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Negotiation of the CEP and associated Arrangements with Thailand was conducted by an inter-agency team led by the Ministry of Foreign Affairs and Trade and comprising officials from the Ministry of Economic Development, the Ministry of Agriculture and Forestry, the Treasury, New Zealand Customs Service, New Zealand Trade and Enterprise (NZTE), the Department of Labour, the Ministry for the Environment and the New Zealand Food Safety Authority. In addition, Te Puni Kokiri and the Ministry for Culture and Heritage were consulted on areas of specific interest, and Te Puni Kokiri regional directors were briefed on the negotiations. Meetings were held with NZTE staff in Auckland and Christchurch in the course of the negotiations.
Starting in November 2003, the Ministry of Foreign Affairs and Trade, in conjunction with other government agencies, organised and implemented a broad-ranging consultation programme to raise public awareness of the New Zealand-Thailand CEP negotiations and to elicit stakeholder views.
This programme used printed, emailed and website information, backed up with extensive, targeted discussions with key stakeholders, particularly exporters and industries likely to be affected by removal of tariffs on imports from Thailand.
The communications supporting the consultations involved:
The above communications were supplemented by a consultation programme involving:
These consultations involved variously officials from the Ministry of Foreign Affairs and Trade, New Zealand Trade and Enterprise, Ministry of Economic Development, Ministry of Agriculture and Forestry, New Zealand Customs Service, Department of Labour and Ministry for the Environment.
The submissions process elicited 82 written submissions or emails, of which:
In addition, a number of individuals and organisations opposing aspects of the CEP submitted their views to Ministers.
Input was sought from stakeholders on the full range of issues in the negotiations, as outlined in the initial December 2003 information paper.
Among those supporting the CEP initiative, most emphasized the benefits of more open and streamlined market access, including mitigating the risk of ‘losing ground’ against other countries securing bilateral trade agreements with Thailand.
Among submissions critical of the CEP, most cited among their reasons ‘unfair’ competition stemming from Thailand’s labour conditions and environmental regulation, plus concerns about the risks of ‘dumped’ Thai products undercutting New Zealand domestic producers. Some of these submissions also raised concerns about the approval process for treaties of this kind and called for rigorous cost benefit analysis before the CEP is signed.
While most submissions supporting a CEP identified opportunities for New Zealand exporters, several highlighted areas such as technology transfer or capacity building that might benefit Thailand.
The summary below canvasses the key issues on which input was received. The government was advised of stakeholder views in the context of considering New Zealand’s negotiating objectives.
Several submissions highlighted the perceived merits of pursuing a comprehensive bilateral agreement with an economy largely complementary to New Zealand’s. A CEP would not only improve access between New Zealand and Thailand but would also enhance engagement with a wider region of increasing importance to New Zealand.
Some submissions urged the government not to let such bilateral initiatives sidetrack New Zealand from multilateral negotiations under the World Trade Organisation Doha Round.
Several noted the recently concluded Thailand-Australia Free Trade Agreement (TAFTA) and Thailand-China FTA (covering horticulture products only at this stage) as a spur to New Zealand negotiators. These set a positive benchmark for New Zealand to match or better but also highlighted the risk of New Zealand exporters being at a competitive disadvantage vis-à-vis Thailand’s imports of similar goods and services from Australia or China.
More than half the submissions mentioned duty rates and non-tariff barriers (NTBs) such as quotas and paperwork as impediments to trade with Thailand.
These submissions established eliminating tariffs as a priority negotiating objective. These tariffs impact most severely on dairy, meat, horticulture and wood products, but have also hampered or deterred manufactured imports from New Zealand, including moulded plastics. Particularly obstructive for New Zealand was tariff escalation – duty rates that rise the more a commodity is processed into a higher value item.
On the defensive side, some submitters called for New Zealand to retain tariffs where they remain significant, eg in textiles, clothing and footwear (TCF) or at least to ensure tariff reductions are reciprocal. There were calls for robust, transparent and enforceable rules of origin to prevent third-country imports piggybacking on Thailand’s preferential access under a CEP.
Offsetting this concern were cited benefits to the New Zealand consumer from access to cheaper Thai imports.
Several submissions highlighted the risk to New Zealand producers of imported products being dumped below Thai domestic prices and called for New Zealand’s standard antidumping regime to be maintained under the CEP.
Submissions detailed many NTBs, including administrative practices that hamper access to the Thai market. They include sanitary and phytosanitary (SPS - human, animal and plant health) requirements, product standards, professional qualifications requirements, excessive paperwork and unpredictable – some say irregular – treatment of imports by various Thai government agencies. Some firms said the deadweight cost effect or the complexity of these obstacles had deterred them from entering the Thai market.
The main SPS concern among exporters to Thailand was the unnecessary pre-washing of potatoes, shortening their freight life, while in New Zealand the Poultry Industry Association cautioned to retain the current measures relating to chicken imports to uphold New Zealand’s disease-free status.
Some submissions noted the CEP provided an opportunity to achieve greater transparency and consistency, saving time, money and improving the prospects for New Zealand goods and services to compete on their merits.
Some submissions identified difficulties relating to purchasing contracts by Thai government agencies. Concerns were expressed about preferences for local suppliers, including in consultancies, and about the use of out-dated technical specifications.
Several submissions detailed business impediments for foreign services providers relating to setting up, staffing and running a business in Thailand and repatriating profits. A CEP was seen as a way of improving this regime and making investment rules clearer and more enforceable.
Massey University regards the tertiary sector market in Thailand as very significant, with considerable potential for growth. It notes a well established specialisation in educating Thais in biological sciences but also sees wide scope for developing English language tuition, including establishing a commercial presence in Thailand.
The Association of University Staff warned that a CEP should not undermine employment conditions for locally engaged staff at New Zealand universities through the employment of Thai casual staff. The AUS believed mutual recognition of qualifications could be pursued outside of a trade context and should not lead to the dilution of New Zealand content or quality.
Some concerns were expressed about the prevalence of software piracy in Thailand and about Thailand’s protection for plant varieties.
Several submissions advocated inclusion of core labour standards in the CEP and verification and inspection of work conditions in Thailand. Several noted Thailand had ratified only four of eight core International Labour Organisation conventions. These submissions painted a picture of inferior working conditions, including some practices that were seen to have infringed basic rights and also supported a production cost structure well below New Zealand’s. Business NZ and Trade Liberalisation Network opposed any labour or environmental provisions.
Several individual submissions argued a CEP would exacerbate environmental pressures, both through increased transport emissions and increased New Zealand dairy production. There were calls for biosafety risks and an energy audit to be a core element of cost-benefit analyses and for New Zealand’s biosecurity regime to be reflected in an explicit reference to international biosafety conventions.
Several submissions called for public services to be excluded from improved access conditions under a CEP. The AUS highlighted education, state-funded research and broadcasting, the CTU added cultural services, while Forest and Bird advocated conservation, environmental and recreational services for exclusion.
A number of submissions opposed any dilution, under a CEP, of local or central government’s right to regulate in the public interest. Some argued that any ‘investor-state dispute resolution’ provision enabling a private investor from one country to sue the government of the other for regulation that impacted on profit would be detrimental to the public interest.
There were mixed views on reflection of the Treaty in the CEP. Some supported inclusion of a Treaty clause no less explicit than that contained in New Zealand’s 2000 CEP with Singapore while others opposed such a clause.
In preparing New Zealand’s offer to Thailand for reciprocal removal of New Zealand’s tariffs, officials endeavoured to identify and consult directly with those industries which had specific concerns about competition from Thai imports and also those industries that are generally more sensitive to tariff reduction or removal. The latter group included textile, clothing, footwear and carpet (TCFC) manufacturers and the automotive component manufacturers. These industries currently have higher tariffs than most other manufactured goods.
There were mixed messages from these industries. Many firms were not concerned about Thai imports specifically, but have concerns about increased competition from low-cost Asian suppliers generally. A few saw potential export opportunities in free trade with Thailand. Few firms appeared to source inputs or other product from Thailand.
To address the concerns of the TCFC sector and the automotive component manufacturers, gradual tariff reduction schedules have been negotiated, through to 2015 for the TCFC sector and to 2010 for automotive components. Similarly the concerns of those industries which indicated a particular sensitivity to Thai imports, for example the whiteware, steel and plasterboard industries, have also been addressed through maintaining tariffs largely at their current 5 percent to 5.5 percent levels before elimination in 2010.
Further information was sought following the initial submissions from a wide range of exporting companies and sectoral organisations to assist with the finetuning of New Zealand’s priorities for improved market access into Thailand. The detailed input received through this process contributed to development of New Zealand’s negotiating strategy.
