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Home > Trade and Economic Relations > Australia > CER Background

The Australia New Zealand Closer Economic Relations (CER) Trade Agreement: 1983 - 2003 Backgrounder

What is CER?
CER and Trade
The Principle Elements of CER
Measures to Remove Technical Barriers to Trade

What is CER?

CER is a series of agreements and arrangements that began with the entry into force on 1 January 1983 of the New Zealand Australia Closer Economic Relations Trade Agreement.

When was the Agreement signed?

The actual treaty was signed in Canberra on 28 March 1983 but then Prime Minister Robert Muldoon had earlier signed a "Heads of Agreement" on 14 December 1982 that allowed the basic provisions of the agreement to take effect from 1 January 1983.

What did it replace?

CER replaced, and went far beyond, the so-called New Zealand Australia Free Trade Agreement (NAFTA) that had been in force since 1 January 1966. Although NAFTA grew out of a renewed interest by Australia and New Zealand in each other's markets, and in that sense it was intended to be of mutual advantage, it had various shortcomings. The bureaucratic process of nominating large lists of products for inclusion in "free trade" schedules contrasts sharply with the comprehensive principle of CER ie everything included unless specifically excluded.

Does CER cover substantially all goods and services?

Yes. Total free trade in goods was achieved by 1990 (five years ahead of schedule) with the elimination of all tariffs and quantitative restrictions. The 1988 CER Services Protocol achieved free trade in services from 1 January 1989 on all services except those inscribed in annexes to the agreement. These inscriptions have been substantially reduced since and currently include only a few items like coastal shipping.

Has CER been good for New Zealand?

Yes. The percentage of New Zealand exports that Australia takes has risen from 13% in 1983 to 20% now and in real inflation adjusted terms our exports have doubled. Over the past 10 years, as CER has consolidated, trans Tasman trade has increased annually by 9% on average exceeding for both countries our annual international trade growth rates.

CER and Trade

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 CER, which underpin substantial flows of merchandise trade, services, investment, labour and visitors between the two countries.

The Australia New Zealand Closer Economic Relations Trade Agreement entered into force on 1 January 1983, replacing the earlier New Zealand Australia Free Trade Agreement. This provided a basis on which, over the last 20 years, the two governments have built an extensive array of agreements and arrangements, substantially extending CER 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 through processes of coordination, mutual recognition and harmonisation. This has been underpinned by frequent contact between the Ministers and government agencies of both countries, by the closeness of the two societies through kinship, travel and business and social relationships and by the increasing integration of markets.

The Principle Elements of CER

Free trade in goods. Since 1990 there have been no tariffs or quantitative restrictions on goods.
CER is entirely consistent with the WTO rules on free trade areas.
Free trade in services. New Zealand and Australian service providers can provide services in each others markets without any restrictions on the basis of a "negative listing" approach. New Zealand retains only two inscriptions (airway services and coastal shipping) and Australia only six (air services, broadcasting and television (x2), third party insurance, postal services and coastal shipping).
Mutual Recognition of goods and occupations. A good that can legally be sold in one country can also be sold in the other, and a person who is registered to practise an occupation in one country is entitled to practise an equivalent occupation in the other. (Five product areas and one occupational group (medical practitioners) are exempted.)
Free labour market. A long history of arrangements, collectively known as the Trans-Tasman Travel Arrangement allow Australians and New Zealanders to visit, reside and work in each other's country without restriction. These arrangements have been supplemented by the Social Security Agreement, the Reciprocal Health Agreement and the Child Support Agreement.

Measures to remove technical barriers to trade:

1988 Memorandum of Understanding on Technical Barriers to Trade;
1990 Agreement on Standards, Accreditation and Quality;
1991 Joint Accreditation System for quality accreditation;
Joint Food Standards mandated by a 1995 agreement and managed by a bi-national agency, Food Standards Australia and New Zealand (FSANZ); and a joint Food Code that entered into effect on 20 December 2002.
1988 Protocol on the Harmonisation of Quarantine Administrative Procedures. (The 1983 CER Agreement allows the adoption of measures to protect human, animal or plant life or health. A regular senior official Biosecurity Dialogue was established in 1999 to manage quarantine issues.)
Competition policy. No safeguards measures or anti-dumping actions apply. Domestic competition law prohibitions on the misuse of market power have been extended to trans-Tasman markets. There are no export subsidies or export incentives on goods traded in the area. Both countries have further restricted their ability to adopt industry assistance measures with adverse effects on competition in the area.
Customs cooperation enabling continuing close cooperation and the pursuit of harmonisation opportunities.
Government Procurement agreements providing for a single trans-Tasman government procurement market.
Business Law. Coordination of competition law, securities law and takeovers law, with work proceeding on consumer protection law, electronic transactions law, disclosure regimes, cross-border insolvency and intellectual property rights.
1994 Memorandum of Understanding between the Australian Securities Commission and the Securities Commission of New Zealand.
1996 Australia New Zealand Single Aviation Market Arrangements and 2000 Open Skies Agreement.
1995 Double Taxation Agreement.
Both countries have modified their investment regimes with respect to investments from the other country so that a large majority of investment proposals do not require approval from the investment authority. Neither country has rejected an investment proposal from the other country for at least ten years.
There are no specific dispute resolution procedures. The close and long-standing political relationship between Australia and New Zealand means that any issues of grievance or concern are addressed through discussion between the two governments.

In the 20th Anniversary year a number of major initiatives were actioned. A treaty establishing a bi-national therapeutics goods regulatory agency was signed and Terms of Reference were agreed for a formal review of the Trans-Tasman Mutual Recognition Arrangement. A Ministerial exchange of letters dealt to the long-standing issue of triangular taxation and a Trans-Tasman Accounting Standards Advisory Group to explore ways to reduce costs and improve efficiency by aiming for a single set of accounting standards.

January 2005.

Sources: Statistics New Zealand; Australia's Trade Outcomes and Objectives Statement

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Page last updated: Monday, 23 June 2008 12:23 NZST

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