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Joint Communique On Aus - NZ Economic Relations

Joint Prime Ministerial Communiqué on Australia - New Zealand Bilateral Economic Relations


As part of our discussions in February 1999, we established a Joint Prime Ministerial Task Force on Bilateral Economic Relations. This reflected our mutual desire to further develop the bilateral economic relationship, address a small number of specific bilateral issues, and examine ways of building on the strong economic foundation that already exists through CER. We consider that the Task Force has played a useful and facilitative role in examining and developing different strands of the bilateral relationship.

Closer Economic Relations (CER)

The bilateral economic relationship is in excellent health. CER, which is at the heart of our relationship, has been a remarkable success in its fifteen years of existence. It has produced benefits to both countries far beyond what were imagined at the time it was established. Trans-Tasman trade, for example, has increased by over 400% since CER’s inception – faster growth than with any of either country’s other major trading partners. CER has also facilitated a high degree of trans-Tasman economic integration, focusing at the outset on free trade in goods and services, and moving to include a deeper integration of labour and capital markets, and regulatory regimes.

CER remains an exemplary template for free trade agreements – open, comprehensive, simple and dynamic.

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.

Investment

Trans-Tasman investment is a significant integrating force between the two economies. The regime for that investment is already open by international standards but it is in both nations’ interest to lower compliance costs for trans-Tasman, as well as all other, investors.

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 A$5 million (A$3 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.

These initiatives will remove screening requirements for more than half of New Zealand investment proposals based on past activity.

For its part, New Zealand will raise the threshold at which consent for non-land foreign investment is required from NZ$10 million to NZ$50 million, on a multilateral basis. The criteria for land-related foreign investment will remain unchanged.

Australian 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.

Social security

Australia and New Zealand benefit greatly from the free flow of people across the Tasman, including through the development of wider and more efficient labour markets. We reaffirm the very positive and important role freedom of trans-Tasman movement and a single Australia-New Zealand labour market play in the development of CER and in the bilateral relationship.

There are many more New Zealanders living in Australia, than there are Australians living in New Zealand, with Australia bearing increased social security costs. Neither country is satisfied with the adequacy of current bilateral social security arrangements, which are in addition inordinately complex, and increasingly unworkable.

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.

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.

Business law

Differences in our business law regimes can act as impediments to investment and trade. The Memorandum of Understanding on the Harmonisation of Business Laws signed between Australia and New Zealand in July 1988 has resulted in good progress in a number of fields, including competition law, company accounting standards, consumer protection and mutual assistance in business regulation.

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 reforms, 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.

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.

Oceans management

The vast ocean which divides New Zealand and Australia can also be a factor in uniting our two nations. Coordination and cooperation in the field of oceans policy has the potential to further strengthen the trans-Tasman relationship.

One of the most immediate issues to be addressed in coordinating oceans policy is the delimitation of the New Zealand and Australian continental shelves and exclusive economic zones. 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. This will provide jurisdictional security for both countries, as well as certainty for industry on both sides of the Tasman.

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 of 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.

Review of Implementation

We are pleased with the successful conclusion today of the Joint Prime Ministerial Task Force. To ensure this program of work is implemented efficiently, our respective Foreign Ministries, in consultation with our Prime Ministers’ departments, will provide us with a joint report on progress in implementing the measures announced in this communiqué before our next meeting.

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