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Australia and New Zealand have one of the most open economic and trade relationships of any two countries. This is based on a comprehensive set of trade and economic arrangements, collectively known as Closer Economic Relations (CER), which underpin substantial flows of merchandise trade, services, investment, labour and visitors between the two countries.
The Australia and New Zealand Closer Economic Relations Trade Agreement (CER) entered into force on 1 January 1983, replacing the earlier New Zealand Australia Free Trade Agreement (NAFTA). This provided a basis on which the two governments have built an extensive array of agreements and arrangements, substantially extending CER (through measures such as mutual recognition, joint agencies and regulatory alignment), and ensuring its continuing relevance to both countries.
Progress towards the comprehensive arrangement that exists today began in the 1980s with efforts to achieve integration through free trade in goods and services. Having achieved this by 1990, both countries moved progressively towards much deeper integration of policies, laws and regulatory regimes. In keeping with the uniquely close relationship that Australia and New Zealand share, CER contains no mechanisms for dispute resolution. Both countries recognise the special nature of the relationship through non-mediated resolution of bilateral disagreements via close dialogue.
CER has been extremely effective in promoting trans-Tasman trade, and has been described by the World Trade Organisation as “the world’s most comprehensive, effective and mutually compatible free trade agreement”.
CER has also in turn laid the platform for even greater ambition in the trans-Tasman economic relationship. Reflecting this, the New Zealand and Australian Governments have committed to explore the long-term vision of creating a seamless trans-Tasman business environment – a Single Economic Market (SEM).
The SEM initiative builds upon the very open trading environment created by CER and related agreements and aims to address behind-the-border impediments to trade deepening economic linkages. The SEM is not about prescribing a particular set of institutional arrangements to govern trans-Tasman markets, rather the work programme focuses on identifying innovative actions that will reduce trans-Tasman discrimination and transaction costs, and make it as easy for New Zealanders to do business in Australia as it is to do business in and around New Zealand.
The framework for this broad and mutually beneficial economic relationship is supported at a political level by annual formal talks between the ‘CER Ministers’ (covering the areas of trade, agriculture and commerce), and also between Treasurers. In addition, there are frequent informal meetings between the relevant New Zealand Ministers and their Australian counterparts.
