WORLD TRADE
ORGANIZATIONWT/COMTD/N/18
21 January 2004
(04-0184)
Committee on Trade and Development Original: English
DUTY- AND QUOTA-FREE ENTRY FOR LEAST-DEVELOPED
COUNTRIES AND EAST TIMOR
Notification from Australia
The following communication, dated 9 December 2003, is being circulated at the request of
the Delegation of Australia.
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The Permanent Mission of Australia in Geneva hereby notifies to the World Trade
Organization Committee on Trade and Development of the duty- and quota-free entry which the
Government of Australia has extended to imports from the 49 countries designated by the United
Nations as "least-developed countries" (LDCs) a nd East Timor with effect from 1 July 2003.
The initiative is comprehensive and unqualified.  It does not exclude sensitive sectors or
provide phasing-in arrangements.
For manufactured goods, the rules of origin require local content to be 50 per cent or more of
total factory cost, and that the last process of manufacture take place in an LDC.  A very broad
definition of local content is provided to assist LDCs meet the 50 per cent target.  An LDC caninclude input from other LDCs, developing countries, Pacific Forum island countries and Australia
(the "qualifying area") in calculating the 50 per cent local content.  Within this, non-LDC developing
country content is subject to a maximum of 25 per cent of manufacturing costs.  Manufacturers are
required to keep cost records and make a declaration as to origin.
Changes to Australia’s Legislation
The Customs Tariff Act 1995, as amended by the  Customs Tariff Amendment Act (No.1) 2003 ,
provides for the duty free entry of goods originating in "Least-Developed Countries", defined as
including the 49 LDCs and East Timor.
Australia's Customs Act 1901  was amended to reflect the rules of origin applying under the
LDC initiative.  Schedule 1 of the Customs Amendment Act (No.1) 2003  (Annex A) incorporates the
above definition of qualifying area for manufactured goods and the 25 per cent non-LDC developing
country cap.  "Least-Developed Country" has the same meaning as in the Customs Tariff Act 1995 .
The local content for goods manufactured in Least-Developed Countries is otherwise calculated in the
same manner as it is calculated for goods manufactured in most other preference countries under
existing provisions of the Customs Act 1901 .
Australian Customs Notice No. 2003/48 outlines the rules for determining whether goods
originate in an LDC or East Timor, as well as the evidence of origin requirements (Annex B).WT/COMTD/N/18
Page 2
ANNEX A
CUSTOMS AMENDMENT ACT (NO.1) 2003
No. 62, 2003
An Act to amend the Customs Act 1901 , and for related purposes
Contents
1. Short title .................................................................................................................. .................2
2. Commencement................................................................................................................. ........2
3. Schedule(s).................................................................................................................. ...............3
SCHEDULE 1 — LEAST-DEV ELOPED COUNT RIES......................................................3
Customs Act 1901............................................................................................................... ...... 3
CUSTOMS AMENDMENT ACT (NO.1) 2003
No. 62, 2003
An Act to amend the Customs Act 1901 , and for related purposes
[Assented to 30 June 2003 ]
The Parliament of Australia enacts:
1. Short title
This Act may be cited as the Customs Amendment Act (No. 1) 2003 .
2. Commencement
(1) Each provision of this Act specified in column 1 of the table commences, or is taken
to have commenced, on the day or at the time specified in column 2 of the table.
Commencement information
Column 1 Column 2 Column 3
Provision(s) Commencement Date/Details
1.  Sections 1 to 3
and anything inthis Act not
elsewhere covered
by this tableThe day on which this Act receives the
Royal Assent30 June 2003
2.  Schedule 1 1 July 2003 1 July 2003
Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented
to.  It will not be expanded to deal with provisions inserted in this Act after assent.
(2) Column 3 of the table is for additional information that is not part of this Act.  This
information may be included in any published version of this Act.WT/COMTD/N/18
Page 3
(3) If a provision commences as a result of item 3 of the table, the Minister must
announce by notice in the Gazette  the day on which the provision commenced.
3. Schedule(s)
Each Act that is specified in a Schedule to this Act is amended or repealed as set out
in the applicable items in the Schedule concerned, and any other item in a Schedule to
this Act has effect according to its terms.
SCHEDULE 1 — LEAST-DEVELOPED COUNTRIES
Customs Act 1901
4. Section 153B
Insert:
Least-Developed Country  has the same meaning as in the  Customs Tariff Act 1995 .
5. Section 153B (after paragraph (f) of the definition of qualifying area )
Insert:
(fa) if goods are claimed to be the manufacture of a Least-Developed Country—
the Developing Countries, the Forum Island Countries and Australia;  or
6. After subsection 153D(2)
Insert:
Goods claimed to be the manufacture of a Least-Developed Country—special rule(2A) If:
(a) goods claimed to be the manufacture of a Least-Developed Country contain
materials that, in the form they were received by the factory, weremanufactured or produced in Developing Countries that are not
Least-Developed Countries;  and
(b) the allowable expenditure of the factory on those materials in aggregate
would, but for this subsection, exceed 25 per cent of the total factory cost of
the goods;
that allowable expenditure on those materials is taken to be 25 per cent of the total
factory cost of the goods.
7. After paragraph 153D(3)(b)
Insert:
(ba) the goods are claimed to be the manufacture of Papua New Guinea or a
Forum Island Country;  andWT/COMTD/N/18
Page 4
8. After section 153N
Insert:
153NA  Manufactured goods originating in a Least-Developed Country
Goods claimed to be the manufacture of a Least-Developed Country are the
manufacture of that country if:
(a) the last process in their manufacture was performed in that country;  and
(b) having regard to their qualifying area, their allowable factory cost is at least
50 per cent of their total factory cost.
[Minister’s second reading speech made in—
House of Representatives on 15 May 2003Senate on 16 June 2003 ]WT/COMTD/N/18
Page 5
ANNEX B
AUSTRALIAN CUSTOMS NOTICE NO. 2003/48
Least-developed countries – rules of origin
From 1 July 2003, goods that originate in Least-Developed Countries (LDCs) and in East Timor will
be eligible for duty-free entry.  The Prime Minister announced the decision in Los Cabos, Mexico on
25 October 2002.  The purpose of this Notice is to outline the rules for determining whether goods
originate in a LDC or in East Timor.
Legislation
Duty-free entry
The Customs Tariff Act 1995 (the Tariff) allows the entry of goods manufactured or produced in
LDCs and East Timor free of import duty from 1 July 2003.  The countries eligible for duty-free entry
are listed in Part 2 of Schedule 1 to the Tariff, which is reproduced at Attachment A to this notice.
Other duties and taxes
While goods from LDCs and East Timor are free of import duty from 1 July 2003, excise-equivalent
duties, goods and services tax, dumping duties and other taxes and levies, including cost recovery
charges, if relevant, are still payable.
Rules of origin for duty-free entry
Under Division 1A of Part VIII of the Customs Act 1901 (Customs Act), two categories of goods will
be considered to be manufactured or produced in an LDC or East Timor for the purposes of duty-free
entry: unmanufactured raw products and manufactured goods.
(i) Unmanufactured raw products
Under section 153H of the Customs Act, goods are th e produce of an LDC or East Timor if they are
its unmanufactured raw products, as defined in section 4 of that Act.
(ii)  Manufactured goods
Under section 153NA, goods are the manufacture of an LDC if:
(a) the last process in the manufacture of the goods was performed in an LDC;  and(b) the allowable factory cost of the goods is not less than 50 per cent of the total factory cost of
the goods.
The above provisions, and the methods for calculating allowable factory costs and total factory costs,
are similar to those for most other preference countries.
Allowable expenditure on materials
Section 153D of the Customs Act sets out the method for calculating the allowable expenditure on
materials sourced from within a qualifying area.WT/COMTD/N/18
Page 6
The allowable expenditure on materials is the value of materials originating within a qualifying area
(less the value of any inputs to those materials that originate outside the qualifying area).
For LDCs, the qualifying area consists of th e Developing Countries (DCs), the Forum Island
Countries (FICs) and Australia. FICs and DCs are list ed in Parts 1, 3 and 4 of Schedule 1 to the Tariff.
The total value of materials originating in DCs that are not LDCs that can be included in the allowable
expenditure on materials is limited to 25 per cent of the total factory cost of the goods.  This provision
is aimed at ensuring that the benefits of the Government’s decision flow primarily to LDCs, rather
than to other DCs.
Other preferential arrangements for LDCs
Where goods manufactured in an LDC do not meet the rules of origin for LDCs, the goods may still
be eligible for a preferential rate of duty where they meet the rules of origin for other preference
countries, as set out in Division 1A of Part VIII of the Customs Act.
For those goods manufactured in an LDC that do not meet the rules of origin for any relevant
preference scheme, the general rate of duty will be payable.
Administration
Evidence of origin
Before claiming duty-free entry, importers need to obtain sufficient evidence that the goods meet the
rules of origin for LDCs.  For example, importers could obtain a declaration from the producer ormanufacturer of the goods.  Examples of such declarations are provided at Attachment B to this
Notice.
A declaration from a supplier that is not the producer or manufacturer of the goods will not be
sufficient evidence that the goods meet the rules of origin for LDCs.
Import entry requirements
For each import entry, the appropriate country code  for the LDC must be input in the origin field,
even if the goods do not qualify for preference.
One of the following preference codes must then be input in the preference indicator field:
• "L" when claiming duty-free entry because the rules of origin for LDCs are met
• "F" when claiming duty-free entry because the rules of origin for FICs are met
• "A" when claiming the five percentage point margin of preference because the rules of origin
for DCs are met or
• "X" when preference is not claimed because the relevant preferential rules of origin are not
met.
Incorrect claims for preference
Importers should take reasonable care to ensure, before claiming preference, that their goods meet the
relevant rules of origin.WT/COMTD/N/18
Page 7
Where preference is claimed and the Australian Customs Service finds that the imported goods do not
meet the relevant rules of origin, Customs will demand the duty short-paid and may impose penalties.
Additional action may be taken where fraud is indicated.
Contacts
Any inquiries in relation to this Notice should be directed by email to origin@customs.gov.au or to
the Manager Origin, Trade Branch on (02) 6275 6551.
John Arndell
Acting National ManagerTrade
For Chief Executive Officer
July 2003WT/COMTD/N/18
Page 8
Attachment A
LEAST-DEVELOPED COUNTRIES
Afghanistan Madagascar
Angola Malawi
Bangladesh Maldives
Benin Mali
Bhutan Mauritania
Burkina Faso Mozambique
Burundi Myanmar, Union ofCambodia Nepal
Cape Verde Niger
Central African Republic Rwanda
Chad Sao Tome and Principe
Comoros SenegalCongo, Democratic Republic of Sierra Leone
Djibouti Solomon Islands
Equatorial Guinea Somalia
Eritrea Sudan
Ethiopia Tanzania, United Republic ofGambia Togo
Guinea Tuvalu
Guinea-Bissau Uganda
Haiti Vanuatu
Kiribati Western SamoaLao People's Democratic Republic Yemen, Republic of
Lesotho Zambia
Liberia
COUNTRIES TREATED AS LEAST-DEVELOPED COUNTRIES
East Timor (Timor Leste)WT/COMTD/N/18
Page 9
Attachment B
EXAMPLES OF DECLARATIONS BY PRODUCERS AND MANUFACTURERS
UN-MANUFACTURED RAW PRODUCTS
“I declare that the goods described below* are the un-manufactured raw products of
………………………….., ( name of Least-Developed Country ).”
Item Nos.Marks and
Numbers of
packagesQuantity of
goods DescriptionNumber and
date of invoices
Signature:Name:
Position in production business:
Name of production business:
Date:
MANUFACTURED GOODS
“I declare that:
(a) the last process in the manufacture of the goods described below* was performed in
………………………………….. ( name of Least-Developed Country ); and
(b) not less than 50% of their total factory cost is represented by the sum of the allowable
expenditure of the factory on materials, labour and overheads and the cost of inner containers of………………………………….. ( names of relevant Least-Developed Countries, Developing
Countries, Forum Island Countries and/or Australia ); and
**(c) expenditure of the factory on materials produced or manufactured in
……………………………….. ( names of all relevant Developing Countries that are not
Least-Developed Countries ) that has been included, in aggregrate, in the allowable expenditure of the
factory on materials does not exceed 25% of the total factory cost of the goods.”
*Description of goods:
Item Nos.Marks and
Numbers of
packagesQuantity of
goods DescriptionNumber and
date of invoices
Signature:
Name:
Position in manufacturing business:
Name of manufacturing business:Date:
*  If the declaration is on the invoice for the goods, a reference in the body of the declaration to the invoice lines
covered by the declaration is an acceptable alterna tive to completing the “Description of goods” table.
**Only include if a Developing Country that is not a Least-Developed Country is cited in (b).
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