Memorandum of Understanding Between the Government of New Zealand and the Government of Australia on Coordination of Business Law

This Memorandum:

• replaces the Memorandum of Understanding between the Government of New Zealand and the Government of Australia on Harmonisation of Business Law signed on 1 July 1988
• records the following understandings reached in discussions between the Government of New Zealand and the Government of Australia regarding promotion of closer economic relations between New Zealand and Australia .

  Mutual benefits to be obtained by the two countries

• The Governments of New Zealand and Australia recognise the importance of accelerating, deepening and widening the relationship that has developed through the growth of trans-Tasman trade, particularly since the commencement of the Australia New Zealand Closer Economic Relations Trade Agreement in 1983. Both Governments consider that further coordination of significant areas of business law (including consumer law) can facilitate the achievement of this goal.
• Both Governments also acknowledge the importance of a global approach to business law issues (particularly in light of the increasing prevalence of electronic commerce) and the significance of the trans-Tasman relationship in that approach.
• Both Governments are aware that existing laws and regulatory practices relating to business within each economy may impede the development of trans-Tasman business activity. Through the development of increased coordination and dialogue, both parties will endeavour to minimise such impediments.
• An array of approaches exists to achieve the goal of increased coordination in business law. Both Governments recognise that one single approach would not be suitable for every area, that coordination is multi-faceted and does not necessarily mean the adoption of identical laws, but rather finding a way to deal with any differences so they do not create barriers to trade and investment. In working towards greater coordination, the efforts of both Governments will focus on reducing transaction costs, lessening compliance costs and uncertainty, and increasing competition.
• This Memorandum of Understanding reflects our desire to deepen the trans-Tasman relationship within a global market, through increased coordination of business law, thereby creating a mutually beneficial trans-Tasman commercial environment. Such an environment will allow New Zealand and Australia to share a common outward focus in commercial activities within the greater global market.

Existing business law coordination

• Starting from their similar legal and commercial backgrounds, New Zealand and Australia have already achieved a significant degree of coordination and cooperation in a number of areas of business law, including:    

a.    competition laws enforced by the Commerce Commission in New Zealand and Australian Competition and Consumer Commission;

b.    consumer protection laws, including fair trading laws;

c.    cross investment activity including the offer of securities between Australia and New Zealand, in particular, equities and interests in managed funds; cross border listings on ASX and NZSE;

d.    and the cross border operations of the two futures markets, SFE and NZFE; and

e. mutual recognition of registered occupations, as provided for under the Trans-Tasman Mutual Recognition Arrangement.  

Further development of business law coordination

• Attached in the Annex is a list of areas identified by both Governments as possible candidates for coordination. Both Governments will examine further the scope for coordination of business laws and regulatory practices in each of these areas.
• In order to determine the suitability of each of these candidates for coordination, regard will be given to:

a.   The desirability of ensuring for each particular situation, that a firm, ideally, will only have to comply with one set of rules, and have certainty as to the application of those rules in the other jurisdiction, and with which regulator (ie Australian or New Zealand) it needs to deal;

b.   Whether the situation should be regulated solely through domestic rules or whether a bilateral, or multilateral solution would be more appropriate; and

c.   Whether a good reason exists for the law in this area to be different between Australia and New Zealand.

• Having taken these principles into consideration, both Governments will still need to ensure that realistic goals are set and that the benefits of coordination outweigh the costs. Globalising and localising factors also need to be considered by both Governments in this respect.
  (Globalising and localising factors are forces that would push law makers to take either a more multilateral or a more domestic approach to the formation of business law. An example of a globalising factor could be the reduction of compliance costs and uncertainty to businesses trading across borders. An example of a localising factor could be a unique local condition).

Consultation

• In addition to the items specified in the work programme (see Annex), when either Government considers that a difference between their respective business laws or regulatory practices gives rise to an impediment to the development of the trans-Tasman relationship, the two Governments will consult with a view to resolving the impediment, whether or not the area of law is already included in the programme and regardless of the priority accorded to the matter at the time.
• Each Government will keep the other Government informed of proposed reforms in the business law area. Further, each Government will give the other the opportunity to be involved in the others reform process at an early stage.
• Each Government will take the necessary steps to facilitate early examination of the areas of business law and regulatory practices contained in the programme.

Report back to Ministers

• Officials will report annually to their respective Ministers responsible for business law as to the status of the work highlighted for action in the Annex to this Memorandum of Understanding.

Review of the Memorandum of Understanding

• Both Governments mutually determine that they will review this Memorandum of Understanding five years from the date of its signature, and every five years following that date.

Outcome

• Both Governments will seek to finalise their consideration of the suitability of the candidates specified in the work program for further coordination, by the end of 2000.
• The understandings set out in this Memorandum are not intended to preclude the possibility of earlier coordination in any area of business law or regulatory practice.

Commencement and implementation

• The Minister of Commerce of New Zealand and the Treasurer of the Commonwealth of Australia will have responsibility on behalf of their respective Governments for the implementation of this Memorandum of Understanding including the establishment, and any variation, of the work programme.
• This Memorandum of Understanding will come into effect on the date of its signature.  

Signed in Auckland, 31 August 2000 by:

Hon Paul Swain, Minister of Commerce, for the Government of NZ

Hon Joe Hockey, Minister for Financial Services and Regulation, for the Government of Australia

Hon Jim Sutton, Minister for Trade Negotiations, for the Government of NZ

Hon Mark Vaile, Minister for Trade, for the Government of Australia

Annex

Work Programme for Coordination of Business Law

• Providing for the cross-recognition of companies
• Seeking to achieve greater compatibility in our disclosure regimes in relation to financial products
• Managing cross-border insolvency
• Providing a regulatory framework for recognising in each jurisdiction a stock market operating in compliance with comparable rules of the other jurisdiction
• Exploring the potential for more closely coordinating the granting and recognition of registered intellectual property rights 
• Facilitating information sharing and, where appropriate, jointly participating in policy, compliance and education programs on consumer issues relating to business law including consumer protection in electronic commerce
• Seeking to achieve greater consistency in legislation affecting electronic transactions
• Exploring the potential for greater consistency in trans-Tasman application and enforcement of competition law.