3114 NEW ZEALAND GAZETTE No. 107

REVISED DUTY CONCESSION SCHEME FOR WOVEN FABRICS CONTAINING WOOL

Background

Since March 1987 a duty concession scheme has been in place which has enabled apparel manufacturers to apply for duty free access for woven fabrics containing wool which are to be used in the manufacture of apparel. The two relevant concession approvals are published chapter level concessions. The reference numbers are 780848J for Chapter 51 and 580438J for Chapter 55.

The concessions read:

“Fabric for use in the manufacture of apparel as may be approved”

To be able to claim duty free entry under these concessions fabric importers have had to obtain approval from the Textile and Woollen Mills Association (the T&W M Association).

Since the introduction of this scheme in 1987 a number of changes have been made in respect of the administration and operation of the Part II Tariff concessions system. The most significant of these is that the system is now administered by the Ministry of Commerce, under delegated authority from the Minister of Commerce, rather than by the Customs Department on behalf of the Minister of Customs. Also a charging system has been implemented for all Reference 99 concession applications, with the current fee being $252 per application. Several new categories of concessions have also been introduced.

A recent examination of the scheme by the Ministry’s legal advisors has confirmed that the Minister of Commerce does not have the power to delegate authority to any person or organisation outside the Public Service which would enable, for example, the T&W M Association to grant tariff concessions under the Tariff Act. Furthermore, it is not acceptable to approve a concession subject to a further approval being obtained.

Proposed Scheme

In these circumstances it is appropriate that the concession scheme administered by the T&W M Association for apparel fabrics should operate on the same basis as that applied to other goods to be used as inputs to manufacturing. For example, apparel manufacturers requiring knitted fabrics which are not manufactured in New Zealand are able to apply for duty free entry for such fabrics as manufacturing inputs. It is therefore proposed that the two existing concession approvals be withdrawn and replaced by a system whereby fabric importers are required to apply for concessions for apparel fabrics under the Reference 99 “Inputs to Manufacturing” policy.

In general this category is confined to situations where a concession would not normally be granted in terms of the definition of “suitable alternative” but a particular situation justifies a concession. The concession is intended to assist in the lowering of input costs for industry.

The current concession scheme, as administered by the T&W M Association, has been important in ensuring that apparel manufacturers have obtained duty free access for those fabrics which are not manufactured in New Zealand. The revised scheme will ensure that similar access can be retained by manufacturers. It must be stressed that earlier investigations and discussions between the T&W M Association, apparel manufacturers and officials have shown that it has not been possible to distinguish any further in tariff terms between those woven fabrics being made in New Zealand and those not made locally, either for the purposes of Part I of the Tariff or for the purpose of defining products for Part II by way of published Reference 99 concessions.

While the T&W M Association will still be consulted in respect of most applications, decisions on future concession applications will now be made by the Ministry of Commerce based on the usual criteria of the “Inputs to Manufacturing” policy. Under these criteria concessional entry is usually:

i. for specific quantities of the item which is required as an input into manufacturing;

ii. conditional upon the agreement of potential New Zealand suppliers being obtained;

iii. approved for a specified period of time.