AGREEMENT ESTABLISHING THE ASEAN – AUSTRALIA – NEW … · AGREEMENT ESTABLISHING THE ASEAN – AUSTRALIA – NEW ZEALAND – FREE TRADE AREA NATIONAL INTEREST ANALYSIS (and associated

AGREEMENT ESTABLISHING THE ASEAN – AUSTRALIA – NEW ZEALAND – FREE TRADE AREA

NATIONAL INTEREST ANALYSIS

(and associated instruments)




CONTENTS

EXECUTIVE SUMMARY 2

1 NATURE AND TIMING OF PROPOSED TREATY ACTIONS 9

2 REASONS FOR NEw ZEALAND BECOMING A PARTY TO THE TREATIES 10

2.1 Background 10

2.2 Benefitsfromenhancedtradeandeconomiclinks 10

2.3 BenefitsofclosercooperationwiththePhilippinesonlabourandenvironment 13

3 ADVANTAGES AND DISADVANTAGES TO NEw ZEALAND OF THE TREATY ACTIONS 14

3.1 AdvantagestoNewZealandinenteringintotheAANZFTA 14

3.2 AdvantagestoNewZealandinenteringintotheinstrumentsonlabourandenvironment

cooperationwiththePhilippines 26

3.3 AdvantagestoNewZealandinenteringintothebilateraltemporaryemployment

entryandworkingholidayschemearrangements 28

3.4 DisadvantagestoNewZealandenteringintotheAANZFTA 28

3.5 DisadvantagestoNewZealandenteringintotheinstrumentsonlabourandenvironmental

cooperationwiththePhilippines 30

3.6 DisadvantagestoNewZealandinenteringintothebilateraltemporaryemployment

entryarrangement 30

4 LEGAL OBLIGATIONS wHICH wOULD BE IMPOSED ON NEw ZEALAND BY THE TREATY ACTIONS AND AN OUTLINE OF THE DISPUTE SETTLEMENT MECHANISM 31

4.1 Initialprovisions 31

4.2 Tradeingoods 31

4.3 Rulesoforigin(ROO) 32

4.4 Customsprocedures 33

4.5 Sanitaryandphytosanitary(SPS)measures 33

4.6 Standards,technicalregulationsandconformityassessmentprocedures(STRACAP) 34

4.7 TradeRemedies 34

4.8 Tradeinservices 35

4.9 Movementofnaturalpersons 37

4.10 Electroniccommerce 37

4.11 Investment 37

4.12 Economiccooperation 39

4.13 Intellectualproperty(IP) 40

4.14 Competition 40

4.15 Generalprovisionsandexceptions 40

4.16 Institutionalprovisions 41

4.17 Consultationsanddisputesettlement 41

4.18 Finalprovisions 42

4.19 NotificationtotheWTO 42

4.20 RelatedOutcomes 42

4.21 ApplicationofAANZFTAbetweenNewZealandandAustralia 44

4.22 ThetreatiesonlabourandenvironmentalcooperationwiththePhilippines 44

5 MEASURES wHICH THE GOVERNMENT COULD OR SHOULD ADOPT TO IMPLEMENT THE TREATY ACTIONS 47

6 ECONOMIC, SOCIAL, CULTURAL AND ENVIRONMENTAL COSTS AND EFFECTS OF THE TREATY ACTIONS 48

6.1 Economiceffects 48

6.2 Socialeffects 75

6.3 Culturaleffects 76

6.4 Environmentaleffects 77

7 COSTS TO NEw ZEALAND OF COMPLIANCE wITH THE TREATIES 80

7.1 Tariffrevenue 80

7.2 Coststogovernmentagenciesofimplementingandcomplyingwiththetreaties 80

7.3 Coststobusinessesofcomplyingwiththetreaties 81

8 COMPLETED OR PROPOSED CONSULTATION wITH THE COMMUNITY AND PARTIES INTERESTED IN THE TREATY ACTIONS 82

8.1 Inter-departmentalconsultationprocess 82

8.2 Publicconsultationprocess 82

9 SUBSEQUENT PROTOCOLS AND/OR AMENDMENTS TO THE TREATIES AND THEIR LIKELY EFFECTS 86

10 wITHDRAwAL OR DENUNCIATION 87

11 ADEQUACY STATEMENT 88

ANNEX: NEw ZEALAND’S BILATERAL TRADE wITH EACH ASEAN MEMBER COUNTRY 89

2

EXECUTIVE SUMMARY

Background

In lateNovember2004, leaders fromASEAN(AssociationofSoutheastAsianNations),Australia

andNewZealandagreedto launchnegotiations foraFreeTradeAgreement (FTA) involving the

10countriesofASEAN,1aswellasAustraliaandNewZealand– tobeknownas theASEAN–

Australia –NewZealandFreeTradeArea (AANZFTA).At that time, the leaders agreed that the

AANZFTAwouldbecomprehensive,coveringtradeingoods,servicesandinvestment.Negotiations

began in early 2005 and, after 16 rounds of negotiations, were substantively concluded in late

August2008.TheAgreementwassignedinHuaHin,Thailandon27February,2009.

Together,the12countriesinvolvedhaveacombinedpopulationofover566millionpeopleandan

estimatedGDPexceedingUS$700billion.AgreementtomovetoFTAnegotiationsfollowedfour

yearsofeconomicandtechnicalcooperationundertheAFTA-CERCloserEconomicPartnership

whichhadbeenagreedin2000.

InconjunctionwiththeAANZFTAnegotiations,NewZealandhasalsoconcludedbilateraltreaties,

Memoranda of Agreement (MOAs) with the Philippines covering labour and environmental

cooperation. They constitute further concrete contributions towards strengthening the growing

bilateral economicandpolitical relationshipswith thePhilippines.Theyalsosupplementexisting

labour and environment instruments New Zealand has with other key ASEAN partners (Brunei,

SingaporeandThailand)andareexpectedtobesupplementedbyadditionalinstrumentsinthese

areaswithMalaysiainthecontextofNewZealand’songoingbilateralnegotiationsforanFTA.

ThisNationalInterestAnalysis(NIA)assessesAANZFTA,aswellastheMOAswiththePhilippines,

from the perspective of their impact on New Zealand and New Zealanders. The MOAs will be

consideredaspartofthisNIAgiventhattheyaretreaty-leveldocumentsnegotiatedinthebroader

contextoftheAANZFTA.TheNIAdoesnotseektoaddresstheimpactofsuchinstrumentsonany

oftheotherParties.

Reasons for New Zealand becoming a Party

ThemainreasonsforNewZealandenteringintoAANZFTAandassociatedinstrumentsarethatthey:

Expand opportunities available to New Zealand exporters by removing barriers to trade and•

establishingsoundframeworksunderwhichtrade(ingoodsandservices)andinvestmentcan

flourish.

ProvideadditionalincentivestoutiliseNewZealandmaterialsbywayoftheincorporationofthe•

cumulationprincipleintherulesoforigin(ROO)whichallowsoriginatinggoodstobecumulated

betweenthePartiesandusedintheproductionoffurthergoods.

ProvidegreatercertaintyandtransparencyforNewZealandbusinesseswishingtooperateinthe•

ASEANmarketsbywayofa rangeofmechanismswhichenhanceregulatorycooperation to

facilitatetradeandreduceassociatedtransactionscostsinbothgoodsandservicestrade.

1 TheMembersofASEANareBrunei,Cambodia,Indonesia,Laos,Malaysia,Myanmar,thePhilippines,Singapore,ThailandandVietNam.

3

ProvidegreatersecurityforNewZealandinvestorsintheASEANmarkets,includingthroughthe•

potentialforrecoursetobindinginvestor-statearbitrationprocedures.

AssistinraisingthecommercialprofileofNewZealandcompaniesinASEANmarkets.•

Enhance New Zealand’s strategic engagement with the ASEAN region and broader regional•

integrationprocesseswhicharecentraltoNewZealand’sfutureeconomicprosperityandsecurity.

Provideframeworks(bywayoftheMOAs)formoreeffectivelydiscussingandcooperatingon•

labour and environmental issues with the Philippines. These outcomes supplement existing

instruments on labour and environment with other ASEAN Parties (Thailand, Brunei and

Singapore)andasimilaroutcomeisbeingsoughtwithMalaysiainthecontextofongoingbilateral

FTAnegotiations.

Advantages and disadvantages to New Zealand of the treaty actions

Advantages

NewZealandwillbenefit fromtheeventualeliminationof tariffson99percentofNewZealand’s

currentexportstothefourkeymarketsofIndonesia,Malaysia,thePhilippinesandVietNam,which

onfullimplementationwillequatetoanannualdutysavingofapproximately$50millionbasedon

currenttrade.

Onthebasis thatAANZFTAwillenter into forceon1July2009, this tariffeliminationwilldeliver

significantbenefitstoexporters,includingtheremovaloftariffs:

in 2010 on over $429 million of current exports to Indonesia, Malaysia and the Philippines•

encompassing,insomemarkets,butter,milkpowder,cheese,wool,kiwifruit,applesandsome

manufacturedproducts.Thiscovers28percentoftotalcurrentexportstoIndonesia,Malaysia,

thePhilippinesandVietNam.Whentheexportsthatalreadyenterthesemarketsdutyfreeare

takenintoaccount,70percentofNewZealand’stotalcurrentexportswillenterthesemarkets

dutyfreein2010.

between2011-2015on$60millionofcurrentexportstoIndonesia,MalaysiaandthePhilippines•

encompassing, insomemarkets,beef,wine,kiwifruit,apples,onions,aluminium,certain iron

andsteelproductsandsomemanufacturedproducts.Thiscovers4percentofNewZealand’s

totalcurrentexportstoIndonesia,Malaysia,thePhilippinesandVietNam.By2015,74percent

oftotalcurrentexportstothesemarketswillbedutyfree.

in2016on$137millionofcurrentexportstoVietNamencompassingmilkpowder,somepaper•

and wood products, apples, kiwifruit and sheep meat. This accounts for 9 percent of

New Zealand’s total current exports to Indonesia, Malaysia, the Philippines and Viet Nam.

By2016,83percentoftotalcurrentexportstothesemarketswillbedutyfree.

The removal of tariffs between 2017-2020 on $238 million of current exports to Indonesia,•

Malaysia,thePhilippinesandVietNamencompassing,insomemarkets,butter,liquidmilkand

cream,frozenFrenchfries,beefandbeefoffal.Thiscovers16percentofNewZealand’stotal

currentexportstoIndonesia,Malaysia,thePhilippinesandVietNam.By2020,99percentof

totalcurrentexportstothesemarketswillbedutyfree.

Theremovaloftariffsonotherlinesaccountingforlessthan$1millionofcurrentexportsby2025•

encompassingjuice,jamandsomemanufacturedproducts.

4

Theinclusionofrobustregionalrulesoforigin(ROO)willallowNewZealandexporterstoeffectively

takeadvantageofthepreferentialconditionsofferedunderAANZFTAfortradeingoods,without

unduecompliancecosts.

AANZFTAdoesnotprovideforanyspecialagriculturalsafeguard.Thissetsapositiveprecedentfor

futureFTAsthatNewZealandmayundertake.

NewZealandwillalsobenefitfrom:

Improvedcommitmentsinservices,particularlyinthecontextofeducationservices.•

Enhanced investment protection provisions, including by way of investor-state dispute•

settlementprovisions.

ProvisionstofacilitatethemovementofbusinesspeopleintheASEANregion.•

AANZFTAcontainsarangeofmechanismsrelatingto,amongstotherthings,customsprocedures

andcooperation,sanitaryandphytosanitary(SPS)measures,standards,technicalregulationsand

conformityassessmentprocedures(STRACAP),electroniccommerceandintellectualproperty(IP).

ThesearealldesignedtoreducebarrierstodoingbusinessinASEAN,aswellastoimprovedialogue

andcooperationbetweenNewZealandandtheASEANmembercountries.

AANZFTA also establishes an overarching framework for cooperation to enhance the benefits

of the Agreement, with the objective of building on the existing relationships and creating

newopportunities.

ThetreatiesonlabourandenvironmentalcooperationwiththePhilippinesincludethe“core”trade

and labour and trade and environment provisions. They will also enhance communication and

cooperationontheseissuesandassistinmeetingthesharedobjectivesofraisingworkingstandards

andimprovingenvironmentalprotectionintherespectivecountries.Thesetreatieswillsupplement

similarinstrumentsnegotiatedpreviouslywithotherASEANPartners(Thailand,BruneiandSingapore)

andthosebeingsoughtwithMalaysiainthecontextoftheongoingbilateralFTAnegotiationswith

thatcountry.

Finally,thetemporaryemploymententryarrangementsandundertakingstoenterintonegotiations

onworkingholidayschemes in relation to thePhilippinesandVietNam,whichwhilenotpartof

AANZFTAitself,mayassistinmodestlyeasingdomesticlabourshortages.

Disadvantages

Amoreambitiousoutcomeontheeliminationoftariffswaspreferred,butwassimplynotpossible.

Upto10percentoftarifflinesinthetariffschedulesofmajormarketswillremainsubjecttotariffs.

Such lines, however, constitute only around one percent of New Zealand’s current exports to

themajormarketsofIndonesia,Malaysia,thePhilippinesandVietNam(whicharevaluedataround

$15million).

The removalof tariffsonproducts imported intoNewZealandcanresult innegativeadjustment

effectsforimport-competingsectors.AANZFTAdoes,however,attempttomitigatetheseimpacts

bydelayingtariffeliminationonimportsofacutesensitivitytoparticularNewZealandindustriesand

throughvariouscontingentprotections.

5

There is no commitment to clear imported goods within defined timeframes. In this respect,

AANZFTAdiffersfromtheFTAwithChina.GiventherangeofcountrieswhichcompriseASEAN,it

was never likely that ASEAN as a group would have been prepared to commit to time-bound

clearanceoutcomes.

As with many FTAs, AANZFTA includes a safeguard mechanism under which ASEAN member

countriesmightbeabletoimposeadditionaldutiesonNewZealandproductsiftheexportsunder

AANZFTAarecausingseriousinjurytodomesticindustry.GiventhesmallsizeofNewZealand’s

exportsinrelationtothedomesticproductionandconsumptionofmostASEANmembercountries,

however,theeffectofthemechanismislikelytobelimited.

AANZFTA’sservicescommitmentswerenotmadeonthebasisofanegativelist,2norwilltheybe

subject toaMostFavouredNation (MFN)3obligation.VietNamhas,however,providedanMFN

commitment for “Mode 1” higher education services (a sector of key commercial interest to

NewZealand).This isdiscussed inmoredetailbelow.At thesame time, itwasnotpossible to

secureamoresubstantialimprovementoverASEANmembercountries’GATScommitments.There

is,however,areviewclausethatrequiresthePartiestorenegotiateservicescommitmentswiththe

aimoffurtherimprovingcommitmentswithinthreeyearsofentryintoforceofAANZFTA.Inaddition,

AANZFTAincludesaseparate“trigger”forobligatorynegotiationsonimprovingservicescommitments

ifASEANconcludesanagreementon trade inservicesatsomestage in the futurewitha third

country thatsecuresbettercommitments thanare inAANZFTA. (SimilarlyNewZealandwillalso

“trigger”suchnegotiations ifNewZealandoffersbetterservicescommitmentstoathirdcountry

underafutureagreement).

Finally,therearenoup-frontcommitmentsoninvestmentmarketaccess.Suchcommitmentswill

benegotiatedandenterintoforcewithinfiveyearsoftheentryintoforceofAANZFTA.Thereisalso

noMFNprovisionforinvestment,thoughthiswillalsobethesubjectoffuturenegotiation.

Legal obligations under AANZFTA and the associated instruments

ThekeynewobligationsforNewZealandinclude:

Thereductionand/oreventualeliminationoftariffsonallgoodsoriginatingfromASEANmember•

countries,withlongertransitionalperiodsforsomegoods.

Usingeitherachangeoftariffclassification(CTC)oraregionalvaluecontent(RVC)approach•

for the rules of origin (ROO) relating to goods entering New Zealand under an AANZFTA

preferentialtariff.

CertificateoforiginsystemforexportsobtainingpreferentialtreatmentunderAANZFTA.•

EstablishmentofasafeguardmechanismunderAANZFTAtoaddresssituationsofseriousinjury•

toaNewZealand industrycausedby increased importsasaresultof tariff reductionsunder

theAgreementbyeithersuspendingfurthertariff reductionsorrevertingtohighertariffs fora

certainperiod.

2 Anegativelistapproachiswhereallsectorsandmeasureswillbefreefrombarriersand/orrestrictionsunlessotherwiselisted.Inotherwords,thenegative list containsall of the reservations thatmight apply to aParty’s servicescommitments. This is in contrast to thepositive listapproachwherethePartyconcernedexplicitlyliststhosesectorsinwhichitisundertakingcommitments.

3 MFNtreatmentmeansallPartieswouldreceivethebenefitsofadditionalliberalisationintradeinservicescontainedinfuturetradeagreementsconcludedwiththirdparties.

6

Market access and national treatment commitments in a range of services sectors that go•

beyondNewZealand’sexistingWTOcommitments.

CommitmentsonthetemporaryentryofASEANbusinessvisitorswhichgobeyondNewZealand’s•

existingWTOcommitments.

Investmentprotectiondisciplines.•

Frameworks to enhance economic cooperation generally, as well as cooperation in customs•

procedures,SPSmeasures,STRACAP,electroniccommerce,intellectualproperty,andcompetition.

ObligationsinthemajorityofareasofAANZFTAareconsistentwithexistingNewZealandlawand

practice. In addition, AANZFTA does not prevent New Zealand from taking measures it deems

necessarytofulfilitsobligationstoMäoriundertheTreatyofWaitangi,ortosupportcreativeartsof

nationalvalue.

Inconjunctionwith theAANZFTAnegotiations,butnotaspartofAANZFTA itself,NewZealand

hasalsomadesomearrangementsonthetemporaryemploymententryofaverylimitednumber

of specified workers from the Philippines and Viet Nam. New Zealand has also reached a joint

understanding to enter into negotiations on reciprocal working holiday schemes with these

twocountries.

Finally,theMOAsonlabourandenvironmentalcooperationwiththePhilippinesrequireNewZealand

to commit to further cooperation on labour and environment issues, including establishing a

cooperationprogramme,seeking funding forcooperationactivitiesandholdingregularmeetings

betweenseniorofficialsintheseareas.

Economic, social, cultural and environmental effects

Economic effects

AANZFTAisexpectedtomakeanetpositivecontributiontotheNewZealandeconomythrough:

Expansionoftradeingoodsandservicesasaresultofthereductionsintariffbarrierswithduty•

savingsandnewopportunitiesforNewZealandexporters.

Enhancedregionalintegration,includingtheexpansionandfacilitationofimprovedinvestorand•

businesslinks,whichwilltriggerfurtherfactorproductivitygains.

Improvementsinproductivityasaresultofdynamiceffects,includingthepotentialforenhanced•

levelsofinvestmentandgreaterinnovationandcompetition.

TheoveralloutcomeofAANZFTAwillbestrengthenedeconomictieswiththeASEANeconomies.•

Thiswill furthercontribute toNewZealand’swiderobjectiveofenhanced integration into the

regionaswellascontributetoeffortstoimproveskills,innovation,competitionandtechnology

levelsinNewZealand.

Thebulkofthesegainsareestimatedtoresultfromthetradeingoodsarea.•

7

Social effects

AANZFTAandtheassociateddocuments,includingtheMOAsthathavebeenconcludedwiththe

Philippines, are not expected to have any discernible negative social effects in New Zealand.

New Zealand’s commitments on movement of natural persons and the separate temporary

employmententryarrangementsandthearrangementstonegotiateworkingholidayschememade

outsidetheAANZFTAtothePhilippinesandVietNam,containarangeofsafeguardsdesignedto

mitigateasfaraspossibleanynegativeimpactsonNewZealandemployment.

Cultural effects

AANZFTAcontainssafeguardstoensurethattherearenoadverseeffectsonNewZealandcultural

values,includingMäoriinterestsinrelationtotheTreatyofWaitangi.Thereisexplicitrecognitionin

theAANZFTAoftheimportanceofsupportingcreativeartsofnationalvalue.

Environmental effects

AANZFTA,aswellastheMOAonenvironmentalcooperationwiththePhilippines,cancontributeto

positiveoutcomesforNewZealandontheenvironmentandsustainabledevelopment.TheMOA

supports the objective of harmonising and ensuring the mutual supportiveness of trade and

environment.ItwillalsoprovideopportunitiestoenhancecapacityinthePhilippinesandNewZealand

forimprovedenvironmentalmanagementandmayassistinpromotingtradeingoodsandservices

thatbenefittheenvironment.TheMOAwiththePhilippinessupplementssimilar instrumentswith

otherASEANPartners(Thailand,BruneiandSingapore)andisexpectedtobesupplementedbya

similarinstrumentbeingnegotiatedwithMalaysiainthecontextofongoingbilateralFTAnegotiations.

Inthisway,theMOAfurtherenhancestheprospectsforbroaderengagementbyNewZealandon

theseissuesovertimeintheregion.Finally,NewZealandhassufficientlyrobustenvironmentallegal

andregulatoryframeworks,aswellaspoliciesandpractices,toeffectivelymanageanypotential

negativeenvironmentalimpactsofAANZFTA.

Costs

In2005,therevenuecollectedonimportsfromtheASEANeconomieswas$26.3million.Astariffs

arephasedoutover timeunderAANZFTA, theNewZealandCustomsServicewillprogressively

collectlessrevenuefromdutypaymentsfromASEANmembercountries.Theexactamountofduty

collected will be influenced by the pattern of actual imports and the proportion that qualify for

preferenceundertheapplicablerulesoforigin.

One-offcostsassociatedwith implementingAANZFTAareestimatedtoamountto$582,000for

promotionandoutreachactivities,aswellascapacitybuilding.Therewillalsobeongoingcostsof

meeting New Zealand’s obligations under AANZFTA, including staffing, establishment of new

institutions,developingimplementingarrangements,andtechnicalassistanceandimplementation

costs.Thesecostswillbecalculatedbykeyagenciesgoingforward.

8

Subsequent Protocols and/or amendments to the treaty

There is general provision for review and amendment, subject to the agreement of the Parties.

Therearealsoanumberofspecificareaswhichcontainfutureworkprogrammes,aswellasthe

possibilityofreview.

NewZealandwouldconsiderproposedamendmentsonacase-by-casebasis.Anydecision to

accept an amendment would be subject to New Zealand’s normal domestic approvals and

proceduresforsuchmatters.

TheMOAswiththePhilippinessimilarlyhavescopeforamendment,asagreedbytheParties.

Implementation

LegislativeandregulatoryamendmentsarerequiredtoalignNewZealand’sdomesticregimewith

therightsandobligationscreatedbyAANZFTA,particularlythoserelatingtotariffsandtherules

oforigin.

TherearenolegislativeorregulatoryamendmentsrequiredforNewZealandtoimplementtheMOAs.

Consultation

Thestudy,preparationandnegotiatingphasesofAANZFTAandassociatedinstrumentsinvolved

extensive consultation between government agencies and with non-government stakeholders

throughoutNewZealand.Acommunicationandoutreachprogrammekeptstakeholdersinformed

ofprogressthroughoutthenegotiationsandprovidedregularandnumerousopportunitiesforinput.

9

1 NATURE AND TIMING OF PROPOSED TREATY ACTIONS

TheAgreementEstablishingtheASEAN–Australia–NewZealandFreeTradeArea(AANZFTA)was

signedbyNewZealandinFebruary2009.AANZFTAwillenterintoforceon1July2009provided

that New Zealand, Australia and at least four ASEAN countries have notified the completion of

necessarydomesticproceduresbythatdate.IfAANZFTAdoesnotenterintoforceon1July2009,

itwill enter into force60daysafter thedatebywhichNewZealand,Australiaandat least four

ASEANcountrieshavemadesuchnotifications.

TheMemorandaofAgreement(MOAs)withthePhilippinesonLabourCooperationandEnvironmental

CooperationweresignedbeforetheAANZFTAandwillenter intoforcefollowinganexchangeof

notesindicatingcompletionoftherelevantdomesticrequirementsforsuchinstruments.

10

2 REASONS FOR NEW ZEALAND BECOMING A PARTY TO THE TREATIES

2.1 Background

InlateNovember2004,leadersfromASEAN(AssociationofSoutheastAsianNations),Australiaand

New Zealand were gathered in Vientiane, Laos for the ASEAN, Australia and New Zealand

CommemorativeSummit.Duringthismeeting,theleadersagreedtolaunchnegotiationsforaFree

TradeAgreement(FTA)involvingthe10countriesofASEAN,aswellasAustraliaandNewZealand.At

thattime,theleadersagreedthattheFTAwouldbecomprehensive,coveringtradeingoods,services

and investment.4 Negotiations began in early 2005 and, after 16 rounds of negotiations, were

substantivelyconcludedinlateAugust2008.TheAgreementwassignedinFebruary2009.

InconjunctionwiththeAANZFTAnegotiations,NewZealandhasalsoconcludedbilateralinstruments

withthePhilippinescoveringlabourandenvironmentalcooperationwhichareintheformoflegally

bindingintergovernmentalMOAs.TheyarenotexplicitlylinkedwithAANZFTA,buttheyhavebeen

concluded inthecontextofAANZFTA.Theyconstitute furthersubstantivecontributionstowards

strengtheningthegrowingbilateraleconomicandpoliticalrelationshipwiththePhilippines.These

outcomes also supplement existing labour and environment instruments with other key ASEAN

partners(Brunei,SingaporeandThailand)andinstrumentsbeingsoughtwithMalaysiainthecontext

oftheMalaysiaandNewZealandFTA.

2.2 Benefits from enhanced trade and economic links

ThissectionsetsoutthedirectandindirectbenefitsofAANZFTAineachkeyarea.

2.2.1 Direct benefits from enhanced trade and economic links with ASEAN

AcoreobjectiveofNewZealandtradepolicyistobroadenanddeepentheopportunitiesavailable

toexportersby removingand reducingbarriers to tradeand investment,aswellas toestablish

frameworks through which trade and investment linkages can evolve and expand. Concluding

agreementswithagroupofkeytradingpartnerstoremovetradeandinvestmentbarriersisoneway

ofachievingthisobjective.

AANZFTAisexpectedtocontributetoNewZealand’seconomicperformance.Specifically, itwill

promotetheflowofgoods,services,capital,people,knowledgeandtechnologyona“NewZealand

Inc”basis.

AANZFTAalsocontributestotheobjectivesenumeratedintheMinistryofForeignAffairsandTrade’s

Statementof Intent that “NewZealand’s internationalconnectionssupport transformationof the

NewZealandeconomyandsustainable economicgrowth through increased tradeand through

improvedflowsofinvestment,skillsandtechnology”.5

4 SeetheReportoftheHigh-LevelTaskForceontheAFTA-CERFreeTradeArea(theAngkorAgenda),ExecutiveSummary,paragraph9.

5 SeeMinistryofForeignAffairsandTrade’sStatementofIntent2007-2010IntermediateOutcomeII.TheStatementofIntentisavailableontheMFATwebsite(www.mfat.govt.nz).

11

TheASEANeconomiesrepresentamarketofmorethan566millionpeople,accountingformore

thanUS$1,400billioninglobaltrade,andareanincreasinglyimportantdestinationforNewZealand

goods,servicesuppliersandoutwardinvestment.

This importance is reflected in the high rate of growth in trade between New Zealand and the

ASEANeconomies.NewZealandexports to theASEANcountries have increased121percent

since2000toaround$4.6billionin2008.Overthesameperiod,importsfromtheASEANcountries

haveincreased244percenttoalmost$7.6billionin2008.

TheeliminationoftariffsandotherbarrierstotradeunderAANZFTAwillopenupfurtheropportunities

forNewZealandexportersthroughouttheASEANmarkets.Indeed,asaresultoftheASEANmember

countries’commitmentsunderAANZFTA,tariffswillbeeliminatedonallkeyproductsoftradeinterest

in major markets within twelve years. Significant commercial benefits are provided to exporters

throughtheeliminationoftariffsonabout99percentofNewZealand’sexportstoprioritymarkets.6

Moreover,unlikeinpreviousFTAstherearenospecialsafeguardsforagriculturalproducts.

RulesofOrigin(ROO)areanessentialfeatureoftheAANZFTA–theysetthecriteriafordetermining

whichgoodsqualify forpreferential tariff treatment (i.e. theydeterminewhichproductscountas

“Australian”,“NewZealand”,“Indonesian”,“Malaysian”,“Vietnamese”etc)andpreventgoodsfrom

partiesoutsidetheAANZFTAfromaccessingthosebenefits“throughthebackdoor”.InAANZFTA,

theROOwillalloworiginatinggoodstobecumulatedbetweenthePartiesandusedintheproduction

offurthergoods.Thecumulationprinciple-appliedinthemulti-partysettingofAANZFTA–means

thatNewZealand inputs,as longas theymeet theoriginatingcriteria,notonlygainpreferential

treatmentwhenexportedtoanotherparty,butthosegoodscanbecountedaspartofthequalifying

content forgoodsproducedandtradedbetweenall theParties.Thisprovides further incentives

withintheregiontoutiliseNewZealandmaterialsandhelpsimproveNewZealand’sinteractionin

thedynamicASEANregion.

Beyondmarketaccessforgoods,AANZFTAwillprovidemoreopportunities,andgreatercertainty

andtransparency,forNewZealandbusinesseswishingtooperateintheASEANmarkets.

NewZealand’sservicestradeintoASEANhasexpandedinrecentyears,particularlyinthesectors

oftourismandeducation.In2007,almost87,000ASEANtouristsvisitedNewZealand,makingit

oneofNewZealand’slargertourismmarkets.Intheareaofeducation,ASEANstudentnumbers

studyinginNewZealandhavegrowntoover7,800in2007.AANZFTAthereforeprovidesastrong

base from which to further build services trade, particularly in those services sectors where

New Zealand has rapidly growing commercial interest and relative comparative advantage, as

ASEANeconomiescontinuetodevelopandopenfurthertoforeignserviceproviders.

In2007,NewZealandinvestmentintheASEANregiontotalledalittleover$3.76billion.NewZealand’s

total investment in the ASEAN region has grown 61 percent since 2003. Singapore, Malaysia,

ThailandandIndonesiaareallamongNewZealand’stop25totalinvestmentdestinations.

6 TheprioritycountriesforNewZealandinthecontextoftheAANZFTAnegotiationshavegenerallybeenthosemajorASEANeconomieswithwhichNewZealanddoesnothaveanFTAatpresent–namely,Indonesia,Malaysia,thePhilippinesandVietNam.Itshould,however,benotedthattheoutcomeswithMalaysiawerenotasambitiousasNewZealandwouldhavehopedfor.TheongoingbilateralnegotiationsforanFTAwithMalaysiaarethereforeexpectedtodeliverabetteroveralloutcomethanAANZFTA.

12

InvestmentfromASEANmembercountries inthesameperiod intoNewZealandtotalledalmost

$8.22 billion (constituting 3.2 percent of total foreign investment in New Zealand), with almost

$1.64 billion being inward foreign direct investment. Singapore is New Zealand’s fourth largest

sourceoftotalinvestment,andhasadirectinvestmentstockofalmost$1.64billion.

Reflectingthisgrowing investmentrelationshipbetweenNewZealandandtheASEANeconomies,

AANZFTA will also provide greater security for New Zealand investors and investments in these

markets,includingthroughthepotentialforrecoursetobindinginvestor-statearbitrationprocedures.

AANZFTAalsocontainsarangeofmechanismswhichprovideaplatformforenhancedregulatory

cooperationtofacilitatetradeandreduceassociatedtransactioncostsinbothgoodsandservices

trade. This includes frameworks for customs procedures, standards, technical regulations and

conformityassessmentprocedures(STRACAP)andsanitaryandphytosanitary(SPS)measuresand

forcooperatingonarangeofothertrade-relatedissuessuchascompetitionandtheprotectionof

intellectualproperty(IP)rights.

The economic cooperation components of AANZFTA constitute an important subset of wider

economiccooperationbetweenNewZealandandASEAN,contributingdirectlytoNewZealand’s

strategicengagementwiththeASEANregionandbroaderregionalintegrationprocessescentralto

NewZealand’sfutureeconomicprosperityandsecurity.

With the increasing number of preferential trade agreements being concluded internationally,

avoidingdisadvantageinkeyexportmarketsrelativetocompetitorsfromthirdcountriesundersuch

agreements isanother important reason forNewZealand’spursuitofFTAs.AANZFTAtherefore

assistsinaddressingourdefensivecommercialinterestsofpreservingandenhancingexistinglevels

ofcompetitiveness.

Moregenerally,ASEANisactiveinnegotiatingFTAswithothercountries.Ithasagreementswith

China,Japan,RepublicofKorea,andhasrecentlyconcludedagoods-onlyagreementwithIndia.

ASEAN isalsonegotiatingwitha rangeofcountries, including theEU.ProtectingNewZealand

exporters’competitiveposition inASEANvis-à-vis thesecompetitorswas thereforeanotherkey

objectiveforthenegotiations.

2.2.2 Indirect benefits from enhanced trade and economic links with ASEAN

As well as offering direct economic benefits, AANZFTA advances a number of New Zealand’s

broaderstrategicinterests.

New Zealand and ASEAN7 are members of the World Trade Organization (WTO). Trade reform

and liberalisation through negotiations at the WTO remains New Zealand’s primary trade policy

objective.EnteringintoacomprehensiveFTAwithASEANisexpectedtohelpmaintainmomentum

towardsNewZealand’swidergoalofmultilateraltradeliberalisation.NewZealandandanumberof

ASEANmembercountriesalsoworktogetherontradeandeconomic issues inarangeofother

multilateralorganisations.

7 AllASEANcountriesaremembersoftheWTOwiththeexceptionofLaos,whichhasobserverstatusandisundertakingaccessionnegotiations.

13

Attheregionallevel,alongwithNewZealand,sevenASEANcountries8arealsomembersofAsia

PacificEconomicCooperation(APEC).APECcontinuestomakeprogressinfacilitatingtradeand

openingmarketsinmembereconomieswithaviewtoachievingfreeandopentradeandinvestment

in the Asia-Pacific region, with work now being undertaken on the possibility of a Free Trade

AgreementoftheAsia-Pacific(FTAAP).Additionally,NewZealandandtheASEANcountriesareall

involved in the East Asia Summit (EAS) process. Within the EAS, a Comprehensive Economic

PartnershipforEastAsia(CEPEA)isproposed.

Withmorethan70percentofNewZealand’stradeand investmentoccurring in theAsia-Pacific

region,thepotentialcontributiontobroaderregionalintegrationinitiativesthatflowsfromentering

intoacomprehensiveFTAwithASEANisalsoexpectedtobesignificant.

2.3 Benefits of closer cooperation with the Philippines on labour and environment

AssetoutintheGovernment’s2001policyframeworkonintegratinglabourissuesintoFTAsand

the Government’s 2001 policy framework on integrating environmental issues into FTAs,9

NewZealandbelievesthatpursuinglabourandenvironmentobjectivesinthecontextofFTAscan

contributetosustainabledevelopment.Sustainabledevelopment is,afterall,aboutanintegrated

approachtothegoalsofeconomic,social,environmentalandculturaldevelopment.FTAscontribute

acrossallofthesecomponents.

New Zealand initially sought to include labour and environment outcomes within the AANZFTA

framework,butmetwithresistancefromitsnegotiatingpartners.Inaddition,NewZealandalready

hadinstrumentsonlabourandenvironmentwithsomeASEANmembers(Brunei,Singaporeand

Thailand)andtheongoingnegotiationsforabilateralFTAwithMalaysiaincludebothissues.Insuch

circumstances,andtoavoidunnecessaryduplication, itwasdeterminedthatatargetedbilateral

approach was more appropriate. New Zealand has therefore concluded two treaties with the

Philippines(intheformofMOAs)onlabourandenvironmentalcooperation.

TheseinstrumentsareconsistentwiththeGovernment’s2001policyframeworks.Thesetreaties

have been concluded in the context of AANZFTA and are seen as a way of strengthening the

growing bilateral economic and political relationship with the Philippines. Together, these two

instrumentswillhelptoreinforcethesharedobjectivesofraisingworkingstandardsandimproving

environmentalprotectionsineachcountry.

TheMOAswith thePhilippineshavebroadlysimilarstructuresandprovisions to the labourand

environmentoutcomesnegotiatedwithotherFTApartners,includingThailand(throughtheCEP),

BruneiDarussalam,ChileandSingapore(undertheframeworkoftheTrans-PacificSEP);andChina

(in theChina-NewZealandFTA).They reaffirmbothcountriessharedcommitment to the“core”

trade and labour and trade and environment principles. They also establish mechanisms for

ongoingcooperationanddialogue,andforaddressinganyissuesthatmayariseintheseareas.

The MOAs also provide an opportunity for the New Zealand Government to seek input on

implementationfromunionrepresentativesandrelevantnon-governmentorganisations,aswellas

makingprovisionforpublicparticipationincooperationactivities.

8 ThesevencountrymembersofbothASEANandAPECareBrunei,Indonesia,Malaysia,thePhilippines,Singapore,Thailand,andVietNam.Cambodia,LaosandMyanmararenotmembersofAPEC.

9 TheGovernment’s2001PolicyFrameworkscanbefoundat:(http://mfat.govt.nz/Trade-and-Economic-Relations/Trade-Agreements/index.php).

14

3 ADVANTAGES AND DISADVANTAGES TO NEW ZEALAND OF THE TREATY ACTIONS

3.1 Advantages to New Zealand in entering into the AANZFTA

3.1.1 General

TheAANZFTA:

Expands upon the trade benefits that already flow to New Zealand from ASEAN’s existing•

WTOcommitmentsacrossawiderangeofareas.

Maintains and reinforces New Zealand’s existing rights and obligations under the various•

WTOAgreements.

Providesforadditionalmechanismsforbilateralandplurilateralcooperation.•

3.1.2 Trade in goods

ASEANisNewZealand’sthirdlargestmarketforgoods,taking$3.7billionofNewZealandproducts

in2007.TherearefourmajorASEANmarketswithwhichNewZealanddoesnothaveanexisting

FTA: Indonesia, Malaysia, the Philippines and Viet Nam. New Zealand’s exports to these four

countries are valued at around $1.5 billion, with duties paid estimated to be approximately

$50million.

TheAANZFTAcommitsallPartiesto,ataminimum,bindtheircurrentappliedtariffsandgoesonto

provide for eventual eliminationof tariffs on99percentofNewZealand’s exports to these four

countries,whichonfullimplementationwillequatetoanannualdutysavingof$48millionbasedon

currenttrade.

Thistariffeliminationwilldeliversignificantbenefitstoexportersincluding:

Theremovaloftariffsin2010on$429millionofcurrentexportstoIndonesia,Malaysiaandthe•

Philippinesencompassing,insomemarkets,butter,milkpowder,cheese,wool,kiwifruit,apples

andsomemanufacturedproducts.Thiscovers28percentoftotalcurrentexportstoIndonesia,

Malaysia,thePhilippinesandVietNam.Whentheexportsthatalreadyenterthesemarketsduty

freearetakenintoaccount,70percentofNewZealand’stotalcurrentexportswillenterthese

marketsdutyfreein2010.

Theremovaloftariffsbetween2011-2015on$60millionofcurrentexportstoIndonesia,Malaysia•

and the Philippines encompassing, in some markets, beef, wine, kiwifruit, apples, onions,

aluminium, certain iron and steel products and some manufactured products. This covers

4percentofNewZealand’s totalcurrentexports to Indonesia,Malaysia, thePhilippinesand

VietNam.By2015,74percentoftotalcurrentexportstothesemarketswillbedutyfree.

Theremovaloftariffsin2016on$137millionofcurrentexportstoVietNamencompassingmilk•

powder,somepaperandwoodproducts,apples,kiwifruitandsheepmeat.Thisaccountsfor

9percentofNewZealand’s totalcurrentexports to Indonesia,Malaysia, thePhilippinesand

VietNam.By2016,83percentoftotalcurrentexportstothesemarketswillbedutyfree.

15

Theremovaloftariffsbetween2017-2020on$238millionofcurrentexportstoIndonesia,Malaysia,•

thePhilippinesandVietNamencompassing,insomemarkets,butter,chocolate,liquidmilkand

cream, frozenFrench fries,beefandbeefoffal.Thiscovers16percentofNewZealand’s total

currentexportstoIndonesia,Malaysia,thePhilippinesandVietNam.By2020,99percentoftotal

currentexportstothesemarketswillbedutyfree.

Theremovaloftariffsonotherlinesaccountingforlessthan$1millionby2025encompassing•

juiceandjamandsomemanufacturedproducts.OnepercentofNewZealand’stotalcurrent

exports to Indonesia, Malaysia, the Philippines and Viet Nam will remain subject to tariffs

in2025.

Thephase-outoftariffsonNewZealandimportsalsohasadvantagesforNewZealand.NewZealand’s

economyisdependentonimportsinordertosupplyarangeofgoodsandservices.Consumerswill

benefit directly from cheaper products. Cheaper imports of equipment and machinery, which

account for31percentofNewZealand’s imports fromASEAN, isexpectedtohavebenefits for

NewZealandmanufacturers,includingthroughreductionsinpricesandenhancedcompetitionwith

otherimportedproducts(egfromChina).

Key Outcomes in Priority Markets for Major Goods Exports to ASEAN

Dairy:Tariffsonkeyproductswillbeeliminatedatvariousstagesbetween2010and2020.Examples

ofexportsonwhichtariffswillbeeliminatedby2010arewholemilkpowder,butterandcheesein

Indonesia;andcasein,milkpowder,cheeseandbuttermilkinthePhilippines.Theseproductsface

tariffsofupto5percent.Examplesofproductswithlatereliminationdatesincludeunsweetened

skimmilkpowderinIndonesia;casein,buttermilk,andbutteroilinVietNam;liquidmilk,butterand

somecheeseinthePhilippines.NewZealand’scurrentdutyfreeaccesstoMalaysiaformilkpowder,

liquidcream,wheyandcaseinisnowlockedinandprotectedmeaningthatMalaysiacannotnow

legallyraisethetariffs.Malaysia’stariffsinbutterandcheesewillbeeliminatedoncetheagreement

entersintoforceandthoseonicecreamwillbeeliminatedin2010.UnlikewithotherFTANewZealand

hasconcluded,nospecialsafeguardsapplyfordairy.

Meat and Wool:Tariffsonkeybeefexportswillbeeliminatedbetween2012(Philippines)and2020

(Indonesia).Tariffsonsheepmeatwillbeeliminated in2010 forPhilippines,2016 forVietNam;

whereastheprevailingtariffratewillapplyforsomesheepmeatinIndonesia.Tariffsonwoolwillbe

eliminatedin2010(thePhilippinesandIndonesia)and2016(VietNam).NewZealand’sexistingduty

freeaccessformeatandwoolexportstoMalaysiaisalsonow“lockedin”,i.e.Malaysiacannotnow

legallyincreasethosetarifflevels.UnlikewithotherrecentFTAs,thesearenospecialsafeguardson

NewZealand’smeatorwoolexportsthroughAANZFTA.

Forestry: Tariffs on key products will be eliminated at various points between 2010 and 2020.

Examples of products that will be eliminated by 2010 include fibreboard and some paper for

IndonesiaandlessprocessedwoodproductsforthePhilippines.Tariffsontheseitemsareupto

5percent.Examplesofproductsthatwillbesubjecttolatertariffeliminationincludeplywoodand

majorpaperexportstothePhilippines(wheretariffswillbeeliminatedin2017),newsprintforMalaysia

(where tariffswillbeeliminated in2020)andsomepaperandparticleboard items forVietNam

(wheretariffswillbeeliminatedin2020).

16

Horticulture:Tariffsareeliminatedonawidevarietyofhorticultureproducts,withsomeglobally

significantexportssubjecttoearlyelimination.Tariffsonapplesandkiwifruitforinstancewillbein

eliminatedin2010(Indonesia,Malaysia–apples),2011(Philippines),2012(Malaysia–kiwifruit)and

2016(VietNam).Tariffsononionswillbeeliminatedby2010forIndonesia,andwillbereducedfrom

40percentto5percentinthePhilippines,by2018.

Manufactured Goods:AkeyadvantageofAANZFTAformanufacturersisthatrulesoforigincanbemet

onaregionalbasis.ThismeansthatNewZealandmanufacturerswillbenefitthroughbothimproveddirect

accessandalsothroughtheabilitytoincludeNewZealandmaterialsintheoriginassessmentofgoods

manufactured and traded within the region by Australia and ASEAN manufacturers and exporters.

ThiswillallowNewZealandmanufacturerstobetterintegratetheiroperationsintoregionalsupplychains.

Examples of manufactured products subject to relatively early elimination include navigational

equipment, electrical static converters, air conditioners, commercial refrigerators, toys, road sign

equipmentandswitchboardequipment.Tariffsontheseproducts(whichcanbeashighas15percent)

willbereducedandeliminatedbetween2010and2013,inoneormoreofNewZealand’skeymarkets

(Indonesia,Philippines,VietNamandMalaysia).

3.1.3 Rules of origin (ROO)

TheobjectivesforROOinthecontextofAANZFTAweretheassurancethat:

NewZealandexporterswouldbeabletoeffectivelytakeadvantageofthepreferentialconditions•

offeredunderAANZFTA,dosowithoutunduecompliancecosts.

Theruleswouldstandthetestoftimeasbusinessesevolvetheirproductionmodelsintheface•

ofincreasingglobalcompetition.

Thissetofobjectiveshasbeenachieved.As inanyFTA,productsmustmeettherelevantROO

criteriainordertoqualifyforpreferentialtarifftreatment.Thispreventsgoodsfromothersources

accessingthebenefitsoftheAgreementbyentering“throughthebackdoor”.

The AANZFTA ROO provides “co-equal” or alternative rules for the majority of product lines.

Thismeansthatmanufacturers/exporterscanchoosebetweeneitherachangeoftariffclassification

(CTC)approachoraregionalvaluecontent(RVC)approachwitha40percentfreeonboard(FOB)

threshold,dependingonwhichapproachbestsuits theirbusinessmodel.Thisoutcomereflects

bothASEAN’spreferencefor(andfamiliaritywith)anRVCbasedapproach,aswellasNewZealand’s

andAustralia’smovetowardstheCTCapproachintheirmostrecentlyconcludedFTAs.Significantly,

theCTCapproachunderAANZFTArepresentsthemostextensiveuseofthisapproachthatASEAN

hasagreedinanyofitsFTAs.

TheinclusionoftheCTCapproachwillensureconsistencyinapproachforNewZealandexporters.

Further,theCTCapproachisgenerallyconsideredto:

providegreatercertaintyastoorigin(oncequalify,alwaysqualify);•

reducetheneedforcostly“redtape”(i.e.recordsandaccountingsystems);•

facilitateaccesstoglobalsupplychains;•

facilitatechangestomanufacturingprocessesasnewtechnologiesdevelop;and•

simplifyborderadministrationandverification.•

17

TheinclusionoftheRVCapproachensuresthatinareasofparticularsensitivity,suchasironandsteel,

wheretheCTCapproachiscomparativelyrestrictive,NewZealandexporterscanstillclaimpreferential

treatmentthroughmeetingthe40percentRVCthreshold.TheprovisionofoptionalCTCandRVC

rules means that New Zealand exporters should have no difficulty in meeting origin requirements

acrossanyproductlineandtherebyqualifyforpreferentialtarifftreatmentunderAANZFTA.

Under AANZFTA, the ROO also provide a mechanism through which originating goods can be

cumulatedacrosstheParties.TheexportopportunitiesunderAANZFTAarethereforeexpandednot

onlythroughdirectaccessforNewZealandgoodstoASEANmarkets,butalsothroughtheability

toincludeNewZealandmaterialsintheoriginassessmentofgoodsmanufacturedandtradedwithin

theregionbyAustraliaandtheASEANmanufacturersandexporters.Inthisway,AANZFTAprovides

12 manufacturing bases from which to source input materials, thus enabling New Zealand

manufacturers/exporterstomakemoreoptimalchoicesinsourcingtheirinputsinordertoremain

internationallycompetitive.

AANZFTAalsoprovidesforexportcertificationoforigin(minorexceptionsapply),whichgenerally

resemblesthecertificationoutcomeundertheChina-NewZealandFTAwithonedifference:

AANZFTAmakesnoprovisionfortradedgoodscoveredbyan“advanceruling”onoriginfrom•

theimportingcustomsadministrationtobeexemptfromtherequirementtosubmitacertificate

oforigin.

Thecertificatesoforiginsystemareanessentialmechanismforaccessingthebenefitsofthetariff

preferencesunderAANZFTA.

3.1.4 Customs procedures

AANZFTAwillhelptoimprovelogisticalperformanceandpermittradebetweenNewZealandand

theotherPartiestotakeplaceinafarmoretimelymannerandatlowercostthanbeforeAANZFTA.

The provisions on customs procedures are intended to improve predictability, consistency and

transparency in theapplicationof customs lawsandadministrativeproceduressoas toensure

moreefficientadministration,aswellasfasterclearanceofgoodsinordertofacilitatetrade.

Thecooperationdimension,whichsitsalongsidethevarioustradefacilitationinitiativescontainedin

theprovisionsrelatingtocustomsprocedures,isanotherimportantfeatureofAANZFTA.EachParty

may,asdeemedappropriateandtotheextentpermittedbyitsdomesticlaw,assistthecustoms

administrationsofeachotherPartyinrelationtoawiderangeofactivities,includingsimplifyingand

harmonisingcustomsproceduresandproviding,wherepossible,capacity-buildingassistanceand

prior notice of changes to relevant laws, regulations, procedures and guidelines. This will give

NewZealandtheopportunitytoconsultotherPartiesonsignificantissuessuchasvaluationofimports

forduty-liabilitypurposes.Itwillalsohelptopre-emptcustoms-relatedproblems(andlimittheirlikely

incidence)aswellasofferingtheopportunitytoresolveanydifficultiesefficientlyandeffectively.

3.1.5 Sanitary and phytosanitary (SPS) measures

AANZFTAestablishesarangeofmechanisms–suchasregularmeetingsandworkinggroupson

specificissues–forregulators,otherofficialsandtechnicalexpertstoworktogethermoreeffectively

toaddressbarrierstotradeintheSPSarea.

TheoverallobjectiveistobetterfacilitatetradeingoodsbyensuringthatSPSmeasuresarenomore

restrictivethannecessary,andtoprovideameanstoimprovetransparency,communicationand

consultationonSPSissues.

18

3.1.6 Standards, technical regulations and conformity assessment procedures (STRACAP)

ThecostofcomplyingwithSTRACAP-relatedmatterscansometimesconstitutesignificantbarriers

totradeingoods.Withoutformalarrangementsormechanisms,itisdifficulttoengagewithother

countriesatthetechnical/regulatorylevelinawaythatwillproducetangiblesolutionstotheadverse

impactsthatSTRACAPcanhaveontradeflows.

AANZFTAestablishesaplatformforenhancedregulatoryco-operationtobetterfacilitatetradeand

reduce associated transaction costs for trade in goods between the Parties. The mechanisms

includeexchangeof information, cooperation, regularmeetingsandworkinggroupson specific

issuesforregulators,otherofficialsandtechnicalexperts.Inaddition,thereareprovisionsforgreater

transparency and information sharing which are designed to facilitate trade, reduce transaction

costsforpeopledoingbusinessbetweenthePartiesandstrengthenriskmanagementsystems.

3.1.7 Trade remedies

NewZealandhasretainedtheabilitytotaketraderemedyactionsunderWTOrules.AANZFTAalso

hasasafeguardmechanismunderwhichanyPartycaneithertemporarilysuspendtariffreductions

orincreasethetariffrateiftherehavebeenincreasedimportsofaproductasaresultofthetariff

reductionsbeingcarriedoutunderAANZFTAandsuchincreaseshavecausedseriousinjurytoa

domestic industry.Thepurposeof themechanism is toallowadomestic industrysometimeto

adjust to increased importcompetitionarising from the implementationofAANZFTA.Whilst it is

unlikelythataNewZealandindustrywouldseektousethismechanism,itisavailableifrequired.

3.1.8 Trade in services

AANZFTAwillassistintheexpansionofservicestradebetweenNewZealand,AustraliaandASEAN

membercountries.

Intermsofspecificcommitments,8ofthe10ASEANcountrieshavemadeservicescommitments

thatexpandontheircommitmentsintheWTOGeneralAgreementonTradeinServices(GATS).10

Such“GATS-plus”commitmentsareinthefollowingsectors:11

BUSINESS SERVICES

Professionalservices•

Legalservices(Indonesia,VietNam);−

Accountingservices(Malaysia,Myanmar,thePhilippines);−

Taxationservices(Malaysia);−

Architecturalservices(Brunei− 12,Indonesia,Malaysia,Myanmar);

Engineeringservices(Indonesia,Malaysia,Myanmar,thePhilippines,Thailand);−

Urbanplanningservices(Indonesia,Malaysia,Thailand);−

10 ThetwothathavenotareCambodia(whichhasonlyrecentlyaccededtotheWTOandthereforedidnotofferimprovementsoverandabovethoseithasrecentlyagreedwithWTOmembers)andLaos(whichisnotcurrentlyaWTOmemberanddoesnotthereforehaveanyexistingGATScommitments).

11 The commitments, as set out below, are clustered according to the WTO’s Services Sectoral Classification List MTN.GNS/W/120,10July1991.

12 BruneiisapartytotheTrans-PacificStrategicEconomicPartnershipAgreement,butwasgivenanextensiontocompleteitsservicesschedules.These have not yet been agreed, and so for the time being Brunei’s GATS-plus commitments in AANZFTA represent a benefit toNewZealand.

19

Landscapearchitecturalservices(Malaysia,Myanmar,Thailand,thePhilippines);−

Veterinaryservices(Malaysia);and−

Interiordesignservices(thePhilippines).−

Computerandrelatedservices(Indonesia,Malaysia,Myanmar,Thailand).•

Researchanddevelopmentservices(Indonesia).•

Otherbusinessservices•

Advertisingservices(Malaysia,Myanmar);−

Managementconsultingservices(Myanmar);−

Technicaltestingandanalysisservices(Indonesia);−

Servicesincidentaltomanufacturing(Indonesia);−

Servicesincidentaltomining(thePhilippines);−

Projectmanagementservices(Indonesia);−

Maintenanceandrepairofequipment(Indonesia);−

Translationservices(Myanmar);and−

Printingandpublishingservices(Myanmar).−

COMMUNICATION SERVICES

Telecommunicationservices(Brunei,Indonesia,Malaysia,thePhilippines,Thailand);•

Audiovisualservices(Myanmar).•

CONSTRUCTION AND RELATED ENGINEERING SERVICES

Constructionservices(Brunei,Indonesia,Malaysia,Myanmar,thePhilippines).•

EDUCATIONAL SERVICES

Educationservices(Indonesia,Malaysia,Myanmar,thePhilippines,Thailand,VietNam).•

ENVIRONMENTAL SERVICES

Environmentalservices(thePhilippines).•

FINANCIAL SERVICES

Financialservices(Indonesia,Malaysia,Singapore• 13,thePhilippines).

HEALTH RELATED AND SOCIAL SERVICES

Healthservices(Indonesia,Malaysia).•

TOURISM AND TRAVEL RELATED SERVICES

Tourismservices(Brunei,Indonesia,Malaysia,thePhilippines,Thailand).•

13 SingaporehasmadeanumberofGATS-pluscommitmentsinAANZFTA,howeveronlythosethatrelatetofinancialservicesgobeyondwhatithasalreadycommittedintheNewZealand–SingaporeCEPortheTrans-PacificSEP.

20

TRANSPORT SERVICES

Maritimetransportservices(Brunei,Indonesia,Myanmar);•

Airtransportservices(Indonesia,Myanmar,thePhilippines,Thailand);and•

Pipelinetransport(thePhilippines).•

OTHER SERVICES

Energyservices,includingservicesrelatedtotheenergysector(Indonesia,thePhilippines,Thailand).•

LaosisnotyetamemberoftheWTO.Assuch,NewZealanddoesnotcurrentlybenefitfromany

commitmentswithLaos.Inthatsense,allofLaos’servicescommitmentsinAANZFTAareabenefit

toNewZealand.Laosmadecommitmentsinthefollowingsectors:

Accountingservices;•

Landscapearchitecturalservices;•

Integratedengineeringservices;•

Computersandrelatedservices;•

Telecommunicationservices;•

Constructionservices;•

Educationservices;•

Tourismservices;•

Environmentalservices;and•

Financialservices.•

IndonesiaandMalaysiaalsomadeGATS-pluscommitmentsontheestablishmentofcommercial

presence(Mode3)14thatwillapplytoallsectorsintheirrespectiveschedules.

TherearealsoanumberofGATS-plusoutcomesintherulesthatapplytotradeinservicesbetween

NewZealandandtheASEANcountries.Someofthekeyimprovementsrelateto:

Domestic regulation• ,wherethefocusisonacceleratingauthorisationandlicensingprocesses,

as well as limiting the extent to which such processes can be used as informal barriers to

NewZealandservicesuppliers.

Transparency• ,particularlyinthecontextofanynewlawsandregulations(orchangestoexisting

ones)whichmightimpactonNewZealandservicessuppliers.

Qualifications recognition• ,wherethePartieswillencouragetheircompetentbodiestoenter

intodiscussionsonqualificationsrecognition.

Investment protections• ,wheretheprotectionsfor investmentthathavebeenestablishedunder

theInvestmentChapteralsoapplyforanyspecificcommitmentsinMode3(CommercialPresence).

14 Therearefour“modes”ofsupplyassociatedwithtradeinservices:Mode 1: Cross-Border Trade,wheretheserviceissuppliedbyaproviderphysicallylocatedinonecountry(egbywayoftheInternet),toaconsumerinanother;Mode 2: Consumption Abroad,whereacustomertravelstoanothercountrytoconsumeaservice;Mode 3: Commercial Presence,whereaforeignservicesupplierestablishesapresenceinanothercountrytoprovideaservice,throughincorporation,branchoffice,jointventureorsomeotherformofbusinessentity;andMode 4: Movement of Natural Persons,whichcoversthetemporarymovementofapersonintoacountryinordertosupplyaservicedirectly.

21

Review• ,wherethePartieswillrenegotiateservicescommitmentswithinthreeyears.Thereare

also ‘built-in agendas’ on air transport services, domestic regulation and subsidies with the

intentionthatanynewdevelopmentsintheWTOinthoseareaswillbebroughtintoAANZFTA.

TheseprovisionshelptoensurethatAANZFTAkeepsupwithdevelopmentsintheWTOand

that, as ASEAN countries’ services sectors grow and open further to foreign competition,

AANZFTAcanevolvetotakeadvantageofthis.

Parity• ,wherethereisanadditional“trigger”fornegotiationsonimprovingservicescommitments

ifASEANconcludesanagreementonservicesinthefuturewithathirdcountrythathasbetter

commitmentsthanareinAANZFTA.Ifthiswastooccur,ASEANmustenterintonegotiationswith

NewZealandandAustraliawithaviewtobringingthoseadditionalcommitmentsintoAANZFTA.

(SimilarlyNewZealandwillalso“trigger”suchnegotiationsifNewZealandoffersbetterservices

commitmentstothirdcountryunderafutureagreement).Furthertothistriggerfornegotiations

Viet Nam has provided MFN for mode 1 higher education services (ie distance learning,

mostlyinternet-based).ThismeansthatanyimprovementsVietNamprovidestoafuturepartner

inanFTA(involvingASEAN)inthisareawillbeextendedtoNewZealandaswell.

Telecommunications• ,whereanAnnexprovidesNewZealandexportersoftelecommunications

serviceswithgreatercertainty that telecommunications regulation inASEANcountrieswillbe

transparent,objectiveandnon-discriminatory.ItwillhelptoensurethatASEANmembercountries

restrainmajortelecommunicationssuppliersfromanti-competitiveuseoftheirmarketpower.It

will also encourage regulatory frameworks that promote open and competitive markets in

telecommunications. This not only benefits New Zealand exporters of telecommunications

services,butalsoNewZealandbusinessesthatoperateinthesemarketsthatwishtouseand

purchasetelecommunicationsservicesfromotherproviders.

Financial services• ,whereanAnnexprovidesNewZealandfinancialservicesupplierswithmore

transparency and certainty regarding access to ASEAN markets. Like telecommunications,

financialservicesareanimportantunderlyingservicethatisessentialforall internationaltrade

andinvestment.TheadditionaltransparencyandcertaintyprovidedbytheAnnexonFinancial

ServicesthereforebenefitsNewZealandbusinessesthatoperate inASEANmarketsanduse

financialservices.

Education Services

AswiththeFTAwithChina,securingimprovementsinaccessfortheeducationservicessectorwas

NewZealand’shighestpriorityfortheservicesnegotiationsforAANZFTA.NewZealand’sinterests

ineducationservices in thenegotiationswereconcentratedontwospecificmodesofdelivery–

distanceeducation(Mode1)andpresenceofnaturalpersons(Mode4).Thisisduetotherelatively

smallsizeofmanyNewZealandeducationexporters.Mode3(commercialpresence)requiresthe

investmentofsignificantresourceswhichcarriesmoreriskthanModes1and4,althoughthisisan

areathat isexpectedtobecomemore important forNewZealandexporters inthefutureasthe

exporteducationsectorfurtherdevelops.

22

AANZFTA contains a range of GATS-plus outcomes for education services. This includes

commitments in the sector by Indonesia, Malaysia, the Philippines, Thailand and Viet Nam.15

Whilst such outcomes did not necessarily represent new market access because they were

commitmentstobindexistinglevelsofopennessineducationservicesforthesecountries,these

outcomes do provide valuable gains in terms of transparency and certainty (i.e., that access

conditionscannotbemadeworsethancurrentcommitments).Thisisabenefiteducationexporters

from other countries will not have in ASEAN markets. This certainty and transparency is very

importantasitgivesNewZealandeducationexportersgreaterconfidencetoenterthesemarkets

and invest (in termsof resourcesandeffort) inbuildingamarketpresence inASEANcountries.

ThisinturnhelpsenhanceNewZealand’sbusinessandeconomicintegrationwiththeregion.

3.1.9 Movement of natural persons

AANZFTAwill facilitate themovementofbusinesspeopleengaged in tradeand investmentand

establishstreamlinedandtransparentproceduresforapplicationsforimmigrationdocumentsand

processesforbusinesspeople.

AANZFTAobligesASEANmembercountriestopublishallrelevantinformationabouttheirimmigration

requirementsinrespectofthecategoriesofbusinesspeopleandservicesupplierscoveredbytheir

respectiveschedulesofcommitments.Anychangestotheseregulationsmustalsobepublished

promptly.Thereisarequirementthatfeesforprocessingimmigrationformalitiesbereasonableand

thePartiesmustprovidebusinesspeopleandservicesuppliersthatapplyfortemporaryentryto

theircountrieswithdetailedinformationonthestatusoftheirapplications.

The availability of clear and up-to-date information about the requirements and conditions for

temporaryentryforbusinessvisitors,combinedwithareasonablyexpeditiousprocessforprocessing

immigrationdocumentsandapplications,willfacilitatethemovementofbusinesspeople,investors

andtradersaroundtheregion.Itwillalsoensurethatbusinesspeopleareabletomakethemostof

thetradeandinvestmentcommitmentscontainedinAANZFTA.

LiketheServicesChapter,therulesrelatingtomovementofnaturalpersonsincludesascheduleof

specific commitments from each of the Parties. These schedules contain commitments on the

temporaryentryandstayofparticularcategoriesofbusinesspeople,investorsandservicesuppliers.

Someofthekeyimprovementsare:

Extension of stay (or new commitments) for business visitors in sectors listed in the Party’s•

schedule(Indonesia,Laos,thePhilippines16,Thailand).

Extensionofstay(ornewcommitments)forintra-corporatetransfereesinsectorslistedinthe•

Party’sschedule(Indonesia,Laos,Malaysia,thePhilippines,Singapore17,Thailand).

NewcommitmentsinMode4inarangeofservicessectors(Indonesia,Malaysia,Myanmar,the•

Philippines,Thailand).

Newcommitmentsoninvestors(thePhilippines).•

Newcommitmentsoninstallers/maintainers(Malaysia).•

15 Asnotedabove,LaosisnotamemberoftheWTOand,assuch,NewZealanddoesnotbenefitfromanyservicescommitmentsfromLaos.ThismeansthatanycommitmentsLaosmakesinAANZFTArepresentagainforNewZealand.Inthisregard,Laoshas–amongstotherthings–madecommitmentsindistanceeducation,‘consumptionabroad’andcommercialpresence(Modes1-3) inSecondary,Higher,Adultand‘Other’Education.

16 ThePhilippinescommitmentsonbusinessvisitorsalsoapplytogoodssellers.17 Singapore’scommitmentsonintra-corporatetransfereesapplytoallservicessectors,notjustthoselistedinitsservicesschedule.

23

3.1.10 Electronic commerce

Electronic commerce plays an important and growing role in trade and investment activities,

includingbywayofinternetdeliveryofservices,onlinepurchasing,onlinemonitoring,andelectronic

documentation.

Giventheirrelativestagesofeconomicdevelopment,however,someASEANmembercountriesdo

nothavethenecessarylegalframeworksforelectroniccommerce.Accordingly,AANZFTAtakesa

cooperative approach to this issue. Over the medium term, this will help improve transparency

(throughinformationsharingrequirements),reducetransactioncosts(throughpromotionofpaperless

trading)andpromotegreatercertaintyandpredictability(throughpersonaldataprotection).

3.1.11 Investment

Upuntilnow,NewZealandhasonlyhadFTAscontainingInvestmentChapterswithtwoASEAN

membercountries–namely,SingaporeandThailand.FortheremainingeightASEANmembers,no

treaty-levelframeworkhasexistedtoeffectivelysafeguardNewZealandinvestors’ interests.Ata

timewhenNewZealand is increasingly focusedon thepotentialgains to thewidereconomyof

increased outward investment, AANZFTA provides a credible regional legal framework for

NewZealandinvestorsandtheirinvestments.

AANZFTA contains a range of investment protection provisions. Such provisions apply to both

citizensandpermanentresidentsoftheParties.ThisisanimprovementonthescopeoftheThailand

CEP,whichdoesnotcoverpermanentresidents,andontheSingaporeCEP,which,whilecovering

permanent residents, does not contain all the protection elements that the AANZFTA does (for

example,aroundexpropriationofinvestments).

SomeofthekeybenefitstoNewZealandinclude:

Provisionsthatenablethefreetransferofallpaymentsrelatingtoaninvestment,includingcapital•

necessary for establishing the investment, and the returns generated from that investment,

betweenASEANcountriesandAustraliaandNewZealand.Theseareasignificantadditionto

existingprotectionsavailabletocurrentandprospectiveinvestors.

Commitments to provide protection from arbitrary expropriation. This significantly builds on•

existing rules in the region. Neither party may expropriate or nationalise the investments of

investors of the other Party, unless such an action is done for a public purpose; in a non-

discriminatorymanner;onpaymentofcompensation;andinaccordancewithdueprocessof

law.Importantly,theprovisionsalsoensurethatanycompensationpaidmustbeequivalentto

the fair market value of an expropriated investment, and must be paid without delay, and

renderedinaneffectivelyrealisableandfreelytransferablecurrency,withappropriateinterest.18

SuchexpropriationprovisionsareakeyprotectionforNewZealandinvestors.Theyminimisethe

riskofarbitrarygovernmentactiontoexpropriateestablishedinvestments,andensurethatany

expropriationactionsareappropriatelycompensatedintheeventthattheyoccur.

18 ThereisalimitedexceptionforSingaporeandVietNaminrelationtoexpropriationrelatingtoland.

24

Provisions to enhance the transparency of investment regimes, including by requiring the•

publication of a country’s international investment agreements and domestic investment

measures.Accesstosuchinformation,andcommunicationsbetweenthePartiesonanymatter

covered by the Investment Chapter, is facilitated by a provision that requires each Party

todesignatespecificcontactpoints.ThiswillbeausefulmechanismforkeepingNewZealand

(andNewZealandinvestors)abreastofdevelopmentsininvestmentpolicyintheotherParties,

particularly those countries where gaining information on policy settings has – in the past –

beendifficult.

TheFTAprovides for the compulsory settlementof disputesbetween foreign investors and the

country inwhichtheinvestment ismade.CompulsoryInvestor/StateDisputeSettlement(CISDS)

enhancestheprotectionsforNewZealandinvestmentsinASEANbygivinginvestorsrecourseto

internationalproceduresbeyondthedomestic legalsystem.Theseprocedurescanbeaccessed

onlyifadisputecannotbesettledthroughconsultationandnegotiation,andunlessthepartiesto

thedisputeagreeotherwise.Therearealsosafeguardstopreservethegovernment’s regulatory

prerogatives and to minimise the government’s exposure to inappropriate expropriation claims.

As AANZFTA is the first ASEAN-wide FTA to include a chapter on investment, New Zealand

(andAustralia)investorswillalsobethefirsttobenefitfromstandardisedCISDSprovisionsacross

theregion.

3.1.12 Economic cooperation

AANZFTAestablishesa framework for tradeand investmenteconomiccooperationdesigned to

directlysupportimplementationoftheAgreementandtoenablemaximumcommercialbenefittobe

derivedfromit.TheobjectiveistocomplementexistingeconomicpartnershipsbetweenNewZealand

andotherPartiestoAANZFTAtherebycontributingdirectlytoNewZealand’sstrategicengagement

withtheASEANregionaswellascreatenewopportunitiesinareasofmutualinterest.

AnImplementing Arrangement for a Work Programme of Economic Cooperation Projectshasbeen

developed to help operationalise the framework. The programme focuses on the provision of

implementationsupportandcapacitybuildingineightmutuallyagreedareasasfollows:

RulesofOriginandotherAspectsofImplementationofTariffCommitments;−

SanitaryandPhytosanitaryMeasures;−

Standards,TechnicalRegulationsandConformityAssessmentProcedures;−

Services;−

Investment;−

IntellectualProperty;−

SectoralIntegration;and−

Customs.−

25

While precise details regarding implementation of the Economic Cooperation Work Programme

have yet to be fully finalized by the Parties, New Zealand has agreed to take the lead on the

followingprojects:

“SPS Assessments” – specific funding for the processing in New Zealand of import health•

standards(IHS)-relatedrequestsfromASEANmembercountries.

“SPSsupport”–toincreasethecapacityofASEANmembercountriestoprepareproductsand•

documentationforHIS-relatedassessment.

“DairyIndustryDevelopment”–toassistthedevelopmentofdairyindustriesinASEANmember•

countries,beginningwithastudy.

“Regulatory InfrastructuralAnalysis fortheDairyandMeat Industry”–reviewofthe legislative•

underpinning,resourcingandexistingadministrativesystemsandproceduresassociatedwith

theprovisionoffoodsafetyandanimalhealthcertification.

NewZealand’sfundingcontributiontotheAANZFTAEconomicCooperationProgrammeisexpected

tobe$4.6millionover3-5years.

3.1.13 Intellectual property

NewZealand’sexportscurrentlyface–tovaryingdegrees–uncertainIPprotectionandenforcement

in the ASEAN region. AANZFTA can help address this uncertainty by providing a platform for

enhancedcooperationandcapacitybuildingintheIParena.Itsaimistodevelopanenvironment

thatallowsforeffectiveprotectionandenforcementofIPrightsintheASEANregionovertime.This

will provide greater certainty for New Zealand businesses over the adequate provision and

enforcementofintellectualpropertyrightsandwillfacilitatetradeandinvestmentflows.

AANZFTAincludescommitmentsaroundtheprotectionandenforcementofcopyright,government

use of legitimate software, and the protection of trade marks and geographical indications. It

promotescooperation insupportingaccessionto international IP–relatedtreatiesand introduces

measuresthatfacilitatedialogueandcooperationbetweenthePartiesonIPmatters.Italsoincludes

commitmentsrelatingtogreatertransparencyintheParties’domesticregimes.

3.1.14 Competition

AANZFTA recognises the importanceofcooperation in thepromotionofcompetition,economic

efficiency,consumerwelfareand thecurtailmentofanti-competitivepractices.This isconsistent

withNewZealand’sviewthatcompetitionpolicyisanimportantareaforeconomiccooperation.

AANZFTA’s inclusion of a Competition Chapter is important because it will allow Australia and

NewZealandtocontributetothedevelopmentofcompetitionpoliciesandinstitutions inASEAN

countries.Over time, thedevelopmentofcompetitionpolicies, lawsand institutionsshouldhelp

developamorestableandpredictableregulatoryenvironmentunderwhichtradecantakeplace.

This should also help to ensure that the benefits from AANZFTA, particularly in terms of trade

liberalization,arenotunderminedbyanti-competitivebehaviour.

26

3.1.15 Other outcomes of AANZFTA

ConsistentwithNewZealand’spreviousFTAs,AANZFTA:

MaintainsNewZealand’sabilitytotakemeasuresitdeemsnecessarytoaccordmorefavourable•

treatmenttoMäori,includinginfulfilmentofitsobligationsundertheTreatyofWaitangi;

DoesnotprecludeNewZealandfromtakingmeasuresnecessarytoprotectnationaltreasuresor•

specificsitesofhistoricalorarchaeologicalvalueortosupportcreativeartsofnationalvalue;and

Includesrobustandtransparentdisputesettlementprovisions.•

3.2 Advantages to New Zealand in entering into the instruments on labour and environment cooperation with the Philippines

The instruments provide a basis for New Zealand to advance its objectives for environmental

protection, labour standardsandbuilding stronger economicandpolitical relationshipswithour

tradepartners.TheinstrumentsarenotexplicitlylinkedtoAANZFTAbuthavebeenconcludedinthe

contextofAANZFTA.

3.2.1 Advantages to New Zealand in entering into the MOA on labour cooperation with the Philippines

ThisisnotthefirstsetoflabourcooperationoutcomesthatthePhilippineshasconcluded,butthey

arethemostcomprehensivethatithasnegotiatedinthecontextofanFTAandwhichincludea

specificreferencetotherelationshipbetweentradeandlabour.

Thistreatyenumeratesasetofsharedcommitmentswhichincluderecognitionthatitisinappropriate

tosetoruselabourlaws,regulations,policiesandpracticesfortradeprotectionistpurposes,and

thatitisinappropriatetoencouragetradeorinvestmentbyweakeningorreducingtheprotections

affordedindomesticlabourlaws,regulations,policiesandpractices(Article2).Issuesthatmayarise

thattouchonthese,oranyothercommitments,canbeconsultedonwithaviewtotheirresolution.

Atimeframeof90daysisestablishedforameetingto“assistintheresolutionofanysuchmatters”.

TheMOAalsoallowsforthepossibilityofMinistersbeinginvolvedinresolvinganyissues.

TheMOArepresentsanopportunityforNewZealandtoimprovedialogueandconductcooperative

activitieswiththePhilippinesinthefollowingareas(Article3):

Labour laws and practices, including the promotion of labour rights and obligations and•

decentwork;

Information,complianceandenforcementsystems;•

Sound labour relations, including labour management consultation, cooperation and labour•

disputesettlement;

Occupationalsafetyandhealth;•

Humancapitaldevelopment,training,andemployability;and•

Human resource development initiatives including sharing of labour market trends, skills•

development,buildingmutualcapacity,andthepromotionandprotectionofemploymentrights

andobligationsofmigrantworkers.

27

Inadditiontothisindicativelistofthetypesofactivitiesthatmightbeundertaken,anAnnextothe

MOAprovidessomeexamplesofpotentialprojectsforpossiblecooperation.EachPartymay,as

appropriate,invitetheparticipationofitsunionsandemployersand/orotherpersonsandorganisations

inidentifyingpotentialareasforcooperationandinundertakingcooperativeactivities.

ALabourCommitteewillalsobeestablishedtooverseetheimplementationandoperationofthe

MOA.TheLabourCommitteemayconsultwithorinvitetheparticipationofmembersofthepublic

orrelevantsectorsoveranymattersrelatingtotheoperationoftheMOA.

3.2.2 Advantages to New Zealand in entering into the MOA on environmental cooperation with the Philippines

This instrument is the most comprehensive outcome on environmental cooperation that the

PhilippineshasundertakentodateinthebroadcontextofanFTA.

This treaty includes specific reference to the relationship between trade and the environment.

Tothisend,theMOAestablishesasetofsharedcommitmentswhich includerecognitionthat it

is inappropriate to set or use environmental laws, regulations, policies and practices for trade

protectionistpurposesandthatitisinappropriatetoencouragetradeorinvestmentbyweakening

or reducing the protections afforded in domestic environmental laws, regulations, policies and

practices(Article2).AswiththeMOAonlabourcooperation,thereisprovisionforeitherPartyto

consultwiththeotheronanyissuesthatmayariseinrelationtotheoperationoftheMemorandum

withaviewtotheirresolution.Atimeframeof90daysisestablishedforameetingto“assistinthe

resolutionofanysuchmatters”.TheMOAalsoallowsforthepossibilityofMinistersbeinginvolved

inresolvinganyissues.

Takingaccountoftheirnationalprioritiesandavailableresources,NewZealandandthePhilippines

haveundertakentocooperateonmutuallyagreedenvironmentalissuesincludingconcernssuchas:

Sustainablemanagementoftheenvironment;•

Airqualitymanagement;•

Waterqualitymanagement;•

Toxicchemicalsandhazardousandsolidwastesmanagement;•

Restorationofdegradedwatershed,riverbasinsandwetlands;•

Conductofresearchdealingwithmajorriverbasins;and•

Concernsaffectingordealingwithclimatechange.•

This is not an exhaustive list and other items may be added to the cooperative programme.

Thenon-governmentsectorandotherorganisationsmayalsobeinvitedtoparticipateinidentifying

potentialareasforcooperationandinconductingcooperativeactivities.

AnEnvironmentCommitteewillbeestablishedtooverseeaprogrammeofcooperativeactivities,

serveasachannelfordialogueonmattersofmutualinterest,reviewtheoperationandoutcomesof

theMOA,andprovideaforumforresolvingdifferences.EachPartymayconsultorseektheadvice

ofrelevantstakeholdersandprovidethemwithanopportunitytosubmitviewsoradvicetoiton

mattersrelatingtotheoperationoftheMOA.

28

3.3 Advantages to New Zealand in entering into the bilateral temporary employment entry and working holiday scheme arrangements

InconjunctionwiththeAANZFTAnegotiations,butnotaspartofAANZFTAitself,NewZealandhas

alsomadesomelimitedarrangementsof lessthantreatystatusontemporaryemploymententry

andreachedanunderstandingtoenterintonegotiationsonreciprocalworkingholidayschemes,

alsooflessthantreatystatus.

Thetemporaryemploymententryarrangementsareforalimitednumberofskilledworkersfromthe

PhilippinesandVietNam(thespecificnumbersareprovidedbelow).Althoughinvolvingonlyvery

limited numbers, these arrangements may assist in easing labour shortages in, for example,

engineering.ShouldthelabourmarketinNewZealandcontractinthefuture,therequirementthat

suchworkersholdabona fide jobofferwillprotectemploymentopportunitiesandconditionsfor

NewZealanders.

Theunderstandingtoenterintonegotiationsonreciprocalworkingholidayschemessimilarlyrelate

tothePhilippinesandVietNam.

3.4 Disadvantages to New Zealand entering into the AANZFTA

3.4.1 Trade in goods

Market Access – Exports

New Zealand would have preferred more ambitious outcomes on goods, including through the

swiftereliminationoftariffsonalargernumberofproducts.UndertheAANZFTA,upto10percent

oftariff linesinthetariffschedulesofmajormarketswillremainsubjecttotariffs. Inotherwords,

while theAANZFTAprovides for the eliminationof tariffs on keyNewZealandexports tomajor

markets, someproducts that account for a small valueof exports to thesemarketswill remain

subjecttoduties.Theseincludesomehorticulture,wine,seafood,meat,dairyandsteelproducts

whichareexportedinsignificantquantitiestoother(non-ASEAN)markets.Collectively,exportsof

theseproductsare,however,justonepercentofNewZealand’sexportstothemajormarketsof

Indonesia,Malaysia,thePhilippinesandVietNam.Currentexportsinthiscategoryarevaluedat

around$15million.Moreambitiousoutcomeswouldhavebeenbeneficialbothforthedirectbenefit

ofexports,andalsointermsofprecedentsforothernegotiations,butweresimplynotpossiblein

thecontextofthenegotiations,whichinvolvedelevenotherPartieswithvaryinglevelsofambition

forFTAs.

Market Access – Imports

Anytradeagreementinvolvingreciprocaltariffremovalcancreate–atthesametimeasexport-focused

sectors secure improved access to offshore markets – negative adjustment effects for domestic

producersinthedomesticmarketasaresultofincreasedexposuretoforeignsuppliers.

Inordertohelpmitigatethepotentialforanynegativeadjustmenteffects,AANZFTAincludeslonger

phase-outperiodsforimportsensitivesectorsinNewZealand,suchas,clothing,footwear,carpets,

sometextilesandsomemanufacturedproductssuchassteelandplasterboard.Thesephase-outs

forimport-sensitivesectorsare,ingeneral,longerinAANZFTAthaninotherFTAsthatNewZealand

hasnegotiated(includingtheChina-NewZealandFTA).

29

3.4.2 Customs procedures

There isnocommitment inAANZFTAtoclear importedgoodswithindefinedtimeframes. In this

respect,itdiffersfromtheFTAwithChina.GiventherangeofcountrieswhichcompriseASEAN,

however, itwasnever likely thatASEANwouldhavebeenpreparedtocommit toasingle time-

boundclearancetimeframewhichwouldapplyacrossallofitsmembercountries.

3.4.3 Trade remedies

GiventherelativelylowlevelofNewZealand’stariffsandthesmallsizeofNewZealand’sexportsin

relation to the domestic production and consumption of most ASEAN member countries,

NewZealanddidnotgenerallyconsidertheinclusionofasafeguardmechanismasbeingnecessary

forAANZFTA.Ifanything,itwasconsideredthatNewZealandfirms–notwithstandingtheirrelatively

smallsize–couldbedisadvantagedthroughtheirexportsbeingsubjecttoasafeguardmeasure.

Theinclusionofasafeguardmechanismbecamenecessary,however,inordertosecureASEAN

agreementtomoreambitioustariffcommitments.Insuchcircumstances,NewZealandfocusedon

ensuringthatthemechanismcontainedanumberofprotectionsdesignedtominimiseitsuseinan

overlyprotectionistmanner,includinglimitsontheoverallperiodduringwhichsafeguardactioncan

betakenandonthemaximumlengthoftimeforwhichameasurecanbeimposed.Theseprotections

weresecured.

3.4.4 Trade in services

New Zealand would have preferred AANZFTA to have included a Most Favoured Nation (MFN)

provision,19 more substantial improvements on ASEAN member countries’ GATS commitments,

andforservicescommitmentstohavebeenmadeonanegativelistbasis.Anegativelistgenerally

providesgreaterlegalcertaintyandtransparencyaboutthebarriersthatexisttoservicestradeand

itsdynamicnaturerenders itbettercapableofcapturingchanges intheregulatoryenvironment.

ASEANhas,however,notcompletedanegativelistservicesoutcomewithanytradepartnerand

NewZealandwassimilarlyunabletosecureanegativelistinitsFTAwithChina.

AANZFTAdoes,however,includeareviewclausethatrequiresthePartiestorenegotiateservices

commitmentswiththeaimoffurtherimprovingcommitmentswithinthreeyearsofentryintoforce.

Italsoincludesanadditional“trigger”fornegotiationsonimprovingservicescommitmentsifASEAN

concludesatradeinservicesagreementatsomestageinthefuturewithathirdcountrythathas

better commitments than are in AANZFTA. In such circumstances, ASEAN must enter into

negotiationswithNewZealand(andAustralia)withaviewtobringingthoseadditionalcommitments

intoAANZFTA. (SimilarlyNewZealandwillalso“trigger”suchnegotiations ifNewZealandoffers

betterservicescommitmentstothirdcountryunderafutureagreement).

WhileAANZFTAgenerallyappliestobothcitizensandpermanentresidentsoftheParties,Thailand,

thePhilippines,VietNamandMyanmarhaveincludedspecificreservationsagainsttheinclusionof

permanentresidentsintheirschedulesofreservations.Thismeanstheydonothaveanobligation

toprovidethebenefitsofAANZFTAtoNewZealand’spermanentresidentswheretheyaresupplying

aservice.

19 Asnotedearlier,VietNamhas,however,providedanMFNcommitmentforMode1highereducationservices.

30

AANZFTA also includes a provision relating to a services safeguard. New Zealand would have

preferrednottohaveincludedsuchaprovision.Thisprovisiondoesnot,however,constituteafull

safeguardmechanism.Rather,itreferstotheworkthatismandatedintheGATStoconsiderthe

questionofaservicessafeguardandcommitsthePartiestodiscussbringinganysuchmechanism

intoAANZFTAifithasbeenagreedintheWTOcontext.Ifthishasnotoccurredwithinthreeyears

ofentry into force, thePartiesare tocommencediscussionsonbringingsuchasafeguard into

AANZFTA.Inthemeantime,theprovisionenablesaPartytorequestconsultationsifitconsidersthe

implementationofAANZFTAtohavecausedasubstantialadverseimpactonitsdomesticservices

sector. IfNewZealandreceivedsucharequest, itwouldbeable todeterminethescopeof the

consultations. In any case, no safeguard measure may be taken unless the Parties concerned

agree.Inotherwords,theprovisionwillhavenopracticaleffectonNewZealand’sservicesexporters

unlessNewZealandagreedthatasafeguardmeasurecouldbeimposed.

3.4.5 Investment

AANZFTAdoesnotcontainanyup-frontcommitmentsonmarketaccess.Thesecommitmentswill

benegotiatedandenterintoforcewithinfiveyearsoftheentryintoforceofAANZFTA.Although

corelanguageonNationalTreatmenthasbeenagreed,theprovisionsoftheArticleshallnotapply

until such timeasall12Partieshaveagreed to theschedulesof reservations to that language.

Similarly,theInvestmentChapterdoesnotcontainanMFNprovision,withthisalsobeingthesubject

offuturenegotiation.

3.5 Disadvantages to New Zealand entering into the instruments on labour and environmental cooperation with the Philippines

NodisadvantageshavebeenidentifiedtoNewZealandenteringintotheseinstruments.

3.6 Disadvantages to New Zealand in entering into the bilateral temporary employment entry arrangement

Theconditionsattachedtothetemporaryentryarrangements–includingthelimitationonnumbers,

skilllevelrequirementsandtherequirementthatthejobsmeetNewZealandlabourmarketconditions

–arespecificallydesignedtomitigateanypotentialnegativeimpactsonNewZealandemployment.

31

4 LEGAL OBLIGATIONS WHICH WOULD BE IMPOSED ON NEW ZEALAND BY THE TREATY ACTIONS AND AN OUTLINE OF THE DISPUTE SETTLEMENT MECHANISM

AANZFTAprovidesfortheliberalisationoftradebetweenASEAN,AustraliaandNewZealandwith

theobjectiveofservingasanimportantbuildingblocktowardsregionaleconomicintegrationand

sustainableeconomicdevelopment.

ThespecificobligationsthatNewZealandwillassumeineachChapteroftheAANZFTAaresetout

below in thesequence inwhich theyappear inAANZFTA.Also included in thisSectionare the

obligationsarisingfromtheassociateddocumentsandinstruments,includingtheMOAswiththe

Philippines.(AlthoughnotpartofAANZFTA,theunderstandingsrelatingtotemporaryemployment

entryandworkingholidayschemesreachedseparatelywiththePhilippinesandVietNamarealso

setoutbelow.Itshould,however,benotedthattheseunderstandingsdonotconstitutetreatiesand

arenotdirectlylinkedtoAANZFTAitself).

4.1 Initial provisions

Amongst other things, AANZFTA reaffirms New Zealand’s rights and obligations in the

WTO(Preamble).

4.2 Trade in goods

NewZealandisrequiredtoprogressivelyreduceand/oreliminateitscustomsduties(ortariffs)on

goodsoriginatingfromASEANmembercountriesinaccordancewithitsscheduleofcommitments

annexed to AANZFTA, and may not increase existing customs duties (Chapter 2, Article 1).

ThePartiesmayconsideracceleratingtheagreedreductionand/oreliminationtariffcommitments

(Chapter2,Article2).

ThemainobligationsimposedbyAANZFTAareto:

Be consistent with the WTO Agreements, eliminate and not reintroduce all forms of export•

subsidiesforagriculturalgoodsdestinedfortheotherparties(Chapter2,Article3).

AccordnationaltreatmenttothegoodsofotherPartiesinaccordancewithWTOrequirements•


Ensurethatall feesandchargesinrelationtoimportationandexportationarecommensurate•

withthecostoftheservicesprovided,andthatthedetailsofanysuchfeesandchargesare

madeavailabletotheotherParties(Chapter2,Article5).

Not adopt or maintain any quantitative restrictions or non-tariff measures, except in the•

circumstancesspecified(Chapter2,Article7).

EstablishaCommitteeonTradeinGoodstoconsideranymatterrelatingtotheChapterson•

Trade in Goods, ROO, Customs Procedures, SPS measures, STRACAP and Safeguard

Measures(Chapter2,Article11).

Withintwoyearsofentryintoforceoftheagreement,partieswillreviewnontariffmeasureswith•

theviewtoconsideringthescopeforadditionalmeanstoenhancefacilitationoftradeingoods.

32

4.3 Rules of origin (ROO)

AANZFTAestablishesrulesfordeterminingwhethergoodstradedbetweenthePartiesqualifyas

originatinggoodsandthereforeareeligibletoreceivetariffpreferencesunderAANZFTA.

GoodswhollyobtainedinanyoneParty,orgoodsproducedentirelyfrommaterialsthatoriginate

fromanyofthePartieswillqualifyforpreferentialtreatment.Forproductsthatcontainthirdparty

inputs,AANZFTAprovidesalternativepathwaysfordeterminingorigin(Chapter3,Article4):

Under the change in tariff classification (CTC) approach, a good will qualify as originating if•

allthirdpartyinputsusedintheproductionofthatgoodhaveundergoneaspecifiedchangeof

tariffclassification.

Undertheregionalvaluecontent(RVC)approach,agoodwillqualifyforpreferentialtreatment•

aslongasthevalueoforiginatinginputsisequaltoorgreaterthan40percentoftheFOBvalue

of thatgood.Conversely thirdparty inputsmustnotexceed60percentof theFOBvalueof

thegood.

TheoptionofeithertheCTCorRVCapproachvariesforsomeproducts.Formotorvehiclesand

automotive parts, the rule is a 40 percent RVC rule only. For some textiles, the RVC option is

replacedbyanalternativeprocess rule,while forcarpetsand footwear there isnoRVCoption.

Foralimitednumberofproducts,theCTCruleissupplementedwithaminimumRVCrequirement

of35percentFOB.

Foranygoodtoqualify,itmustbeconsigneddirectlybetweentheParties(Chapter3,Article14).

If transported through a non-Party, thegoodsmust not enter the trade or commerce there, or

undergoanythingmorethansimplelogisticalprocesses,suchasunloadingandreloading,repacking,

oranyoperationrequiredtokeepthemingoodcondition.

ClaimsforpreferentialtarifftreatmentinASEANcountrieswillrequirethepresentationofaCertificate

ofOrigin(Chapter3,Article15).Thesecertificateswillbeprovidedbyissuingbodiesorauthorities.

TheNewZealandCustomsServiceisrequiredtonotifydetailsoftherelevantNewZealandissuing

bodiestotheASEANSecretariat.

NewZealandisobligedtorequireissuingbodies,producers,exportersandimporterstoretainorigin

documentsfornotlessthanthreeyears.

AANZFTAspecificallyallows(Chapter3,Article18)forareview,commencingnolaterthan18months

after entry-into-force, to encourage consideration of further liberalisation of the product specific

rules (in particular the wider application of chemical process rules) and the adoption of lower

thresholdsforcumulation.Takentogether,thesewouldincreaseNewZealandbusinessopportunities

throughevendeeperintegrationofmanufacturingactivitywithintheregion.

TomonitortheimplementationandadministrationofthischapterthePartieswillestablishaRules

ofOriginsub-Committee.Thiswillalsocreateaforumfordiscussiononany issuesorproposed

modificationsofthechapter.

33

4.4 Customs procedures

AANZFTA commits the Parties to pursue a range of trade facilitation measures and promote

cooperationamongstcustomsadministrations

Tradefacilitationisaddressedthrough:

Commitmentto,whereverpossibleandtotheextentpermittedbyeachParty’scustomslaw,•

conformwiththestandardsandrecommendedpracticesoftheWorldCustoms’Organization


AgreementtoassistthecustomsadministrationsofeachotherPartytosimplifyandharmonise•

customsprocedures(Chapter4,Article4).

Encouragementoftheuseofautomatedsystemswhereverpossible(Chapter4,Article6).•

Consistencyandpredictabilityofproceduraloutcomes(forexample,byanobligationtoprovide•

“advancerulings”inrespectoforiginandtariffclassifications)(Chapter4,Article8).

Encouragingtheuseofmoderncustomsproceduressuchasriskmanagementsoastobetter•

facilitatetheclearanceoflow-riskgoodsandplacethefocusuponhigh-riskgoods(Chapter4,

Article9).

Agreementtomakerelevantinformationpubliclyavailable(Chapter4,Article11).•

Designation of one or more contact points to address enquiries from interested persons•

concerningcustomsmatters(Chapter4,Article11).

4.5 Sanitary and phytosanitary (SPS) measures

AANZFTAwillcomplement theexistingSPSagreements thatNewZealandhaswith itspartners

undertheThailandCEP,theTrans-PacificSEPandtheChinaFTA,asallofthoseagreementsare

underpinnedbytheWTO’sAgreementontheApplicationofSanitaryandPhytosanitaryMeasures

(SPSAgreement).

AANZFTAprovidesforthedevelopmentofmechanismstoallowpartiestoenhanceimplementation

oftheSPSAgreement, includingstrengtheningcooperationonequivalenceofeachParty’sSPS

measures(Chapter5,Article5). ItalsoprovidesforPartiestocooperateon“regionalisation”(the

adaptationtoregionalconditions),inaccordancewiththeSPSAgreement(Chapter5,Article8).

RecognitionoftheoutcomesofcooperationwilloccurundertheauthorityoftheSub-Committeeon

SanitaryandPhytosanitaryMatters(SPSSub-Committee)madeupofallmembersoftheAANZFTA


AANZFTAemphasisescommunicationbetweenthecompetentauthoritiesofallParties,including

throughtheSPSSub-Committeeandsubsidiaryworkinggroups.Therearespecificproceduresfor

informing relevant SPS-related changes by both importing and exporting members (Chapter 5,

Article7).

Decisionsonmattersaffectingbiosecurityandfoodsafetywillcontinuetobemadeandenforcedin

accordancewithNewZealand’sexistingregulatoryregime.TherightofNewZealandtodetermine

itsappropriatelevelofsanitaryandphytosanitaryprotectioninaccordancewiththeSPSAgreement

ispreserved.

34

4.6 Standards, technical regulations and conformity assessment procedures (STRACAP)

AANZFTA establishes a framework of disciplines, processes and procedures for addressing

a rangeof technicalbarriers to trade.TheSTRACAP framework recognisesdifferentoptions for

differentcircumstancesbasedonanunderstandingofthesupportingarchitectureofriskmanagement

within jurisdictions. It also provides opportunities to deepen existing cooperative relationships

and establish new institutional relationships between ASEAN, Australia and New Zealand.

Throughsuchco-operativerelationships/arrangements,NewZealandwillbeabletoseektoresolve

issues with STRACAP requirements that impede or add unnecessary costs to the activities of

NewZealandexporters.

AANZFTAwill alsoencourage theexchangeof informationandco-operation in thepreparation,

adoptionandapplicationofstandards(Chapter6,Article5).

ThePartieswilluseinternationalstandardsasthebasisfortheirtechnicalregulationsandshallgive

positiveconsiderationtoacceptingasequivalenttechnicalregulationsoftheotherParties.Wherea

Partydoesnotacceptequivalenceoftechnicalregulationsitmustexplainthereasonsforitsdecision


AANZFTA ensures that the Parties will give positive consideration to accepting the results of

conformityassessmentprocedurestakeninanotherParty,providedthattheyaresatisfiedthatthe

procedureoffersanassuranceequivalenttothatprovidedbyaprocedureconductedintheirown

country.Acceptanceoftheresultsofconformityassessmentprocedurescanbeenhancedbya

rangeofmechanismsincludingmutualrecognitionarrangements.Partiesalsohaveanobligationto

explaintheirreasonsfornotacceptingconformityassessmentproceduresperformedbyanother

Party.(Chapter6,Article7).

AANZFTAencouragesthePartiestointensifytheirjointeffortsintheSTRACAPareawithaviewto

facilitatingtrade.Togiveeffecttothis,thePartieswillgivepositiveconsiderationtoproposalsfor

cooperationinarangeofareas,aswellassector-specificcooperationactivities(Chapter6,Article

8). In addition, thePartieswill seek to identifyother trade facilitation initiatives, suchasexisting

agreementsorarrangementsonregulatoryissues,withaviewtoextendingtheapplicationofsuch

initiatives toAANZFTApartners thatarenotalreadyparty to thesearrangementsoragreements


AANZFTAalsoestablishesaSub-CommitteeonStandards,TechnicalRegulationsandConformity

Assessment Procedures (STRACAP Committee) which will determine its work programme in

responsetoprioritiesasidentifiedbythePartiesfromtimetotime(Chapter6,Article13).

4.7 Trade Remedies

ThecommitmentsontraderemediesinAANZFTAdonotaffectNewZealand’srightsandobligations

undertheWTOregardinganti-dumping,subsidiesandcountervailingmeasuresandglobalsafeguards.

AANZFTAprovides for the impositionofasafeguardmeasure to importsduring theperiod that

tariffsarebeingphasedoutorreducedforanyparticulargood,andforthreeyearsbeyondthat.

AmeasurecanbeimposedbyanyPartytoAANZFTAtoaddresssituationsofseriousinjurytoa

domesticindustrycausedbyincreasedimportsasaresultoftariffreductionsundertheAgreement

byeithersuspendingfurthertariffreductionsorrevertingtohighertariffsforacertainperiod.(Chapter

7,Article3).

35

Toapplyasafeguardmeasure,NewZealandwouldhavetoundertakeaninvestigation,publishthe

findingsandonlysuspendtariffreductionsorincreasethetarifftotheminimumextentnecessaryto

preventorremedytheinjurybeingcausedandtofacilitateadjustmenttoimportcompetition.Under

nocircumstancescouldNewZealand increase the tariffbeyondthe lesserof theMFNrate that

applied on either entry-into-force of the agreement or at the time a measure was imposed.

NewZealandwouldalsohavetoprogressively liberalisethemeasureatregular intervals if itwas

imposedformorethanoneyear.(Chapter7,Articles3and6).NewZealandwouldhavetoprovide

compensationtotheotherPartieswhoseexportsaresubjecttothemeasureintheformofeither

equivalent tariff concessions or offsetting other obligations under AANZFTA equivalent to the

measureimposed.IfNewZealandwasunabletoagreeoncompensationwiththeaffectedParties,

thosePartieshavetherighttosuspendequivalenttariffconcessionsonNewZealand’s.Thisright

cannotbeexercisedforthefirsttwoyearsameasureisinplaceifitwasimposedasaresultofan

absoluteincreaseinimports.(Chapter7,Article8).

Any ASEAN member country that proposed to apply a safeguard measure on imports from

NewZealandwouldobviouslybesubjecttothesamerequirementsoutlinedabove.

4.8 Trade in services

AANZFTAseekstofacilitatetradeinservicesbetweenNewZealandandASEANmembercountries

by building on current GATS commitments and improving transparency. AANZFTA excludes

services supplied in theexerciseofgovernment authority,20 governmentprocurement, subsidies

(althoughthereareprovisionsenablingthePartiestoenterintoconsultationsonsubsidiesissues)

andsomeairtransportservices(Chapter8,Article1).

AANZFTAestablishesthegeneralobligationsofnationaltreatment(Chapter8,Article3)andmarket

access(Chapter8,Article4)insectorslistedintheservicesschedules,subjecttotherestrictions

specified in suchschedules.To theextentof associatedcommitmentsmade inNewZealand’s

servicesschedule, theseobligationsentitleASEANmembercountryservicesupplierswishing to

operateinNewZealandtoaccessthemarketwithoutquotarestrictions(marketaccess)andonthe

samebasisasdomesticsuppliers(nationaltreatment).

AANZFTA also establishes obligations to ensure that measures affecting trade in services are

transparent,areadministeredinareasonable,objectiveandimpartialmanner(Chapter8,Articles

10,11and12)andthatmeasuresrelatingtoqualificationrequirementsandprocedures,technical

standards, and licensing requirements and procedures do not become unnecessary barriers to

tradeinservices(Chapter8,Article10).AlloftheseprovisionsareconsistentwithNewZealand’s

existingregulatorysettingsandpractices.

AANZFTA also applies the protections for investment agreed under the Investment Chapter to

Mode3(CommercialPresence)(Chapter8,Article22).

20 Servicessuppliedintheexerciseofgovernmentalauthorityaredefinedasservicessuppliedneitheronacommercialbasisnorincompetitionwithoneormoreservicesuppliers.

36

NewZealandhasmadeGATS-pluscommitmentscoveringModes1-3inthefollowingsectors:

‘Other education services’ (language training provided in specialist language institutions and•

tuitioninsubjectstaughtattheprimaryandsecondarylevelsinspecialistinstitutionsoperating

outsidetheNewZealandcompulsoryschoolsystem);

Environmentalservices(theprovisionofconsultancyservicesacrossthefullrangeofenvironmentally-•

relatedservices,andthedeliveryofservicesinwasteandwastewatermanagement);

Legalservices(extensionofexistingcommitmenttocovertheprovisionofforeignlawservices);•

Taxationservices(extensionofexistingcommitmenttocovertaxplanningandconsultingservices);•

Engineeringservices(removalofrestrictionrelatingtoregistration);•

Integratedengineeringservices;•

Urbanplanningandlandscapearchitectureservices(relatingtoconsultancy);•

Veterinaryservices(extensionofexistingcommitmenttocoverMode1);•

Computerservices(extensionofexistingcommitmentstocovermaintenanceandrepairofoffice•

machineryandequipment,includingcomputers;andothercomputerservices);

Managementconsultingservicesandservicesrelatedtomanagementconsulting;•

PlacementandsupplyservicesofPersonnel;•

Photographicservices;•

Conventionservices;•

Creditreportingservices;•

Collectionagencyservices;•

Interiordesignservices;•

Telephoneansweringservices;•

Duplicatingservices;•

Otherbusinessservices;•

Construction services (extension of existing commitment to cover consultancy related to•

constructionservicesandrentingofconstructionequipment);and

Non-life insuranceservicesand insurance intermediation (removalof restriction related to the•

AppleandPearMarketingBoard).

NoneofthesecommitmentsgobeyondNewZealand’sexistingregulatoryenvironmentorpolicy

settingsinanyrespect.

The obligations of the Telecommunications Annex in relation to anti-competitive practices,

transparencyanddueprocessforanylicensingrequirements,interconnection,co-location,leased

circuitsandanindependentregulatorybodyareconsistentwithNewZealand’sexistingdomestic

telecommunicationsregulatoryregime.

37

TheobligationsintheFinancialServicesAnnextomakeinformationavailable,respondtoenquiries

anddealwithapplicationsexpeditiouslyandtonotrestrictthetransferofinformationorpreventthe

processingofinformationbyafinancialservicesprovider,areconsistentwithcurrentNewZealand

domesticregulationsandpractice.

4.9 Movement of natural persons

AANZFTA’s provisions on publication (Chapter 9, Article 8), fees for processing immigration

formalities(Chapter9,Articles4and6),andinformationprovisiontoapplicantsfortemporaryentry

(Chapter9,Article6)areallconsistentwithcurrentNewZealandimmigrationpractice.

NewZealand’scommitmentsprovidefortheentryofASEANmembercountrybusinessvisitorsand

installers/servicersforuptothreemonthsinanycalendaryear.Executives,managersandspecialists,

asintra-corporatetransferees,arepermittedtoenterforuptothreeyears.ASEANmembercountry

IndependentProfessionalServiceSuppliersarepermittedentryforuptooneyear,subjecttolabour

markettests.

WhilegoingbeyondNewZealand’sexistingGATScommitments,thesecommitments–inasfaras

theyrelatetoMode4–arewithinNewZealand’s2005servicesofferintheongoingWTOnegotiations

andwithinexistingimmigrationpolicyparameters.Theextensionofcommitmentstogoodssellers

andinvestorsreflectsthecoverageofgoodsandinvestmentunderAANZFTA.

4.10 Electronic commerce

AANZFTA’sobligationstopublishandprovideinformation(Chapter10,Article3),maintain(oradopt

assoonaspracticablypossible)adomestic legal framework insupportofelectroniccommerce

(Chapter10,Article4),maintaindomestic frameworksonelectronicauthentication (Chapter10,

Article5),worktowardsmutualrecognitionanddigitalsignatures(Chapter10,Article5),provide

protection for consumers (Chapter 10, Article 6), protect personal data (Chapter 10, Article 7),

implementpaperless trading (Chapter10,Article8)andcooperate (Chapter10,Article9)areall

expressedintermsof“wherepossible”and/or“assoonaspracticable”.Alloftheseobligationsare

consistentwithcurrentpracticeinNewZealand.

4.11 Investment

AkeyobligationunderAANZFTAwithregardtoinvestmentrelatestonationaltreatment(Chapter

11,Article4).This requiresallcovered investments tobetreatedno less favourablyby thehost

country than investments that have been made by its own nationals. Parties are able to enter

reservationstothiscommitment(Chapter11,Article12).Thescopeandcontentofthesereservations,

andofNewZealand’sowncommitments,willbethesubjectofongoingnegotiationswhichshould

beconcludedwithinfiveyearsofentryintoforceofAANZFTA(Chapter11,Article16).

Theotherkeyobligationsare:

Providingcoveredinvestmentswithfairandequitabletreatment,andfullprotectionandsecurity•

(Chapter11,Article6);

Compensationforlossesrelatingtoarmedconflict,civilstrife,orstateofemergency(Chapter11,•

Article7);

38

Allowingtransfersrelatingtoacoveredinvestmenttobegenerallymadefreelyandwithoutdelay•

intoandoutofeachParty’sterritory(Chapter11,Article8);

Disciplinesrelatingtoexpropriationandcompensation(Chapter11,Article9);•

Transparencydisciplines(Chapter11,Article13);•

EstablishmentoftheInvestmentCommittee(Chapter11,Articles17);and•

Compulsoryinvestor-statedisputesettlementprovisionstoenforcecommitmentsinAustralia,•

New Zealand and all ten ASEAN countries, thereby providing investors with recourse to

international arbitration procedures beyond domestic legal systems for claims (Chapter 11,

SectionB–discussedbelow).

Compulsory Investor/State Dispute Settlement

AANZFTA establishes a mechanism for the compulsory settlement of disputes between foreign

investorsandthecountryinwhichtheinvestmentismade.Ifadisputecannotbesettledthrough

consultationandnegotiation,andunlessthepartiestothedisputeagreeotherwise,theinvestoris

abletosubmittheissuetoconciliationorarbitrationbytheInternationalCentrefortheSettlementof

InvestmentDisputes (ICSID)orarbitrationunder the rulesof theUnitedNationsCommissionon

International Trade Law (UNCITRAL) or, if the disputing parties agree, to any other arbitration

institutionorunderanyarbitralrules.21

Theprovisionsenablinginvestor-statedisputesettlementonlyapplytoclaimsoflosssufferedfrom

breaches of specific obligations (national treatment, treatment of investment, compensation,

transfers, expropriation), and only where those specific obligations relate to the management,

conduct,operationorsaleorotherdispositionofacoveredinvestment.Asaconsequence,actions

relatingtodecisionsonpotentialinvestmentsintoNewZealandundertheOverseasInvestmentAct

2005arenotsubjecttoinvestor–statearbitration.

AANZFTA’sCompulsoryInvestor/StateDisputeSettlement(CISDS)provisionsmeanNewZealand

couldbesubject to internationalarbitrationofadisputebroughtbyan investor fromanASEAN

country. The agreement however includes a number of provisions designed to safeguard the

government’s right to regulate and to avoid exposure to inappropriate expropriation claims.

Importantly,provisionsintheAnnexonExpropriationandCompensationmaintainthegovernment’s

abilitytoexerciseitsregulatorypowersfornon-discriminatoryactionsthataredesignedandapplied

toachievelegitimatepublicwelfareobjectives,suchastheprotectionofpublichealth,safetyand

theenvironment.

ObligationsonNewZealandtoengageinanarbitrationprocessandpotentialrisksaremitigatedbya

seriesofprovisionssetoutintheInvestmentChapter,includingthoserelatingtocleartime-limitsfor

the admissibility of claims (Article 22 (Conditions and Limitations on Submission of a Claim)) and

allowingpreliminaryobjectionstoavoidclaimsthatarefrivolousorwithoutmerit(Article25(Conduct

oftheArbitration)).Inaddition,itisaconditionofsubmissionofaclaimthatadisputinginvestormust

waiveitsrighttoinitiateorcontinueanyrelatedproceedingsbeforethedomesticcourtsoradministrative

tribunalsofthehostcountry(Article22(ConditionsandLimitationsonSubmissionofaClaim)).

21 InthecaseofVietNamandthePhilippines,wherethelocalcourtshavejurisdictionoverbreachesoftreatyobligations,investorsalsohavetheoptiontosubmitsuchaclaimtotherelevantdomesticcourt.

39

TheChapteralsoprovidesforconsultationontheconsolidationofclaimsarisingoutofacommon

questionoflaworfact(Article24(Consolidation));protectionofconfidentialdocuments(Article26

(TransparencyofArbitralProceedings));andprovisionslimitingtheissueofawardstorealdamages,

costsandfeesonly,thusavoiding,asfaraspossible,thepossibilityofpunitivedamages(Article28

(Awards)).ThereisalsoaprocessforthePartiestoreachajointdecisiononanyissuedisputedby

aninvestor,withsuchadecisionbeingbindingonthetribunal(Article27(GoverningLaw)).

AlloftheprovisionsrelatingtoinvestmentarewithinNewZealand’sexistingregulatoryandpolicy

settingsanddonotcompromisepolicyflexibilityinareasofvitalnationalinterest.

4.12 Economic cooperation

AANZFTAprovidesforthePartiestoworktogetheronanEconomicCooperationWorkProgramme

(ECWP).ThisisintendedtosupporttheimplementationofthewiderAgreement(Chapter12,Article1).

TheECWPsetsoutobjectivesandindicativecooperationactivitiesforsupportingtheimplementation

ofAANZFTA,aswellasprovidingforthepossibleincorporationofanynewand/orchangedpriorities

thatmightbeidentifiedduringtheimplementationoftheAgreement.Atthisstage,the8areasof

activitycoveredbytheECWPare:

ROOandotheraspectsrelatedtotheimplementationoftariffcommitments.•

SPSmeasures.•

STRACAP.•

Tradeinservices.•

Investment.•

IP.•

Sectoralintegration.•

Customsprocedures.•

Whileprecisedetails regarding implementationof theECWPhaveyet tobe fully finalisedby the

Parties,NewZealandhasofferedtotaketheleadonthefollowingprojectsundertheECWP:

“SPS Assessment” – specific funding for the processing in New Zealand of import health•

standards(IHS)-relatedrequestsfromASEANmembercountries.

“SPSsupport”–toincreasethecapacityofASEANmembercountriestoundertaketheSPS-•

relatedprocessesrequiredtoprepareproductsforIHSassessment.

“DairyIndustryDevelopment”–toassistthedevelopmentofdairyindustriesinASEANmember•

countries,throughascopingstudy.

“RegulatoryInfrastructuralAnalysisfortheDairyandMeatIndustry”–areviewofthelegislative•

underpinning,resourcingandexistingadministrativesystemsandproceduresassociatedwith

theprovisionoffoodsafetyandanimalhealthcertification.

ItisexpectedthatNewZealandwillneedtocontributeupto$4.6millionover3-5yearstoimplement

approvedprojectsundertheECWP.

40

TheECWPistobeimplementedoverfiveyearsfromthedateoftheentryintoforceofAANZFTA

andwillbereviewedbytheAANZFTAJointCommitteetoassessitsoveralleffectiveness(Chapter

12,Article7).

4.13 Intellectual property (IP)

AANZFTArequiresPartiestoaccordtonationalsofotherPartiestreatmentnolessfavourablethan

itaccordstoitsownnationalswithregardtotheprotectionofIPrights(Chapter13,Article4).There

arealsorequirementsrelatingtotheprotectionandenforcementofcopyright(Chapter13,Article

5),theuseoflegitimatesoftwarebynationalgovernments(Chapter13,Article6),theprotectionof

trademarksandgeographicalindications(Chapter13,Article7),greatercooperation(Chapter13,

Article9),andtransparency(Chapter13,Article10).

AANZFTAalsorecognisestherightofaPartytoestablishappropriatemeasurestoprotectgenetic

resources,traditionalknowledgeandfolklore,consistentwithinternationalobligations,includingthe

WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement)


ThePartieswillalsoestablishanIntellectualPropertyCommittee.Thiswillestablishitsownwork

programmeandmonitorthroughPartynotificationstheimplementationoftheintellectualproperty

chapterofAANZFTA.(Chapter13,Article12).

4.14 Competition

AANZFTAaffirmssomecorecompetition-relatedprinciples,includingthatitdoesnotdiminishthe

rightofeachPartytodevelop,set,administerandenforceitsowncompetitionlawsandpolicies

(Chapter 14, Article 1). AANZFTA also establishes that the Parties will engage in a range of

cooperation activities in the field of competition (Chapter 14, Article 2) and establishes contact

pointsfortheexchangeofinformationbetweenParties(Chapter14,Article3).Last,inlinewiththe

cooperativenatureofthechapter,competitionisnotsubjecttotheAANZFTAdisputesettlement

mechanism.(Chapter14,Article4).

4.15 General provisions and exceptions

AANZFTAcontainsanumberofgeneralexceptionswhichmakeitclearthattheAgreementdoes

not prevent Parties from taking certain measures in certain circumstances. These exceptions

acknowledgetheregulatoryrightofthePartiestoadoptorenforcemeasurestodealwithacrisisor

to achieve certain priority policy outcomes, even if these measures may affect their AANZFTA

obligations. The exceptions contain disciplines to ensure that they cannot be abused for trade

protectionistpurposes.

ArticleXXoftheWTO’sGeneralAgreementonTariffsandTrade1994(GATT1994)andArticleXIV

oftheGATSareincorporatedintoAANZFTAinrelationtocertainChapters(Chapter15,Article1).

Theseprovisions(namely,GATTArticleXXandGATSArticleXIV)stipulatethatthePartiesareable

to adopt or enforce measures necessary to protect public morals, human, animal or plant life,

providedthosemeasuresarenotusedfortradeprotectionistpurposes.Otherexceptionsinclude

theability to takemeasuresrelatingtotheconservationofexhaustiblenatural resources,andto

protectnationaltreasuresorspecificsitesofhistoricalorarchaeologicalvalueortosupportcreative

41

artsofnationalvalue.ItshouldalsobenotedthatGATTArticleXXcontainsanimportantexception

thatimportsmadefromprisonlabourmaybeprohibited.Initsexistinglegislation,NewZealandhas

alreadyoperationalisedtheprohibitiononimportsmadefromprisonlabour.

AANZFTAalsoprovidesthataPartyisnotpreventedfromtakingactionwhichitconsidernecessary

forthe“protectionofitsessentialsecurityinterests”(Chapter15,Article2)ortotakemeasuresto

dealwithseriousbalanceofpaymentsandexternalfinancialdifficulties(Chapter15,Article4).

NewZealand’sabilitytotakemeasurestoaccordmorefavourabletreatmenttoMäoriinfulfilment

ofTreatyofWaitangiobligationsisexpresslyprovidedforinaTreatyofWaitangiexception(Chapter

15,Article5).

4.16 Institutional provisions

AANZFTAestablishesan“FTAJointCommittee”toreviewtheimplementationandoperationofthe

Agreementandrecommendanyamendmentstoit(Chapter16,Article1).TheFTAJointCommittee

willmeetwithinoneyearofAANZFTAenteringintoforceandthereafterasthePartiesagree.

InadditiontotheFTAJointCommittee,andasnotedabove,anumberofspecialistcommitteesare

also established under AANZFTA to facilitate the ongoing interaction of experts, including a

Committee on Trade in Goods, a sub-Committee on ROO, a sub-Committee on SPS Matters,

asub-STRACAPCommittee,aCommitteeonTradeinServices,anInvestmentCommitteeandan

IntellectualPropertyCommittee.

Thesecommitteeswillreviewandmonitortheoperationoftheirrespectivespecialistareas,provide

a forum to discuss any problems that might arise in the implementation of the Agreement and

identifyprospectsforfuturejointcoordinationandstrengtheningoflinks.Therequirementtoconvene

eachcommitteevariesbetweenthespecialistareas.

AgeneralreviewofAANZFTAwilltakeplacein2016,andeveryfiveyearsthereafter(Chapter18,

Article13).Thisreviewprovidestheopportunitytoaccelerateorexpandthecommitmentsunder

AANZFTA.

4.17 Consultations and dispute settlement

AANZFTAincludesaconsultationanddisputesettlementmechanismfortheavoidanceorsettlement

ofdisputesbetweenthePartiesarisingoutoftheAgreement.

ThedisputesettlementproceduresinAANZFTAareinlinewithNewZealand’sstandardpractice

andWTOprocedures.Theprocessiscompulsory,theoutcomesarebindingandtheprocedures

for dispute settlement are sufficiently detailed to enable disputes to be dealt with swiftly and

effectively.ThisensuresthatNewZealandisabletopursueamattertoarbitrationshoulditbelieve

that another Party has failed to carry out its obligations under the Agreement. Correspondingly

NewZealandmayalsobeheldtoaccountifanotherPartybelievesNewZealandhasviolatedits

AANZFTAobligations.

Ifconsultationsarenotabletoresolveadispute,aParty(orParties)mayrequesttheestablishment

ofanarbitraltribunaltomakefindingsonthematteratissue(Chapter17,Article8).Suchfindings

arebindingonthePartiestothedispute.AnAANZFTAPartythatisnotapartytothedispute,but

hasasubstantialinterestinamatterbeforethearbitraltribunal,mayalsomakesubmissionsandbe

heardbytheArbitralTribunalasathirdparty(Chapter17,Article10).

42

Commitments under the Economic Cooperation, Competition, Electronic Commerce and SPS

Chaptersareexcludedfromthescopeofthedisputesettlementmechanism.Commitmentsunder

theMovementofNaturalPersonsChapteraresubjecttothedisputesettlementmechanismonlyin

limitedcircumstances(Chapter9,Article9).

IftheArbitralTribunalfindsthataPartyhasfailedtofulfilitsobligationsundertheAANZFTA,then

thatPartymusttakestepstocomplywithitsobligationswithinareasonableperiodoftime.Ifthat

PartydoesnottakesuchstepswithinareasonableperiodoftimethenconveningaCompliance

Review Tribunal (Chapter 17, Article 16) offering compensation or suspending concessions of

equivalenteffect(Chapter17,Article17)areoptionsavailabletothedisputingparties.

4.18 Final provisions

AANZFTAconfirmsthatnothingintheAgreementcanbeconstruedasderogatingfromanyrights

orobligationsthatthePartiesalreadyhaveasWTOmembers(Chapter18,Article2)andthatthe

PartieswillundertakeageneralreviewoftheAgreement,withaviewtofurtheringitsobjectives,in

2016(andeveryfiveyearsafterthat)(Chapter18,Article9).

4.19 Notification to the wTO

Upon signature, New Zealand, Australia and the ASEAN member countries will need to notify

AANZFTAtotheWTOasafreetradeareawithinthemeaningofGATTArticleXXIV(goods)and

GATSArticleV(services).

4.20 Related Outcomes

Bilateral arrangements relating to temporary employment entry

InconjunctionwiththeAANZFTAnegotiations,butnotaspartofAANZFTAitself,NewZealandhas

enteredintothefollowingarrangementsoflessthantreatystatusfortemporaryemploymententry

intoNewZealandasfollows:

ThePhilippines:

100registerednurses(applicantsneednotbeinthePhilippinesatthetimetheyapplyforavisa,•

and may work in New Zealand for up to three months while seeking to meet registration

requirements).

20farmmanagers.•

20engineeringprofessionals.•

VietNam:

100chefs.•

100engineeringprofessionals.•

43

Thesearenewarrangementsandonlyapplytothecountriesspecified.Theyprovideforentryas

employeesforuptothreeyearsdependentupontheemploymentagreement,withoutlabourmarket

testingandsubjecttospecifiedqualificationsrequirements.

Theeffectofthesearrangementsisthat(withinthecapssetoutabove)workersinthosespecified

occupationscanenterNewZealandwithoutlabourmarkettestingeveniflabourmarkettestingis

otherwiserequiredinanyofthespecifiedsectorsgenerally.Workersfromthosecountriesandin

thosespecifiedoccupationswillcontinuetobeabletoenterprovidedtheyhavethequalifications

andworkexperiencespecified in thearrangementseven if thequalificationsorworkexperience

requirementsareamended forworkers fromother sourcecountries.The requirement that such

workersholdabonafidejobofferwillcontinuetoprotectemploymentopportunitiesandconditions

forNewZealanders.

Employersandapplicantswouldcontinue toneed tomeetstandard immigrationpolicy.Among

otherthings,thisrequiresabona fidejoboffer(includingmarketratesandtermsandconditions,as

wellasproof that thebusinesscanaffordtosustaintheposition),evidencethat theapplicant is

qualified through qualifications and/or work experience to carry out the job, and that heath

professionalswillbeabletomeetrelevantregistrationrequirements.Standardhealthandcharacter

requirementswouldalsobemandatory.

Bilateral arrangements relating to working holiday schemes

InconjunctionwiththeAANZFTAnegotiations,butagainnotaspartofAANZFTAitself,NewZealand

hasreachedunderstandingstoenterintonegotiationsonreciprocalworkingholidayschemeswith

thePhilippinesandVietNam.Oncenegotiated,theschemeswouldprovideforamaximumof100

entrantsfromeachcountryperannum.Aswithothersimilarschemes,thesewouldbearrangements

oflessthantreatystatus.

Market economy status for Viet Nam

In a joint understanding concluded in association with AANZFTA, New Zealand has bilaterally

acknowledgedthemarketeconomystatusofVietNam.ConfirmingVietNam’smarketeconomy

status does not require any substantive legislative or regulatory change, nor will it change

New Zealand’s current approach to Viet Nam (eg in relation to the application of anti-dumping

provisions).ConfirmingVietNam’smarketeconomystatuswashoweveranimportantobjectivefor

VietNaminthecontextoftheAANZFTAnegotiations.

Understanding on general exceptions provision

All Parties to AANZFTA, in an associated document of less than treaty status, also set out an

understandingthatmeasurestakeninaccordancewiththegeneralexceptionsprovision(Chapter15,

Article 1) may include measures taken to comply with the Basel Convention on the Control of

Transboundary Movements of Hazardous Wastes and their Disposal,orotherrelevantinternational

agreements.Generalexceptions,however,stillhavetobejustifiedwithinthetermsofthatarticleand

meetthedisciplinesensuringthatsuchexceptionscannotbeusedinatradeprotectionistmanner.

44

4.21 Application of AANZFTA between New Zealand and Australia

NewZealandandAustraliahave jointlyagreed inanexchangeof lettersoftreatystatusthatthe

AANZFTA obligations will only be applied to a limited extent between the two countries. It is

considered that under the New Zealand Australia Closer Economic Relations Trade Agreement

(ANZCERTA)umbrellaofinstrumentsNewZealandandAustraliaalreadyhave,orareworkingon,a

broadandrobustrangeofcommitmentsaimedtowardsfurtheringtheSingleEconomicMarket.

New Zealand and Australia have however agreed that the tariff and Rules of Origin (ROO)

commitments, including the Operational Certification Procedures, will apply between the two

countriesinordertomaximisethebenefitsoftheAANZFTAregionalROOoutcome.Thisensures

thattheAANZFTAcumulationprinciplewillextendtotradebetweenNewZealandandAustralia–

i.e. exports from New Zealand to Australia (and vice-versa) will be able to count components

importedfromASEANcountriestowardmeetingtheROOrequirementsforreceivingpreferential

tarifftreatment.

New Zealand and Australia have also agreed that the General Exceptions Chapter will apply,

includingtheTreatyofWaitangiprovision.Certainframeworkprovisions,suchastheestablishment

ofafreetradearea,objectivesanddefinitionshavealsobeenspecifiedasapplyingbetweenAustralia

andNewZealand.

4.22 The treaties on labour and environmental cooperation with the Philippines

These two instrumentsare treaty level, legallybindingdocumentswhichwerenegotiated in the

contextofAANZFTA.

MOA with the Philippines on labour cooperation

TheMOAcontainsthegenerallyrecognised“core”tradeandlabourprinciplesandisconsistentwith

theGovernment’s 2001 “Framework for IntegratingLabour into Free tradeAgreements”. These

include the recognition by both parties that it is both inappropriate to set or use labour laws,

regulations, policies and practices for trade protectionist purposes, or to encourage trade or

investmentbyweakeningorreducingtheprotectionsaffordedindomesticlabourlaws,regulations,

policies and practices. Both Parties reaffirm their obligations as members of the ILO and their

commitmenttotheprinciplesoftheILODeclarationonFundamentalPrinciplesandRightsatWork

anditsfollow-up.

Thespecific(reciprocal)obligationsforNewZealandundertheMOAare:

To work to ensure that labour laws, regulations, policies and practices are in harmony with•

internationallabourcommitments.

Topromotepublicawarenessoflabourlawsandregulationsdomestically.•

To designate a national contact point within six months of entry into force to facilitate•

communication.

TocooperatewiththePhilippinesonlabourmattersofmutualinterestandbenefit.•

Toprovidefundingtosupportmutuallyagreedcooperativeactivities.•

45

FortheLabourCommittee,whichincludesseniorofficialsoftherelevantgovernmentagencies•

responsible for labourmatters, tomeetwithin the firstyearof theMOA’soperationandthen

subsequentlyeverytwoyears,unlessotherwisemutuallyagreed.Thesemeetingswillserveto

establish an agreed work programme of cooperative activities, oversee and evaluate those

activities,serveasachannelfordialogueonmattersofmutualinterest,reviewtheoperationand

outcomesoftheMOAandprovideaforumtodiscussandexchangeviewsonlabourissuesof

interestorconcern.

EachPartymay,asappropriate,invitetheparticipationofitsunionsandemployersand/orother•

personsandorganisationsoftheircountriesinidentifyingpotentialareasforcooperationandin

undertakingcooperativeactivities.

TheMOArequiresconsultationintheeventofanissuearisingoveritsinterpretationorapplication.

ThePartiesarerequiredtomakeeveryefforttoresolvethematterthroughcooperation,consultation

anddialogue.IfaPartyseeksameetingtoassistintheresolutionofanysuchmatter,theParties

shallmeetassoonaspracticableand,unlessothermutuallyagreed,nolaterthan90daysfollowing

the request. If a matter is not resolved, it may be communicated to a meeting of the Labour

Committee,whichmayincludeMinisters,formutualdiscussionsandconsultations.

TheMOAremainsinforceforthreeyearsfromdateofentryintoforceandshallautomaticallybe

renewedforfurtherperiodsofthreeyearsunlessonePartynotifiestheotherPartyinwriting,through

diplomaticchannels,of its intention to terminate theAgreementat least sixmonthsprior to the

intendeddateoftermination.

MOA with the Philippines on environmental cooperation

TheMOAcontainsthegenerallyrecognised“core”tradeandenvironmentprinciplesandisconsistent

withtheGovernment’s2001“FrameworkforIntegratingEnvironmentintoFreeTradeAgreements”.

Theseincludetherecognitionbybothpartiesthatitisinappropriatetoeithersetoruseenvironmental

laws,regulations,policiesandpracticesfortradeprotectionistpurposes,ortoencouragetradeor

investment by weakening or reducing the protections afforded in domestic environmental laws,

regulations,policiesandpractices.

Thespecific(reciprocal)obligationsforNewZealandundertheMOAare:

TocooperatewiththePhilippinesonmutuallyagreedenvironmentalissues.•

Toprovidefundingtosupportmutuallyagreedcooperativeactivities.•

Toencourageandfacilitate,asappropriate,certaincooperativeactivities.•

Todesignateanationalcontactpointtofacilitatecommunication.•

FortheEnvironmentCommittee,whichmayincludeseniorofficialsoftheirgovernmentagencies•

responsible for environmental matters or such other persons as deemed appropriate by each

Party,tomeetwithinthefirstyearoftheentryintoforceoftheMOAandsubsequentlyasmutually

agreed.Thesemeetingswillservetoestablishanagreedworkprogrammeofcooperativeactivities,

overseeandevaluatethoseactivities,serveasachannelfordialogueonmattersofmutualinterest,

reviewtheoperationandoutcomesoftheMOAandprovideaforumforresolvingdifferences.

EachPartymayprovideanopportunityforrelevantstakeholderstosubmitviewsoradvicetoit•

onmattersrelatingtotheoperationoftheMOA.

46

TheMOAprovidesforconsultationtooccurintheeventofanissuearisingoveritsinterpretationor

application. The Parties are required to make every effort to reach a consensus on the issue/s

throughcooperation,consultationanddialogue.IfaPartyseeksameetingtoassistintheresolution

ofanysuchissue/sthePartiesshallmeetassoonaspracticableand,unlessothermutuallyagreed,

nolaterthan90daysfollowingtherequest.ThemattermaybecommunicatedtotheEnvironment

Committee,whichmayincludeMinisters,forconsultations.

TheMOAremainsinforceforthreeyearsfromdateofentryintoforceandshallautomaticallyrenew

for furtherperiodsof threeyearsunlessonePartynotifiestheotherParty inwriting, throughthe

diplomatic channel, of its intention to terminate at least six months prior to the intended date

oftermination.

47

5 MEASURES WHICH THE GOVERNMENT COULD OR SHOULD ADOPT TO IMPLEMENT THE TREATY ACTIONS

AverysmallnumberoflegislativeandregulatoryamendmentsarerequiredtoalignNewZealand’s

domesticlegalregimewiththerightsandobligationscreatedunderAANZFTAandtherebyenable

NewZealandtoratifyAANZFTA.

Thefollowingchangeshavebeenidentifiedasbeingrequired:

AnamendmenttotheTariffAct1988toenabletheapplicationofpreferentialtariffrates,and•

regulationstoimplementtheserates;

AnamendmenttotheTariffAct1988toprovideforthetransitionalsafeguardmechanism;•

AnamendmenttotheCustomsandExciseAct1996toallowforthetreatycommitmenttonotify•

thenamesofissuingentitiesforcertificatesoforigin;and

Regulationswill need tobe introducedand/or amendedunder theCustomsandExciseAct•

1996togiveeffecttotheROOobligations.

It has been proposed that an AANZFTA Bill be included in the 2009 legislative programme as

acategory2bill.TheBillandtherelevantregulationsshouldoptimallybepassedinthefirsthalf

of 2009 as the Parties have indicated they would like to see AANZFTA enter into force on

1July2009.

48

6 ECONOMIC, SOCIAL, CULTURAL AND ENVIRONMENTAL COSTS AND EFFECTS OF THE TREATY ACTIONS

6.1 Economic effects

6.1.1 Introduction

AANZFTA,aswellastheMOAswiththePhilippines,isexpectedtohaveanoverallpositiveimpact

ontheNewZealandeconomy.TheeconomicimpactsofAANZFTAareassessedinSections6.1.3

and6.1.4belowpursuanttotheframeworkwhichhasbeenusedtoassesstheThailandCEP,the

Trans-PacificSEP,andtheChinaFTA.

6.1.2 Relationship between trade and macroeconomic performance

Trade is an important factor in driving New Zealand’s national economic performance. Indeed,

thesmallertheeconomy,thegreaterthebenefitsfromtrading,notleastbecausetheopportunities

for“trading”domesticallyaremorelimited.Putsimply,internationaltradeprovidessmalleconomies

likeNewZealand theopportunity tospecialise including through innovatingandaddingvalue to

productswheretheyenjoyacomparativeadvantage.Thisbenefitisperhapsofalessermagnitude

forlargereconomiessincethesizeofthedomesticeconomyissuchthatitalreadyoffersscope

for the development of simple exchanges and comparative advantage-related specialisation.

(Small)sizethereforehasbeenasignificantdriverofNewZealand’strade-relateddependencyand,

importantly, its capacity to innovate and compete. Following on from this, changes in trade

(particularlyforsmalleconomies)mayimpactontheeconomy–forexample,byaffectinglevelsof

prices,incomeoremployment.

Moregenerally,therelationshipbetweentradeandgrowthiswellestablished.Extensiveeconomic

researchhasdemonstratedthattradeandgrowtharepositivelyrelated,andaneconomy’sopenness

totradehasbeenlinkedtotheexplanationofdifferencesintheeconomicgrowthrateofcountries.

6.1.2.1 Static Effects

The direct impact of trade liberalisation on economic growth may be described as the “static”

effects.Theseincludethegainsderivedfrom:

Lowered tariff andnon-tariff barriers in exportmarketswhichgeneratehigher export returns•

andvolumes.

Domestictariffliberalisationwhichgeneratesefficiencygainsfromabetterallocationofresources•

(“allocativeefficiency”),cheaperconsumptionandcompetitiveeffects.

WhereimprovedmarketaccessunderFTAsenablesexporterstoachievenetincreasesinthevalue

oftheirexports,thismaytranslatedirectlyintohigherGDP,jobgrowthandincome.Moreover,the

opportunity for local companies to increase market size through greater exports can increase

productivityandefficiencythrougheconomiesofscale.Thismaybeachieved,forexample,bythe

introductionofnewprocessingtechnologiestoservicethelargermarket.

49

Outputandproductivitylevelsrisewhenresourcesshifttomoreefficientsectorsoftheeconomyas

tariffsreduce.Inapreviouslytariff-protectedsector,importswillbecheaperandcanbeexpected

toexpandtheirshareofthemarket.Domestically-focusedfirmswithhighercoststructuresasa

consequenceoftariffprotectionwillrespondbyincreasingtheirefficiency,reducingoutputsufficiently

to reduce their costs or shifting resources into more competitive production. Over time, these

processeswillleadtogreaterspecialisationandincreasedcomparativeadvantage.Theseeffects

areprimarilydriventhroughsimpletariffremoval,suggestingthatcountriesthatliberalisethemost

arelikelyovertimetobenefitthemost.Atthesametime,therearelikelytobephasesofadjustment

andtransitionthataffectsectorsindifferentways.

TheextenttowhichdomesticpriceschangeasaconsequenceofFTAsdependsonthesizeofthe

distortionsbeingremoved.Itisalsodependentonthedegreeofcompetitionalreadyprevailingin

thedomesticmarket. Ingeneral, lowertariffswill result in lowerdomesticprices.Producersgain

accesstointermediategoods,thusmakingtheirfinishedproductsmorecompetitiveinthedomestic

andexportmarkets.

Whenaneconomyliberalisesunderpreferential tradeagreements,thegainsmaybereducedor

evenreversedduetothephenomenonoftradediversion.Thisdescribessituationswhereimports

are sourced from FTA partners due to the margin of preference they enjoy over more efficient

producers.WhereFTApartnersarealreadyinternationallycompetitivesuppliers,however,therisk

oftradediversionandthuswelfarereductionislower.

TheimpactofchangestothelargerASEANeconomies’tariffregimeonNewZealandexporters,

andtheimpactonNewZealanddomesticsectorsofchangestotheNewZealandtariffregimeare

consideredinsection6.1.3.2below.

6.1.2.2 “Second-Order” Effects

An increase inopenness to tradehelpsspurproductivity increasesandgrowthwithinacountry

through more efficient allocation of resources, the stimulation of innovation and the transfer of

knowledgeandtechnologybetweencountries.Productivityincreasesderivedfromthemoreefficient

allocationofresourcesfollowingtariffremovalareconsideredtobestaticgainsandweredescribed

insection6.1.2.1above.

TheothersourceofproductivitygrowthflowingfromFTAsis“dynamicproductivitygains”.These

effectsarehardertoquantify.Theyaccumulateovertimeandmaybeattributabletothedownstream

effects of trade agreements, rather than the immediate impacts driven by tariff removal and

improvementsinmarketaccessalone.Theymayalsobeknownas“second-order”effects.

Tradeandinvestmentmaybestimulatedthroughboththemarketaccessliberalisationprovisionsof

FTAsand improvements in the regulatory frameworkbroughtaboutby theFTAswhich increase

transparency, fairnessandpredictability forbusinesses.Asa resultof the facilitationof increased

tradeandinvestmentflows,companiesaremoreexposedtocompetition,innovation,international

benchmarkinganddevelopstrongerlinkswithinternationalbusinesspartners.Suchexposurehelps

driveproductionandmaintainNewZealandcompaniesattheleading-edgeintermsofbest-practice

across a range of issues (innovation, technology, knowledge, research and product/service

development,etc).Spilloversfromthisprocessintothedomesticeconomycanincludethegeneration

ofongoingproductivityimprovements(dynamicproductivitygains)acrossthewidereconomy.

50

The“second-order”effectsrelatingtotheregulatoryframeworksforbilateraltradingrelationshipsunder

FTAsareofparticularrelevance.ThegainsinthecaseofAANZFTAareassessedinsection6.1.4.

6.1.2.3 Measuring the Macroeconomic Impact of FTAs

FTAshaveanimpactonthemacroeconomicindicatorsthatmeasurethegrowthandtradeflowsof

oureconomy.Economictheorysuggeststhatthemostrelevantmeasureofthequantifiableimpact

ofFTAsontheNewZealandeconomyasawholeisthroughthechangein“welfare”(thatis,the

valuetoNewZealandconsumersofaFTAintermsofenhancedincome).Thepreferredwelfare

indicatoris“realconsumption”–theaggregatedquantityofgoodsandservicesthatthehousehold

canconsumegivencurrentandfutureincomeflows.ChangesinrealGDPreflectonlychangesin

theoveralllevelofeconomicactivityandnotchangesinnetnationalincomeorwelfare.

Inbroad terms, themagnitudeof themacroeconomiceffect of FTAswill bedeterminedby the

followingfactors:

Contributionofexportsandimportstotheeconomy.•

SizeofthebarrierstotradebeingaddressedintheFTA.•

Relativesignificanceofbilateraltradebetweenthetwocountries.•

Extentofdynamicproductivityimprovement.•

6.1.3 Static effects on the New Zealand Economy of the AANZFTA

WhenappliedtoAANZFTA,theframeworkforassessingtheeconomicimpactssuggeststhatitwill

makeasignificantlypositivecontributiontoNewZealand’seconomicgrowthprospectsovertime.

6.1.3.1 Magnitude of Effects

Thesectionbelowappliesthethreefactorsoutlinedinsection6.1.2toAANZFTAandexplainswhy

theoverallimpactofitontheNewZealandeconomyisexpectedtobepositive.

Contribution of trade to the New Zealand economy

TrademakesafundamentalcontributiontotheNewZealandeconomywithexportsofgoodsand

services accounting for around 29 percent of GDP. As a small, geographically isolated nation,

NewZealandfirmsarereliantonaccesstoforeignmarketstogaineconomiesofscaleandremain

internationallycompetitive.

NewZealand’seconomyisalsodependentonimportstohelpsupplytherangeofgoodsandservices

to our producers and consumers. Imports are currently worth around 30 percent of GDP.

NewZealand’sabilitytoengageandcompetesuccessfullyintheglobaleconomywill,therefore,be

adefiningfactorinourfutureeconomicperformance.ThemoresuccessfulNewZealandisattrading,

thehigherthestandardoflivingitcanafford.AANZFTAhelpstocementthisinter-relationship.

51

Size of the barriers to trade being addressed in AANZFTA

New Zealand

NewZealandisarelativelyopeneconomy,with58percentofalltarifflinescurrentlydutyfree.In

2005,22NewZealand’saverageappliedtariffacrossallproductswas3.5percent,withhighertariffs

ofbetween17and19percentapplyingtocertainclothingandfootwearproductsandcarpets.The

Post-2005TariffPolicyagreedbyCabinetinSeptember2003setaprogrammeforthereductionof

those high tariffs down to 10 percent by 1 July 2009 and for all other tariffs between 5 and

12.5percenttobeharmonisedat5percentby1July2008.

Indonesia

ThemajorityofNewZealand’sexportstoIndonesiafacetariffsof5percent.Manymanufactured

products face tariffs in the range of 10-15 percent; examples include electrical apparatus, air

conditionersandcertainrefrigerators.Indonesia’sappliedtariffsvariedfromzeroto170percent(for

mainlyalcoholicproducts).AnalysisconductedbytheNewZealandMinistryofForeignAffairsand

Tradeputstheaverageappliedad valoremtariffrateat9.8percentin2005.Otherareaswhichhave

highaverageappliedtariffsaretransportequipmentandpreparedfoods.Theseaverageapplied

ratescomparetoIndonesia’sWTOaverageboundratesof37.1percentonallgoods,and47percent

onagriculturalproducts.

TABLE 1 INDONESIA’S APPLIED AVERAGE TARIFFS 2005

Source: Government of Indonesia, 2005

Notes: 2005 Applied MFN Rates.

22 2005wasthebaseperiodformostofthestatisticsthatwereattheheartoftheAANZFTAnegotiationsandgenerallyrepresentedthemostrecentdata that theASEANmembercountriescould sharewithNewZealand.Asaconsequence,2005 isutilisedas thebasedateandreferencepointthroughouttheupcomingsections.

52

Malaysia

Around58percentofMalaysia’starifflinesareappliedatzeropercent.NewZealand’sexportsface

tariffswhichcanbeashighas50percent includingonsomeironorsteelproducts.Overall,the

highest applied tariff rate in Malaysia is 60 percent, which is applied in glassware and ceramic

products.Theproductgroupingswhichhavethehighestappliedtariffratesaretransportequipment,

articles of stone,metal products, footwear andplastics and rubber.Analysis conductedby the

NewZealandMinistryofForeignAffairsandTradeputstheaverageappliedad valoremtariffrateat

8.1percentin2005.TheseaverageappliedratescomparetoMalaysia’sWTOaverageboundrates

of25.1percentonallgoods,and79.7percentonagriculturalproducts.

TABLE 2 MALAYSIA’S APPLIED AVERAGE TARIFFS 2005

Source: Government of Malaysia, 2005


53

The Philippines

In2005,96percentofNewZealand’sexportstothePhilippinesfacedtariffsof7percentorless.

Tariffsonfruitandvegetablesaretypicallyhigher,withtariffsof15percentormoreonproducts

suchasstrawberries,avocadosandonions.Overall,themajorityoftarifflinesinthePhilippineshave

appliedtariffsoflessthan20percent,whilerelativelyfewtarifflinesareappliedatzeropercent.The

highestappliedtariffrateis65percent,andisappliedinsugarproducts.Theproductswhichface

thehighestappliedtariffsinthePhilippinesareintransportequipment,animalproducts,armsand

ammunition, prepared foods, vegetable products and textiles, clothing and footwear. Analysis

conductedbytheNewZealandMinistryofForeignAffairsandTradeputstheaverageappliedad

valoremtariffrateat7.5percentin2005.TheseaverageappliedratescomparetothePhilippines’

WTOaverageboundratesof25.6onallgoods,and34.7percentonagriculturalproducts.

TABLE 3 THE PHILIPPINES’ APPLIED AVERAGE TARIFFS 2005

Source: Government of Philippines, 2005


54

Viet Nam

The majority of New Zealand’s exports to Viet Nam face tariffs of between 5 and 20 percent.

Manyprocesseddairyproducts, suchas chocolate and ice-cream face tariffs of 20percent or

higher. In2005, thehighestapplied tariff rate inVietNamwas100percent (mainly forpersonal

vehicles).Textiles,clothingandfootwearhaveaverageappliedrateshigherthan35percent,asdo

prepared foods. Manufactured products also face average tariffs of higher than 25 percent.

About 30 percent of Viet Nam’s tariffs are applied at zero percent. Analysis conducted by the


18percentin2005.VietNamhasrecentlyaccededtotheWTOanditstariffsarenowfallingtomeet

theaverageboundrateof11.4onallgoods,and18.8percentonagriculturalproducts.

TABLE 4 VIET NAM’S APPLIED AVERAGE TARIFFS 2005

Source: Government of Viet Nam, 2005


Brunei Darussalam

Under the Trans-Pacific Strategic Economic Partnership Agreement, tariffs on 92 percent of

New Zealand’s exports to Brunei Darussalam were eliminated from the entry into force of that

Agreement.Theremainingtariffswillbephasedoutby2015.

Singapore

AsSingaporeprovidesdutyfree-accessforNewZealandexports,includingthroughexistingFTAs

suchastheTransPacificSEPandNewZealand-SingaporeCEP,therearenobarrierstotradein

goodstobeaddressed.

55

Thailand

TheThailand-NewZealandCEPalreadyprovidesfor thereductionand,overtime,eliminationof

tariffsonallproducts.Assuch,NewZealandexportersalreadyenjoypreferentialtariffratesonmany

products, with 52 percent of New Zealand’s exports to Thailand entering duty free. All of

NewZealand’sexportstoThailandwillbedutyfreeby2025.

Cambodia

Cambodia’stariffregimeisappliedatzero,7,15,or35percent.Around8percentofproductlines

haveanappliedtariffrateofzeropercent.Thehighestappliedrateof35percentisappliedacross

a wide range of product groups, with high concentrations in machinery, textiles and clothing,

transportequipment,preparedfoods,chemicalsandanimalproducts.Analysisconductedbythe


14.7percentin2005.TheseaverageappliedratescomparetoCambodia’sWTOaveragebound

ratesof19percentonallgoods,and28.1percentonagriculturalproducts.

TABLE 5 CAMBODIA’S APPLIED AVERAGE TARIFFS 2005

Source: Government of Cambodia, 2005


56

Laos

MostofLaos’tariffsareappliedateither5ortenpercent.However,someappliedratesstretchup

to 40 percent. These affect fruit, vegetables, coffee and tea, alcohol, tobacco, plastics, wood,

machinery,personalvehicles, furnitureandsome toys.Analysisconductedby theNewZealand

MinistryofForeignAffairsandTradeputstheaverageappliedad valoremtariffrateat10.1percent

in2005.LaosisnotamemberoftheWTO,soisnotsubjecttoWTOdisciplinesinrespectofitstariff

policies.Assuch,withoutAANZFTAtherewouldbenoupperlimitonthetariffsthatcouldapplyto

NewZealandexportstoLaos.

TABLE 6 LAOS’ APPLIED AVERAGE TARIFFS 2005

Source: Government of Laos, 2005


57

Myanmar

Around75percentofMyanmar’sappliedtariffsarebelow10percent,with92percentappliedata

tariffrateof15percentorlower.Myanmar’shighestappliedtariffrateis40percent,whichisapplied

onalcoholandpersonalvehicles.AnalysisconductedbytheNewZealandMinistryofForeignAffairs

andTradeputstheaverageappliedad valoremtariffrateat6.1percentin2005.Theseaverage

appliedratescomparetoMyanmar’sWTOaverageboundratesof83percentonallgoods,and

102.2percentonagriculturalproducts.

TABLE 7 MYANMAR’S APPLIED AVERAGE TARIFFS 2005

Source: Government of Myanmar, 2005


Relative significance of New Zealand-ASEAN bilateral trade

New Zealand and the ASEAN countries have a complementary goods trading relationship,

with New Zealand exporting large volumes of primary products and importing a range of

manufactured goods from ASEAN. This has been reflected in the significant growth in bilateral

tradeflowsinrecentyears.

NewZealandexportstotheASEANcountrieshaveincreased145percentsince1998toaround

$3.7billionper year.Over the sameperiod, imports from theASEANcountries have increased

258percenttoalmostNZ$5.7billionincalendaryear2007.

IntermsofrelativeimportancetoNewZealand,inthe2007calendaryear:

Indonesia• wasNewZealand’s7thlargestexportdestination,withexportsworthNZ$777million.

IndonesiawasNewZealand’s14thlargestsourceofimports,valuedatNZ$731million.

Singapore• wasNewZealand’s10thlargestexportdestination,withexportsworthNZ$687million.

SingaporewasNewZealand’s5thlargestsourceofimports,valuedatNZ$2,149million.

58

The Philippines• was New Zealand’s 11th largest export destination, with exports worth

NZ$667million.ThePhilippineswasNewZealand’s26thlargestsourceof imports,valuedat

NZ$216million.

Malaysia• wasNewZealand’s12thlargestexportdestination,withexportsworthNZ$651million.

MalaysiawasNewZealand’s8thlargestsourceofimports,valuedatNZ$1,126million.

Thailand• wasNewZealand’s15thlargestexportdestination,withexportsworthNZ$567million.

ThailandwasNewZealand’s9thlargestsourceofimports,valuedatNZ$1,125million.

Viet Nam • wasNewZealand’s23rdlargestexportdestination,withexportsworthNZ$362million.

VietNamwasNewZealand’s36thlargestsourceofimports,valuedatNZ$135million.

Myanmar• was New Zealand’s 114th largest export destination, with exports worth almost

NZ$5million.MyanmarwasNewZealand’s87th largest sourceof imports, valuedat nearly

NZ$2million.

Brunei Darussalam• wasNewZealand’s135th largestexportdestination,withexportsworth

NZ$3million.BruneiDarussalamwasNewZealand’s28thlargestsourceofimports,valuedat

NZ$186million.

Cambodia• wasNewZealand’s146thlargestexportdestination,withexportsworthNZ$2million.

CambodiawasNewZealand’s94thlargestsourceofimports,valuedatNZ$1million.

Laos• wasNewZealand’s160th largest exportdestination,withexportsworthNZ$755,940.

LaoswasNewZealand’s152ndlargestsourceofimports,valuedatNZ$3,899.

DetaileddataonthecompositionofbilateraltradewitheachASEANmembercountryissetoutin

theAnnex.23SetoutbelowaretwotablesthathighlightthecompositionofNewZealand’stradewith

ASEANasawhole.

TABLE 8 NEw ZEALAND’S TOP TEN EXPORTS TO ASEAN

Product Export value (NZ$ M) % total exports

Dairy 1,869.7 50%

Mineral Fuels 216.1 6%

Meat 178.8 5%

Cereal preparations 174.8 5%

Wood 170.8 5%

Pulp 129.5 3%

Machinery 113.3 3%

Iron and steel 101.0 3%

Food wastes 73.1 2%

Starch 64.7 2%

Subtotal top ten exports 3,091.7 83%

Total exports 3,722.4

Data Source: New Zealand Customs

23 Useof2005data(withtheexceptionof2006forVietNam)insuchtablesreflectsthedatawhichformedthebasisforthenegotiations.

59

TABLE 9 NEw ZEALAND’S TOP TEN IMPORTS FROM ASEAN

Product Import value (NZ$ M) % total imports

Mineral Fuels 2,148.4 38%

Electrical Machinery 581.9 10%

Machinery 493.7 9%

Ships 409.6 7%

Vehicles 306.3 5%

Plastic 264.2 5%

Paper 118.8 2%

Food wastes 109.6 2%

Furniture 98.7 2%

Rubber 77.2 1%




6.1.3.2 Specific Market Access Outcomes

ThecontextforNewZealand’sengagementwithASEANcountrieshasbeensetwithintheframework

ofitsexistingbilateralorplurilateralFTAswithSingapore,BruneiDarussalam,andThailandandthe

re-engagementwithMalaysiaforabilateralFTA.Cambodia,Laos,andMyanmarareleastdeveloped

countriesand,assuch,alreadyhavedutyfree,quotafreeaccesstotheNewZealandmarket.They

were therefore not a key target for these negotiations. Against this background, New Zealand

focusedonthosemajormarketswhereNewZealanddidnothaveanexistingFTA,oranongoing

separatenegotiation.TheoutcomesinthisareaalsoreflecttheAANZFTAParties’recognitionof

eachothersdifferinglevelsofdevelopmentasestablishedintheAANZFTA’s“guidingprinciples”.24

This was understood to mean inter alia, differentiated timeframes for tariff elimination with the

developedcountries(AustraliaandNewZealand)expectedtoundertakeearliertariffeliminationthan

thedevelopingandLeastDevelopedCountry(LDC)membersofASEAN.

TariffeliminationhasbeensecuredonallkeyproductsoftradeinteresttoNewZealandinthese

majormarkets.Significantcommercialbenefitsareprovidedtoexportersthroughtheeliminationof

tariffsonabout99percentofNewZealand’scurrentexportstosuchmarkets.Moreover,unlikein

previousFTAstherearenospecialsafeguardsforagriculturalproducts.

Thekeyfeaturesbycountryareasfollows(theseoutcomesarealsosummarisedinTables10and

11below):

Indonesia

New Zealand’s exports to Indonesia were valued at $777 million in 2007, making Indonesia

NewZealand’slargestexportmarketinASEAN.UndertheAANZFTA,thepercentageofNewZealand

exportsthataredutyfreeincreasesfrom36percentin2005,to64percentin2010andto99percent

in2020.

24 TheGuiding Principles for Negotiation on ASEAN-Australia and New Zealand Free Trade Area (FTA)canbefoundontheASEANSecretariat’swebsite:www.aseansec.org/16799.htm

60

The Philippines

NewZealand’sexportstothePhilippineswerevaluedat$667millionin2007.In2005,only2percent

ofNewZealand’sexportstothePhilippinesentereddutyfree;thisincreasesto74percentin2010

andto99percentin2020.

Viet Nam

VietNam isa rapidlygrowingexportmarket forNewZealand. In2007,exportswere valuedat

$362million,roughlydoublethatof2005.Asalessdeveloped(andnewer)memberofASEAN,and

consistentwiththe“guidingprinciples” for theAANZFTA, iespecialanddifferentiatedtreatment,

AANZFTAprovidesforslowertariffeliminationtimeframesforVietNamthanthoseagreedforthe

Philippines, Indonesia and Malaysia. The percentage of New Zealand’s trade that is duty free

increasesfrom28percentin2006to83percentin2016.99percentofNewZealandexportsto

VietNamwillbedutyfreeby2020.

Malaysia

Malaysiaaccountedfor$651millionofNewZealand’sexportsin2007.AANZFTAprovidesforthe

eliminationoftariffsonover97percentoftradeby2013.ThisisasolidfoundationforNewZealand’s

ongoingbilateralFTAnegotiationswithMalaysia.Theremainingtwopercentoftradethatissubject

totariffeliminationafter2013,ornon-eliminationoutcomes,facerelativelyhightariffsandaccount

forahighproportionofdutiespaidonNewZealandexportstoMalaysia.

Singapore

The AANZFTA reconfirms New Zealand exporter’s existing duty free access to the Singapore

market,whereexportswerevaluedat$687millionin2007.

Thailand

NewZealandhasanexistingbilateralFTAwithThailand(theThailandCEP)whichprovidesforthe

eliminationofalltariffsby2025(thisisconfirmedbyAANZFTA).NewZealandexportstoThailand

werevaluedat$567millionin2007.

Brunei

NewZealandhasanexistingFTAwithBrunei (theTrans-PacificStrategicEconomicPartnership

Agreement).Thisprovidesfortheeliminationofalmostalltariffsby2015.NewZealand’sexportsto

BruneiwerevaluedatNZ$3millionin2007.

Laos, Cambodia and Myanmar

Total New Zealand exports to these three Least Developed Countries (LDCs) were valued at

$7millionin2007.Asthesethreecountrieshaveleastdevelopedstatus,theirexportshaveentered

NewZealanddutyfreeandquotafreesince2001(whenNewZealandagreedtoprovideLDCswith

dutyfreeandquotafreeaccesstoitsdomesticmarket).TheoutcomesofAANZFTAprovidefortariff

eliminationbythesethreecountriesonbetween85and88percentoftarifflines,with2020being

theearliestdatefortariffelimination.Giventheirleastdevelopedstatus,thesecountrieswerenota

primaryfocusinthesenegotiations.

61

TA

BLE

10

TA

RIF

F E

LIM

INA

TIO

N U

ND

ER

AA

NZ

FTA

Sin

gap

ore

Bru

nei

Tha

iland

M

alay

sia

Ind

one

sia

Phi

lipp

ines

Vie

t N

amLa

os,

Cam

bo

dia

and

Mya

nmar

Cov

erag

e93

%87

%90

%85

%85

%85

%83

%(8

0%fo

rM

yanm

ar)

No

rmal

Tra

ckTr

eatm

ent

100%

oft

ariff

sel

imin

ated

on

entr

y-in

to-f

orce

.

Tarif

fso

f5%

or

less

will

bee

limin

ated

in2

010.

Tarif

fso

fles

sth

an2

0%w

illbe

el

imin

ated

in2

016.

Tarif

fsw

illbe

elim

inat

edb

y20

21.

Tarif

fso

fles

sth

an1

0%e

limin

ated

in2

011.

Tarif

fso

fles

sth

an2

5%w

illbe

el

imin

ated

in2

017.

Tarif

fsc

anno

tbe

rais

eda

bove

th

eir

2005

rat

esfr

ome

ntry

-into

-fo

rce

ofth

isA

gree

men

t,an

dta

riffs

of

gre

ater

than

5%

will

bes

ubje

ct

ton

on-li

near

red

uctio

nsp

rior

to

elim

inat

ion.

Tarif

fso

fles

sth

an1

5%e

limin

ated

in2

012.

All

othe

rta

riffs

will

bee

limin

ated

by

2018

.Elim

inat

ion

in2

016

and

2017

ha

sbe

enn

egot

iate

don

som

epr

oduc

tso

fkey

exp

orti

nter

estt

oN

ewZ

eala

nd.T

ariff

sca

nnot

be

rais

eda

bove

thei

r20

05r

ates

from

en

try-

into

-for

ceo

fthi

sA

gree

men

tan

dm

any

will

bes

ubje

ctto

re

duct

ions

prio

rto

elim

inat

ion.

The

rem

aini

ngta

riffs

will

bee

limin

ated

by

2013

.Tar

iffs

cann

otb

era

ised

abo

veth

eir

2005

ra

tes

from

ent

ry-in

to-f

orce

oft

his

Agr

eem

ent,

and

man

yw

illbe

sub

ject

tor

educ

tions

prio

rto

el

imin

atio

n.

No

rmal

Tra

ck

with

Fle

xib

ility

Cov

erag

e0%

0%3%

0%5%

5%5%

5%

Trea

tmen

tN

otA

pplic

able

Not

App

licab

leTa

riffs

will

be

elim

inat

edb

y20

15.T

ariff

sca

nnot

be

rais

ed

abov

eth

eir

2005

rat

esfr

om

entr

y-in

to-f

orce

of

this

A

gree

men

t,an

dm

any

will

be

subj

ectt

ore

duct

ions

prio

rto

elim

inat

ion.

Not

App

licab

leTa

riffs

will

bee

limin

ated

by

2015

.Ta

riffs

can

notb

era

ised

abo

veth

eir

2005

rat

esfr

ome

ntry

-into

-for

ceo

fth

isA

gree

men

t,an

dm

any

will

be

subj

ectt

ore

duct

ions

prio

rto

el

imin

atio

n.

Tarif

fsw

illbe

elim

inat

edb

y20

20.

Tarif

fsc

anno

tbe

rais

eda

bove

thei

r20

05r

ates

from

ent

ry-in

to-f

orce

of

this

Agr

eem

ent,

and

will

bes

ubje

ct

tor

educ

tions

prio

rto

elim

inat

ion.

Tarif

fsw

illbe

elim

inat

edb

y20

24.

Tarif

fsc

anno

tbe

rais

eda

bove

thei

r20

05r

ates

from

ent

ry-in

to-f

orce

of

this

Agr

eem

ent,

and

will

bes

ubje

ct

tor

educ

tions

prio

rto

elim

inat

ion

Sen

sitiv

e

Tra

ck 1

Cov

erag

e3%

7%6%

6%6%

6%7%

and

(10%

for

Mya

nmar

)

Trea

tmen

tN

otA

pplic

able

Tarif

fsw

illbe

re

duce

dan

del

imin

ated

by

202

0

Tarif

fsw

illbe

re

duce

dan

del

imin

ated

by

202

0

Tarif

fsw

illbe

el

imin

ated

by

2020

Tarif

fsw

illbe

red

uced

and

el

imin

ated

on

3-5%

oft

ariff

lin

esb

y20

20.

Tarif

fso

f5p

erce

nto

rle

ssw

illbe

ca

pped

att

heir

2005

rat

e.Ta

riffs

of5

per

cent

or

less

will

be

capp

eda

tthe

ir20

05r

ate.

Tarif

fso

not

her

lines

will

ber

educ

ed

by2

0%o

rto

5%

whi

chev

eris

lo

wer

.

All

othe

rta

riffs

will

ber

educ

edto

5

perc

entb

y20

22.

All

othe

rta

riffs

will

ber

educ

edto

5

perc

entb

y20

25.

Sen

sitiv

e

Tra

ck 2

Cov

erag

e3%

3%4%

4%4%

4%5%

Trea

tmen

tN

otA

pplic

able

The

trea

tmen

ton

thes

elin

esin

clud

esc

aps

at5

0%,7

5%,a

nde

xclu

sion

from

com

mitm

ents

.Th

etr

eatm

ento

nth

ese

lines

in

clud

esc

aps

at5

0%o

fthe

200

5ra

te,a

red

uctio

nto

50%

,a

redu

ctio

nto

20

perc

ent,

and

excl

usio

nsfr

omc

omm

itmen

ts.

Up

to2

%o

flin

esw

illbe

exc

lude

dfro

mta

riffc

omm

itmen

ts.O

ther

line

sw

illbe

sub

ject

tota

riffc

aps

and

limite

dta

riffr

educ

tions

.

62

TA

BLE

11

KE

Y M

AR

KE

T S

UM

MA

RY

OF

OU

TC

OM

ES

Ind

one

sia

Vie

t N

amP

hilip

pin

esM

alay

sia

%

of

N

Z T

rad

e

Dut

y F

ree

Key

Pro

duc

ts D

uty

Fre

e%

of

N

Z T

rad

e

Dut

y F

ree

Key

Pro

duc

ts D

uty

Fre

e%

of

N

Z T

rad

e

Dut

y F

ree

Key

Pro

duc

ts D

uty

Fre

e%

of

N

Z T

rad

e

Dut

y F

ree

Key

Pro

duc

ts D

uty

Fre

e

Alre

ady

Dut

yFr

ee36

.3%

Pet

food

,woo

dpul

p,lo

gs,p

aper

,sc

rap

met

al27

.6%

Logs

and

saw

ntim

ber,

furs

kins

an

dhi

des

1.9%

Circ

uitb

oard

s,p

ulp

woo

d82

.9%

Milk

pow

der,

bee

f,sc

rap

m

etal

,cas

ein,

fish

fille

ts,

woo

dpul

p,c

ream

Ent

ryin

tofo

rce

36.3

%

27.6

%

2.0%

Som

efo

otw

ear,

som

eau

tom

otiv

epa

rts

89.0

%B

utte

r,c

hees

e,g

hee,

hon

ey,

fruit

juic

e,c

anne

dpa

ua

2010

63.8

%W

hole

milk

pow

der,

che

ese,

but

ter,

woo

l,pa

per

and

pape

rboa

rd,a

pple

s,k

iwifr

uit,

navi

gatio

nale

quip

men

t,fro

zen

vege

tabl

es

27.6

%

74.1

%C

asei

n,m

ilkp

owde

r,c

hees

e,

butt

erm

ilk,s

ome

fore

stry

pr

oduc

ts

92.1

%P

aper

,app

les,

tallo

w,m

achi

ne

part

s,ic

ecre

am

2011

63.8

%

27.6

%

77.9

%S

ome

dairy

and

fore

stry

pr

oduc

ts,k

iwifr

uit,

appl

es95

.5%

Pap

er,s

wee

tcor

n,b

eans

,fru

itju

ice

2012

64.3

%S

tatic

con

vert

ors,

air

cond

ition

ers,

lock

s,

alum

iniu

m,t

oys

27.6

%

80.1

%B

eef,

froze

nfre

nch

fries

,toy

s97

.2%

Ele

ctric

alp

arts

,fib

rebo

ard,

ki

wfru

it,c

hoco

late

2013

64.3

%S

oap,

jew

elle

ry,r

efrig

erat

ors

27.6

%81

.5%

Som

efo

rest

ryp

rodu

cts,

ba

thfi

ttin

gs97

.3%

Som

eiro

nan

dst

eel

prod

ucts

,pap

er

2014

64.4

%K

itche

nan

dba

thfi

ttin

gs(e

.gb

aths

an

dsi

nks)

,bar

bed

wire

27

.6%

81

.5%

97

.3%

2015

64.5

%A

lum

iniu

m,s

teel

and

pla

stic

s27

.6%

82

.4%

Win

e,s

alt

97.3

%

2016

64.5

%

83.3

%W

hole

and

ski

mm

ilkp

owde

r,

butt

erfa

t,so

me

pape

ran

dw

ood

prod

ucts

,app

les,

kiw

fruit,

sh

eepm

eat

82.4

%

97.9

%

2017

66.4

%Fr

ozen

fren

chfr

ies,

whe

y,b

utte

roi

l86

.8%

But

ter,

liqu

idm

ilka

ndc

ream

,pa

per

prod

ucts

,che

ese,

w

hey,

alu

min

ium

89.7

%S

ome

pulp

and

pap

erp

rodu

cts

97.9

%

2018

66.8

%Li

quid

cre

am88

.4%

Bee

f,sa

lmon

,mag

arin

e,

ice-

crea

m,w

ood

89.7

%

97.9

%

2019

86.6

%U

nsw

eete

ned

skim

milk

pow

der,

som

ew

hole

milk

pro

duct

s91

.4%

Som

eda

iryp

rodu

cts

(in

clud

ing

case

ina

nd

butt

erm

ilk),

avoc

ados

,fru

itju

ice

99.6

%Li

quid

milk

,but

ter,

che

ese,

be

efo

ffal

97.9

%

2020

98.6

%B

eef,

beef

offa

l,ch

ocol

ate

98.8

%B

utte

roi

l,pa

rtic

leb

oard

,pap

er,

air

cond

ition

ers,

whi

tew

are

99.6

%

98.9

%N

ewsp

rint,

plas

tics,

pa

ints

,whi

tew

are

2021

98.6

%

98.8

%

99.6

%

98.9

%

2022

98.6

%

98.8

%

99.6

%

98.9

%

2023

98.6

%A

pple

juic

e,ja

m98

.8%

99

.6%

98

.9%

2024

98.6

%

98.8

%

99.6

%

98.9

%

2025

98.6

%

98.8

%

99.6

%

98.9

%

Not

Sub

ject

to

Elim

inat

ion

1.4%

She

epm

eata

nds

ome

mea

tofl

esse

rex

port

sig

nific

ance

,fro

zen

fish

fille

ts,

alco

hol,

som

efo

rms

ofd

airy

pro

duct

s,

avoc

ados

,hon

ey

1.2%

Ste

el,w

ine,

sea

food

(in

clud

ing

froze

nfis

hfil

lets

)0.

4%O

nion

s,g

oatm

eat,

and

som

est

eel,

plas

tica

ndm

achi

nery

pr

oduc

ts

1.1%

Pou

ltry,

ste

el,w

ine,

liqu

idm

ilk

63

Non-elimination Outcomes

AANZFTAprovidesfortariffeliminationonbetween85and100percentoftarifflines:VietNamis

offering tariffeliminationon90percentof tariff lines,and IndonesiaandthePhilippinesareboth

offeringeliminationonbetween93-95percentoftarifflines.ThisistypicalofthetypeofFTAthat

ASEANusuallyundertakes.TariffsareeliminatedonalowerproportionoftarifflinesunderAANZFTA

thanundertheNewZealand-ChinaFTA(97percent)andtheThailandCEP(100percent).Under

AANZFTA,thelinesnotsubjecttotariffeliminationarescatteredthroughouteachASEANmember

country’sscheduleonthebasisoftheirownsensitivities.

ThismeansthatalthoughAANZFTAprovidesfortariffeliminationonallkeyproductsofNewZealand

export interest in major markets, there are instances of products of global export interest to

NewZealandthatarenotsubjecttotariffeliminationoutcomesinAANZFTA–inthesecases,the

tariffwilleitherbereduced,subjecttoa“tariffratequota”bound,ortheMFNtariffratewillapply.

Theseincludesomehorticulture,wine,seafood,meat,dairyandsteelproducts.Collectively,exports

ofsuchproductsconstituteonlyonepercentofNewZealand’sexportstothemajormarketsof

Indonesia,Malaysia,thePhilippinesandVietNam.

64

Estimated Reduction in Duties on New Zealand exports to Key ASEAN Markets

Indonesia

New Zealand exports to Indonesia incurred estimated duty payments of $12.1 million in 2005.

Table12showstheestimatedreductionindutypaymentsoncurrentexportstoIndonesiaoverthe

implementationperiodofAANZFTA.ThevalueofdutysavingswillincreaseasexportstoIndonesia

grow, includingbecauseof increasedexportactivity in response to tariff liberalisation in thiskey

exportmarket.

TABLE 12 REDUCING DUTIES ON NEw ZEALAND EXPORTS TO INDONESIA

UNDER AANZFTA

Data Source: Government of Indonesia,

New Zealand Ministry of Foreign Affairs and Trade calculations

65

The Philippines

NewZealandexportstothePhilippinesincurredestimateddutypaymentsof$11.4millionin2005.

Table13showstheestimatedreductionindutypaymentsoncurrentexportstothePhilippinesover

theimplementationperiodofAANZFTA.Thevalueofdutysavingswill increaseasexportstothe

Philippinesgrow,notleastbecauseofincreasedNewZealandexportstothePhilippinesinresponse

totariffliberalisation.

TABLE 13 REDUCING DUTIES ON NEw ZEALAND EXPORTS TO THE PHILIPPINES

UNDER AANZFTA

Data Source: Government of the Philippines,


66

Malaysia

New Zealand exports to Malaysia incurred estimated duty payments of $7.9 million in 2005.

Table14showstheestimatedreductionindutypaymentsoncurrentexportstotheMalaysiaover

the implementationperiodofAANZFTA.Thevalueofdutysavingswill increaseasNewZealand

exportstoMalaysiaexpand,includingasaconsequenceofariseinexportsinresponsetotariff

liberalisationinMalaysia.

TABLE 14 REDUCING DUTIES ON NEw ZEALAND EXPORTS TO MALAYSIA

UNDER AANZFTA

Data Source: Government of Malaysia,


67

Viet Nam

NewZealandexportstoVietNamresulted inestimateddutypaymentsof$22.4million in2006.

Table 15 shows the estimated reduction in duty payments on current New Zealand exports to

VietNamoverthe implementationperiodofAANZFTA.Thevalueofdutysavings isexpectedto

increaseasNewZealandexportstoVietNamgrow,includingbecauseofanexpectedgrowthin

exportsinresponsetotariffliberalisation.

TABLE 15 REDUCING DUTIES ON NEw ZEALAND EXPORTS TO VIET NAM

UNDER AANZFTA

Data Source: Government of Viet Nam,


6.1.3.3 Potential Impacts on New Zealand of Tariff Liberalisation under AANZFTA

Inbroadterms,NewZealand’scommitmentsontariffliberalisationfollowsasimilarstructuretothe

commitmentsofAustraliaandASEANcountries,with90percentoftarifflinescontainedina“normal

track”(witheliminationbetweenentryintoforceand2012)and10percentoflinesina“sensitivetrack”

withtariffstobeeliminatedbetween2013and2020.Themostsignificantyearsfortariffeliminationare

entryintoforce(80percentoflines),2010(afurther5percentoflines),2012(another5percentof

lines),2017(6percentoflines),2020(4percentoflines).Tariffsonasmallnumberoftarifflinesare

eliminatedeachyearbetween2013and2019.ThestructureoftheNewZealandofferandtheeffect

onIndonesian,Malaysian,PhilippineandVietnamesetradeissetoutinTable16below.

68

TABLE 16 STRUCTURE OF NEw ZEALAND OFFER

Percentage of Tariff Lines

Key Products Becoming Duty Free

Percentage of NZ Imports Already Duty Free from:

Indonesia Malaysia Philippines Viet Nam

Already Duty Free

58.6% 78.5% 77.9% 76.8% 26.4%

2009 79.8% Someplastics,rubber(excludingnewcartyres),wood,glassfibres,manufactures,somefoodproducts

78.8% 83.3% 80.4% 28.4%

2010 84.7% Someplastics,rubber 80.0% 86.6% 82.9% 32.4%

2011 84.7% Nil 80.0% 86.6% 82.9% 32.4%

2012 90.0% Someplastics,wood,yarn,certainfabrics,someironorsteelproducts,glasswoolinsulation,refrigerators,tugboats,mattresses,upholsteredseatswithwoodenframes

81.1% 91.9% 88.1% 39.2%

2013 90.3% Somemetalfurniture,bicycles

82.0% 92.4% 91.3% 51.1%

2014 90.3% Someironandsteelbarsandrods

82.0% 92.4% 91.3% 51.1%

2015 90.3% Saddlesandharnesses 82.0% 92.4% 91.3% 51.7%

2016 90.4% Verynarrowrangeoffabrics 82.3% 92.4% 91.3% 52.0%

2017 96.5% Fabrics,carpets,clothing,footwear,someironorsteel,newcartyres

83.9% 93.4% 94.6% 54.5%

2018 96.7% Footwear 85.0% 93.4% 94.7% 65.6%

2019 96.8% Woodenfurniture 87.2% 95.5% 95.5% 92.0%

2020 100.0% Some:Clothing,plasticsandwood,chemicals,ironandsteel,foodproducts

100.0% 100.0% 100.0% 100.0%

Whilethereisareductioninmosttariffspriortoelimination,thisdoesnotoccurinayear-by-year

linearfashionaswasthecasewiththeChinaFTA.Infact,becauseofNewZealand’sscheduled

unilateraltariffcuts,NewZealand’sactualcurrentappliedtariffsonmanylinesarelikelytoalready

bebelowtheAANZFTAcommitmentformostoftheimplementationperiod.However,allNewZealand

rateswilleventuallyreducetozero.

69

“Sensitive Track”: Elimination in 2013-2020

ProductsinthispartofNewZealand’scommitmentstoASEANgenerallyfallintothreecategories:

Clothing, footwear, carpets and some textile products (TCFC). These have generally been•

accordedearliereliminationdatesinpreviousFTAsandtypicallyhavehigherappliedtariffs.

Somemanufacturedproducts.Althoughtheseproducts,havelowerappliedtariffsandrelatively•

earlyeliminationdatesunderpreviousFTAs theyhavebeen identifiedassensitive to imports

fromASEANmembercountries.Theseproductsinclude(wooden)furniture,somesteelproducts

andplasterboard(gib-board).

ItemsoftradeinteresttocertainASEANcountries,onwhichalaterdatefortariffeliminationhas•

beenprovidedinordertobalanceNewZealand’scommitmentsagainstcommitmentssecured

fromeachASEANcountry.Examplesofsuchproductsincludesomechemicals,plasticsand

manufacturedproducts.

The2020eliminationdaterepresentsatwelveyeartimeframefortariffelimination.Thisislongerthan

thetenyeartimeframefortariffeliminationintheThailandCEPandtheeightyeartimeframeagreedfor

the New Zealand-China FTA. The twelve year timeframe represents a balanced and calibrated

responsebyNewZealandtotheundertakingsmadebykeyASEANnegotiatingpartners.Forinstance,

manysensitivelinesforASEANwillnotbeeliminateduntil2020aswell(egbeefinIndonesia).

ASEANisNewZealand’sthirdlargestsourceofimportsoverall,andisamajorsupplierofproducts

inthetraditionallysensitiveTCFCareas.Ingeneral,itistheseproductareaswhereNewZealand

maintainsitshighestappliedtariffs,currentlyupto10percent.ASEANisalsoasignificantsourceof

importsofawiderangeofmanufacturedproductswhereNewZealandtariffsarenowat5percent,

suchasfurnitureandsomeplasticsandsteelitems.

Against this background, table 17 below shows these key areas of New Zealand’s domestic

sensitivityandthecorrespondingtariffoutcomesunderAANZFTA.

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TABLE 17 TARIFF OUTCOMES IN KEY AREAS OF NEw ZEALAND’S

DOMESTIC SENSITIVITY

Percentage of imports from ASEAN on which tariffs will be eliminated

Imports from

ASEAN 2005 (NZ$

millions)

Duties in 2005

(NZ$)

% Duty

Free in 2005

% Duty

Free in 2009

% Duty

Free in 2010

% Duty

Free in 2012

% Duty

Free in 2013-2016

% Duty

Free in 2017

% Duty

Free in 2018

% Duty

Free in 2019

% Duty

Free in 2020

Plastic & Rubber 262.3 2,931,466 64.1% 75.2% 77.7% 82.3% 87% 100%

Textiles & clothing 73.6 4,321,113 34.1% 34.2% 34.9% 39% 53.6% 100%

Footwear 26.2 3,806,977 5.1% 5.2% 7.5% 13.1% 96.1% 100%

Metal products 97.5 706,759 34.9% 44.1% 51.1% 74.2% 80.3% 81.7% 83,1% 100%

Furniture 102.4 4,545,334 0.1% 0.5% 31.1% 90% 100%

Miscellaneous manufactures

28.9 630,373 17.5% 36.6% 51.4% 74.8% 100%

AscanbeseenfromTable17,extendedtimeframesfortariffeliminationhavebeenprovidedfor

many TCFC products from ASEAN countries. These items have traditionally been sensitive for

NewZealandandonlyisolatedproductsofminimaltradeinteresttoASEANaresubjecttoelimination

priorto2017.Similarly,extendedtimeframesfortariffeliminationarealsoprovidedforsomesteel,

furniture,newtyresandmanufacturedproductswheredomesticsensitivitiestoimportsfromASEAN

have been identified. These timeframes are typically longer than in the previous FTAs that

NewZealandhasconcluded.Ontheotherhand,AANZFTAfollowstheapproachinsomeprevious

agreements suchas theThailandCEPbyproviding for a relativelyhighproportionof tariff lines

tomove to zeroonentry into force.Consequently, for someproducts therewill beearlier tariff

eliminationthanundertherecentlyconcludedFTAwithChina,butthisisnotinareasofparticular

domesticsensitivity.

Consultation with New Zealand industry has shown that views vary on the issue of the

elimination of New Zealand tariffs for ASEAN. Four key themes were evident in the majority of

import-sensitivesectors:

Businesses are already planning on the basis of the post-2005 tariff programme that sets•

out unilateral cuts in tariffs through to July 2009andwhichwill be held at those levels until

June2011.

ThereisagenerallevelofcomfortwiththeapproachadoptedinNewZealand’spreviousFTAs•

suchastheThailandCEPandtheTrans-PacificSEP.Thesehaveresultedinahighpercentage

oftariffseliminatedonentry-into-force,furthermid-rangetariffseliminatedby2008/10andthe

highest,mostsensitive,tariffseliminatedby2015.

There is an awareness that the levels of domestic protection will be altered following the•

implementationoftariffcommitmentscontainedinFTAsconcludedwithmajorsourcesofimports

such as China. This will mitigate the effect of tariff commitments in other FTAs, including

AANZFTA.

ThereisastrongdesiretoensurethatthetraderemediesregimeavailableundertheWTOto•

protect domestic industry from import surges and unfair competition would not be diluted

throughAANZFTA.Asnotedelsewhereinthisreport,thishasbeensecured.

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TheASEANcountriesalreadyhaveasignificantshareof the imports inmanyofNewZealand’s

import-sensitivesectors.Thelongerphase-outperiods(insomecasesthroughto2020)includedin

AANZFTAshouldhelptomitigateanynegativeimpactsofthetariffreductionsundertheAgreement

byallowingdomesticindustryamorelengthytransitionperiod.Thiswillallowdomesticindustries

moretimetoadjust.Shouldsomenegativeeffectsemerge,NewZealandcan,ofcourse,continue

to have recourse to all existing WTO trade remedy-related measures as well as the additional

safeguardmechanismthatiscontainedinAANZFTAifthereductionintariffsunderAANZFTAresults

inincreasedimportsthatcauseseriousinjurytoadomesticindustry.

Potential Impacts on New Zealand of Australia’s Tariff Liberalisation under AANZFTA

SincetheintroductionofCERin1983,NewZealandexportershaveenjoyedpreferentialaccessto

theAustralianmarket.Australia isnowNewZealand’s largestexportdestination,withexports in

2007worthover$8.0billion.ThispreferentialaccesshasassistedNewZealandexporterstodevelop

competitiveadvantagesoverthirdcountryexporters,includingtheASEANeconomies.Thereduction

ofAustraliantariffsonimportsfromASEANwill,however,erodetheadvantagethatNewZealand

exportscurrentlyhaveintheAustralianmarketthroughCER.

Australia has committed to remove all tariffs on products from the ASEAN countries by 2020.

ThisgradualreductionwilltestthecompetitivenessofNewZealand’sexportsintoAustraliainareas

ofmutual interestwith theASEANcountries.Moreparticularly, thereareasignificantnumberof

productlinesonwhichAustraliahasagreedtoeliminatetariffsrelativelyquickly.Examplesofthis

includefootwearandautomotiveparts,onwhichAustraliahascommittedtotariffeliminationupon

entryintoforce.

NewZealandexportershavehowever,alreadybeguntoadjusttothereductionsintheirpreferential

levelsofaccesstotheAustralianmarket.ThishasoccurredasaresultofAustralia’stariffliberalisation

undertakenasaconsequenceofWTO-relatedcommitments,anditsobligationstoitsotherFTA

partners,includingtheUnitedStates,Singapore,ThailandandmostrecentlyChile.

6.1.3.4 Potential Impacts on the New Zealand Economy of the Outcome in Services

The services commitments that New Zealand has made to the ASEAN countries are all within

existingpolicy settings. Inpractice, therefore, those sectors coveredby suchcommitments are

alreadyopentoforeigncompetition.Itisnotexpectedthatthebindingofthisdegreeofopenness

totheASEANcountriesinAANZFTAwillhaveanyadverseimpactontheNewZealandeconomy.

Tradeinservicesandparticularlytheimpactofchangesintheconditionsfacedbyservicesuppliers

ismoredifficulttomeasurecomparedtotradeingoods.Manyanalysesrelyonsurveysandother

qualitativedata,ratherthanquantitativematerial.Suchanalysesarethereforedifficulttoquantifyin

ameaningfulwaybeyondthegeneralsectoralheadings.Forinstance,servicestradestatisticsmay

nottakeaccountofthesalestakingplaceinanothermarketthroughthecommercialpresenceofa

NewZealandfirmthere.This isduetothe inherentdifficulty incollectingdisaggregatedservices

dataandalsobecauseofconfidentialityissuesrelatedtothecollectionofservicesstatistics.

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There are some services sectors like tourism and education however, where some quantitative

materialisavailable.NewZealand’sservicestradehasexpandedinrecentyears,particularlyinthe

sectorsoftourismandeducation. In2007,almost87,000tourists fromASEANcountriesvisited

NewZealand,making itoneofNewZealand’s larger tourismmarkets. In theareaofeducation,

ASEANstudentnumbersstudyinginNewZealandhavegrowntoover7,800in2007.AANZFTA

thereforeprovidesagoodbaseonwhichtobuildandexpandservicestradeasASEANeconomies

developandopenfurthertoforeignserviceproviders.

ASEANmembereconomiesarerapidlygrowingandmostarestilldevelopingtheirdomesticservices

industries.ThiscreatesopportunitiesforNewZealandservicesexporters,butalsobringschallenges

given the fact that many of New Zealand’s services exporters are small niche operators which

struggletoestablishapresenceinexternalmarkets.

Given their relatively small size, theadditional certainty and transparency for servicesprovidedby

AANZFTAisespeciallyimportanttoNewZealandservicessuppliers.Thiswillprovidethemwithgreater

confidenceandcertaintythatthe“rulesofthegame”willnotchangetotheirdisadvantage.Thisinturn

providestheopportunityforthemtodeepenandbroadentheirengagementwithintheregion,build

newandbroadenexistingrelationshipsandincreasetheintegrationoftheNewZealandservicesector

insouth-eastAsia.Thisisexpectedtofacilitatefurthergrowthinservicesexportsregionally.

6.1.3.5 Potential Impacts on the New Zealand Economy of the Outcome on Investment

As noted in section 2.2.1, the investment relationship between New Zealand and the ASEAN

countriesisgrowingquickly,havingtrebledsince2002.InthecaseofAANZFTA,andgiventhereis

nomarketaccessoutcomeforinvestmentagreedatthispoint,theoutcomewillstillhavepositive

benefitsforNewZealandintwointer-relatedways:“signalling”;andbroaderdynamiceffects.

In terms of “signalling”, the AANZFTA outcome, including the added-value of the investment

protections(ieoverandaboveexistingconditionsforNewZealandinvestorsandinvestmentsinto

theregion),isexpectedtogenerategreaterinterestinNewZealandbothasasourceofinvestment

intotheregion,butalsoasalocationforinvestmentfromtheregion.

Moregenerally,investmentflowsinbothdirectionshaveanumberofbenefitswhichtheinvestment

protectionsnegotiatedinAANZFTAcanhelpmaintainandfacilitate.Thesebenefitsincludethose

direct capital and portfolio flows – ie the ‘static’ and traditional macro-economic benefits from

investment.Theseinturnhelpdrivedynamicproductivitygainsincludingthewayinwhichinvestment

canattractandsupportinnovation,includingthroughthetransferofmanagerialskillsandadvanced

technical know-how. Improved and adaptable skills and new organisational techniques,

technologies and management practices can yield competitive benefits and enhance factor

productivityforcountrieslikeNewZealandaswellashelpsustainemploymentaseconomicand

technologicalconditionschangeovertime.

TheInvestmentChaptercontainsarangeofprotectionelementswhichrelate inparticulartothe

equitable treatment of investments once established in the host market and introducing new

commitmentsonprotectionsforinvestmentsinthosecountrieswheresuchcommitmentsdonot

yet exist for New Zealand. At a time when New Zealand government policy is focusing on the

potentialgains toNewZealandof increasedoutward investment,AANZFTAprovidesacredible

regionallegalframeworkforinvestorsandtheirinvestmentsatanopportunetime.

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Giventhe importanceof theavailabilityof foreigncapitalandopportunities for internationalisationof

New Zealand business in New Zealand’s economic development, a growing bilateral investment

relationshipwiththeASEANeconomiesresultingfromAANZFTAcanbeexpectedtohaveapositive

impact on the New Zealand economy. The AANZFTA outcome does not, however, compromise

NewZealand’sexistingregulatoryenvironmentandNewZealand’sinvestmentscreeningregimeunder

theOverseasInvestmentAct2005willcontinuetoapplytoinvestmentsfromtheASEANeconomies.

6.1.3.6 Conclusions Regarding Static Gains to the New Zealand Economy

Basedontheaboveassessment,itispossibletoconcludethattherewillbeoverallpositivestatic

gains to theNewZealandeconomyasawhole from the reciprocalmarketaccess liberalisation

underAANZFTA.

Asdiscussed inSection6.1.2.1, thedirect impactof trade liberalisationoneconomicgrowth is

essentiallyderivedfromreducedtariffandnon-tariffbarriers.Thesebenefitsarelikelytovaryfrom

sectortosector,andamongindividualcompanies,dependingonthesignificancetotheindividual

exporterofremovaloftariffs.

ThereareexpectedbenefitstoNewZealandexporterswhocurrentlytradewiththeASEANcountries,

orthosewhomaybeencouragedbyAANZFTAtoinvestigateexportingtothosemarkets.Thebenefits

areexpectedtobeintermsofeitherincreasedtradevolumes(bothcurrentandnewexportproducts)

or increased returns from current exports, or a combination of the two. AANZFTA also helps to

establishandmaintaina“levelplayingfield”forthoseNewZealandexporterswhoarecompetingwith

thirdcountryexportersthatalreadyenjoypreferentialaccessintotheASEANeconomies.

Intermsofinvestment,duetothefacilitatoryand“signalling”(ieasoninvestmentdestination)nature

ofAANZFTA,NewZealand’sbilateralinvestmentrelationshipwiththeASEANeconomiesisexpected

tocontinuetogrowandhaveapositiveimpactontheNewZealandeconomy.

Onnon-tariffbarriers,AANZFTAcontainsageneralprohibitiononnon-tariffmeasuresthatarenot

consistentwiththeparties’WTOrightsandobligationsandarequirementtoensurethatpermitted

non-tariff measures do not create unnecessary obstacles to bilateral trade. This will provide a

bilateralcourseofactionunderAANZFTAonanyunjustifiablenon-tariffmeasures.Italsoprovidesa

basis forthedevelopment,againovertime,ofoutcomesdesignedtofacilitatetradeandreduce

associatedtransactionscostsinparticularregulatoryareasandforspecificproducts.Moreover,it

isalsoworthnotingthattheinstitutionalmechanismestablishedintheFTAprovidesanotherwayto

addressnon-tariffbarriersthatNewZealandexportersdidnothavebeforeAANZFTA.This isan

important“addedvalue”benefitoftheAgreement.

The phased nature of the tariff and non-tariff reductions will see the bulk of these static gains

deliveredovertime.

74

6.1.4 “Second order” effects on New Zealand of AANZFTA

AsoutlinedinSection6.1.2.2,increasedtradeandservicesflowsfacilitatedbyregulatoryimprovements

undertradeagreementscanhelpgeneratewiderdynamicproductivitygainsthroughoutthewider

NewZealandeconomy.Theseeffectsarehardertoquantify.Theyaccumulateovertimeandmaybe

attributabletothedownstreameffectsoftradeagreementsovertime,ratherthanthemoreimmediate

impactsdrivenbytariffremovalandothermarketaccessimprovementsalone.

ThereareanumberofaspectsofAANZFTAthatmighthelpgenerate“second-order”benefitsfor

the New Zealand economy. These relate to the provisions outlined in Sections 3 and 4 and in

particularincludecustomsprocedures,SPSmeasures,STRACAP,electroniccommerce,economic

cooperation,IPrights,competition,andconsultationanddisputesettlementprocedures.

Collectively, these provisions should, over time, significantly enhance the predictability and

transparencyoftheNewZealandtradingrelationshipwiththeASEANeconomies.Takentogether

withthemarketaccessimprovementsrelatedtothereductionoftariffsandservicesinthestatic

effects section (Section 6.1.3), these are expected to help generate the “second-order” effects

relatedtodynamicproductivity.

Althoughithasnotbeenpossibletoquantifythepreciseeconomiceffectsoftheseprovisions,itcan

beassumedthatNewZealandcompaniesaremorelikelytobenefitthantolosefromtheapplication

ofimprovementstotheregulatoryframeworkgoverningthetradeandeconomicrelationshipwith

theASEANeconomies.Inthiscontext,modestdynamicproductivitygainsareexpectedtoaccrue

totheNewZealandeconomyovertime.

6.1.5 Conclusions regarding overall gains to the New Zealand economy

Overall, AANZFTA is expected to make a net positive contribution to the New Zealand

economythrough:

anexpansionoftradeingoodsandservicesasaresultofthereductionsintariffandnon-tariff•

barrierswithdutysavingsandnewopportunitiesforNewZealandexporters;

improvementsinproductivityasaresultofdynamiceffects,includingthepotentialforenhanced•

levelsofinvestmentandgreatercompetition;and

enhancedregionalintegration,includingtheexpansionandfacilitationofimprovedinvestorand•

businesslinks,whichwilltriggerfurtherfactorproductivitygains.

The overall outcome of AANZFTA will be to strengthen New Zealand’s economic ties with the

ASEAN member states which will contribute to New Zealand’s wider skills, innovation, and

technology-relatedgoals.

Governmentagenciesaredevelopingawhole-of-governmentstrategyinconjunctionwithprivate

sectorandotherstakeholderstoensurethatNewZealandderivesasmucheconomicbenefitas

possiblefromAANZFTA.

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6.2 Social effects

AANZFTAandtheassociateddocuments,includingtheMOAsthathavebeenconcludedwiththe

Philippines, are expected to have an overall net-benefit to New Zealand socially. They are not

expectedtohaveanydiscerniblenegativesocialeffects.Thefollowingsectionexaminespotential

effectsondomesticemployment,socialregulationandimmigration.

6.2.1 Employment

Freetradeagreementsmayhavebothpositiveandnegativeemploymenteffects.Giventhatsuch

agreements facilitate greater trade by removing or reducing trade barriers and distortions,

themajornegativeeffectscanbeexpectedtobefoundinindustriespreviouslyprotectedbytariffs

orotherbarrierstotrade,whichmayfinditdifficulttocompetewithcheaperimportsunderanFTA.

Positiveemploymenteffects,however,canbeexpectedinindustrieslikelytogainfromincreased

exportopportunitiesundertheagreementandinareasoftheeconomywhereactivity increases,

eitherdomesticallyorinexportingtothirdcountries,asaresultofcheaperimportsavailableunder

theAgreement.

Aspreviouslymentioned,AANZFTAprotectsNewZealand’sdomesticinterestsinsensitivesectors

such as clothing, footwear, carpet and furniture through longer transitions, or longer phase-out

periodsfortariffsonthesesensitiveitems.Thiswillprovidethesesectorswithmoretimetoadjust

totheincreaseincompetitionfromASEANcountries.

AsnotedinSection6.1,itisexpectedthatAANZFTAwillresultinanincreaseinNewZealand’snet

exportstoASEANmembercountriesandanincreaseinoveralleconomicactivityinNewZealand.

Thatsuggeststhat,inaggregate,theeffectofAANZFTAonemploymentinNewZealandislikelyto

bemodestlypositive.

Arrangementsfortemporaryentry intoNewZealand’semploymentmarketbyskilledFilipinoand

VietnameseworkershavebeenmadeinconjunctionwiththeAANZFTAnegotiations,butnotaspart

of the Agreement itself. As noted in Sections 3.1.9 and 4.9, the conditions attached to those

arrangements–includingthelimitationofnumbers,skilllevelrequirementsandtherequirementthat

the jobs meet New Zealand labour market conditions – are specifically designed to avoid and

mitigateasfaraspossiblenegativeimpactsonNewZealandemployment.

TheworkingholidayschemesthataretobenegotiatedseparatelywiththePhilippinesandVietNam

arealsoexpectedtohaveapositivesocialimpactallowingyoung,skilledFilipinosandVietnamese

toengageintourismandincidentalemploymentinNewZealand.Oncenegotiated,thebenefitsof

suchschemesshouldaccordwiththoseofsimilarschemesNewZealandparticipatesin.

6.2.2 Social regulation

NewZealand’ssocialregulationframeworkswillnotbeaffectedbyAANZFTA.Intheareaoftrade

inservices,AANZFTAfollowsthestructureoftheGATSandthereforeexcludesservicessuppliedin

theexerciseofgovernmentauthority.Moreover,NewZealandhasnotmadeanycommitmentsin

respectofpubliclyprovidedservices,suchaspublichealth,education,housingandsocialwelfare.

76

In terms of labour standards, the MOA with the Philippines reaffirms the commitments of both

countriestomaintainingsoundlabourpoliciesandpractices.InlinewiththeGovernment’sexisting

policyframework,thisinstrumentestablishesmechanismsthroughwhichspecificlabourissuescan

beaddressedbywayofbothcooperativeandconsultativeprocessesbetweenthetwocountries.

This instrument can also be seen as complementing other existing labour-related instruments

negotiatedwithotherASEANpartnersinthecontextofNewZealand’sotherFTAs(iewithThailand,

Singapore,Brunei)andtheongoingnegotiationswithMalaysiaforabilateralFTA.

Finally,NewZealand’scommitmentsonthemovementofnaturalpersonsunderAANZFTA,aswell

as the separate arrangements relating to temporary employment entry, include a number of

safeguardsdesigned toavoid, as far aspossible, negative impactson theNewZealand labour

market. This includes the fact that New Zealand labour standards apply to all people receiving

remuneration in New Zealand, including entrants under the temporary employment entry

arrangements.Similarly,theworkingholidayschemeswillbenegotiatedonthebasisthattheymust

includecertainsafeguardstopreventtheirabuseormisuse.

6.2.3 Immigration

Thespecificcommitmentsenteredintoinrespectofmovementofnaturalpersons,aswellasthe

separate arrangements relating to temporary employment entry and (once concluded) working

holidayschemeswiththePhilippinesandVietNam,donotrequirechangestoexistingimmigration

policy.Thespecifictemporaryemploymententrychangesarenotexpectedtoimpactgreatlyonthe

numbersofpeopleenteringthecountry,astheyaredependentupontheavailabilityofbona fidejob

offers.ThepromotionoftradeandinvestmentopportunitiesunderAANZFTAandthesubsequent

riseinNewZealand’sprofileinASEANmembercountriesmay,however,encouragegreaterinterest

inimmigrationtoNewZealandfromASEANcountries(includingbyskilledmigrants)andviceversa.

Thiscanonlyoccur,however,throughtheambitofcurrentimmigrationpolicysettings.

6.3 Cultural effects

AANZFTA and its associated instruments and documents, including the MOAs that have been

concludedwiththePhilippines,arenotexpectedtohaveanynegativeculturaleffects.

Indeed,AANZFTAincludescertainsafeguardstoensurethatNewZealandpreservestheabilityto

pursuecertainculturalpolicyobjectives,suchassupportingthecreativeartsandtakingmeasures

inrelationtoMäori,includinginfulfilmentofTreatyofWaitangiobligations.

AANZFTAincorporatestheGATTexception(GATTArticleXX(f))thatPartiesmaytakemeasures

necessarytoprotectnationaltreasuresorspecificsitesofhistoricalorarchaeologicalvalue,providing

thatsuchmeasuresarenotusedfortradeprotectionistpurposes.AANZFTAelaboratesfurtherthat

Partiesmaytakemeasuresinsupportofcreativeartsofnationalvalueandthatthismayincludea

rangeofartisticactivity, forexample, theatre,danceandmusic, literature, indigenous traditional

practiceanddigitalinteractivemedia.

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TheTreatyofWaitangiexception(Chapter15,Article5)providesthatnothinginAANZFTAprevents

the New Zealand Government from taking any measure it deems necessary to accord more

favourable treaty toMäori, through the fulfilmentof itsobligationsunder theTreatyofWaitangi.

Interpretation of the Treaty of Waitangi itself is also carved out of the purview of the dispute

settlementmechanism.

AANZFTAalsorecognisesthateachPartymayestablishappropriatemeasurestoprotectgenetic

resources,traditionalknowledgeandfolklore,inaccordancewithitsinternationalobligations.

6.4 Environmental effects

New Zealand approached the AANZFTA negotiations in the context of the Government’s 2001

policy framework of ensuring that sustainable development and environmental objectives are

appropriatelysupportedbyFTAs

AANZFTA,aswellastheMOAonEnvironmentalCooperationwiththePhilippines,cancontribute

to positive outcomes for New Zealand on the environment and sustainable development. They

supporttheobjectiveofharmonisingtradeandenvironmentandprovideopportunitiestoenhance

capacityinthePhilippinesandNewZealandforimprovedenvironmentalmanagementandpromote

tradeingoodsandservicesthatbenefittheenvironment.

TheMOAsetsoutalistofspecific,thoughnotexclusive,areasforcooperationidentifiedasbeing

ofmutual interestandbenefittotheParties.Theseincludeenvironmentalmanagementsystems,

urban environmental management, air quality management, water quality management; toxic

chemicalsandhazardousandsolidwastemanagement,restorationofdegradedwatersheds,and

climatechange.Thesecooperationactivitiesmayleadtothedevelopmentofenvironmentalpractices

andsystemsthatcouldhaveapositiveimpactonenvironmentalmanagementinbothcountries.

FTAshavethepotentialtoaffecttheenvironmentinpositiveandnegativeways.Therearefourmeans

bywhichtheenvironmentcanbeaffected:throughchangesinenvironmentalregulation;changesin

thetypesofgoodsandservicesthataretraded;changesinthedistributionandintensityofproduction

andconsumption;andchangesinthescaleofproduction.Thesearediscussedbelow.

6.4.1 Regulatory effects

FTAsmay,inprinciple,havepositiveandnegativeregulatoryeffectsinrelationtotheirimpacton

existingenvironmentalpoliciesandstandards.

Ingeneralterms,boththeNewZealandandinternationalexperienceontheeffectofFTAsisthat

positive regulatory effects can be realised if care is taken not to undermine the ability of the

governmenttopursueappropriateandeffectiveenvironmentalpolicies. In thisregard,AANZFTA

doesnotaffectthegovernment’sabilitytoregulateforenvironmentalprotection.

ThegeneralexceptionstoAANZFTAincorporatetherelevantWTO(GATTandGATS)exceptions

relatingtomeasuresnecessarytoprotecthuman,animalorplantlifeorhealth,ormeasuresrelating

to the conservation of exhaustible natural resources. These exceptions apply across the whole

Agreement,includingtradeingoodsandinservices,subjecttotherequirementthattheyarenot

appliedinamannerwhichwouldconstituteameansofarbitraryorunjustifiablediscriminationora

disguisedrestrictionontradeingoodsorservicesorinvestment.

78

NewZealand’senvironmentallaws,policies,regulationsandpracticesconstituteanenvironmental

managementsystemthatisdesignedtodealwithanyadverseeffectsofeconomicactivity(including

activity resulting from tradeagreements) inamannerconsistentwith theGovernment’sbroader

objectiveofsustainabledevelopment.

RelevantlegislationincludestheResourceManagementAct1991,theHazardousSubstancesand

NewOrganismsAct1996,theOzoneLayerProtectionAct1996,theSoilConservationandRivers

ControlAct1941,theEnergyEfficiencyandConservationAct2000,theClimateChangeResponse

Act2002,theAquacultureReform(RepealsandtransitionalProvisions)Act2004,theBiosecurity

Act 1993, the Conservation Act 1987, the Crown Minerals Act 1991, the Fisheries Act 1949

(amended1993),theForestsAct1949(amended1993),andtheWildlifeAct1953.

AANZFTAwillnotcompromiseNewZealand’sabilitytoapplytheselaws,policiesandregulations,

norwill itconstrainNewZealand’sabilitytosetnewlaws,policiesandregulationsprovidedthat

theseareappliedtomeetalegitimateobjectiveandarenotimplementedinadiscriminatorymanner.

Inaddition,theGovernmenthas instigatedarangeofvoluntary initiativestoassist inaddressing

potential adverse environmental effects, including the New Zealand Packaging Accord and the

CleanStreamsAccord.TheGovernmentalsocontinuestoencourageandpromoteadherenceto

theOECDGuidelinesonMultinationalEnterprises.Theseguidelinesencouragemultinationalfirms

toestablishandmaintainenvironmentalmanagementsystemsandtakeintoaccount(andaddress

wherenecessary)theenvironmentaleffectsoftheiractivities.

TheMOApromoteshighlevelsofmutualsupportivenessbetweentheParties’environmentaland

tradepolicies.Theyexplicitlyacknowledgethesovereignrightsofeachcountry toset theirown

policiesandnationalprioritiesandtoset,administerandenforcetheirownenvironmentallawsand

regulations. They also provide for cooperation and information exchange, which can potentially

encourage “best practice” on environmental regulations being shared between the Parties. No

adverse impactsonNewZealand’sbiosecurityregulationsareanticipatedasexistingpolicyand

practicewillbemaintained.

6.4.2 Product effects

ProducteffectsconcernchangesinthecompositionofNewZealand’stradearisingfromtheremoval

of traderestrictions.Positiveproducteffectsarising fromthe liberalisationof trade ingoodsand

servicesthatbenefittheenvironmentcaninprinciplehelpoffsetanynegativescaleandstructural

effectsoffreertrade.Increasedtradecanalsobenefittheenvironmentbyenhancingaccesstoless

ecologically damaging inputs (for example, cleaner technologies) to New Zealand production

systems.Anincreaseinthemovementofgoods,however,canalsobringwithitapossibleincrease

in biosecurity risk, and may require increased attention to and monitoring of movements of

environmentallyhazardousorenvironmentallysensitivegoodsandendangeredspecies.

AANZFTAmayopenupnewopportunitiesforNewZealandproductionandexportofgoodsthat

benefittheenvironment.ThisisarapidlygrowingareaoftradeforNewZealand,withthegrowthin

NewZealand’sglobalexportsofsuchproductsexpandingbymorethanfivepercentayearoverthe

pastfouryears.

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AANZFTA is also considered unlikely to pose significant risks in relation to movements of

environmentally hazardous or environmentally sensitive goods and endangered species.

New Zealand’s environmental laws, regulations, policies and practices are considered to be

sufficientlyrobusttodealwithanyparticularissuesrelatedtoproducteffectsthatmightariseand

theAANZFTAdoesnotchangethissituation.

6.4.3 Structural effects

ThestructuraleffectsofAANZFTAarenotexpectedtobesignificantforNewZealand.Sucheffects

canbebothpositiveandnegative.PositiveeffectsarisewhenanFTA results in the removalof

policiesthatcontributetoenvironmentaldamage,forexample,theremovalofsubsidiestoagriculture

that contribute to over-production and result in land degradation. Negative effects can arise in

situationswhereanincreaseinproductionofgoodsfortradeleadstoenvironmentaldamageand

policyinterventionsareinadequatetodealwiththis.

Economicandenvironmentalpolicy reformsover thepast25years inNewZealandhashelped

reducedistortionsintheeconomy,sofurtherpositivestructuraleffectsfromtheremovalofpolicies

areexpectedtobeminimal.Anynegativestructuraleffectsareexpectedtobemanageablewithin

existingenvironmentalpolicies,regulationsandpractices.

6.4.4 Scale effects

Potential negativeeffectsstem frompollutionandotherenvironmental risksassociatedwith the

expansionofeconomicactivityand the increase in themovementofgoods.Thesemaynotbe

completelyoffsetbytheadvantagesderivedfromincreasedgrowthasaconsequenceoftheFTA.

Environment-relatedpolicyinstrumentsthereforeneedtobekeptunderreviewtohelpensurethe

overallsustainabilityofeconomicgrowth,includingthatdrivenbyFTAs.

WhereanFTAaugmentsgrowthintheNewZealandeconomy,thiscanhavethepositiveeffectof

helpingleverageadditionalfinancialresources,whichcanbeusedtoaddresswiderenvironmental

concerns(forexample,enablingcompaniestoinvestincleanertechnologiesandgovernmentsto

raiserevenueforfinancingenvironment-relatedinfrastructure).

Onbalance,theoveralleconomicimpactofAANZFTAontheNewZealandeconomyisnotexpected

togeneratesubstantivenegativescaleeffectsthatcannotbeaddressedbyNewZealand’scurrent

frameworkofenvironmentandsustainabledevelopment-relatedlegislation,policiesandpractices.

80

7 COSTS TO NEW ZEALAND OF COMPLIANCE WITH THE TREATIES

7.1 Tariff revenue

In2005,therevenuecollectedonimportsfromtheASEANeconomieswas$26.3million.Astariffs

arephasedoutover timeunderAANZFTA, theNewZealandCustomsServicewillprogressively

collectlessrevenuefromdutypayments.Theexactamountofdutycollectedwillbeinfluencedby

thepatternofactualimportsandtheproportionthatqualifyforpreferenceundertheapplicablerules

oforigin(ROO).

Someof therevenuepotentially foregoneasa resultofAANZFTAhasalreadybeenreducedby

NewZealand’scommitmentsunder theThailand-NewZealandCEP, theTrans-PacificStrategic

EconomicPartnershipAgreement(whichincludesSingaporeandBrunei),andthedomestictariff

reductionprogrammeinplacefortheperiod1July2006–1July2009.

7.2 Costs to government agencies of implementing and complying with the treaties

One-offcostsassociatedwith implementingAANZFTAincurred inthe2008/09financialyearare

estimated to amount to $582,000, as currently bid for from the inter-agency FTA Growth

and Innovation Fund (GIF) pools for promotion and outreach activities and capacity building.

Keyactivitiesinclude:

The development of a whole-of-government AANZFTA website to provide comprehensive•

informationonthecontentoftheAgreementandprovidemarketinformationonthekeyASEAN

markets. The site will also include a tariff locator along the lines of the New Zealand-China

FTAwebsite.

TheproductionofappropriatepublicationsexplainingthekeyoutcomesofAANZFTA.•

Aone-day“roadshow”heldineachofthefivemajorcentres(Auckland,Hamilton,Wellington,•

ChristchurchandDunedin)in2009to:

outlinethecontentofAANZFTAtotheNewZealandbusinessandwiderstakeholdercommunity;−

assistincapacitybuildingfordoingbusinesswiththeASEANcountries.−

As with other FTAs New Zealand has entered into, there will be on-going costs of meeting

NewZealand’sobligationsunderAANZFTA,aswellastheassociateddocumentsandinstruments

(for example, the MOAs with the Philippines) This includes staffing, the establishment of new

institutions, developing implementation arrangements, technical assistance and implementation

costs.Itisdifficulttoestimatescostsatthisstage.Keyrelevantgovernmentagencies(Ministryof

ForeignAffairsandTrade,MinistryofAgricultureandForestry,MinistryofEconomicDevelopment,

MinistryfortheEnvironment,DepartmentofLabour,NewZealandCustomsService,NewZealand

FoodSafetyAuthority)willseekfundingfortheseactivities,togetherwiththefundingofactivities

associatedwithotherFTAsaspartoftheEconomicTransformationbudgetinitiative.

81

Inaddition,newfundingwillbesoughttocontributeupto$4.6millionover3-5yearstoimplement

approvedprojectsundertheAANZFTAEconomicCooperationWorkProgramme.

Governmentagencieswillalsobeworkingwiththeprivatesectorandotherstoimplementstartegies

for best leveraging opportunities from AANZFTA. Such activties are considered, however, to

representaninvestmentinAANZFTA,ratherthanacompliancecost.

7.3 Costs to businesses of complying with the treaties

Asoutlined inSection3.1, thepredominanteffectofAANZFTAshouldbe to reducetransaction

costsforNewZealandbusinessintradingwithASEANcountriesthroughtradefacilitatingoutcomes

across the agreement, including in areas such as customs procedures, STRACAP and SPS

measures.

Someof theseoutcomes,suchas trade facilitatingprovisions forcustomsprocedures,willhelp

reducetransactionscostsfromtheoutsetofAANZFTA.Otheroutcomesareexpectedtodevelop

andincreaseovertimefromtheplatformthatAANZFTAcreatesinareassuchasSTRACAPand

SPSforenhancedregulatorycooperationtofacilitatetrade.

82

8 COMPLETED OR PROPOSED CONSULTATION WITH THE COMMUNITY AND PARTIES INTERESTED IN THE TREATY ACTIONS

8.1 Inter-departmental consultation process

ThenegotiationofAANZFTAandassociateddocumentsand instrumentswasconductedbyan

inter-agencyteamledbytheMinistryofForeignAffairsandTrade.Theinter-agencyteamcomprised

officials from the Ministry of Agriculture and Forestry, the Ministry of Culture and Heritage, the

DepartmentofLabour,theMinistryofEconomicDevelopment,theMinistryofEducation,theMinistry

fortheEnvironment,Treasury,NewZealandCustomsService,NewZealandFoodSafetyAuthority,

TePuniKokiri,NewZealandQualificationsAuthority,NewZealandTradeandEnterprise (NZTE),

andtheReserveBankofNewZealand.

Otherrelevantdepartmentsandagencieswerealsoregularlyconsultedduringthenegotiationsin

thepreparationofNewZealand’sposition,inparticularinthepreparationofNewZealand’stariff

scheduleandservicesschedule.

The Department of Labour and the Ministry for the Environment were directly involved in the

negotiationoftheMOAswiththePhilippines.

TheDepartmentofthePrimeMinisterandCabinetwasalsogenerallyandregularlyconsultedonthe

AANZFTAprocess.

8.2 Public consultation process

FromSeptember2004,theMinistryofForeignAffairsandTrade,togetherwithothergovernment

agencies, organised and conducted a wide-ranging consultation programme to raise public

awarenessofthenegotiationsandtoseekstakeholderviews.

Thisprogrammeusedprinted,emailedandwebsite information,supportedbyextensivespecific

discussionswithkeystakeholders,suchasexportersandindustrysectorslikelytobeinterestedin

oraffectedby theoutcomesofAANZFTA (includingtheMOAson labourandtheenvironmental

cooperationwiththePhilippines).

Communication programme

Thecommunicationprogrammesupportingtheconsultationsincluded:

Updates in the bimonthly MFAT news bulletin, Business Link, which is also posted on the•

MFATwebsite.

Acallforsubmissionsinadvanceofthecommencementofnegotiationsinearly2005.•

Anon-goingcallforsubmissionspostedontheMFATwebsitethroughoutthenegotiatingperiod.•

RegularbulletinspostedontheMFATwebsitewhichprovidedinformationaboutthenegotiations•

andrequestedviewsfromstakeholdersandthegeneralpublic.

83

Ongoing presentations on the negotiations as part of wider trade policy consultations with•

interestedpartiesincludingNGOs.

Regularupdateson thenegotiatingprocess,emailed tostakeholderswhohad registeredan•

interestinthenegotiations.

Consultation programme

PublicoutreachandconsultationhastakenplacethroughoutthenegotiationofAANZFTA,including

withkeystakeholdersonnegotiatingobjectives. Inparticular,stakeholdershavebeenconsulted

on the phase-out of tariffs, rules of origin, services and investment commitments (including the

shape of potential outcomes on movement of natural persons), and associated labour and

environmentoutcomes.

Thecommunicationsprogrammeprovidedthebasisforaconsultationprogrammeinvolving:

Meetingsandemailcorrespondencewithcompaniesandsectoralorganisationswithaninterest•

inaccesstothekeyASEANgoodsandservicesmarkets.

Meetingsandemailcorrespondencewithcompaniesandsectoralorganisationswithaninterest•

inNewZealand’stariffphase-outarrangementsunderAANZFTA.

Meetingswithorganisationswithabroadinterest inthenegotiations, includingtheCouncilof•

Trade Unions, The Export Institute, the Federation of Mäori Authorities, the Employers and

Manufacturers Association (Northern), the Canterbury Manufacturers Association, the Asia

Foundation,AmnestyInternational,LocalGovernment,andEducationNewZealand.

Meetings with a range of business groups in New Zealand, including Business New Zealand,•

ChambersofCommerce,andtheASEAN-NewZealandCombinedBusinessCouncil(ANZCBC).

TheInternationalTreatiesList,producedevery6monthsbytheMinistryofForeignAffairsand•

Trade,providedanupdateonthenegotiationprocess,identifyinginparticularissuesofinterest

toMäori.Thiswasdistributedtoiwi,andprovidedcontactdetailsforfeedbackfromiwi.

Submissions process

Theconsultationprocess,elicitedasignificantnumberofsubmissions,includingfrom:

AmnestyInternational,BusinessNZ,theCouncilforInternationalDevelopment,theCanterbury•

Manufacturers’Association,TeManaAkonga(theNationalMäoriTertiaryStudents’Association),

theDairyCompaniesAssociationofNewZealand,theEmployersandManufacturersAssociation

(Northern),FairWorldLinks,FurnitureAssociationofNewZealand,theGreenPartyofAotearoa

NewZealand,HeinzWattiesLimited,MeatandWoolNewZealand/MeatIndustryAssociation

/ Deer Industry New Zealand, the Marine Industry Association, New Zealand Winegrowers,

NewZealandFootwearIndustryAssociation,NewZealandCouncilofTradeUnions,Horticulture

Export Authority, New Zealand Forest and Wood Processing Industry, New Zealand Trade

Liberalisation Network, New Zealand University Students’ Association, Otago Chamber of

Commerce,ZespriGroupLimited,Yum!RestaurantsInternational.

84

Issues covered in the consultation process

Thekeymessageswere:

OveralltherewasstrongsupportforanFTAwithASEAN.•

Those in support of AANZFTA saw the removal of tariffs as a significant benefit to many•

businessesandconsumers.Mostsubmissionsaccordedprioritytotheeliminationoftariffs in

threeASEANmarkets:Indonesia,thePhilippinesandVietNam.NewZealandalreadyhasFTAs

with Brunei, Singapore and Thailand and is currently negotiating an FTA with Malaysia. The

submissionsindicatedminimalornobusinessinterestintheLDCcountrymembersofASEAN.

Many organisations consulted noted that standards, labelling requirements, quarantine•

requirements, mandatory testing and other non-tariff barriers to trade caused many of the

problemsencounteredindoingbusinessinASEAN.Organisationsstressedtheneedtoaddress

these in theAANZFTA.The forwardworkprogramme inAANZFTA includesamechanismto

consultandworktoremovenon-tariffbarriers.

Servicesexportershighlightedrestrictionsrelatingtoqualificationsrecognition,requirementsfor•

partnershipsorjointventures,andcomplexandtime-consumingprocessesforvisasandwork

permits. The chapter on movement of natural persons provides greater transparency and

certaintyaroundVisas.

Education was a particular area of interest in services. Distance education and presence of•

naturalpersonswerehighlighted,aswellasagrowinginterestincommercialpresence.Thailand,

Malaysia, and Viet Nam were identified as priority countries for education service providers.

AANZFTAincludesarangeofnewcommitmentsineducationservices.

Concerns around intellectual property protection were also identified as an issue for the•

negotiations.AssetoutinSection4.13,AANZFTAreinforcescommitmentstoanyIPobligations

ASEAN member countries have under the TRIPS Agreement. AANZFTA also maintains

substantive commitments on copyright and on cooperation to assist with the adequate and

effectiveprotectionandenforcementofintellectualpropertyrightsintheASEANregion.

Consultationsoninvestment issueshighlightedconcernswiththelackof legalprotectionsfor•

NewZealandinvestorsandtheir investmentsinASEAN(exceptwithThailandandSingapore,

whereNewZealandalreadyhasinvestmentagreements).TheinvestmentprovisionsofAANZFTA

include improved protection for New Zealand investors through national treatment and

CompulsoryInvestor/StateDisputeSettlement(CISDS).CISDSallowsinvestorstoenforcethe

chapter’sprotectionsbytakingapartygovernmenttointernationalarbitrationforbreach.

Someofthesubmissionsoninvestmentraisedconcernsrelatedtothefreetransferoffunds.•

Provisionswere secured in theAANZFTA that allowandprovidecertaintyon the transfer of

investmentfunds.

Some unions, organisations, and businesses involved in the manufacturing of textiles, carpet,•

clothing,footwear,furniture,whiteware,andsteelexpressedconcernthatNewZealandshouldnot

liberaliseitstariffsfasterinAANZFTAthanintheChinaFTA.Officialshaveaccommodatedthese

concerns in the AANZFTA, typically by achieving either the same phase-out periods for these

productsasintheChinaFTAor,insomecases,bysecuringevenlongerphase-outperiods.

85

Many industry submissions noted concerns about fair market practice and the need for•

protectionsagainstdumpedandsubsidisedgoodsfromASEANcountries.Tothisend,AANZFTA

doesnotaffectNewZealand’sabilitytofullyutilisetheexistingWTOtraderemedymeasures.

ConcernswereraisedaboutthelabourandenvironmentstandardsofsomeASEANmember•

countriesandtheneedtopursuetheGovernment’sprioritiesinintegratinglabourandenvironment

objectives in the context of AANZFTA. Negotiators were able to take this into account by

establishing treaty-level labour and environment instruments with the Philippines which

supplementexistingoutcomesintheseareaswithotherkeyASEANmemberstates.

SomesubmissionsraisedconcernswithNewZealandnegotiatingwitha regionalgrouping that•

includes Myanmar. AANZFTA does not change New Zealand’s relationship with Myanmar.

NegotiatinganFTAwithacountryor,inthecaseofAANZFTA,agroupofcountries,didnotconstrain

oraltertheapproachNewZealandtakesbilaterally,plurilaterallyormultilaterallyonhumanrights-

relatedmatters.NewZealandexpectstocontinueitsongoingbilateraldialogueandengagementon

theseissues,aswellasthroughallrelevantinternationalandregionalmechanisms.

86

9 SUBSEQUENT PROTOCOLS AND/OR AMENDMENTS TO THE TREATIES AND THEIR LIKELY EFFECTS

AANZFTA provides that it may be amended by agreement in writing by the Parties and that any

amendmentswouldcomeintoforceonthedateordatesagreedamongthem(Chapter18,Article6).

AnumberofChapters(forexample,InvestmentandServices)containfutureworkprogrammesthat

mayresultinparticularamendmentstoAANZFTAinthemedium-term.

NewZealandwouldconsiderproposedamendmentsonacase-by-casebasisandanydecisionto

acceptanamendmentwouldbesubjecttothenormaldomesticapprovalsandprocedures.

EitherPartytotheMOAswiththePhilippinesmayproposeanamendmentinwriting.Anyamendments

agreedinwritingbythePartiesshallenterintoforcewhenthePartiesnotifythecompletionofany

necessary domestic legal procedures. Again, New Zealand would consider any proposed

amendmentsonacase-by-casebasisandanydecisiontoacceptanamendmentwouldbesubject

tothenormaldomesticapprovalsandprocedures.

87

10 WITHDRAWAL OR DENUNCIATION

Any Party may withdraw from AANZFTA by giving six months advance notice in writing.

TheAgreementterminatesifNewZealandwithdraws,orifAustraliawithdraws,ortheAgreementis

inforceforlessthanfourASEANmembercountries(Chapter18,Article8).

TheMOAswith thePhilippines remain in force forperiodsof threeyears,andareautomatically

renewedforfurtherperiodsofthreeyears,unlessonePartynotifiestheotherPartyofitsintentionto

terminatetheinstrumentsbygivingsixmonths’advancenoticeinwriting.

88

11 ADEQUACY STATEMENT

TheRegulatory ImpactAnalysisUnithasreviewedtheaspectsof theextendedNational Interest

Analysis(NIA)thatcovertheregulatoryimpactstatement(RIS)elementsandconsiderstheextended

NIAisadequateaccordingtotheadequacycriteria.

89

ANNEX: NEW ZEALAND’S BILATERAL TRADE WITH EACH ASEAN MEMBER COUNTRY25

Indonesia

Top Ten New Zealand Exports to Indonesia (2005)

Product Export value (NZ$ 000) % total exports

Dairy 151,544.1 41%

Food Wastes 60,738.1 16%

Meat 45,521.4 12%

Pulp 45,274.3 12%

Wood 17,793.3 5%

Iron and steel 7,551.9 2%

Starch 7,065.3 2%

Machinery 4,970.1 1%

Vegetables 4,790.3 1%

Vegetable Preparations 4,178.3 1%



Data Source: Government of Indonesia

Top Ten New Zealand Imports from Indonesia (2005)

Product Import value (NZ$ 000) % total imports


Paper 42,601.4 10%

Electrical Machinery 31,773.5 8%

Plastic 22,667.7 5%

Wood 15,862.5 4%

Rubber 15,401.3 4%

Furniture 11,631.9 3%

Glass and glassware 8,516.1 2%


Cocoa 5,598.5 1%

Subtotal top ten imports 339,436.7 82%

Total imports 412,786.3


25 The2005yearisusedasthebasisforanalysisasthiswasthebaseyearforinformationexchangedinthecourseofnegotiations,andwhichinformedNewZealand’snegotiationswithitsAANZFTAPartners.TheexceptiontothisisVietNamwhichexchangedinformationbasedona2006 base year. More up-to-date New Zealand export and import information is contained in the Statistics New Zealand publication:NewZealand’sExternalTradeStatistics,availableat(www.stats.govt.nz).

90

Singapore

Top Ten New Zealand Exports to Singapore (2005)

Product Export value (2005 (NZ$ 000) % of total exports

Dairy 183,987.3 41%



Meat 24,003.1 5%

Meat/Fish Preparations 23,208.9 5%

Aircraft 18,306.4 4%

Beverages, Liquor 13,632.0 3%

Fruit 11,020.7 2%

Art Works 10,514.0 2%

Photographic 7,234.7 2%



Data Source: Government of Singapore

Top Ten New Zealand Imports from Singapore (2005)

Product Import value (2005 (NZ$ 000) % of total imports


Machinery 110,779.5 13%


Plastic 36,138.3 4%

Pharmaceutical 14,741.1 2%


Paper 13,569.2 2%

Cocoa 11,886.9 1%

Organic chemicals 9,977.8 1%

Books 8,256.9 1%




91

Viet Nam

Top Ten New Zealand Exports to Viet Nam (2006)

Product Export value (2006) (NZ$ 000) % of total exports

Dairy 136,317.7 55%

Wood 57,523.2 23%

Pulp 10,363.2 4%

Hides 6,811.4 3%

Furs 6,106.0 2%


Cereal Preparations 3,822.9 2%


Paper 1,998.5 1%

Starch 1,895.4 1%



Data Source: Government of Viet Nam, 2006. Detailed data is not available for 2005.

Top Ten New Zealand Imports from Viet Nam (2005)

Product Import value (2005) (NZ$ 000) % of total imports


Footwear 8,637.2 12%

Fruit 6,869.1 10%

Ceramics 3,188.5 4%

Leather 2,911.3 4%

Apparel Other 2,810.2 4%

Fish 2,523.9 4%

Coffee, Tea 2,113.4 3%






92

The Philippines

Top Ten New Zealand Exports to the Philippines (2005)


Dairy 267,970.0 68%

Paper 30,315.1 8%

Starch 18,945.4 5%

Wood 16,561.6 4%


Pulp 8,833.5 2%


Meat 4,361.4 1%


Sugar 2,840.8 1%



Data Source: Government of the Philippines

Top Ten New Zealand Imports from the Philippines (2005)


Fruit 27,533.9 32%



Inorganic Chemicals 3,574.1 4%



Apparel Other 1,648.2 2%







93

Malaysia

Top Ten New Zealand Exports to Malaysia (2005)


Dairy 212,244.1 45%

Meat 67,372.7 14%



Paper 16,861.4 4%


Vegetables 12,410.2 3%


Pulp 11,024.6 2%

Wood 11,021.9 2%



Data Source: Government of Malaysia

Top Ten New Zealand Imports from Malaysia (2005)

Product Import value (2005 (NZ$ 000) % of total imports


Machinery 147,793.0 23%


Plastic 34,197.9 5%


Fat, Oil 26,959.5 4%

Rubber 15,765.4 2%


Fertilizers 12,735.5 2%

Paper 9,604.8 1%




94

Thailand

Top Ten New Zealand Exports to Thailand (2005)


Dairy 153,332.0 43%


Fish 18,428.9 5%

Pulp 17,910.2 5%

Wood 16,167.1 5%

Wool 13,101.3 4%

Furs 11,493.8 3%

Hides 7,557.9 2%





Data Source: Government of Thailand

Top Ten New Zealand Imports from Thailand (2005)


Vehicles 211,843.9 32%



Plastic 40,200.9 6%


Oils, Cosmetics 20,890.4 3%

Meat/Fish Preparations 19,817.7 3%

Rubber 15,164.9 2%






95

Brunei Darussalam

Top Ten New Zealand Exports to Brunei Darussalam (2005)


Dairy 1,734.0 53%

Iron or steel articles 784.4 24%

Vegetables 186.1 6%

Fish 106.4 3%

Meat/Fish Preparations 99.2 3%

Carpet 83.0 3%


Vehicles 40.0 1%

Headgear 33.5 1%

Machinery 27.0 1%




Top Ten New Zealand Imports from Brunei Darussalam (2005)



Dairy 3.2 0%

Machinery 1.6 0%

Apparel Other 1.2 0%

Tools & Cutlery 0.5 0%

Apparel knitted 0.4 0%

Headgear 0.3 0%

Plastic 0.1 0%

Carpet 0.1 0%

Paper 0.1 0%




96

Laos

Top Ten New Zealand Exports to Laos (2005)


Machinery 548.8 100%

Aircraft 0.6 0%

Dairy 0.2 0%

Subtotal top ten exports 549.6 100%

Total exports 549.6

Data Source: Government of Laos

Top Ten New Zealand Imports from Laos (2005)



Machinery 13.6 19%

Beverages, Liquor 6.2 9%


Silk 0.6 1%

Wood 0.2 0%

Textile Made Up 0.1 0%

Photographic 0.1 0%

Iron or steel articles 0.0 0%

Carpet 0.0 0%

Subtotal top ten imports 70.7 100%

Total imports 70.7


97

Myanmar

Top Ten New Zealand Exports to Myanmar (2005)


Dairy 5,315.5 100%


Data Source: Government of Myanmar

Top Ten New Zealand Imports from Myanmar (2005)


Wood 592.8 86%


Furniture 29.3 4%

Straw 13.1 2%

Machinery 12.5 2%

Ceramics 3.8 1%


Leather 1.7 0%

Oils, Cosmetics 0.1 0%

Plastic 0.0 0%


Total imports 692.8


98

Cambodia

Top Ten New Zealand Exports to Cambodia (2005)


Electrical Machinery 2,093.5 56.1%

Aircraft 1,002.3 26.9%

Cereal Preparations 162.4 4.4%

Fruit 115.1 3.1%

Hides 74.9 2.0%

Dairy 68.9 1.8%

Iron or steel articles 40.1 1.1%

Vehicles 39.6 1.1%

Pharmaceutical 32.1 0.9%

Misc. Vegetable Preparations 30.3 0.8%

Subtotal top ten exports 3,659.0 98.0%


Data Source: Government of Cambodia

Top Ten New Zealand Imports from Cambodia (2005)




Synthetic Filaments 23.9 5%

Plastic 23.1 4%

Textile Made Up 17.4 3%

Footwear 16.2 3%

Fertilizers 10.3 2%


Clocks 4.4 1%

Leather 2.4 0%


Total imports 525.2





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