The U.S.-Australia Free Trade Agreement (FTA) is an agreement between the United States and Australia that eliminates trade barriers, increases investment, and enhances economic growth between the two countries. It was signed on May 18, 2004, and entered into force on January 1, 2005. One of the important aspects of the U.S.-Australia Free Trade Agreement is the preference criterion.
The preference criterion is a provision in the agreement that gives preferential treatment to goods and services originating from the United States and Australia. This means that when goods and services are traded between the two countries, they are subject to lower tariffs, or in some cases, no tariffs at all, if they meet certain criteria.
One of the criteria that goods must meet to qualify for preferential treatment is the rules of origin. The rules of origin determine whether a product can be considered as originating in the United States or Australia.
To meet the rules of origin requirement, a product must be wholly obtained or produced in either the United States or Australia. In cases where a product is not wholly obtained or produced in one country, it must undergo further processing or manufacturing in that country to be considered as originating there.
Another criterion that determines whether goods qualify for preferential treatment is the value-added requirement. This requirement ensures that goods that are traded between the two countries have a significant amount of value added by either the United States or Australia.
To meet the value-added requirement, a product must undergo a substantial transformation in either the United States or Australia. This means that the product must be substantially different from the components that were used to create it.
The U.S.-Australia Free Trade Agreement also includes provisions for the protection of intellectual property rights and the reduction of non-tariff barriers to trade. These provisions aim to promote a fair and open trading system between the two countries, which can lead to increased economic growth and job creation.
In conclusion, the preference criterion is an important aspect of the U.S.-Australia Free Trade Agreement that gives preferential treatment to goods and services originating from the United States and Australia. To qualify for preferential treatment, products must meet the rules of origin and value-added requirements. The agreement also includes provisions for the protection of intellectual property rights and the reduction of non-tariff barriers to trade.