The Albanese Labor Government will abolish almost 500 ‘nuisance’ tariffs on selected imported goods from July 1 this year, including across textile, clothing and footwear.
This is the biggest unilateral tariff reform in at least two decades.
Out of the 500 tariffs on the chopping block, 118 are linked to the fashion and textile space, including three tariffs in footwear, 12 across clothing items and 57 related to cotton.
This includes the removal of tariffs on protective footwear, with annual imports worth $160 million, chamois leather with $100,000 in annual imports, and pyjamas with almost $108 million in annual imports.
Other tariffs include fur skins and artificial fur; raw hides and skins; wool; man-made filaments; special woven fabrics; impregnated, coated, covered or laminated textile fabrics; knitted or crocheted fabrics; and other made-up textile articles.
The total package of reforms covers 14 per cent of Australia’s total tariffs, with the removal of these reforms expected to streamline approximately $8.5 billion worth of annual trade and could save businesses over $30 million in compliance costs each year.
A consultation on the proposed initial reforms is underway, with submissions open on the Treasury website and closing April 1, 2024.
According to a joint statement from the Treasury, the tariffs identified have been selected because their abolition will deliver benefits for businesses without adversely impacting Australian industries or constraining Australia in sensitive FTA negotiations.
“By abolishing hundreds of import tariffs, we’ll reduce red tape, boost productivity, ease the burden on small businesses and help to cut the cost of doing business,” Treasurer Jim Chalmers said.
“These tariffs impose a regulatory burden on Australian businesses and raise the costs of imported goods but they do little to protect our workers and businesses because they apply to goods that are mostly already eligible for duty‑free importation.
“Tariff reform will also provide a small amount of extra help with the cost of living challenge by making everyday items such as toothbrushes, tools, fridges, dishwashers and clothing just a little bit cheaper.”
Meanwhile, the Minister for Trade and Tourism, Don Farrell said trade is an important element to Australia's economy, considering one in four Australian jobs are trade-related, and that 27 per cent of Australia’s economic output is supported by trade.
“Trade that is simple, fast, and cost‑effective can boost Australia’s international competitiveness, help create jobs, and reduce cost of living pressures,” Farrell said.
The Australian Fashion Council told Ragtrader it supports the removal of barriers around trade for its fashion and textile members - many of which are small and medium-sized businesses.
“We also seek however to ensure that our local textile, clothing and footwear (TCF) manufacturing sector is supported and that we not only preserve and grow our sovereign capabilities, but create an advanced manufacturing force of the future.
“In line with the AFC’s recent budget submission, we encourage the government to prioritise initiatives which facilitate local manufacturing capability of ‘Fibre and its Derivatives’ (from fibre to yarn, textiles to fashion and uniforms) to boost jobs, the economy and exports, as well as government procurement of uniforms and workwear that will provide businesses with the stability to create more jobs, upskill staff and invest in advanced equipment.”
Peak retail industry body, the Australian Retailers Association (ARA) also welcomed the tariff reforms, despite saying they will provide only “modest” cost relief for retailers.
ARA CEO Paul Zahra said every little bit helps when it comes to reducing the cost of doing business for retailers.
“We are pleased to see some initiatives aimed at business in the Treasurer’s pre-budget announcement. The ARA has been a strong advocate for reduced import levies and reduced red tape for business.
“Whilst this tariff reduction will provide only modest cost relief for retailers, the simplified system will eventually have a flow-on benefit to business productivity – a critical issue this year whilst retailers aim to get back on their feet.
“We look forward to the full details being revealed in May,” Zahra continued. “With interest rate pressures having a lag effect, we know that households and retailers are feeling the biggest spending crunch right now. The cost of doing business remains at an all-time high for retailers – from energy, leasing and wages costs to continued supply chain pressures.
“We are keen to see much broader business measures from the government in this year’s Budget which bring significant and immediate relief.”
In addition to cost-of-living measures which provide direct relief to households in need, the ARA also called for improve supply chain resilience, increased government investment in recycling infrastructure, a payroll taskforce to align states and territories, small business incentives around energy and tax, and workforce solutions.