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:

• strengthen the broader relationship between Australia and New Zealand;
• develop closer economic relations between the Member States through a mutually beneficial expansion of free trade between New Zealand and Australia;
• eliminate barriers to trade between Australia and New Zealand in a gradual and progressive manner under an agreed timetable and with a minimum of disruption
• develop trade between New Zealand and Australia under conditions of fair competition.
  

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.

In 2008, trans-Tasman goods and services trade was valued at around $23 billion. Key Australian merchandise exports to New Zealand (total value of $9.4 billion) included refined petroleum ($646 million); crude petroleum ($477 million); passenger motor vehicles ($435 million); medicaments (incl veterinary) ($379 million) and computers ($300 million). Merchandise imports from New Zealand (total value of $5.6 billion) included crude petroleum ($348 million); paper and paperboard ($250 million); non-monetary gold ($224 million); and alcoholic beverages ($204 million). Two-way trade in services amounted to $ 6 billion in 2008.

During 2008, two-way accumulated investment between Australia and New Zealand amounted to over $93 billion. New Zealand is the third largest market for Australian investment abroad, with Australia the largest investor in New Zealand. Over half of Australia's total investment in New Zealand is FDI, reflecting the high level of economic integration. Recently there has been significant new commercial investment from Australia in New Zealand's transport and banking sectors.

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.

In February 2006, Australia and New Zealand agreed to commence negotiations on an Investment Protocol to form part of ANZCERTA. Unlike Australia’s other free trade agreements ANZCERTA does not include any substantive commitments on investment liberalisation. At their 17 July 2008 meeting the Australian Treasurer and New Zealand Finance Minister agreed that negotiations should be progressed. The Investment Protocol could be concluded during late 2009 or early 2010.