in Korea and their accessibility. For example, there is a requirement that proposed standards are notified to Australia and that standards are made publicly available.

Macadamia nuts hanging on a tree ready for picking.