Our work with the WTO
New Zealand has been a member of the World Trade Organization (WTO) since it started in 1995. We were also a founding member of its predecessor, the General Agreement on Tariffs and Trade (GATT).
- What does the WTO mean for NZ?
- WTO agreements
- Agreement on Government Procurement (GPA)
- Information Technology Agreement (ITA)
- Environmental Goods Agreement (EGA)
- Settling trade disputes
- Negotiating trade agreements
- Trade policy reviews
The World Trade Organization deals with the global rules of trade. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible between its members. New Zealand joined the WTO when it was created in 1995, replacing the General Agreement on Tariffs and Trade organisation that was formed in 1947. New Zealand's Permanent Mission in Geneva works together with MFAT's Trade Negotiations and Legal Divisions and a range of New Zealand Government agencies to represent the New Zealand Government at the WTO.
The key functions of the WTO are to:
- oversee the negotiation and implementation of agreements
- settle trade disputes
- review the trade policies of individual members
- help developing country members comply with WTO rules
The WTO is based on the premise that trade should be:
- without discrimination - a member should not discriminate between its trading partners (the "most favoured nation" or MFN principle) and should not treat foreign goods and services differently from the way it treats its own (the "national treatment" principle).
- free - this means removing unnecessary barriers to trade
- predictable - so companies, investors and governments can be confident that the rules will not be changed, or trade barriers raised, arbitrarily.
- more competitive - by discouraging unfair practices such as subsidies and dumping
- encouraging of development – while WTO-based trade enables development, developing country members may need help developing their capacity to implement agreements
New Zealand is a small country with an economy that is highly dependent on trade. (Our share of world trade has held steady at around 0.36% since 1990.) Membership in the WTO means that we benefit from its trade rules and we have a process to settle disputes if other trade partners breach these rules. On its own New Zealand would stand less chance of persuading a bigger country to change a trading practice which impacted negatively on us. The WTO also provides the basis for New Zealand negotiating specific free trade agreements either bilaterally or plurilaterally (with a group of countries), through specific provisions of the WTO agreements.
The WTO operates by consensus. Every member’s opinion carries the same weight and all members must agree before a decision can be made. This means that progress can be slow, but once an agreement is reached, all members are obliged to honour it. This system works to our advantage in four significant ways:
- We can trade under WTO agreements
- We have a way to settle trade disputes
- We take part in world trade negotiations
- We participate in Trade Policy Reviews
At the heart of the WTO are the multilateral trade agreements. These are the legal ground rules for international trade covering goods, services and intellectual property that all WTO members must follow.
The rule book covering trade in goods is the General Agreement in Tariffs and Trade (GATT). Its aim is to reduce tariffs, non-tariff measures affecting trade, and subsidies which disadvantage competitors. The GATT is complemented by a large number of subsidiary agreements and annexes, dealing with various issues related to goods trade. These include:
Agreement on Agriculture
Agreement on the Application of Sanitary and Phytosanitary Measures (SPS)
Agreement on Technical Barriers to Trade (TBT)
Agreement on Subsidies and Countervailing Measures
Agreement on Import Licensing.
The General Agreement on Trade in Services (GATS) is a set of rules covering trade in services (eg education, tourism, financial services, accountancy, legal services, and management consulting). Its objective is to ensure that such trade takes place under clear and predictable rules. Each WTO member has made some legally binding commitments to treat foreign service providers in the same way they treat their own services providers.
The Trade Related Aspects of Intellectual Property Rights (or TRIPS) agreement sets out the minimum levels of protection for different forms of intellectual property, such as copyright (music, art and design), patents, inventions, and trade marks. Members are able to decide how to apply these minimum standards in their own domestic laws.
The WTO provides a highly effective and legally binding process to settle trade disputes between members. The WTO’s dispute settlement system has been called the “jewel in the crown” of the WTO and has been used by WTO Member governments, including New Zealand, on more than 450 occasions since it was established in 1995. The dispute settlement system is of particular value to smaller countries, and their businesses, because it provides an impartial way to resolve trade disputes based on agreed rules as opposed to outcomes determined by the relative size and importance of the countries involved.
MFAT has been involved in a number of WTO trade disputes on behalf of our exporters and the Government: nine as a complainant and 40 as a third party. We make a complaint when our direct interests are significantly affected by a trade restriction. We participate as a third party in disputes between other WTO members when we want to influence the interpretation and application of WTO agreements on matters that are also of direct interest to us.
If you encounter an obstacle exporting a product or service to a WTO member country, you can contact MFAT and we will examine whether the restriction violates WTO rules. If it does, we'll first try and resolve the issue through direct discussion with the government concerned. Many trade problems have been resolved in this way. If we can’t reach a resolution, we'll then consider whether WTO dispute settlement proceedings would be an appropriate response.
MFAT works with other New Zealand government agencies to represent New Zealand’s interests during WTO negotiations, to ensure New Zealand's voice is heard, and that our economic interests are advanced and protected.
Current negotiations – Doha
The WTO Doha Round of trade talks, known as the Doha Development Round or Doha Development Agenda, aims to improve the existing rules around international trade. The main goal is to reach agreement on how to further reduce trade barriers, particularly for the benefit of developing country members.
The Doha Round began in 2001 and negotiations have continued since then. At the 2013 meeting in Bali, WTO Trade Ministers agreed to the Bali Package—an outcome that included a new agreement on Trade Facilitation designed to reduce administrative and procedural barriers to trade. The Trade Facilitation Agreement is currently in the process of being implemented by the WTO membership.
New Zealand remains committed to reaching a conclusion to the Doha Development Round because of the potential global benefits. Our focus remains on reducing trade-distorting practices in agriculture, a major sticking point of the talks so far.
Trade in agriculture and fisheries
Trade in agricultural products is critical to New Zealand’s economy, but the WTO rules on agricultural trade are not as well developed or effective as the rules for trade in industrial goods. New Zealand has also been active in the Doha Round of negotiations to seek agreement to reduce tariffs on non-agricultural market access (NAMA). These often include high tariffs on fisheries and forestry products. We have been a champion of an agreement addressing fisheries subsidies.
Plurilateral agreements and negotiations
WTO members can also participate in agreements in areas currently outside WTO rules. Some examples include:
- The Agreement on Government Procurement (GPA) establishes open, fair and transparent conditions of competition in over 40 Government Procurement markets around the world. As a signatory to the GPA, New Zealand companies are able to compete on equal terms with their international counterparts for government procurement contracts to provide a broad range of goods and services. Parties to the GPA include the United States, Canada, Japan and the European Union. New Zealand joined the GPA on 13 August 2015.
Read more about the GPA (external link)
Read NZTE’s guides to winning government business (external link) (external link)
- the 1996 Information Technology Agreement (ITA), a plurilateral tariff agreement between a limited number of WTO members which progressively eliminated tariffs on a range of ICT products. In 2015 agreement was reached to expand the ITA in order to account for the rapidly evolving technologies in the ICT sector. The expanded ITA (known as ITA II) eliminates tariffs on 201 products estimated by the WTO to be worth NZD 1.9 trillion annually.
Read more about the ITA (external link)
The WTO monitors members' trade policies and practices, including in the context of their WTO obligations, through a process of regular Trade Policy Reviews.
The purpose of the reviews is to promote a greater adherence to the rules and to provide a better understanding of each member’s trade and economic policies. New Zealand has undergone five reviews, with the first taking place under the GATT (the precursor to the WTO) in 1990, and subsequent reviews occurring every six years.
During the 2015 review process, the New Zealand delegation fielded over 250 questions on topics such as New Zealand’s FTA agenda, rules governing overseas investment, the agriculture sector, sanitary and phytosanitary requirements for imports, and the New Zealand Government’s Business Growth Agenda. More than 30 WTO members (including the EU on behalf of its 28 members) made statements during the review. Most were very positive, with New Zealand’s economy recognised as “one of the most robust, transparent and open in the world”. New Zealand’s open trade regime and sound economic policies were credited with contributing to robust growth in the economy despite challenges such as the Global Financial Crisis and the Canterbury Earthquakes. WTO members also commended New Zealand’s contribution to the multilateral trading system and the leadership role we have taken with respect to the Doha Round agriculture negotiations.
New Zealand’s next TPR will take place in 2021.