The Hon Simon Crean MP, Minister of Trade

Hon Tim Groser, Minister of Trade

New Zealand and Australian Ministers responsible for the trans-Tasman trade and economic relationship met in Wellington on 9 August 2009 for the annual Closer Economic Relations (CER) Ministerial Forum.

Ministers welcomed the very good progress that had been made over the preceding year to strengthen and deepen the relationship, working towards the ultimate goal of an Australia-New Zealand 'Single Economic Market'.

This progress built on 26 years of CER and the Joint Statement on Strengthened Trans-Tasman Cooperation issued by Prime Ministers Key and Rudd at their meeting in early March.

Ministers expressed their strong commitment to driving forward the trans-Tasman agenda in the face of the global economic crisis. It was more important than ever to foster open markets, keep capital and credit flowing and resist the rise of protectionism around the world.

"The CER economy remains open for business despite the current economic challenges," Ministers said.

CER is a model for the world, going beyond barriers at the border to deeper economic and regulatory integration. Two-way trade is currently worth over NZ$26 billion (A$21 billon). Merchandise trade has grown at an average of 6.2% per annum over the last two decades. Two-way investment between Australia and New Zealand stands at over NZ$122 (A$97 billion).

"This is testament to the success of the CER and SEM agenda for both countries," said Ministers. "We are becoming increasingly integrated - and this has direct benefits for business and the wider economy."

The progress made over the past year has been aimed at reducing barriers at and behind the border. Ministers noted that they would be reporting on progress to Prime Ministers ahead of their meeting in Canberra later in the month.

Areas of focus included industry policy, notably modernising 'rules of origin', freeing up investment rules, an ambitious new work programme for the Single Economic Market looking particularly at enhancing the regulatory environment for business, seeking to streamline travel across the Tasman, collaboration on improvements in the rules around food trade, and exploring the scope to liberalise services trade even further. Ministers also discussed current biosecurity issues, the review of the Trans-Tasman Mutual Recognition Arrangement, and collaboration on science including climate change and areas of innovation and scientific research.

New Zealand participants were Minister of Trade Tim Groser, Minister of Commerce and Associate Finance Minister Hon Simon Power, and Minister of Agriculture, Forestry and Biosecurity Hon David Carter. Australian participants were Minister of Trade Simon Crean, Assistant Treasurer Senator Nick Sherry, and Minister for Agriculture, Fisheries and Forestry, Tony Burke.

ANNEX: PROGRESS ON THE CER/SEM AGENDA IN 2009

Ministers recalled that CER is the world's most open and successful free trade agreement, which continues to move beyond the traditional features of such agreements to include deep and broad regulatory and administrative cooperation designed to reduce or remove impediments to doing business and facilitate the movement of people, goods, services and capital across the Tasman.

Ministers, recalling the goal of a 1 January 2010 implementation date, noted that the mandated review of CER Rules of Origin was close to conclusion, but that the issue of the rule for men's and boys' suits still needed to be resolved. Ministers noted that the review, when completed, would make the CER ROO among the most modern and liberal in the world. Ministers welcomed the benefits that both economies could secure through the efficiency gains and enhanced international competitiveness for their industries that would result from this modernisation of the CER rules.

Noting the increasing significance of services trade to both their economies, the Ministers welcomed the ongoing progress of liberalisation of services trade through the CER Services Protocol, and agreed to continue to examine the few remaining sectors still exempted from coverage under the Protocol.

Recalling the entry into force in 2008 of the revised Australia New Zealand Government Procurement Agreement, Ministers emphasised that all government procurement policies in New Zealand and in Australia (including at federal and State/Territory level) would remain CER-consistent, treating suppliers from both Australia and New Zealand on an equal basis in order to support a single trans-Tasman government procurement market.

Ministers welcomed the substantial progress at officials' level in negotiating amendments to the Joint Food Standards Treaty. Ministers affirmed their commitment to the joint food standard system, which they recognised had provided substantial benefits to both parties, and noted that the amendments to the Treaty would serve to enhance the operation of the joint Food Code while minimising separate standards or opt-outs.

Ministers warmly acknowledged the recognition by New Zealand of Australia's systems for assuring the safety of certain foods exported to New Zealand. Ministers noted that the decision reflected the high degree of confidence that New Zealand and Australia shared in each other's food safety systems. The Ministers noted that Australia will progress its own legislative amendments to give this reciprocal effect. They agreed to work towards further reductions in barriers to trans-Tasman food trade.

Recognising New Zealand and Australia's BSE-free status, Ministers welcomed the new, simplified arrangements for BSE certification for New Zealand beef products entering Australia. They noted their expectation of the introduction of certification by establishment for beef products in the near future.

Reaffirming both governments' ambition for CER to serve as a model free trade agreement, and the desire for enhanced flows of capital between the two countries, Ministers highlighted the good progress being made in negotiations on a CER Investment Protocol. They recognised that the negotiations were on track for conclusion before the end of 2009.

Ministers also welcomed the current work by officials on both sides of the Tasman to explore the scope to expand joint trade promotion activities to increase global market shares for the trans-Tasman economy as a whole. In particular, they encouraged both trade promotion authorities to work together to leverage for CER the benefits of the jointly negotiated ASEAN-Australia-New Zealand Free Trade Agreement which is expected to enter into force early in 2010.

Building on the shared vision of a trans-Tasman Single Economic Market, Ministers expressed their commitment to reduce transaction costs for business. They looked forward to the results of the Prime Ministers' deliberations on a refreshed approach to deepening regulatory harmonisation or alignment and the work being done to develop a "shared outcomes" approach to accelerating this goal and stimulating business, creating jobs and encouraging productivity.

This new approach will build on the existing work under the MoU on Business Law Coordination. Ministers endorsed progress in lowering the regulatory barriers for business. Examples are the work to enhance the UNCITRAL model law on trans-Tasman cross-border insolvency provisions to avoid complexities and costs associated with multiple insolvency proceedings; and the commencement of discussions on a regime under which financial intermediaries could operate across the Tasman without requiring further approvals or licences.

Recognising the shared interests in economic and regulatory reform, Ministers welcomed the participation by New Zealand in the Council of Australian Governments' Business Regulation and Competition Working Group.

Ministers also noted the progress being made in preparing a response to the Productivity Commission's review of mutual recognition schemes and the Trans-Tasman Mutual Recognition Arrangement (TTMRA). Ministers noted that a joint New Zealand and Australian interim response to Heads of Government to the review recommendations is close to completion. The final response will be submitted by the end of 2009. It is expected that the response will result in improvements to the Arrangement, which will enhance two-way trade in goods and services further.

Ministers also endorsed the ongoing work developing options and guidelines for trans-Tasman institutional cooperation. This work seeks to pull together the lessons learnt from the broad scope of trans-Tasman institutional arrangements to provide a tool-box for choosing the most efficient and effective institutional arrangements from a spectrum of possibilities as we advance Single Economic Market initiatives. Ministers encouraged the early conclusion of this work.

Taking stock of recent achievements in the CER relationship, Ministers welcomed the recent signature of the updated Double Taxation Agreement between Australia and New Zealand. This Treaty better reflects the current commercial realities of trans-Tasman trade and investment. The commitment to an Arrangement on Trans-Tasman Retirement Savings Portability similarly reflects existing CER realities. It will enable New Zealanders and Australians who work and live across the Tasman for a time to keep their financial affairs in order. Both of these instruments will further reduce non-tariff barriers to trade and investment, and improve certainty and transparency for trans-Tasman businesses.

New Zealand Ministers also reaffirmed New Zealand's continuing interest in exploring the possibility of mutual recognition of imputation credits, including when the current review of Australia's Future Tax System is complete.

Work mandated by Prime Ministers to investigate ways to streamline trans-Tasman travel by reducing remaining barriers at the border was welcomed by Ministers. Ministers agreed that this initiative represented a significant new step forward in CER.

Ministers also endorsed the work currently underway to enhance Australia-New Zealand collaboration on climate change, noting in particular New Zealand's founding membership of the Australian-initiated Global Carbon Capture and Storage Institute (GCCSI). Australia and New Zealand agreed to work together to highlight the importance of scientific research to reduce agriculture emissions and sustain food production by improving productivity. Ministers also noted collaboration between Australian and New Zealand officials on carbon markets, and reinforced the desirability of achieving harmonisation of approaches to greenhouse gas emissions reductions including with respect to agriculture, both on farm and in processing.

Promoting sustainable forest management and combating illegal logging continue to be important matters for cooperation with other countries in the Asia-Pacific region. Australian and New Zealand Ministers agreed that officials would seek to identify possible mechanisms for formalising collaboration on these matters.

Ministers noted the close collaboration between New Zealand and Australia on a joint bid to host Square Kilometre Array (SKA) international radio telescope project. A decision on the location of the SKA is expected in 2012, with construction scheduled for the period 2014 -2020. Over its estimated fifty-year lifespan, the SKA will generate significant spin-offs in supercomputing, fibre optics, renewable energy, construction and manufacturing.

Biosecurity and quarantine market access issues were covered. The importance of using sound science as the basis for quarantine decisions was underscored, and Ministers affirmed their commitment to minimising negative trade impacts through the timely resolution of outstanding biosecurity issues.

On New Zealand apples access to Australia, Ministers noted that the issue is being dealt with through the World Trade Organisation's dispute settlement process.

Australian Ministers expressed their hope that New Zealand would be able to conclude the review of its Import Health Standard for imports of Australian honey shortly, with Ministers on both sides again reinforcing the importance of efficient and science-based biosecurity measures.

Australian Ministers provided an update on the ongoing implementation in Australia of the Quarantine and Biosecurity Review. This provides an opportunity for improved biosecurity coordination between Australia and New Zealand, which would benefit both countries.

The encouraging signs of fresh momentum and the commitment shown in recent months by members to concluding the WTO Doha Round were noted, with Ministers committing to work together, including through the Cairns Group, in pursuit of a successful conclusion to the Doha Round by 2010.

In addition, the impact that new trade barriers, even WTO consistent ones can have on dampening trade flows were noted, particularly measures such as domestic and export subsidy initiatives, with Ministers committing to refrain from introducing trade-distorting policy measures, and to encourage others to do the same.

Ministers also discussed the current state of play on their shared trade negotiating agenda, and on the global economic difficulties facing both countries. They agreed that Australian and New Zealand officials would further discuss the potential for a reconvened CER-Mercosur Dialogue with a reinvigorated agenda including trade facilitation, investment and behind-the-border issues.

Ministers noted their ongoing commitment to Australia and New Zealand working cooperatively together on regional initiatives to broaden and deepen regional economic integration.

Ministers welcomed the decision by Pacific Islands Forum Leaders at their meeting in Cairns on 6 August 2009 to launch negotiations on PACER Plus. Ministers confirmed the importance they attached to deepening regional trade integration through PACER Plus which would enable Pacific Island countries to raise their standards of living, increase jobs and export capacity, and promote sustainable economic growth. Ministers acknowledged that capacity building would be a key element of PACER Plus negotiations. Ministers noted their support for the Office of the Chief Trade Advisor including through Australia's and New Zealand's funding contributions. Ministers reaffirmed a strong desire to continue close cooperation with Forum counterparts on PACER Plus, including at the meeting of Forum Trade Ministers scheduled to take place no later than November, to develop a framework for the negotiations, taking into account the guidance provided by Leaders.

Mr Crean invited Mr Groser to participate in the next meeting of the Ministerial Council on International Trade in early 2010, in view of the increasingly close engagement between the Australia and New Zealand on trade-related activities.

In conclusion, Ministers reflected overall on the good progress that had been made in advancing trans-Tasman trade and economic integration over the previous year, recognising that the relationship was in excellent shape. Ministers noted that they would report back to the respective Prime Ministers ahead of the Prime Ministers' meeting in Australia later this month.

WELLINGTON

9 August 2009