{"id":"F2004B00317","name":"Customs (Australia–US Free Trade Agreement) Regulations 2004","slug":"customs-australia-us-free-trade-agreement-regulations-2004","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"288 of 2004","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":31350,"registerId":"commonwealth-F2004B00317-current","compilationNumber":null,"startDate":"2026-04-01","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Part 1","sectionType":"part","heading":"Introductory","content":"## Part 1—Introductory","sortOrder":0},{"sectionNumber":"1.1","sectionType":"section","heading":"Name of Regulations","content":"#### 1.1 Name of Regulations\n\n  These Regulations are the Customs (Australia–US Free Trade Agreement) Regulations 2004.","sortOrder":1},{"sectionNumber":"1.3","sectionType":"section","heading":"Authority","content":"#### 1.3 Authority\n\n  These Regulations are made under the Customs Act 1901.","sortOrder":2},{"sectionNumber":"1.4","sectionType":"section","heading":"Definitions","content":"#### 1.4 Definitions\n\n  In these Regulations:\n\n> Act means the Customs Act 1901.\n\n> Agreement has the meaning given by section 153YA of the Act.\n\n> Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 means the Agreement of that name set out in Annex 1A of the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994.\n\n> Note: The Marrakesh Agreement Establishing the World Trade Organization is in Australian Treaty Series 1995 No. 8 (\\[1995\\] ATS 8) and could in 2021 be viewed in the Australian Treaties Library on the AustLII website (http://www.austlii.edu.au).\n\n> non‑originating materials has the meaning given by section 153YA of the Act.\n\n> originating materials has the meaning given by section 153YA of the Act.\n\n> produce has the meaning given by section 153YA of the Act.\n\n> US means the United States of America.\n\n> used has the meaning given by section 153YA of the Act.","sortOrder":3},{"sectionNumber":"Part 2","sectionType":"part","heading":"Tariff change requirement","content":"## Part 2—Tariff change requirement","sortOrder":4},{"sectionNumber":"2.1","sectionType":"section","heading":"Change in tariff classification requirement for non‑originating materials","content":"#### 2.1 Change in tariff classification requirement for non‑originating materials\n\n  For the purposes of subsection 153YD(3) of the Act, a non‑originating material used in the production of goods that does not satisfy a particular change in tariff classification is taken to satisfy the change in tariff classification if:\n    (a) it was produced entirely in the US, or entirely in the US and Australia, from other non‑originating materials; and\n    (b) each of those other non‑originating materials satisfies the change in tariff classification, including by one or more applications of this regulation.","sortOrder":5},{"sectionNumber":"Part 3","sectionType":"part","heading":"Regional value content requirement","content":"## Part 3—Regional value content requirement","sortOrder":6},{"sectionNumber":"3.1","sectionType":"section","heading":"Build‑down method","content":"#### 3.1 Build‑down method\n\n  (1) For the purposes of subsection 153YD(7) of the Act, the regional value content of goods under the build‑down method is worked out using the formula:\n  ![](image.002.png)\n  where:\n\n> customs value means the customs value of the goods worked out under Division 2 of Part VIII of the Act.\n\n> value of non‑originating materials means the value, worked out under Part 4, of the non‑originating materials that are acquired by the producer and are used by the producer in the production of the goods, other than non‑originating materials produced by the producer.\n\n  (2) Regional value content must be expressed as a percentage.","sortOrder":7},{"sectionNumber":"3.2","sectionType":"section","heading":"Build‑up method","content":"#### 3.2 Build‑up method\n\n  (1) For the purposes of subsection 153YD(7) of the Act, the regional value content of goods under the build‑up method is worked out using the formula:\n  ![](image.003.png)\n  where:\n\n> customs value means the customs value of the goods worked out under Division 2 of Part VIII of the Act.\n\n> value of originating materials means the value, worked out under Part 4, of the originating materials that are acquired by the producer, or produced by the producer, and are used by the producer in the production of the goods.\n\n  (2) Regional value content must be expressed as a percentage.","sortOrder":8},{"sectionNumber":"3.3","sectionType":"section","heading":"Net cost method","content":"#### 3.3 Net cost method\n\n  (1) For the purposes of subsection 153YD(7) of the Act, the regional value content of goods under the net cost method is worked out using the formula:\n  ![](image.004.png)\n  where:\n\n> net cost means the net cost of the goods worked out in accordance with Articles 5.4 and 5.18 of the Agreement.\n\n> value of non‑originating materials means the value, worked out under Part 4, of the non‑originating materials that are acquired by the producer and are used by the producer in the production of the goods, other than non‑originating materials produced by the producer.\n\n  (2) Regional value content must be expressed as a percentage.","sortOrder":9},{"sectionNumber":"Part 4","sectionType":"part","heading":"Determination of value","content":"## Part 4—Determination of value","sortOrder":10},{"sectionNumber":"4.1","sectionType":"section","heading":"Value of goods that are originating materials or non‑originating materials","content":"#### 4.1 Value of goods that are originating materials or non‑originating materials\n\n  (1) For the purposes of subsection 153YA(2) of the Act, this regulation explains how to work out the value of originating materials or non‑originating materials used in the production of goods.\n  (2) The value of the materials is as follows:\n    (a) for materials imported into the US by the producer of the goods—the value of the materials worked out in accordance with the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994;\n    (b) for materials acquired in the US—the value of those materials worked out under paragraph (a) on the assumption that those materials had been imported into the US;\n    (c) for materials that are produced by the producer of the goods—the sum of:\n    (i) all the costs incurred in the production of the materials, including general expenses; and\n    (ii) an amount that is the equivalent of the amount of profit that the producer would make for the materials in the normal course of trade.\n  (3) In working out the value of particular originating materials under subregulation (2), the following may be included, to the extent that they have not been taken into account under that subregulation:\n    (a) the costs of freight, insurance, packing and all other costs incurred to transport the materials within the US, or between Australia and the US, to the location of the producer of the goods;\n    (b) duties, taxes and customs brokerage fees on the materials that:\n    (i) have been paid in either or both of the US and Australia; and\n    (ii) have not been waived or refunded; and\n    (iii) are not refundable or otherwise recoverable;\n    including any credit against duties or taxes that have been paid or that are payable;\n    (c) the costs of waste and spoilage resulting from the use of the materials in the production of the goods, reduced by the value of renewable scrap or by‑products.\n  (4) In working out the value of particular non‑originating materials under subregulation (2), the following may be deducted if they were included under that subregulation:\n    (a) the costs of freight, insurance, packing and all other costs incurred to transport the non‑originating materials within the US, or between Australia and the US, to the location of the producer of the goods;\n    (b) duties, taxes and customs brokerage fees on the non‑originating materials that:\n    (i) have been paid in either or both of the US and Australia; and\n    (ii) have not been waived or refunded; and\n    (iii) are not refundable or otherwise recoverable;\n    including any credit against duties or taxes that have been paid or that are payable;\n    (c) the costs of waste and spoilage resulting from the use of the non‑originating materials in the production of the goods, reduced by the value of renewable scrap or by‑products;\n    (d) the costs of processing incurred in either or both of the US and Australia in the production of the non‑originating materials;\n    (e) the costs of originating materials used in the production of the non‑originating materials in either or both of the US and Australia.","sortOrder":11},{"sectionNumber":"4.2","sectionType":"section","heading":"Value of accessories, spare parts or tools","content":"#### 4.2 Value of accessories, spare parts or tools\n\n  If paragraphs 153YD(8)(a), (b), (c) and (d) of the Act are satisfied in relation to goods:\n    (a) the value of the accessories, spare parts or tools must be taken into account for the purposes of working out the regional value content of the goods under Part 3 of these Regulations; and\n    (b) if the accessories, spare parts or tools are non‑originating materials—for the purposes of Part 3 of these Regulations and regulation 4.1, those accessories, spare parts or tools are taken to be non‑originating materials used in the production of the goods; and\n    (c) if the accessories, spare parts or tools are originating materials—for the purposes of Part 3 of these Regulations and regulation 4.1, those accessories, spare parts or tools are taken to be originating materials used in the production of the goods.","sortOrder":12},{"sectionNumber":"4.3","sectionType":"section","heading":"Value of packaging material and container","content":"#### 4.3 Value of packaging material and container\n\n  If paragraphs 153YK(1)(a) and (b) of the Act are satisfied in relation to goods and the goods must have a regional value content of not less than a particular percentage worked out in a particular way:\n    (a) the value of the packaging material or container in which the goods are packaged must be taken into account for the purposes of working out the regional value content of the goods under Part 3 of these Regulations; and\n    (b) if that packaging material or container is a non‑originating material—for the purposes of Part 3 of these Regulations and regulation 4.1, that packaging material or container is taken to be a non‑originating material used in the production of the goods; and\n    (c) if that packaging material or container is an originating material—for the purposes of Part 3 of these Regulations and regulation 4.1, that packaging material or container is taken to be an originating material used in the production of the goods.","sortOrder":13}],"analysis":{"kimi_summary":{"content_quality":"ok","complexity_score":7,"scope_assessment":{"changed":false,"description":"The regulations remain tightly focused on their original purpose: operationalising the rules of origin and valuation requirements for the Australia-US Free Trade Agreement. The scope covers tariff classification changes, regional value content calculations, and material valuation—precisely the technical machinery required to implement the treaty's origin provisions. There is no evidence of scope creep into unrelated customs matters or extension beyond the AUSFTA framework."},"complexity_factors":["Three distinct mathematical formulas for regional value content (build-down, build-up, net cost) with different variables and denominators","Recursive logic in regulation 2.1 allowing multiple applications of the same rule to nested production chains","Cross-referencing to external treaty documents (WTO Valuation Agreement, AUSFTA Articles 5.4 and 5.18) without reproducing their content","Bifurcated valuation methodology in Part 4 with different rules for originating vs non-originating materials, and different treatment for imported vs domestically acquired materials","Conditional inclusions and exclusions in regulations 4.1(3) and 4.1(4) with multiple cumulative criteria (e.g., duties that are paid AND not waived AND not refundable)","Deemed treatment provisions in regulations 4.2 and 4.3 that reclassify accessories, spare parts, tools and packaging as production materials for calculation purposes","Dependence on undefined Customs Act provisions (sections 153YA, 153YD, 153YK) and Division 2 of Part VIII for core concepts like customs value"],"plain_english_summary":"These regulations set the rules for determining whether goods qualify for preferential (discounted) tariffs under the Australia–United States Free Trade Agreement (AUSFTA).\n\n**Who it affects:**\n- **Importers and exporters** moving goods between Australia and the US\n- **Manufacturers** who produce goods using materials from multiple countries\n- **Customs brokers** and freight forwarders handling cross-border trade\n\n**What it does:**\nThe regulations create three technical tests to decide if goods are \"Australian\" or \"American\" enough to get tariff cuts:\n\n1. **The \"tariff shift\" test (Part 2):** If a manufacturer uses imported parts (non-originating materials), those parts must change tariff classification (a bureaucratic category system for goods) during production. There's a clever exception: if the parts themselves were made in the US or Australia from other imported parts that *did* change classification, they still qualify.\n\n2. **The \"regional value content\" test (Part 3):** Goods must contain a minimum percentage of US or Australian content. The regulations provide three different mathematical formulas to calculate this:\n   - **Build-down method:** Start with the final product's value and subtract the value of foreign parts\n   - **Build-up method:** Add up the value of US/Australian parts directly\n   - **Net cost method:** A more complex accounting approach using specific rules from the trade agreement itself\n\n3. **The valuation rules (Part 4):** Detailed instructions on how to put a dollar figure on materials, including what costs count (freight, insurance, duties) and what can be deducted (waste, processing costs). Special rules cover accessories, spare parts, tools, and packaging.\n\n**Why it matters:**\nThese rules determine whether a company pays standard import duties (often 5% or higher) or reduced/zero rates under the free trade agreement. For businesses with complex supply chains spanning multiple countries, these calculations can mean the difference between competitive pricing and being priced out of the market."},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"The Regulations implement technical elements of the Australia–US Free Trade Agreement’s rules of origin and valuation and do not extend beyond that implementing purpose. They remain narrowly targeted at defining origin tests (tariff change and RVC), valuation methods for inputs, and how to treat accessories and packaging for RVC. The provisions (for example reg 2.1's allowance for multi‑step tariff‑change qualification and the three RVC methods) are consistent with the Agreement's operational requirements rather than representing an expansion of policy scope beyond the FTA's origin and valuation regime."},"complexity_factors":["Multiple cross‑references to the Customs Act (notably ss 153YA, 153YD, 153YK) and to Division 2 of Part VIII for customs value","References to external international instruments (WTO Agreement on Implementation of Article VII and specific Articles 5.4 and 5.18 of the Australia–US Agreement) requiring application of foreign‑law valuation rules","Three alternative RVC calculation methods (build‑down, build‑up, net cost) with different bases and inputs (regs 3.1–3.3)","Regulation 2.1 allows recursive (cascading) application of the tariff‑classification change rule, creating nested qualification logic","Detailed valuation adjustments with conditional inclusions and deductions for originating and non‑originating materials (reg 4.1(3)–(4))","Separate rules for accessories/spare parts/tools and for packaging/containers with statutory triggers (regs 4.2–4.3)","Dependency on defined terms that are partly in the Customs Act (several core terms are referenced but not fully restated in the Regulations) (reg 1.4)","Need to convert values into percentages and to reconcile customs valuation and internal cost accounting (practical numerical complexity)"],"plain_english_summary":"This instrument implements the Australia–United States Free Trade Agreement’s rules of origin and value calculations in Australian customs regulations so eligible goods can receive preferential tariffs. It sets how to calculate regional value content, value materials, and treat multi‑stage inputs for origin purposes.\n\nIt affects Australian and US producers, importers/exporters, brokers and the Australian Border Force. It matters because it enables tariff benefits while creating compliance, recordkeeping and sourcing incentives that may change supply‑chain decisions and impose administrative costs."},"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"}},"importantCases":[],"_links":{"self":"/api/acts/customs-australia-us-free-trade-agreement-regulations-2004","history":"/api/acts/customs-australia-us-free-trade-agreement-regulations-2004/history","analysis":"/api/acts/customs-australia-us-free-trade-agreement-regulations-2004/analysis","conflicts":"/api/acts/customs-australia-us-free-trade-agreement-regulations-2004/conflicts","importantCases":"/api/acts/customs-australia-us-free-trade-agreement-regulations-2004/important-cases","documents":"/api/acts/customs-australia-us-free-trade-agreement-regulations-2004/documents"}}