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This submission is structured as follows:
The New Zealand Government welcomes this inquiry into the Australia New Zealand Closer Economic Relations Trade Agreement (CER) by the Joint Standing Committee on Foreign Affairs, Defence and Trade, and is grateful for the Committee’s invitation to make a submission.
The CER Agreement is underpinned by our countries’ strong bilateral relationship. This is based on shared values, interests and strong historical, cultural, geographical and political ties.
New Zealand’s trade and economic relationship with Australia is by far the most extensive and the deepest we have with any bilateral partner. The level of economic integration is reflected in our trade, investment and people flows, depth of regulatory coordination and in an array of inter-governmental trans-Tasman agreements and arrangements.
CER has brought significant benefits to Australia and New Zealand. New Zealand is Australia’s fifth largest export market for goods and services and its primary market for elaborately transformed manufactures. Australia is New Zealand’s largest export market. There are strong investment links between the two countries - New Zealand is Australia’s third most important destination for outward investment, and the sixth largest source of foreign investment in Australia. New Zealand is the largest source of short term visitors to Australia, with over 1 million New Zealanders crossing the Tasman every year.
Trans-Tasman trade has grown at an average of 6% per annum per year for the past decade. Trade figures alone, however, do not illustrate the depth of economic integration between our economies. There is a significant degree of Australian ownership of New Zealand businesses and many head offices of businesses in New Zealand are based in Sydney and Melbourne. The majority of investment capital into New Zealand comes from Australia, providing Australian companies with a very good rate of return.
CER has created an ‘Australasian market’,
giving New Zealand and Australian businesses a
springboard to expand their exports to the rest
of the world. Australia is the first offshore market
for many New Zealand businesses and likewise, New
Zealand provides a straightforward first market
for many Australian companies.
CER has been described by the World Trade Organisation
as the ‘world’s most comprehensive, effective
and mutually compatible free trade agreement’.
CER’s strength has been its ability to move
beyond a traditional trade agreement and address
broader regulatory issues to support deeper and wider
business opportunities. CER has developed into a
number of unique cooperation institutional arrangements
which support deep and broad interactions across
the spectrum of government and business activity.
We are now looking at where we can add value to CER and take it to the next level. In this context, our Governments’ shared goal is now a seamless business environment, or Single Economic Market (SEM). The objectives of deeper regulatory cooperation are to further reduce compliance costs for businesses operating in both economies, thereby promoting the competitiveness of the trans-Tasman economy and to achieve, where possible, greater economies of scale in carrying out complex and intensive regulatory functions, including effective enforcement.
The SEM agenda is not about prescribing a particular set of regulatory or institutional arrangements to govern trans-Tasman markets. Under the SEM umbrella, we are seeking to identify innovative and practical ways to reduce further barriers to trans-Tasman business, including, in particular under the business law cooperation programme. These may include barriers arising from different, conflicting or duplicative regulatory requirements, strengthening our joint capacity to influence international regulatory developments and enhancing international competitiveness by creating an economic environment that attracts global capital and skills. Global trends and rules are increasingly influencing Australia and New Zealand, driving an inevitable convergence in respect of some of our regimes.
It is important that both countries continue to give the ongoing development of the trans-Tasman trade and economic relationship the commitment it warrants, to ensure that it continues to bring benefits to both sides, including in the context of an increasingly globalised, internationalised economic environment. It is not a relationship that should be taken for granted.
Given the comprehensive nature of the trade and economic relationship, differences over specific access issues (apples being a prominent one for New Zealand) are inevitable, but should not overshadow what is an overwhelmingly successful economic and trade relationship.
New Zealand and Australia already cooperate extensively globally, regionally and in third markets to advance our shared interests. New Zealand values this cooperation greatly. As well as deepening trans-Tasman integration, a SEM will enhance New Zealand and Australia’s competitiveness and influence globally. We will often stand to gain much more in third markets by collaborating rather than competing.
This inquiry is another important contribution to the process of advancing a SEM. New Zealand welcomes the opportunity in this submission to explore development in the trade and economic relationship in more detail.
The CER Agreement needs to be considered in the context of the broader bilateral relationship between Australia and New Zealand. It is underpinned by a unique nexus of strong historical, cultural, geographical and political ties and of course by shared values and interests. Australia, indeed, is New Zealand’s most important economic, diplomatic and security partner. The breadth and depth of the CER agreements and arrangements are mirrored across all aspects of the relationship.
This includes, vitally, the freedom of Australians and New Zealanders to visit, reside and work in each other’s country largely without restriction across the Tasman (under the Trans-Tasman Travel Arrangements (the TTTA)). Trans-Tasman freedom of movement has become a key element of the relationship, underlining the essential people to people links and economic growth under CER. Citizens of each country are able to travel across the Tasman freely, as there is generally no need to apply for a visa beforehand. Eligible New Zealanders are issued with a visa on arrival in Australia and Australians do not need a visa to visit New Zealand. These arrangements are supplemented by reciprocal eligibility for certain health and security benefits (including under the Australia-New Zealand Social Security Agreement, the Australia New Zealand Reciprocal Health Agreement and the Child Support Agreement).
The relationship is also underpinned by significant, high-level, political interaction. As Australian Prime Minister Howard noted earlier this year “The relationship between our two countries could not be closer or better, but nonetheless we have both taken the view that it’s important not to take that closeness for granted. And that is why we have regularly embraced…the discipline of bilateral meetings in each other’s countries each year”.
This commitment to the relationship has been reflected at every level of the Government. The two Prime Ministers meet annually in formal talks and also meet less formally in other settings each year. Foreign Ministers have met on a six-monthly basis since 1989. The annual meeting of Trade Ministers has been expanded to a full “CER Ministerial Meeting” which includes Ministers with responsibilities in agriculture and other domestic industries. The Ministers of Defence, the Ministers of Customs and the Treasurer/Finance Ministers meet at least annually. New Zealand Ministers participate in many of Australia’s State/Federal Ministerial Councils, such as the Primary Industries Ministerial Council (PIMC). There are joint Ministerial Councils in areas where we have (or have agreed to implement) joint agencies (namely, the Australia New Zealand Food Regulation Ministerial Council and the Therapeutic Product Interim Ministerial Council).
Complementing these formal encounters, senior business, community, media, senior public servants and political leaders meet annually in the context of the Australia New Zealand Leadership Forum. This is a high-level “Track Two” event designed to ensure that there continues to be a strong constituency in each country that is well-informed about and positively disposed to the other, and to foster the development of a closer relationship between the two countries.
In addition to formalised arrangements, there is a network of links throughout the corporate world, industry associations, professional organisations and a myriad of business, cultural and sporting groups.
CER remains one of the world’s most open and successful free trade agreements. It continues to be extraordinarily successful in improving trans-Tasman trade and investment links and in boosting the international competitiveness of both countries.
Between 1983 and 2003, two way trade in goods expanded at an average annual growth rate of 10%. In 2005, trans-Tasman merchandise trade increased 3.2% on the previous year and was valued at A$14.4 billion.
Despite its smaller size, New Zealand has consolidated its position as a major trading partner of Australia. Australia’s exports to New Zealand have grown rapidly under CER. New Zealand is the fifth largest export market for Australian goods and services and eighth largest source of imports. New Zealand is Australia’s number one market for elaborately transformed manufactures, an important sector of the Australian economy. Likewise, New Zealand’s exports to Australia have increased. Australia is New Zealand’s largest export and import market.
Australia’s bilateral investment ties with New Zealand have also deepened under CER. In 2004, two way investment between Australia and New Zealand was A$61.8 billion. Australia’s total investment in New Zealand was estimated at A$39.4 billion, while New Zealand’s in Australia was A$22.4 billion. New Zealand is Australia’s third most important destination for outward investment, and the sixth largest source of foreign investment in Australia. Australia is the second largest destination for New Zealand investment abroad after the United States. Australia is also the largest foreign investor in New Zealand. New Zealand and Australian investment in each other's countries contributes to economic growth and productivity.
New Zealand is Australia’s number one source of short-term visitors, with approximately 1 million visits by New Zealanders each year. There were approximately 875, 000 Australian visits to New Zealand in 2005. Tourism is a significant driver of two way trade and the majority of New Zealand visitors to Australia are holiday makers (959, 000 out of a total of 1, 249 000 arrivals in the 2004-2005 year). New Zealand visitors make a significant contribution to the Australian economy, spending approximately A$1.2 billion in the 2004-2005 year.
The trade is good for both economies, although the balance is in Australia’s favour. In 2004-2005, for instance, New Zealand exported approximately A$5.3 billion worth of goods to Australia, while Australia exported A$9.2 billion worth of goods to New Zealand.
CER has not just been about trade. It has led to an Australasian market, with deep and strong links between the two economies. Australia has access to another domestic market about the size of Queensland, and the effective size of the New Zealand domestic market has been increased six-fold. Together, the two countries provide our businesses with easy access to a combined market of 24 million people.
CER is also seen by New Zealand as having been highly successful as a spur to the internationalisation of the two economies and to a more competitive, dynamic business environment in New Zealand. It encouraged business people and the general public to understand the vital importance of international linkages.
CER has led to many trans-Tasman firms and commercial linkages. For larger firms, success in the trans-Tasman market has been a catalyst for expanding into Asia, the Americas and Europe. For example, Heinz Watties is a truly ‘Australasian’ company. It operates as Heinz in Australia, Watties in New Zealand, and Heinz Watties internationally, using its trans-Tasman platform to export to Asia.
For some small and medium sized enterprises (SMEs), this has meant trading or integrating across the Tasman. Australia is the first offshore market for many New Zealand businesses and likewise, New Zealand provides a straightforward first market for many Australian companies. SMEs are an important part of the trans-Tasman economy generally and particularly the food and beverage sector.
As well as being highly successful bilaterally, CER, as an FTA model that was compatible with the interests of a small economy (with principles of openness, simplicity, comprehensiveness and WTO consistency) provided a valuable framework for other FTAs.
New Zealand and Australia continue to work together closely on trade policy issues, to promote our shared interests and maximise our impact regionally and internationally. Both our countries’ highest trade priority is to secure an ambitious outcome from the World Trade Organisation (WTO) Doha Round of negotiations. As agricultural exporters we face common challenges, such as global distortions to trade caused by prohibitive market access barriers and high levels of subsidies, along with increasing competition internationally for our goods and services. In this context, the importance to both countries of getting a good result in the current WTO Round cannot be overemphasised. We have shared objectives across a number of areas in these negotiations. On agriculture, our shared objectives are to substantially improve market access, including those products deemed the most politically “sensitive” (such as dairy and meat), substantially reduce domestic support and eliminate export subsidies.
New Zealand strongly supports the continued profile of the Cairns Group as a significant participant in the negotiations and appreciates the important role that Australia plays as Chair. The Cairns Group, under Australia’s leadership, is crucial to our shared efforts to secure our objectives in the WTO, particularly for market access. This is important for both New Zealand and Australia’s direct trade interests.
New Zealand and Australia also have an active and cooperative relationship in APEC and share many objectives. We cooperate closely on trade and investment, for example, promoting FTA best practice and expanding APEC’s investment work. New Zealand looks forward to supporting Australia in its role as chair in 2007 and maintaining a close dialogue on its themes and objectives for that year.
While both our Governments are committed to multilateral trade liberalisation first, New Zealand and Australia have also been active in negotiating bilateral and regional trade agreements1. As well as being successful bilaterally, CER has provided a good model for these negotiations. High-quality and comprehensive regional and bilateral trade agreements, such as CER, can make a useful contribution to moving the WTO process forward, by highlighting the benefits of trade liberalisation. Such agreements also contribute to achievement of the APEC Bogor Goals of free and open trade and investment by 2010 for developed economies and 2020 for developing countries.
New Zealand values greatly the dialogue that it has with Australia on FTAs. Complementing our efforts in the WTO, we are currently negotiating jointly with ASEAN on an ASEAN-Australia/New Zealand Free Trade Agreement. These negotiations were launched in November 2004 and are due to be completed by March 2007. This is the first time that the CER partners have collaborated on an FTA with third countries, and reflects the recognition by ASEAN of the close integration between Australia and New Zealand – that it makes sense to deal with us as a grouping.
Our officials also maintain a close dialogue on FTAs that we are negotiating separately (for example China and Malaysia), with regular exchanges of information and views. While our interests may be different in some areas, we have important shared policy objectives. Given the integration of our economies, New Zealand and Australia have a vested interest in ensuring that neither country negotiates conditions with third countries that could disadvantage the other country economically.
We wish to maintain an active dialogue with Australia on FTAs and are open to opportunities to work closely together in future where it would be mutually beneficial to do so.
Since the establishment of CER, substantial progress has been made integrating the Australian and New Zealand economies - in trade, investment, the flows of people and regulatory approaches (see Annex A for the range of the arrangements, agreements, regulatory and policy cooperation and coordination that comprise CER and the wider economic relationship today). Under CER, tariffs and quantitative restrictions have been removed, the suppliers of goods and services from both countries are treated on a similar basis and business law is more coordinated. The focus is now firmly fixed on identifying, developing and implementing reforms that seek to progress the development of this relationship to create a seamless trans-Tasman business environment - a Single Economic Market (SEM) between New Zealand and Australia. This section identifies key achievements under the SEM concept to date and outlines the current work programme.
The SEM concept was first articulated in 2004 at the annual meeting between Treasurer Costello and Finance Minister Dr Cullen. It is an important part of New Zealand’s economic transformation agenda. While there are no formal barriers to goods, services and factors of production moving across the Tasman, the degree to which they will move will depend upon the extent to which there is “friction” in the combined market created by differences in regulatory and other policy interventions — “behind-the-border” regulation — and other non-regulatory factors. The current SEM reform agenda is focused on reducing these behind-the-border barriers to trade in goods, services and factors of production.
Ultimately, the SEM agenda is about improving productivity and growth in both countries through: lowering non-tariff barriers to trade and regulatory barriers to investment; providing greater economies of scale for businesses and regulators, and better access to new capital and technology; spurring innovation through greater competition and the transfer of knowledge; creating greater employment opportunities and increased choice. The current SEM work programme spans a broad range of regulatory and policy areas with potentially wide implications for business. These can broadly be grouped under the following four themes:
The 1988 Memorandum of Understanding (MOU) on the Coordination of Business Law provided the starting point for dialogue between Australia and New Zealand on business law issues. In August 1999, Australian and New Zealand officials agreed to revise the existing MOU to ensure that it reflected Australia’s and New Zealand’s common understanding of coordination in business law, key objectives for progressing work in this area, and revised work programme. A Memorandum of Understanding on the Coordination of Business Law was subsequently signed in August 2000. This is focused on coordination and recognition that one single approach would not necessarily be suitable for every area. Since the signing of the MOU, coordination of competition law, securities law and takeovers law has been extensive. Work is proceeding on consumer protection law, electronic transactions law, disclosure regimes, cross-border insolvency and intellectual property rights.
A revised Memorandum of Understanding (MOU) on Coordination of Business Law was completed and signed by the Minister of Commerce and the Australian Treasurer in February this year. The MOU provides a framework for further work aimed at reducing some of the difficulties that New Zealand and Australian business face as a result of the differences in our banking systems. These include unnecessary compliance and transactions costs. Over the coming years as these costs are reduced, it will become less expensive for New Zealand businesses to access and operate in the Australian market, and vice versa. Key outcomes from the MOU review are a revised action agenda identifying specific areas of business law where greater coordination may deliver benefits; and a commitment by both countries to consult each other where policy reforms have potential to impact the other country.
The 1994 Memorandum of Understanding between the Australian Securities and Investments Commission and the Securities Commission of New Zealand aims to enhance the efficiency and fairness of the securities and futures markets by providing a framework for cooperation, including channels for communication and the exchange of information and investigative assistance to the extent permitted by the laws and practices of Australia and New Zealand.
In February 2005, the Minister of Commerce and the Australian Treasurer signed a Treaty allowing mutual recognition of trans-Tasman securities offerings such that issuers can now offer securities in both countries using the same offer documents and structure. This is expected to promote investment and reduce the costs of raising capital, while maintaining investor protection through appropriate disclosure.
The 1995 Double Taxation Agreement was designed to share the costs of eliminating double taxation. The Agreement is also aimed at reducing tax impediments to cross-border trade and investment and assisting tax administration. Imputation legislation has also been reformed in both countries. Previously, New Zealand residents lost access to imputation credits if they invested in a New Zealand company via an Australian company, and Australian residents lost access to franking credits if they invested in an Australian company via a New Zealand company. Australia and New Zealand have since extended their imputation laws, with effect from 1 April 2003, to remedy this.
A Trans-Tasman Council for banking supervision was established in February 2005. In June 2005 it recommended legislative changes that would allow greater cooperation between the Reserve Bank of New Zealand (RBNZ) and the Australia Prudential Regulatory Authority (APRA) in fulfilling their respective statutory functions. This will help to ensure, among other things, that where reasonably practicable, each country considers the interests of the other in times of financial crisis. These legislative changes have been supported by the governments on both sides of the Tasman. The next steps in the work programme of the Council are to oversee implementation of the legislative changes in both countries, to work on joint crisis management, and investigate any further impediments to the seamless provision of banking services.
The Trans-Tasman Accounting Standards Advisory Group (TASAG) has been established to advise the Australian and New Zealand accounting standard and oversight bodies on strategies to establish a single set of trans-Tasman accounting standards within the broader context of both jurisdictions’ objective of adopting international accounting standards, and to maximise the influence of Australia and New Zealand in the development of international accounting standards and the international accounting standard setting process. The Advisory Group will also help formulate advice to the two governments on these issues. The role of TASAG in the international accounting standards process provides a good example of frameworks for cooperation in multilateral fora, in areas where our interests are closely aligned and are better served through working together rather than separately;
Cross appointments for TASAG have been completed and a cooperation and coordination MOU agreed and signed. The next step for this group is to move from a focus on standards to reporting requirements and barriers to a single set of accounts. In particular, they plan to report back this year on the existence of sector specific regulation that requires particular reporting that differs across jurisdictions.
The Trans-Tasman Court Proceedings and Regulatory Enforcement Working Group was established by the Prime Ministers of Australia and New Zealand to review the effectiveness and appropriateness of various procedural and regulatory arrangements. The Group’s work aims to “reduce barriers to trans-Tasman commercial activity and support effective and efficient dispute resolution by enhancing legal cooperation in areas such as service of process, the taking of evidence, the recognition of judgments in civil and regulatory matters and regulatory enforcement.”
The issues that this group is working on underpin a wide range of other legal coordination issues. Increased cooperation in areas such as consumer protection, competition law, securities regulation and therapeutics regulation will all be supported by improved enforcement of regulatory regimes across the Tasman, such as measures to enable, for example, the more effective enforcement of civil pecuniary penalties where a person in one country targets consumers or investors in the other country.
New Zealand and Australian customs services continue to work together to simplify and harmonise trans-Tasman import/export procedures. This was given further impetus in 2005 by the establishment of a “Customs to Customs High Level Steering Group”, which was charged with developing improvements to trans-Tasman trade and passenger facilitation processes, trade security standards and mutual support for Pacific Customs administrations. Following discussions at Customs Ministerial Talks in July 2005 and the first meeting of the Customs to Customs High Level Steering Group in August 2005, changes were made at Australia’s eastern international airports to allow New Zealand passport holders to queue in the same lanes as Australians when passing through Customs and immigration checks. Similar arrangements have already been in place for Australian passport holders arriving in New Zealand for a number of years. This is likely to reduce passenger clearance times for New Zealanders entering Australia as well as being an important symbolic action in terms of a single market.
The Australian Productivity Commission undertook a review of the TTMRA in 2003 on behalf of the Australian and New Zealand Governments. Overall, the review demonstrated that the TTMRA and Australia’s Mutual Recognition Agreement (MRA) were working well, contributing significantly to increased trans-Tasman mobility of goods and labour.
The Cross Jurisdictional Review (CJR) Forum, which consists of Australian Federal, State and New Zealand senior officials was tasked to consider the Productivity Commission’s findings and prepare a final report to the Governments. All heads of government endorsed the CJR Forum’s report in September 2005. The CJR Forum is now implementing recommendations arising from the review, which aim to improve the operation of the TTMRA and ensure that it remains an effective cornerstone of a Single Economic Market. These recommendations include:
The current Council of Australian Governments (COAG) review of occupational mobility within Australia aimed at rationalising and harmonising the licensing requirement imposed by State regulators under the MRA will be relevant to New Zealand, in light of the TTMRA. We would wish to maintain a close dialogue with Australia throughout this exercise, to ensure it does not result in a system that might make it harder for New Zealanders working in those licensed occupations to obtain mutual recognition in Australia.
The Australia New Zealand Therapeutic Products Authority will be another significant addition to CER and an important flagship institution for the Single Economic Market, setting a new benchmark for trans-Tasman regulatory cooperation and reducing barriers to trade. The aim in establishing the Authority was to safeguard public health and safety in Australia and New Zealand through an effective and sustainable regulatory system. The Authority will regulate all therapeutic products in the two countries, including over-the-counter and prescription medicines, blood and tissue products and medical devices.
The Australian and New Zealand Governments signed an Agreement between the Government of Australia and the Government of New Zealand for the Establishment of a Joint Scheme for the Regulation of Therapeutic Products in December 2003, which is at the heart of the model for the joint scheme and Authority. Importantly, the Treaty sets the scope of the regulatory model, which aims to protect public health and safety, and sets out the corporate governance structure for the Authority. The governance structure aims to ensure that any concerns around sovereignty are managed by giving each country an equal voice in the running of the Authority. Implementing legislation is currently being drafted in both countries, with a view to the introduction of Bills in both Parliaments in mid 2006.
Due to the groundbreaking nature of the scheme and complex issues regarding the underlying legal frameworks of the two countries and the settings of our respective public management systems, implementation has proved challenging for both countries. In particular, a key challenge was the governance and accountability arrangements that would apply to the scheme and Authority, given the need for the Authority to report, and be accountable, to both Governments. A compromise solution was agreed, whereby governance and accountability provisions would be placed in the domestic implementing legislation implementing the Authority in both countries, and work would be done on a generic governance and accountability framework for any future trans-Tasman regulators that would, in due course, apply to the Authority.
Both countries have learned valuable lessons from the negotiation process, that are becoming apparent as officials commence the generic framework discussions. This work will be valuable in lowering the cost and complexity of negotiating similar institutions in future, should they be required. New Zealand welcomes the commencement of the work on a generic model for governance and accountability provisions in trans-Tasman regulators, which will be developed after the completion of negotiations for the Authority.
CER has continued to evolve. Both countries are exploring options for reducing barriers to trans-Tasman capital flows by adding an investment component to CER. At their annual meeting this year, Dr Cullen and Mr Costello announced that concluding an investment agreement by 2007 would be a key priority in their work programme.
New CER rules of origin were agreed between the two countries in 2005. The new rules will have a liberalising effect on trans-Tasman trade, support the competitiveness of businesses and reduce compliance costs. Legislation to implement the new rules will need to be given priority by both governments in order to meet the announced implementation timeline of 1 January 2007. The new rules of origin allow manufacturers to take advantage of competitive global inputs and still benefit from the market access conditions CER allows. New Zealand was, however, disappointed with the outcome on men’s suits and looks forward to the review in 2009.
Hon Ian MacFarlane, the Federal Minister for Industry, Tourism and Resources, has recently written to Mr Mallard (as Minister of Economic Development) and Mr Maharey (as Minister for Research, Science and Technology) inviting them to agree to officials taking up membership of CSTACI (the Commonwealth, States and Territory Advisory Council on Innovation) to ensure that we share our policy thinking and learning. This offer will be willingly accepted, as Australia and New Zealand face many common issues around innovation, such as strengthening industry investment in research to ensure that science’s contribution to innovation-led economic growth is maximised. New Zealand (MoRST and MED) will host the CSTACI meeting in November 2006. MoRST has also taken up membership of the recently established Australian National Science Forum (NSF) and will host the November NSF meeting the day following the CSTACI meeting.
Deepening the trans-Tasman economic relationship is a strategic priority for the New Zealand and Australian Governments. There are many reasons to continue to cooperate:
The initiatives above illustrate the breadth and depth of trans-Tasman cooperation. Future regulatory cooperation will depend on the clear establishment of benefits for both countries. The assessment of when and how coordination takes place will need to take place on a case by case basis. The appropriate mechanism of coordination will also need to be considered. The broad spectrum of mechanisms of coordination is illustrated in this submission, ranging from the unilateral coordination of laws to joint institutions. Initiatives have and will continue to be undertaken under three broad vehicles2:
As well as deepening the bilateral trade and economic relationship, a SEM will enhance New Zealand and Australia’s influence and competitiveness globally, regionally and in third markets. New Zealand and Australian industries are facing similar challenges globally. At the same time as embracing the trade opportunities that CER has created, some sectors have protested at the need to compete in supplying trans-Tasman consumers. But we cannot have one without also accepting the other. Given that our markets are of mutual importance to each other, we risk limiting economic growth if we seek to set limits on trans-Tasman competition, as some agricultural sectors have sought. Rather than being viewed as a threat, competition can be seen as a driver of innovation and an opportunity for producing stronger New Zealand and Australian businesses better able to enter the global marketplace.
It is essential for us to continue to work together as CER partners to strengthen the Australasian market. In light of the similar challenges Australia and New Zealand are facing in third markets, including issues of scale and increased global competition, food and beverage has been agreed as the focus for the 2006 business dialogue that accompanies the annual CER Ministerial. We see potential benefits from collaboration, in particular on international regulatory issues where we have common interests. Food and Beverage industries on both sides of the Tasman have a relatively high level of common ownership and, more importantly, face similar issues in consolidation of the sector and access to third markets.
One of the greatest opportunities for collaboration
lies in the two countries working together to enter
third markets. This may open up opportunities for
agencies (eg AusTrade and New Zealand Trade and
Enterprise (NZTE)) to collaborate to encourage
greater economic productivity and growth. In some
sectors this collaboration is already in place.
For example, one strong area of innovation-based
industrial collaboration is biotechnology (the focus
of the 2003 CER business sectoral dialogue), particularly
through the Australia-New Zealand Biotech Alliance
(ANZBA). Together New Zealand and Australia constitute
the world’s fifth largest biotechnology hub
worth a combined NZ$14 billion and employing more
than 10,000 people, of which New Zealand has about
4,000. As a demonstration of its commitment to ANZBA,
NZTE established a $12 million Australia New Zealand
Biotechnology Partnership Fund in 2004. It is designed
to facilitate and accelerate trans-Tasman biotechnology
industry collaboration. Developing greater regional
critical mass will give Australian and New Zealand
biotech companies better access to global market
opportunities. As part of this, New Zealand and Australia
now exhibit together at the annual BIO Conference
in the United States. Already the fund has supported
25% of $27 million raised across four projects.
The New Zealand and Australian brands are both well recognised internationally. More recently, the New Zealand New Thinking Brand is promoting New Zealand as a country of creativity, innovation and technology. There is potential for shared research, pooling of resources and marketing offshore. Situations where industry development collaboration in third markets might be successful include:
There may also be opportunities to explore shared information and other services offshore where there is mutual gain for both countries (for example, in the areas above).
Australia is New Zealand’s closest partner in every sense – strong historical, cultural, geographical and political ties underpin our countries close trade and economic relationship. The level of economic integration our countries has achieved is unique and unlikely to be repeated with any other country.
Twenty three years on from CER, the trans-Tasman trade and economic relationship is in excellent shape. CER has brought significant benefits to both countries. It has reduced tariffs, quotas, and other trade barriers to bring our economies closer together. But CER is not just about trade, it has also allowed greater coordination of rules in quarantine, business law, customs and government procurement. CER has created a truly Australasian market.
The few outstanding issues that exist between our countries should not overshadow what is an overwhelmingly successful economic and trade relationship.
CER has facilitated a thriving economic relationship that is now, in many respects, driven by the private sector and a web of other networks outside government. The ongoing development of the economic relationship, however, requires the dedicated commitment of both our Governments. We should not take the benefits for granted.
Having achieved its aim of free trade in goods and services, the focus of CER work is now on ‘behind the border’ trade facilitation and regulatory coordination issues. Our Governments’ shared goal is now a seamless business environment, or Single Economic Market.
New Zealand and Australia already cooperate in multilateral fora, regionally and in third markets to advance our shared interests. New Zealand values this cooperation greatly. This submission has discussed opportunities, in a SEM context, to deepen and enhance that cooperation to make our economies more competitive and robust internationally, both at the government and industry level.
The New Zealand Government would be happy to provide further information on any of the topics discussed in this submission, if that would be of assistance to the Committee.
1 Australia has FTAs/CEPs with Thailand, the USA, Singapore and is currently negotiating with Malaysia, China , ASEAN and the UAE. New Zealand has FTAs /CEPS with Thailand , the Trans-Pacific Economic Partnership (with Brunei, Chile, Singapore), which will enter into force in 2006, and is currently negotiating with Malaysia, ASEAN and China.
2 More information on the different policy coordination mechanisms available is contained in the New Zealand Government’s submission to the Legal and Constitutional Affairs Committee’s inquiry into the harmonisation of legal systems.
