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Aus-NZ Closer Economic Relations: Sutton welcomes proposal to liberalise CER rules

New Zealand Press Association

Sutton welcomes proposal to liberalise CER rules

11 June 2004

Trade Negotiations Minister Jim Sutton today welcomed a new report saying rules governing trans-Tasman trade should be liberalised as they are too restrictive.

Australia’s Productivity Commission, in a review of the rules or origin rules covering the Closer Economic Relations (CER) free trade agreement, said duty charges on trans-Tasman goods should be dropped altogether in some cases.

The CER has been in operation for two decades.

Under the agreement, products have to have a certain amount of product made in either Australia or New Zealand to qualify for tariff-free status.

New Zealand had been seeking review and reform of CER rules of origin "for years", Mr Sutton said.

"Some protectionist Australian industry sectors have resisted, because the present threshold is much harder for small manufacturing sectors such as New Zealand to get over, than the bigger ones such as Australia’s.

"Periodically we have made advances in this area, but they have been knocked back."

"We will look at the commission report and continue to work on this and other possibilities in this area with the Australian Government."

New Zealand officials are currently in Canberra discussing CER rules of origin.

Mr Sutton said he had no doubts that conclusions of the commission "will be pertinent to their discussions".

The commission found that changes in the manufacture of goods have made the rules difficult to administer, hurting businesses that are supposed to benefit from CER.

"The rules of origin have changed very little since the CER agreement came into force 20 years ago," it found.

"In that time, substantial changes to tariff levels, business models and technology and trade have occurred.

"Several of the key problems with the operation of the CER rules of origin stem from these changes."

The commission found there was often an inconsistent interpretation of the rules of origin between Australia and New Zealand, and that some of the tests were too restrictive.

It recommended that a standard definition of manufacturing, as used in the recently completed Australia-Singapore free trade deal, be introduced for CER.

Automatic duty-free entry for any goods that conform with that definition should then be introduced.

It also backs the alignment of Australian and New Zealand legislation, regulations and Customs guidance manuals.