Australia-New Zealand Closer Economic Relations

ANZCERTA – its genesis and the present

The first trade agreement between Australia and New Zealand dates back to 1922 which essentially stated that each party would trade with the other. This was followed by the Australia New Zealand Trade Agreement in 1933, by which the two countries gave each other preferences and some special rates of duty. A partial free trade treaty, the New Zealand Australia Free Trade Agreement (NAFTA), entered into force in 1966, leading to the removal of tariffs and quantitative restrictions on 80 per cent of trans-Tasman trade by the late-1970s. Because NAFTA was not structured to address the changing international economic environment and because it lacked an effective mechanism for removing remaining restrictions, Australia and New Zealand agreed to develop a more open bilateral trading system.

The Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) was signed on 28 March 1983 and has become the cornerstone of the trade and economic relationship. It has been recognised in the WTO as among the world's most comprehensive, effective and multilaterally compatible free trade agreement, covering substantially all trans-Tasman trade in goods, including agricultural products, and services. The objectives of ANZCERTA are to:

Since 1 July 1990, all goods meeting ANZCERTA Rules of Origin criteria can be traded across the Tasman free of duty and quantitative import restrictions.

The Trade in Services Protocol brought services into ANZCERTA from January 1989 allowing most services to be traded free of restriction across the Tasman, too.

ANZCERTA has underpinned a strong growth in trade across the Tasman with annual growth in two-way trade averaging 8.4% over the life of the agreement. Total two-way trade totalled around $21.5 billion in 2007) making New Zealand Australia's seventh largest trading partner and the fifth largest for merchandise trade.

Over the 25 years of CER, the composition of trade between Australia and New Zealand has changed dramatically, reflecting changes in technology, competitiveness, domestic industry structure, trade liberalisation and consumer demand. New Zealand is the principal export market for Australia's manufactured products; equivalent to around 13 per cent of Australia's total exports of manufactured products.

ANZCERTA forms the foundation of a broader economic and trade relationship with New Zealand. It is supplemented by more than 80 government-to-government bilateral treaties, protocols and other arrangements - covering trade and the movement of people, aviation, business law coordination, mutual recognition of goods and professions, taxation, health care, social security, food standards and government procurement.

With most of the trade goals now met, the CER work program focuses on "third generation" trade facilitation issues aimed at fostering closer economic integration through regulatory harmonisation and the creation of a more favourable climate for trans-Tasman business collaboration. Australian and New Zealand Governments now are taking a strategic approach to shaping and guiding a Single Economic Market (SEM) to enable business, consumers and investors to conduct operations across the Tasman in a seamless regulatory environment.

The key focus is on reducing transaction costs, lessening compliance costs and uncertainty, and increasing competition. Significant progress in most areas of business and financial harmonisation has been made. The work is technically complex, conducted in a continually evolving international financial and business environment both to ensure each country's economy is harmonised both to facilitate business transactions across the Tasman and to maximise each country's international competitiveness. Progress on the SEM agenda means that the cost of doing business across the Tasman will continue to fall.