14-MAR-1991
16:08
BHC CANBERRA, E&C SECTION
06 270 6653
P.02
The Australian Government wishes to give prior advice to the Government of Hong Kong that the Prime Minister of Australia will be making a major economic statement on 12 March 1991 that will have implicationɑ for the level of tariffs that will apply to the products of Hong Kong from 1 July 1992.
2.
The Prime Minister's statement, which will be accompanied by statements by other ministers, will build on the substantial tariff cuts announced by the Prime Minister in his May 988 Economic Statement under which duties on the more highly protected items in the Australian Tariff are being phased down in annual cuts from 1 July 1988 to 1 July 1992. Under those cuts, the average MFN trade weighted Australian Tariff is being slashed from just over 18% to around 11.4%.
3.
The cuts to the Tariff to be announced on 12 March will continue the "tops down" approach to tariff reductions. Tariffs on all items which will be dutiable at General (MFN) rates of more than 5% as at 1 July 1992 will be further reduced. This includes tariffs on textiles, clothing and footwear (TCF) and on motor vehicles and components (PMV).
4. As a result of these tariff cuts, protection provided to Australian industry will be reduced to very low levels. Preliminary estimates indicate that the average MFN tariff on all imports will have fallen from around 18 percent in 1987-88 to 4.7 percent by the year 2000. In the case of many products, the General rate of duty (the MFN rate) will be reduced to levels that are significantly lower than are the preferential rates of duty which currently apply to developing countries under the Australian System of Tariff Preferences (ASTP).
5.
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In these circumstances the AUBERT an Government ag 190ided that it can no longer justify maintaining indefinitely tariff preferences for imports from Singapore, Hong Kong, the Republic of Korea, and Taiwan on the itens on which tariffs afe to be cut from 1 July 1992 It will therefore announce on 12 March that the preferential tariff arrangements under: the ASTP for products from these countries will be adjusted over the period of the tariff cuts.
6.
These adjustments will be effectedwbyret zanesing the rates-of duty that will apply to imports of Singapore, Hong Kong, the Republic of Korea and Taiwan on July-1992. This will result in some imports of these countries gradually losing their margins of preference as General (MFN) rates are reduced that is, on items on which General (MN) rates exceed 5% at 1 July 1992. As the General (MFN) rate on these items reaches or passes the rates which have been frozen, the General (MFN) rate will then apply to the item.
7. We emphasise that these adjustments to preferential arrangements will be made in a way that ensures that:
(i) No substantive tariff applying to imports of Hong Kong will/
be increased; /