A Celebration of Trans-Tasman Relations
20 Years of Closer Economic Relations between Australia and New Zealand

The Road to CER

What is CER?

The CER Agreement (Australia New Zealand Closer Economic Relations Trade Agreement also known as ANZCERTA) is a free trade agreement between Australia and New Zealand. It covers all trans-Tasman trade in goods, including agricultural products, and almost all services. ANZCERTA is supported by a web of bilateral arrangements including on the movement of people, mutual recognition of standards, government procurement and aviation.

Where did CER come from?

The CER Agreement was built on a series of preferential trade agreements between Australia and New Zealand, including the 1966 New Zealand and Australia Free Trade Agreement (NAFTA). By the late 1970s, NAFTA and its predecessors had led to the removal of tariffs and quantitative restrictions on 80 per cent of trans-Tasman trade. But NAFTA was complex and lacked an automatic mechanism to move ahead. In March 1980 the concept of "closer economic relations" between the two countries, to improve living standards and international competitiveness, was introduced in a joint communiqu issued by Prime Ministers Malcolm Fraser and Robert Muldoon.

How was the deal struck?

Intensive negotiations commenced between Australian Commonwealth and State Governments, the New Zealand Government and industry organisations and interest groups in both countries. Although the talks were often complex, on the whole, they went along methodically - until March 1982, when two major "sticking points" threatened to stymie the process. New Zealand wanted better access for its dairy products, which it achieved through industry-to-industry agreement. For its part, Australia wanted New Zealand to phase out its export incentives and to progressively liberalise and eliminate quantitative import restrictions. Agreement on these points broke the "logjam", clearing the way for the Heads of Agreement to be signed on 14 December 1982 and for the Agreement to enter into operation on 1 January 1983. The Agreement provided for progressive implementation of a free trade area between the two countries. Formal signing of the Agreement took place on 28 March 1983.

What has happened since the original Agreement?

There have been a number of changes to the CER Agreement. The most important are the Protocol on the Acceleration of Free Trade in Goods which provided for the elimination of all remaining tariffs and quantitative restrictions by 1 July 1990, 5 years ahead of the original schedule, and The Trade in Services Protocol, signed in 1988, which brought services into CER from January 1989.

Since 1 July 1990, all goods meeting the CER rules of origin have been free of tariffs and quantitative import restrictions and there are now very few restrictions on services.

The current CER work program focuses on "third generation" trade facilitation issues. Recently, good progress has been made in advancing several CER issues

including business law reform and tax imputation. Progress has also been made in the regulatory area with the introduction of a joint food standards code and agreement to establish a trans-Tasman therapeutic products agency. Further cooperation in science and technology, biosecurity and quarantine, and industry and competition issues is also expected to result in developing an even more integrated trans-Tasman economy.

The Productivity Commission is currently undertaking a review of the Trans-Tasman Mutual Recognition Arrangement, including an assessment of the benefits of TTMRA and the possible advantages from greater harmonisation and scope for improvements.

In the future the key benefit for the Australian and New Zealand economies from CER may lie in the increased competitiveness - including scale economies - that it is continuing to bring and the leverage this offers in opening up new regional and global markets.