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The CEP provides for the liberalisation of trade and imposes a general obligation on New Zealand to work with Thailand to implement the provisions of this Agreement. A synopsis of the Agreement will be made available to Parliament and is accessible on the Ministry of Foreign Affairs and Trade website. The specific obligations New Zealand will take on in each Chapter of the Agreement are set out below.
New Zealand is required to eliminate its customs duties (ie tariffs) on goods originating from Thailand in accordance with the phase-out schedule in Annex 1.2 (PDF 665KB) to the Agreement and may not increase existing customs duties (Article 2.3). Provision is made for the possible acceleration of tariff elimination through an obligation to promptly enter into consultations on such liberalisation at the request of one of the Parties (Article 2.4).
The Agreement imposes obligations consistent with the requirements of the WTO Agreement to ensure that all fees and charges are commensurate with the cost of the services provided, agricultural export subsidies are not introduced or maintained, and any non-tariff measures are consistent with the WTO, transparent and do not have the effect of creating unnecessary obstacles to trade (Articles 2.5, 2.6 and 2.7).
The Agreement contains obligations aimed at facilitating trade and reducing transaction costs through cooperation and information sharing. It provides for the New Zealand and Thailand customs administrations to enter into a Cooperative Arrangement (Article 3.4). This Arrangement in turn provides for the customs administrations to exchange information, subject to certain safeguards regarding disclosure of confidential information, to exchange personnel and to cooperate with respect to the provision of technical assistance. New Zealand and Thailand are to cooperate to ensure compliance with their customs laws and provide each other with mutual assistance to prevent breaches of their customs laws (Article 3.7). Consultation is required should any differences arise over the requirements in the Agreement (Article 3.10).
A requirement is imposed to conform to the standards and recommended practices of the World Customs Organisation, including with respect to express consignments (Article 3.5). New Zealand and Thailand are also to ensure that their customs procedures are transparent and facilitate trade (Article 3.5). They are to periodically review their procedures to ensure that they continue to facilitate bilateral trade (Article 3.7).
The Agreement adds to the provisions of the WTO Agreement by requiring each country to provide the other with advance notice of any significant modification of its customs laws, regulations and policies which is likely to substantially affect the operation of the Agreement (Article 3.7). Consistent with New Zealand’s current practice, there is a comprehensive publication requirement in relation to laws, regulations and administrative procedures (Article 3.14).
There is a requirement on New Zealand (which is already followed in practice) to provide in advance to New Zealand importers and Thai exporters/producers written rulings on the tariff classification of goods (Article 3.9). As a reciprocal requirement is imposed on Thailand, this provides some surety for the New Zealand exporter as to the tariff classification of a good imported into Thailand and the rule of origin that will apply to that good.
The customs administrations of New Zealand and Thailand are required to consult should either wish to adopt procedures to ensure the security of trade in goods or the security of movement of craft between the two countries (Article 3.11).
The Agreement sets out rules for determining whether goods traded between New Zealand and Thailand qualify for tariff preferences.
Products must be substantially transformed in New Zealand or Thailand to qualify for preference. As mentioned under Section 3.1.2, a Change of Classification (CTC) rule is used to determine if this requirement has been met.
Under CTC, a finished export good will, in principle, receive the benefit of tariff preference on entry into the other Party if it is classified in a different tariff category from all its input materials sourced from third countries. Annex 2 to the agreement details the precise form of CTC which will apply to a particular good.
Textile, apparel, footwear and carpet products must meet a 50 percent Regional Value Content test, based on FOB export price (see Section 3.1.2) as well as satisfy CTC. There are also specific rules relating to minimal operations or processes in Article 4.2, which will ensure that such processes do not confer origin even when a change in tariff classification has occurred.
New Zealand is obliged to require producers, exporters and importers to maintain all records relating to the origin of goods, including declarations made as to the origin of goods (Article 4.2). Section 95 of the Customs and Excise Act 1996 requires that such documents be retained for seven years.
The Agreement allows the New Zealand Customs Service to verify the origin of a good imported into New Zealand from Thailand (Article 4.7). This can extend to requests for information from the importer, exporter or producer, or visits to manufacturing premises. Thailand may also be requested to verify the origin of a good. New Zealand and Thailand are required to give notice of intention to conduct a visit to premises and to obtain written consent from the exporter or producer whose premises are to be visited. The Agreement allows New Zealand or Thailand to deny preferential treatment to goods that fail to meet the requirements for conferring origin, or where the origin of goods cannot be verified by the Customs administrations (Article 4.8).
New Zealand has no substantive additional obligations on anti-dumping, countervailing and global safeguard protections and existing WTO rights and obligations are retained (Articles 5.1, 5.2 and 5.3) New Zealand has committed to be mindful of the WTO provisions on constructive remedies before applying anti-dumping measures against Thailand. There is discretion to exclude partner country trade from any global safeguard action (Article 5.3).
The CEP provides New Zealand with the right to apply transitional safeguards to imports from Thailand during the period that tariffs are phasing out for any particular good and for two years beyond that. These allow either Party to address situations of serious injury to a domestic industry caused by increased imports due to tariff reductions under the CEP by reverting to higher tariffs for a certain period. New Zealand would have to follow the requirements to undertake an investigation into the matter, publish the findings, and only apply an increase in tariff to the minimum extent necessary to remedy the injury being caused (Articles 5.4 to 5.10).
New Zealand’s existing rights and obligations under the WTO Agreement on Sanitary and Phytosanitary Measures (the SPS Agreement) are reaffirmed under the CEP Agreement (Article 6.4). Decisions on matters affecting biosecurity and food safety will continue to be made and enforced in accordance with New Zealand’s existing regulatory regime. The right of either country to determine the level of protection it considers appropriate is also preserved.
New Zealand and Thailand are required to promote communication between their competent SPS authorities on bilateral trade matters (Article 6.5). There are specific procedures outlined to notify new or proposed changes in SPS measures as well as any non-compliance of import consignments with relevant SPS measures. The Agreement also sets out procedures for situations where a Party has to take urgent action to manage a clearly identified risk of serious health effects on human, animal or plant life or health from the importation of a product or products (Article 6.6). The two countries are to protect non-public information that is shared in the facilitation of bilateral trade (Article 6.12). All these procedures are in line with New Zealand’s existing obligations under the WTO SPS Agreement.
New Zealand and Thailand are also required to enhance cooperation and consultation on SPS matters to improve understanding of each country’s measures and regulatory systems, to resolve any concerns about specific SPS measures or food standards and to resolve any technical and scientific issues that arise. There are two mechanisms established for this purpose: the Joint Management Committee (which can establish technical working groups as required – Articles 6.8 and 6.9) and a consultative mechanism to address specific issues affecting trade (Article 6.10).
In addition to the SPS Chapter, there is an exchange of letters in which the two countries are required to expedite consideration of each other’s market access interests. New Zealand is to expedite Thailand’s request for access of its tropical fruits. This does not prejudge the outcome or involve any lowering of New Zealand’s appropriate level of protection but rather involves committing additional resources to carry out risk assessment and potential development of import health standards. (Thailand is to expedite consideration of New Zealand’s request for alternative measures for the importation of potatoes for processing.)
New Zealand’s existing rights and obligations under the WTO Technical Barriers to Trade Agreement are maintained under the Technical Barriers to Trade (TBT) Chapter, including its right to adopt or maintain technical regulations necessary to ensure national security, the protection of human health or safety, animal or plant life or health or the environment, or for the prevention of deceptive practices (Article 7.3). With the aim of facilitating trade between New Zealand and Thailand and reducing transaction costs, both countries take on some additional obligations under the CEP to address standards and conformance issues that impede trade between New Zealand and Thailand.
New Zealand and Thailand are to endeavour to work towards harmonisation of their respective technical regulations and to give positive consideration to accepting as equivalent technical regulations of the other country (Article 7.5).
The Agreement adopts a similar approach with respect to conformity assessment procedures. New Zealand and Thailand agree to give positive consideration to the results of a conformity assessment procedure undertaken in the other country, provided they are satisfied that the procedure offers an assurance equivalent to that provided by a procedure conducted in their own country that the good complies with the relevant technical regulation (Article 7.6). Where New Zealand or Thailand does not accept the other’s technical regulations as equivalent to its own or does not accept the results of a conformity assessment procedure, it must explain the reasons for this decision.
Of particular importance is the obligation for all relevant stakeholders to enter into consultations and take part in work programmes in priority areas where concerns arise over the impact of technical regulations and standards and conformance issues on trade (Article 7.8).
The Agreement requires New Zealand and Thailand to enter into negotiations on trade in services within three years from the entry into force of the Agreement with the aim of concluding an agreement to liberalise trade in services (Article 8.1). In the meantime, New Zealand has not entered into any commitments relating to trade in services.
The Agreement includes an exchange of letters on temporary employment in New Zealand in which New Zealand has agreed to provide access for the temporary employment of Thai chefs in New Zealand provided they have a bona fide job offer (which includes market wage rates) and relevant work experience, and hold a Thai national skills standard certificate for Thai cooking. In practice New Zealand already frequently permits Thai chefs to take up job offers in New Zealand. The key change will be that this access will be guaranteed, with no labour market test applied, provided the above conditions are met. New Zealand has also agreed to explore the scope for developing a system to recognise the qualifications of traditional Thai massage therapists with a view to facilitating their entry into New Zealand for temporary employment purposes.
The Agreement sets out in principle a general obligation in respect of the establishment of investments to provide “national treatment” to investors – that is treatment no less favourable than that accorded to its own investors (Article 9.6). This is, however, qualified by the content of each country’s Schedule under Annex 4. The Schedules set out the specific sectors to which the national treatment provision actually applies and any limitations or requirements with which the other country’s investors must comply. New Zealand’s Schedule does not in fact contain any sector-specific commitments. Furthermore, it specifies that Thai investors are obliged to comply with the requirements of New Zealand’s overseas investment screening regime. In other words, the screening regime is preserved and no operative national treatment or other commitments are made on any specific sectors.
The Agreement also contains certain requirements for the equitable treatment of investments once they have been made in the other country. Again subject to the qualifications set out in the Schedules, New Zealand and Thailand are to provide national treatment to such established investments (Article 9.7). New Zealand’s Schedule confirms, for example, that overseas company reporting requirements will continue to apply to Thai companies and that more favourable treatment may be granted to New Zealand companies in terms of industry development assistance. Particular provisions incorporate the general international law requirements relating to protection of investments from arbitrary expropriation (Article 9.11); provide for equitable treatment of investments in the event of compensation for losses arising from armed conflict or similar situations (Article 9.12); require that proceeds from investments can be freely transferred out of the country (Article 9.13); and ensure that investors of the other country have non-discriminatory access to courts and tribunals (Article 9.15). These protections are to be accorded on the basis that the treatment is no less favourable than that accorded to established investments from other countries (Article 9.8). New Zealand’s investment and domestic legal regimes already operate on a non-discriminatory basis.
The Agreement provides a mechanism for the settlement of disputes between foreign investors and the country in which the investment is made (Article 9.16). If consultations do not resolve the dispute, the dispute may be submitted to a domestic court. The options of submitting the dispute to an arbitral tribunal or the International Centre for Settlement of Investment Disputes (ICSID)[10] are also included in the Agreement. Recourse to either of these options depends on the country in which the investment is made giving its consent to settlement of the dispute in one of these forums.
The two countries undertake to foster cooperation in investment particularly in key industries such as biotechnology, software and electronic manufacturing (Article 9.4). These are the focus of Thailand’s efforts to attract investment and are consistent with the target sectors under New Zealand’s Growth and Innovation Framework.
Consistent with current practice in New Zealand, the Chapter on Electronic Commerce requires the countries to maintain domestic legal frameworks governing electronic transactions (Article 10.3). New Zealand is to provide protection for consumers using electronic commerce to the extent possible and to take appropriate measures to protect the personal data of users of electronic commerce (Articles 10.4 and 10.5). The electronic formats of documents that are required to be completed in relation to the import or export of goods are generally to be accepted (Article 10.6). New Zealand is also to encourage cooperative activities to promote electronic commerce (Article 10.7).
Under the Competition Policy Chapter, New Zealand undertakes to promote competition through addressing anti-competitive practices, applying the Asia Pacific Economic Cooperation (APEC) Principles on enhancing competition and regulatory reform, and promoting coordination on competition law and policy (Article 11.2 - 11.3). New Zealand competition law is to be applied generically to all commercial activities and consistent with the principles of transparency, timeliness, non-discrimination, comprehensiveness and procedural fairness (Article 11.4). Exemptions from the application of competition laws are permitted if they are transparent and reflect the public interest. Where appropriate New Zealand is to cooperate with Thailand on issues of competition law enforcement and consult with Thailand on anti-competitive practices and other competition issues that may affect bilateral trade or investment (Article 11.6 – Article 11.8). The provision for consultation is subject to the protection of the confidentiality of any information exchanged. A publication requirement applies to New Zealand’s competition laws (Article 11.9).
The obligations arising from the chapter on intellectual property are primarily focused upon cooperation and the exchange of information. New Zealand and Thailand are required to fully observe the WTO agreement on trade-related aspects of intellectual property rights, and any other multilateral intellectual property agreements to which both countries are party (Article 12.2). They are required to cooperate with the aim of ensuring effective protection of intellectual property rights and preventing the trade in goods infringing intellectual property rights (Article 12.4).
Other cooperation and exchange of information efforts are focused on increasing awareness and understanding of each country’s respective intellectual property regimes, and facilitating the development of contacts and cooperation between agencies, educational institutions and other entities concerning the protection of intellectual property rights (Article 12.5). The right of a country to adopt appropriate measures to protect traditional knowledge is recognised.
The Agreement establishes a working group to discuss issues relating to government procurement, which will act as a clearing house for the exchange of information on government procurement policies, practices and procedures (Article 13.3). There is an undertaking to work progressively to reduce and eliminate barriers to trade arising from government procurement laws or policies, and to this end the working group is to make a recommendation on the commencement of negotiations on government procurement within one year of entry into force of the Agreement (Articles 13.1, 13.4, 13.5).
There are comprehensive obligations ensuring transparency of laws, regulations and administrative rulings (Article 14.1). Due process requirements in relation to administrative proceedings are included in the Agreement and a requirement to ensure that appropriate domestic procedures exist to enable prompt review of administrative actions (Articles 14.2 – 14.3). The transparency provisions are consistent with New Zealand’s existing law and administrative practice.
The Agreement contains a standard set of provisions which ensure that the Agreement does not prevent New Zealand from taking measures necessary to protect human, animal or plant life or health, protect public morals, prevent deceptive practice, conserve exhaustible nature resources, protect national treasures or specific sites of historical or archaeological value or support creative arts of national value or protect its essential security interests, or necessary for prudential reasons (Article 15.1 – 15.6). The CEP Agreement does not prevent New Zealand from taking measures it deems necessary to fulfil its obligations to Maori, including under the Treaty of Waitangi (Article 15.8).
The Agreement establishes a Closer Economic Partnership Joint Commission to review the general functioning of the Agreement and considers any proposal to amend the Agreement (Articles 16.1 – 16.2). The CEP Joint Commission is to meet once a year. Ministers are to meet every five years to review the operation of the Agreement (Article 16.3).
The Agreement establishes a mechanism to address any government-to-government disputes which may arise regarding the interpretation or implementation of the Agreement (Articles 17.1 – 17.12). Consultations may be requested and there is an obligation to provide an opportunity for such consultations and to make efforts to resolve the dispute through such consultations. If consultations fail to settle a dispute, an arbitral tribunal may be established. Various procedural requirements are set out in the Agreement, which relate to the appointment of arbitrators, the qualifications of arbitrators, functions and proceedings of the tribunals. These provide for the smooth operation of the dispute settlement mechanism. There is a requirement to comply with the award of an arbitral tribunal, and an ability to impose trade sanctions if the country does not do so within a certain period of time.
The Agreement establishes separate dispute settlement arrangements in respect of certain matters. If a dispute between New Zealand and Thailand on SPS issues cannot be settled through a consultation mechanism, the matter can be forwarded to the CEP Joint Commission for consideration. However, the formal dispute settlement procedures established under the Agreement will not be used to settle disputes relating to SPS, competition, electronic commerce, and government procurement (unless incorporated subsequently). New Zealand (and Thailand) however retains the right to use the WTO dispute settlement mechanism to resolve any dispute between them arising under the WTO Agreement. Unless distinct rights or obligations apply under different international agreements, once a dispute settlement forum has been chosen, it is to be used to the exclusion of others. This avoids the possibility of the same case being brought before different fora.
Upon signature, Thailand and New Zealand will need to notify the Agreement to the World Trade Organisation as a free trade area within the meaning of GATT Article XXIV (goods). The foreshadowed negotiations on liberalisation of services will enable notification under Article V of the General Agreement on Trade in Services (GATS) following the conclusion of those negotiations.
[10] Note that Thailand is not currently a party to the relevant Convention.
