The ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) is one of the most significant advantages of sourcing steel from Vietnam rather than other international suppliers. This trade agreement provides reduced or zero customs duty on qualifying steel products, directly reducing the landed cost for Australian importers. Here's how it works and what you need to know.
What Is AANZFTA?
AANZFTA is a free trade agreement between the ten ASEAN member states (including Vietnam), Australia and New Zealand. It entered into force in 2010 and has progressively reduced tariffs on goods traded between the member countries. For steel products, this means that qualifying imports from Vietnam can attract significantly lower customs duty rates than equivalent products from non-AANZFTA countries.
Duty Rates for Steel Products
Under AANZFTA, many categories of steel products from Vietnam attract zero or near-zero customs duty when imported into Australia. This compares favourably to the general tariff rate of 5% that applies to steel from non-preferential trading partners. For large steel orders, a 5% duty saving on the CIF value represents a significant cost reduction.
Rules of Origin
To qualify for AANZFTA preferential tariff rates, steel products must meet the agreement's rules of origin requirements. This generally means the steel must be substantially manufactured in Vietnam — not simply trans-shipped through Vietnam from a third country. A Certificate of Origin (Form AANZ) issued by an authorised body in Vietnam confirms compliance with the rules of origin.
Documentation Requirements
To claim AANZFTA preferential duty rates, importers must present: a valid Certificate of Origin (Form AANZ), commercial invoice matching the certificate details, bill of lading, and a customs declaration specifying the AANZFTA preference. Your customs broker manages this process, but it's important to ensure documentation is correctly prepared at the manufacturing end.
Cost Impact Example
Consider a steel order with a CIF (Cost, Insurance, Freight) value of AUD $500,000. Under the general tariff rate of 5%, customs duty would be $25,000. Under AANZFTA, the duty rate may be 0%, saving the full $25,000. For a large construction project procuring multiple shipments of steel, the cumulative duty savings under AANZFTA can be substantial.
Summary
AANZFTA is a significant but often underappreciated advantage of sourcing steel from Vietnam. The duty savings directly improve the cost competitiveness of Vietnamese-sourced steel compared to suppliers from countries without preferential trade access to Australia. Asia Pacific Industries ensures all documentation requirements are met so our clients automatically benefit from AANZFTA preferential rates.