Introduction
Prime Minister John Howard of Australia and Prime Minister Jenny Shipley
of New Zealand met in New Zealand in February 1999 for annual discussions
on a range of bilateral, regional and multilateral issues.
As a consequence of those discussions and of a mutual desire further
to develop the bilateral economic partnership, Prime Ministers agreed
to establish a Joint Task Force on Bilateral Economic Relations under
the direction of their Departments of Prime Minister and Cabinet. The
Task Force was to address a small number of specific bilateral issues
and to examine ways of building on the already strong economic foundations
of CER. Prime Ministers agreed that the specific bilateral issues would
include:
. barriers and costs to trans-Tasman investment;
. conclusion of negotiations on a bilateral child support
arrangement; and
. revision of the bilateral Social Security Agreement.
On 4 August 1999, after receiving the report of the Task Force, Prime
Ministers Howard and Shipley issued a Joint Communique announcing the
results of the Task Force's work and an agreed program of future action.
In order to ensure the efficient implementation of the work program, Australia's
Department of Foreign Affairs and Trade (DFAT) and New Zealand's Ministry
of Foreign Affairs and Trade (MFAT), in consultation with the two Departments
of Prime Minister and Cabinet, were to provide Prime Ministers with a
joint progress report before their next bilateral meeting.
This report is intended to meet that requirement. Its structure mirrors
the structure of the communique. Extracts from the communique appear in
bold italics and are followed by comments
on progress in implementing the measures agreed by Prime Ministers.
Closer Economic Relations (CER)
"The main focus of both our nations' trade policies is currently
on securing further trade liberalisation through a new WTO round and we
are working cooperatively to promote its launch at the WTO Ministerial
meeting to be held in November in Seattle.
"New Zealand and Australia are willing to consider free trade arrangements
with other significant individual economies or regional groupings, where
they would deliver faster and deeper liberalisation than the multilateral
process, with the objective of gaining better market access for our exporters,
faster economic growth and stronger employment growth. Such arrangements
would need to reflect the principles underpinning CER, including WTO consistency."
Global trade liberalisation
Australia and New Zealand have continued to work very closely in various
international fora, including the WTO, APEC and the Cairns Group, to secure
our shared trade liberalisation objectives, particularly in the area of
agriculture. Australian and New Zealand delegations consulted closely
in the lead up to, and at the WTO Ministerial Meeting in Seattle from
30 November to 3 December 1999. Following the failure at Seattle to launch
a new round of WTO trade negotiations, Ministers and officials are continuing
to consult closely on the best way to move forward on the earliest possible
launch of a round and on other shared objectives such as progress on the
mandated negotiations in agriculture and services.
Notwithstanding the priority we give to the launch of a new multilateral
round of trade negotiations, both countries remain open to the possibility
of concluding free trade agreements with other countries or regional groupings
where these could be expected to deliver substantial economic gains which
could not be achieved elsewhere within a similar timeframe.
Both governments will seek, through negotiations in the WTO, to multilateralise
progress made in regional trade liberalisation. Australia and New Zealand
will take this up in the forthcoming mandated negotiations on agriculture
and services notwithstanding the lack of agreement in Seattle to a new
round of trade negotiations.
AFTA/CER Task Force
In Singapore on 1 October 1999, CER and ASEAN trade and economic ministers
agreed to establish an ASEAN Free Trade Area (AFTA) / CER High Level Task
Force to explore the feasibility of an AFTA-CER free trade area by 2010.
The Task Force has been asked to submit a set of recommendations, including
on the scope and coverage of a possible FTA and to outline the requirements
an FTA would have to meet if it was to be consistent with Article XXIV
of the GATT and Article V of the GATS.
The Rt Hon Sir William Birch GNZM and the Hon Tim Fischer MP have been
appointed to represent New Zealand and Australia respectively. The Task
Force members met in Jakarta on 8-9 February. The second Task Force meeting
will be in New Zealand on 27-28 April and a third meeting is planned for
September. There were useful discussions between Task Force members in
Jakarta in February and positive progress was made. The feasibility study
will be completed in time to be considered at the next meeting of ASEAN
economic and CER trade ministers in Thailand in October 2000.
Pacific Regional Trade Agreement (PARTA)
Australia and New Zealand are also consulting closely with the Forum
island countries regarding the establishment of a Pacific Regional Trade
Agreement following the decision by leaders at the South Pacific Forum
meeting in Palau on 5 October 1999 to negotiate a free trade agreement
between Forum Member countries. The manner in which Australia and New Zealand
are to be included in the Agreement is under discussion and will be resolved
through the negotiation process. Australia and New Zealand met in Wellington
in January 2000 to discuss a joint approach to PARTA negotiations, and
will participate in a pre-negotiations workshop in Suva on 29-30 March.
New Zealand work on free trade agreement (FTA) prospects
New Zealand has begun negotiation of a bilateral FTA with Singapore,
started work on a Republic of Korea/New Zealand Study and is giving consideration
to work in 2000 on an agreed study of an FTA among Singapore, Chile and
New Zealand. New Zealand is keeping Australia closely informed of progress
and the option is open for Australia to associate itself with this work,
which proceeds in the context of our shared commitment to multilateral
trade liberalisation.
Investment
"Australia has reviewed its foreign investment requirements in line
with its APEC Individual Action Plan and will liberalise its foreign investment
regime. The changes will lower compliance costs for all foreign investors
and provide benefits for New Zealand.
"Australia will:
. increase its existing foreign investment business acquisition threshold
from $A5 million ($A3 million for rural) to $A50 million on a multilateral
basis;
. remove foreign investment approval requirements for New Zealanders
who hold or are entitled to hold a special category visa and invest
in Australian residential real estate through Australian registered
companies and trusts; and
. provide simplified processing arrangements for proposals to invest
in businesses, valued at less than $A100 million, on a multilateral
basis."
Amendments to the Australian Foreign Acquisitions and Takeovers Regulations
1989, giving effect to the first two measures (above), entered
into force on 10 September 1999. The third measure was implemented by
changes to administrative arrangements on the same day. These three measures
together provide a simpler and more efficient framework for New Zealanders
wishing to invest in Australia.
Additional Australian measures
Consistent with this approach, the Australian Government has also made
the following changes to foreign investment policy:
. The voluntary notification threshold for the Australian
assets of an offshore company to be acquired by another offshore company
has been increased from $20 million to $50 million.
. Acquisitions of residential real estate by Australian permanent
resident visa holders, not ordinarily resident in Australia, purchasing
through Australian companies or trusts has been exempted from notification
requirements;
. Australian citizens and their foreign spouses purchasing
as joint tenants are no longer required to seek approval for purchases
of residential property in Australia.
. The acquisition of house and land packages, where construction
has not commenced, is no longer limited to fifty per cent of the project's
sales. Approval is conditional on continuous construction of the relevant
dwelling commencing within twelve months.
. Where properties are not subject to heritage listing, the
notification threshold applying to the acquisition of developed non-residential
commercial properties has been raised from $5 million to $50 million.
. Acquisitions of developed non-residential commercial properties,
valued between the notification threshold and $100 million, are no
longer subject to detailed examination, unless the facts of the proposal
raise issues pertaining to the national interest.
. The policy of designating Integrated Tourism Resorts (ITRs),
within which foreign persons are permitted to acquire residential
property without restriction, now applies only to developed residential
property which is leased back to the resort operator, to be available
for tourist accommodation when not occupied by the owner. Owners of
residential property in existing ITRs have retained their entitlements.
. An exemption is now obtainable for the acquisition by foreign
interests of strata-titled hotel rooms in designated hotels where
each room is subject to a long-term (10 years or more) hotel management
arrangement.
. An exemption now exists for the acquisition of interests
in Australian urban land by foreign-owned responsible entities acting
on behalf of managed unit trusts and other managed public investment
schemes registered under Chapter 5C of the Australian Corporations
Law, where they are investing for the benefit of fund investors
or unit holders ordinarily resident in Australia. This is consistent
with rules applying to foreign-owned life insurers and superannuation
funds.
"For its part, New Zealand will raise the threshold at which consent
for non-land foreign investment is required from $NZ10 million to $NZ50
million, on a multilateral basis. The criteria for land-related foreign
investment will remain unchanged."
In New Zealand, regulations entered into force on 9 December 1999 which
raised the threshold at which consent for non-land foreign investment
is required from NZ$10 million to NZ$50 million.
"Australia and New Zealand will consult each other on our respective
foreign investment policies in the context of any specific review of those
policies under our international obligations."
Since the communique was issued, there has been no review of Australian
or New Zealand foreign investment policies under our international obligations.
No such review is currently scheduled.
Should either party undertake such a review, it will consult the other
party as required by the communique.
Social security
"New Zealand and Australia both want more stable and durable social
security arrangements that will provide a better strategic fit for our
wider CER relationship, both now and as it develops in future years. As
part of this, Australia and New Zealand:
. will undertake a full review of social security arrangements, with
a view to developing a sustainable long-term solution to current problems.
We expect that terms of reference will be settled before our next
meeting, in February 2000. We further expect to start putting in place
the changes in arrangements stemming from the review before the Prime
Ministerial meeting in February 2001; and
. will implement an interim arrangement for 2 years that will markedly
simplify the current complex and overly cumbersome administrative
arrangements by simply agreeing the reimbursement track in advance,
and provide for a higher level of reimbursement of the social security
costs incurred by Australia over that period than that provided for
under the current Agreement. Specifically, we have agreed that New
Zealand will reimburse Australia $A125m for the year 1999/2000 and
$A135m for the year 2000/2001 for the costs of providing social security
to New Zealand citizens in Australia. This interim agreement, including
increased reimbursement, will continue until it can be replaced by
a new Social Security Agreement."
Review of social security arrangements
Officials from New Zealand and Australia met in Wellington on 17-18 February
to finalise the terms of reference for the review of social security arrangements
and discuss arrangements for conducting the review. It was agreed that
the review was to be completed with a final report to be presented to
Governments by 30 June 2000, with a view to both countries agreeing on
and starting to implement the changes in arrangements stemming from the
review before the prime ministerial meeting in 2001. The terms of reference
for the review are attached to this report.
Interim arrangements
An exchange of notes implementing the interim reimbursement arrangements
agreed by Prime Ministers was completed and came into force on 25
October 1999. The interim arrangement operates with effect from 1 July
1999 and will remain in force until the entry into force of a revised
bilateral Social Security Agreement. The reimbursement amounts agreed
by Prime Ministers will be applied for the years 1999/2000 and 2000/2001.
If the interim arrangements remain in force after 30 June 2001, the reimbursement
paid by New Zealand to Australia will be derived in accordance with the
terms of the communique. A forecasting model which will underpin determination
of the reimbursement amount is currently under discussion.
Child Support
"Australia and New Zealand have been developing a draft Child Support
Agreement (CSA) to promote more equitable payment arrangements for New
Zealand and Australian parents. We have agreed that the CSA should be
implemented at the earliest opportunity, with operation commencing from
1 July 2000."
The proposed bilateral child support arrangements comprise two agreements,
a principal Child Support Agreement (CSA) and a service arrangement. The
principal agreement provides for the establishment and enforcement of
child and spousal maintenance liabilities by each country. The final text
of the Agreement was agreed between Australian and New Zealand Child Support
Agencies during February 2000 and is due to be signed in March 2000. Discussions
on the Service Arrangement are still proceeding and it is envisaged that
these will be completed and the Arrangement signed in April/May 2000.
Implementing the CSA in Australia
The agreements will come into force in Australia following amendments
to the Child Support (Registration and Collection) Act 1988, the
Child Support (Assessment) Act 1989 and the Family Law Act 1975.
The agreements are also subject to the Commonwealth's treaty review process,
including scrutiny by the Parliamentary Joint Standing Committee on Treaties
(JSCOT). Subject always to Parliamentary and JSCOT approval, Australia's
procedural arrangements for the entry into force of the Child Support
Agreement by 1 July 2000 are on track.
Implementing the CSA in New Zealand
The Agreement is to be given effect in New Zealand by Order in Council.
It will enter into force 30 days after New Zealand and Australia have
notified each other that respective domestic implementation processes
are complete. Therefore, domestic processes in New Zealand (and Australia)
will have to be concluded before 1 June.
Business law
"We have agreed to explore the scope for further regulatory coordination
of our respective regimes and have agreed that any further reform would
need to take account not just of CER but also of the broader regional
and global environments, including the emergence of global standards.
"A study has been commissioned by New Zealand on possible approaches
to further trans-Tasman business law reform, having regard to our objective
of positioning Australian and New Zealand business on the world stage.
Officials will hold discussions on the study in August, with a view to
identifying possible areas for further regulatory coordination.
"As part of this process, New Zealand and Australia will give specific
consideration to:
. cross-recognising trans-Tasman companies through a simplified registration
mechanism;
. issues related to the regulation of overseas financial products
markets which are adequately supervised; and
. cross-border insolvency, in particular, the adoption of the UNCITRAL
Model Law
"Australia recently announced that it would reform its disclosure
requirements for financial products (other than securities). These reforms
are similar in approach to New Zealand's existing regime. In implementing
the reforms, Australia will harmonise its requirements with New Zealand's,
to the greatest extent possible consistent with its policy framework,
to reduce compliance costs and help facilitate the offering of common
products in both countries."
Officials from the New Zealand Ministry of Commerce and the Australian
Treasury met in New Zealand in August 1999 with a view to identifying
possible areas for further regulatory coordination and to consider implementation
of other business law aspects of the communique programme.
Memorandum of Understanding
Officials have agreed to review and modernise the 1988 Memorandum of
Understanding (MOU) on the Harmonisation of Business Laws, and are working
to produce a new MOU for signature by Ministers by early 2000. The MOU
will reflect the desire of both countries to reduce business compliance
costs, increase trans-Tasman competition and reflect the increasing importance
of a global approach to business laws. It will recognise that business
law harmonisation will not necessarily develop identical laws but should
work towards complementary systems which are capable of resolving any
differences which may act as barriers to trade and investment.
Cross-recognition
Substantial work has already been done on the issue of cross-recognition
of trans-Tasman companies. New Zealand officials are preparing a review
paper which will discuss options for taking the issue forward. A specific
proposal for cross-recognition will be considered by officials in the
first half of 2000, with a view to decision by respective Ministers in
the second half of 2000.
Recognition of overseas financial products markets
Australia is developing the necessary statutory framework to support
recognition of overseas markets which are subject to comparable regulation
as part of its proposed Financial Services and Markets legislation being
developed under the Corporate Law Economic Reform Program. Both countries
are also undertaking further work on comparing their respective disclosure
regimes for financial products, so as to be in a position to assess the
scope for achieving a mutual recognition of disclosure regimes by. As
part of this work, New Zealand has prepared a paper on the New Zealand
disclosure regime for financial products, which is currently being considered
by Australian officials.
Cross-border insolvency
Officials have considered cross-border insolvency issues with a view
to adoption of the United Nations Commission on International Trade Law
(UNCITRAL) Model Law on cross-border insolvency. While it may be possible
to go further than the Model Law in relation to trans-Tasman cooperation
on cross-border insolvency matters a number of differences in the way
insolvency administrations are conducted in each country (eg. licensing
of liquidators) still need to be addressed. Officials will ensure that
trans-Tasman harmonisation is considered in the context of future policy
development, with a view to developing a harmonised cross-border insolvency
regime for consideration by respective governments.
Customs
"Our respective Customs agencies have been addressing harmonisation
and simplification issues within CER for some time, and have made considerable
progress. This work will be accelerated, with the objective of: improving
facilitation of trans-Tasman trade by streamlining customs regulatory
procedures; reducing customs compliance costs for trans-Tasman business;
and introducing 'one-stop shop' on-line customs clearance procedures for
agreed trans-Tasman exporters. Officials will implement an agreed work
programme which includes specific milestones for the next year.
Australian and New Zealand customs agencies will also look closely at
the information presently required from importers and exporters, with
a view to investigating ways of appropriately reducing business compliance
costs."
Australian and New Zealand customs services, in consultation with relevant
national agencies, have continued to cooperate on the development of measures
to further harmonise customs procedures and reduce compliance costs for
business, consistent with the pre-existing 25 May 1999 "Trans-Tasman
Cargo Management Statement of Intent". This work has been accelerated
as follows:
Compliance costs
Business compliance costs will be reduced as a consequence of Australia's
cargo management re-engineering program, likely to be completed by mid-2001.
The program aims to reduce by at least 30 per cent the amount of information
required for export/import transactions and will provide the necessary
basis for a trans-Tasman internet-based system for customs reporting.
"One-stop shop"
Australia and New Zealand are evaluating possibilities for establishing
partnerships with strategic industry partners involving periodic Customs
entries and deferred payment of duty. Using methodology developed by Australian
Customs, New Zealand had initiated a trial of partnerships for exports
in August 1998, prior to the Prime Ministers' 1999 meeting. Draft business
rules for accredited clients and an independent audit framework are now
being developed by Australia with a view to an Australian program commencing
by end 2000. The objective in the medium term is to include Australian
and New Zealand traders in this program to facilitate development of a
system of "cross recognition" for each other's audit and compliance
regimes to facilitate cargo clearance. Information on respective compliance
regimes has been exchanged by the two customs services.
Streamlining procedures
A preliminary examination of each country's data requirements has been
undertaken and an analysis of the potential for harmonising our respective
data collection systems is underway. Much will depend on similar work
underway within the G7. This G7 work will be presented to Heads of State
at the next G7 Summit in June 2000 and was analysed by trans-Tasman customs
services in consultation with other relevant agencies. A draft comparison
of Australian and New Zealand Customs import and export data was passed
to New Zealand by Australian Customs in August 1999 and the subsequent
New Zealand analysis is now under consideration by Australian Customs.
This consideration will be completed by 29 February 2000. The customs
agencies propose to publish their analysis by the end of August 2000.
A revised tariff concept paper, which examines the potential for amalgamating
the two countries' tariff functions, was sent by New Zealand Customs to
Australian Customs on 2 September 1999 and is now the subject of
an extensive work program involving several Australian agencies. As a
first step Australian and New Zealand Customs have identified over 500
differences in their respective tariffs. As the next stage in this process
Australian Customs is now identifying goods and classes of goods where
these differences occur. It is expected that this information will be
sent to New Zealand Customs by the end of March 2000. New Zealand is examining
the possibility of adopting Australia's Tariff and Precedent Information
Network (TAPIN) tariff database system, which examination is due to be
completed by 29 February 2000.
A New Zealand proposal to adopt a shared threshold for customs duty on
imports is also being considered by Australia in the context of new tax
system which will be implemented on 1 July 2000.
Oceans management
"New Zealand and Australia will conclude an agreement on the delimitation
of the Australian and New Zealand maritime zones by no later than 2003
one to three years ahead of our respective deadlines for submissions
on the limits of our continental shelves to the United Nations.
"New Zealand and Australia will continue to work cooperatively in
the development of the Trans-Tasman Understanding on Oceans Policy to
ensure it results in mutual and complementary approaches to the protection
and development or our marine resources.
"Australia will also involve New Zealand in the development of a
Regional Marine Plan for the South-eastern region of Australia's Exclusive
Economic Zone (EEZ) in relation to issues of joint interest."
Maritime delimitation
Both sides plan for substantive bilateral discussions on maritime delimitation
to begin by October 2000, as the first stage of a programme designed to
enable formal bilateral agreement by 2003 as agreed.
Oceans policies
The Australian Government released Australia's Oceans Policy in
December 1998. In October 1999, the New Zealand Government announced that
it will develop an integrated Oceans Policy. New Zealand officials have
begun early work on this, welcoming the useful material contained in the
Australian policy document, and will continue discussions with Australian
counterparts during the development of the policy.
As the New Zealand Oceans Policy is developed, the Trans-Tasman Understanding
on Oceans Planning and Management will, correspondingly, be progressively
developed to ensure complementary approaches to oceans management. The
Understanding will be developed through the Australian and New Zealand
Environment and Conservation Council (ANZECC). Officials from both countries
will continue to work cooperatively during bilateral meetings and in the
margins of multilateral fora to progress the development of the Trans-Tasman
Understanding.
Regional marine plan
Preparations for the development of a regional marine plan for the south-eastern
region of Australia's Exclusive Economic Zone are underway as part of
the three-year A$50 million Oceans Policy programme announced in December
1998, under the auspices of Australia's National Oceans Ministerial Board
(NOMB). The newly-established National Oceans Office will continue to
develop this plan under direction from the NOMB. New Zealand will be invited
to contribute to the development of the plan through ANZECC and also through
a steering committee to be established by the NOMB.
Department of Foreign Affairs and Trade, Canberra
Ministry of Foreign Affairs and Trade, Wellington
In their Joint Communique of 4 August 1999 the Prime
Ministers of Australia and New Zealand announced that a full review would
be undertaken of bilateral social security arrangements. The following
terms of reference have been agreed prior to the Prime Ministers'
planned March 2000 meeting, in accordance with the terms of the Communique.
Purpose
New Zealand and Australia will seek more stable, durable
and equitable social security arrangements that will provide a better
strategic fit for our wider CER relationship, both now and as it develops
in future years.
To this end New Zealand and Australia will undertake
a full review of social security arrangements between the two countries
with a view to developing a sustainable long-term solution to current
problems.
The review will cover the terms on which each country
will provide access to social security for migrants from the other country
and provide, or contribute to the cost of, social security for migrants
to the other country.
Scope
Australia and New Ze