Joint Ministerial Statement on Rules of Origin

The Australian Minister for Trade, the Hon. Mark Vaile, and the New Zealand Minister for Trade Negotiations, the Hon. Jim Sutton, have agreed that officials from Australia and New Zealand should examine CER Rules of Origin (ROO) with a view to considering whether improvements which would benefit businesses on both sides of the Tasman should be made.

In their work, officials will be guided by the following principles:

ROO should continue to facilitate trans-Tasman trade in goods manufactured in the Free Trade Area and recognise the changed economic drivers as both economies seek to become more internationally competitive;

All genuine local content should be counted towards meeting the ROO;

The ROO should not act as a constraint on the development of innovative and efficient business practices within Australia and New Zealand;

There should be equity of treatment for all businesses, whether they are integrated manufacturers or use outsourced manufacture;

The ROO need to be able to be administered effectively and consistently by the Customs Services of Australia and New Zealand

Officials will henceforth consult regularly for this purpose, and will jointly report to responsible Ministers on progress.

The first such report will be made by end December 2003, the second by end March 2004.

The third and final joint report due in June 2004 will contain the conclusions of officials' deliberations, and recommendations to Ministers on elements of a possible comprehensive package of reforms.

These deliberations will take place in parallel with the Australian Productivity Commission's review of Rules of Origin and may inform or be informed by that process or any other appropriate example or independent study of ROO regimes.

Consistent with the desire to ensure ROO do not act as a constraint on trans-Tasman trade, Ministers have agreed upon a number of incremental improvements to the current system which should improve the situation for businesses on both sides of the Tasman in the short to medium term.

Officials have therefore been tasked to design, without delay, changes to the ROO which, when implemented, will ensure:

Equity of treatment for outsourcing manufacturing processes in both Australia and New Zealand.

While New Zealand will move first to amend its regulations, the intention of both parties is to move to a consistent approach to outsourcing in the context of the comprehensive package of ROO reforms;

That imported intermediate goods will be appropriately disregarded from the calculation of the total cost of the finished good for the purpose of calculating local content under the CER; and

The establishment of a Joint Customs Committee to ensure a harmonised approach to the manner in which rules are administered.

Officials are also encouraged to identify other issues for potential early harvest as their broader examination of ROO continues.

Such issues might include sensitivity to exchange rates, apportionment of overheads, and issues related to the equity of treatment between integrated and outsourced operations.

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