Commodity Fact Sheet
What’s the Outcome for Processed Foods and Beverages?
Examples: breads, cakes, and pastries; soups and broths; wines; distilled spirits; and chocolate bars.
On February 8, 2004, the United States and Australia concluded negotiations on a Free Trade Agreement (FTA), and on February 13, 2004, President Bush notified Congress of the intent of the United States to enter into an FTA with Australia. The FTA contains commitments on most agricultural products, and addresses other trade measures between the two countries as well.
The current situation . . .Australia generally applies low tariffs on agricultural products, and for certain products, such as chocolate bars, applies a tariff of 5 percent instead of the 17 percent tariff permitted under the rules of the World Trade Organization (WTO). U.S. processed foods and beverages, such as breads, cakes, and pastries (HTSUS 1905), wines (HTSUS 2204), distilled spirits (HTSUS 2208), and chocolate bars (HTSUS 1806.31) face import tariffs of 5 percent, while soups and broths (HTSUS 2104.10) face import tariffs of 4 percent. From 2001 through 2003, U.S. suppliers annually shipped to Australia on average: breads, cakes, and pastries valued at $4.6 million; soups and broths valued at $80,000; wines valued at $1.1 million; distilled spirits valued at $56 million; and chocolate bars valued at $1.3 million.
With the agreement . . .Australia locks in immediate duty-free tariff treatment for all U.S. processed foods and beverages, including those mentioned above.
United States Commitments
The current situation . . . U.S. imports of Australian processed foods and beverages enter duty-free or face tariffs ranging up to 21.3 percent. Breads, cakes, and pastries as well as distilled spirits enter duty-free. Soups and broths face 3.2 percent tariffs, wines face tariffs ranging from 5.3 to 19.8 cents per liter, and chocolate bars face tariffs of 5.6 percent. From 2001 through 2003, U.S. imports of breads, cakes, and pastries from Australia averaged $3.4 million per year; soups and broths averaged $100,000; wines averaged $476 million; distilled spirits averaged $153,000; and chocolate bars averaged $290,000.
With the agreement . . .The United States offers different schedules for tariff elimination for different processed foods and beverages. Duty-free entry is locked in for products like breads, cakes and pastries as well as distilled spirits that already enter the United States duty-free. Tariffs are immediately eliminated for other products, including soups and broths, while tariffs on yet other products are phased out and then eliminated over different transition periods. For example, import tariffs on chocolate bars are phased out over 10 years in equal annual cuts while those for wine are phased out over 11 years using a formula similar to that used in the U.S. - Chile FTA.
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