The ASEAN - Australia - New Zealand Free Trade Agreement covers a number of areas and associated instruments. This section breaks down the agreement and addresses the most frequently asked questions.
ASEAN (Association of South East Asian Nations) member countries are: Brunei, Burma, Cambodia, Indonesia, Lao PDR, Malaysia, the Philippines, Singapore and Viet Nam.
At a Summit meeting in Vientiane, Laos on 30 November 2004, leaders from ASEAN, Australia and New Zealand agreed to launch negotiations for a Free Trade Area (FTA) involving the 10 countries of ASEAN as well as Australia and New Zealand. Agreement to move to FTA negotiations followed four years of economic and technical cooperation under the ASEAN Free Trade Area - Closer Economic Relations (AFTA-CER) Closer Economic Partnership agreed in 2000.
The first round of negotiations for the FTA was held in Manila, the Philippines in March 2005. Negotiations continued over 16 rounds held in various locations throughout the member countries. The Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) negotiations were concluded in Singapore on 28 August 2008.
New Zealand sought an FTA with ASEAN countries for three key inter-related reasons; offensive commercial; defensive commercial; and strategic.
First, the Agreement offers the potential to deliver significant commercial commitments that meet our offensive needs in a growing and important market, representing more than 600 million people and with an estimated GDP exceeding US$2.7 trillion. For New Zealand exporters, investors and service suppliers the importance of this market can be seen in the statistics. ASEAN is New Zealand's third largest export market for merchandise goods (worth NZ$4.4 billion) and two way trade was worth NZ$10.5 billion in the year to December 2010. Tariffs on New Zealand's exports to the region amount to approximately $50 million. (For more information on the economic benefits of the AANZFTA please refer to the analysis in the NIA)
Second, there are defensive commercial interests to protect. ASEAN has already concluded FTA negotiations with a number of New Zealand's competitors in the region (Korea, Japan, China and India). It has also commenced negotiations with the European Union. Already there is evidence that New Zealand exporters are finding it harder to compete in key ASEAN markets. An FTA will allow New Zealand companies to maintain and improve their competitive position in this important market.
Third, there are strategic reasons for entering into the ASEAN Agreement. The Agreement is important to our broader, longer term interests in engagement and interaction with the region as a whole. New Zealand wants to be an integral part of a more highly integrated set of trade and economic arrangements in East Asia and to ensure that that regional integration remains open and outward looking. The AANZFTA agreement is a critical element in that process.
Both New Zealand and Australia have long histories of positive engagement with ASEAN as Dialogue Partners - for New Zealand this spans more than thirty years.
Since becoming a dialogue partner of ASEAN, New Zealand has worked with its ASEAN partners to strengthen its political, security, and economic relationships with all members. Given the importance of trade and investment for the twelve AFTA-CER economies, and of the existing trade relationship between the regions, a free trade area was seen as a way to sustain and further deepen and broaden regional integration as well as economic and political links.
The idea of negotiating a plurilateral deal encompassing the ASEAN nations and the CER partners of Australia and New Zealand was seen as a natural progression from the positive economic, political and strategic relationship that exist as part of the long-standing AFTA-CER forum.
Negotiating with ASEAN alongside Australia as a CER partner also provided some advantages. For instance, the considerable overlap in Australia and New Zealand's trade profiles meant the two countries were able to work constructively together to secure outcome in areas of shared interest.
Another advantage to negotiating alongside Australia in the AANZFTA agreement is that both countries receive the same market access outcomes from ASEAN countries. This means that New Zealand exporters, service suppliers and investors will not be at any disadvantage vis-à-vis their Australian competitors in the ASEAN market.
New Zealand and Australia already have a high quality and comprehensive FTA between them - the New Zealand Australia Closer Economic Relations Trade Agreement (ANZCERTA).
New Zealand and Australia have, however, agreed that the AANZFTA tariff and Rules of Origin (ROO) commitments, including the Operational Certification Procedures, will apply between the two countries in order to maximise the benefits of the AANZFTA regional ROO outcome. This ensures that the AANZFTA cumulation principle will extend to trade between New Zealand and Australia – i.e. exports from New Zealand to Australia (and vice-versa) will be able to count components imported from ASEAN countries toward meeting the ROO requirements for receiving preferential tariff treatment.
New Zealand and Australia have also agreed that the General Exceptions Chapter will apply, including the Treaty of Waitangi provision. Certain framework provisions, such as the establishment of a free trade area, objectives and definitions, have also been specified as applying between Australia and New Zealand.
New Zealand has high quality and comprehensive FTAs with Singapore, (Singapore-New Zealand Closer Economic Partnership and with Brunei, (Trans-Pacific-Strategic-Economic-Partnership-Agreement), Thailand, (Thailand-New Zealand Closer Economic Partnership) and Malaysia, (Malaysia-New Zealand Free Trade Agreement).
While New Zealand has pre-existing FTAs in the region, the AANZFTA agreement opens up new opportunities in key export markets where it has no previous Agreements. For instance, there were no pre-existing FTAs with Indonesia, the Philippines and Vietnam. Respectively these three countries are New Zealand's 11th, 20th and 25th most important bilateral trading partners, collectively representing NZ$3.1 billion worth of trade.
As well as opening new opportunities in ASEAN countries where New Zealand has no existing FTAs, the AANZFTA agreement builds on the outcomes of pre-existing FTAs particularly in the area of services and investment. For instance the Thailand-New Zealand CEP, unlike the AANZFTA agreement, has no chapter on services. Therefore the new commitments Thailand has made in New Zealand's priority services sectors in the AANZFTA agreement represent a new benefit. (See the NIA for more information on ASEAN's trade in services commitments to New Zealand.) Similarly, in investment, the AANZFTA agreement provides additional protections for New Zealand investors and investments into the region that build on existing FTA outcomes with Thailand and Singapore.
The plurilateral nature of the Agreement also presents exporters and manufacturers with opportunities that go beyond those available in New Zealand's bilateral FTAs. For instance, the AANZFTA agreement's rules of origin (ROO) provide a mechanism through which originating goods can be cumulated across the AANZFTA parties. The export opportunities under the Agreement are therefore expanded not only through direct access for New Zealand goods to ASEAN markets, but also through the ability to include New Zealand materials in the origin assessment of goods manufactured and traded within the region by Australia and the ASEAN manufacturers and exporters. In this way, the Agreement provides 12 manufacturing bases from which to source input materials, thus enabling New Zealand manufacturers/exporters to make optimal choices in sourcing their inputs in order to remain internationally competitive. (For more information on the AANZFTA agreement ROO please see the NIA.)
Beyond the commercial reasons, there are significant strategic benefits as a consequence of concluding the AANZFTA agreement in addition to New Zealand's bilateral FTAs. (See "Why did New Zealand want an FTA with the ASEAN countries?")
No. Rather than making these FTAs redundant the AANZFTA agreement confirms the outcomes of these FTAs and adds further value, particularly in the area of services in relation to the New Zealand-Thailand CEP. The plurilateral AANZFTA agreement also provides a collective base or framework from which to progress new deeper bilateral relationships with the other ASEAN member countries. The Malaysian agreement was an example of this.
The FTA entered into force on 1 January 2010 for (and between) the following countries: Australia, Brunei, Malaysia, Myanmar, New Zealand, Singapore, the Philippines and Viet Nam. It entered into force for Thailand on 12 March 2010; Laos and Cambodia on 1 and 4 January 2011 respectively; and Indonesia on 10 January 2012.
The AANZFTA agreement is unique amongst the FTAs ASEAN has negotiated. The Agreement represents the first time that ASEAN has ever negotiated a comprehensive trade agreement as part of a "single undertaking", ie one that simultaneously spans goods, services and investment, as well as the other subjects covered in a modern FTA such as intellectual property and competition policy.
ASEAN has concluded Agreements with other dialogue partners including trade in goods with Korea, Japan, China, and India and, in the case of Korea and China, services and most recently ongoing negotiations in investment. These agreements did not take a comprehensive approach, preferring instead to deal with goods, services and other FTA subjects at different (but consecutive) times. (For more information on ASEAN's other FTAs see www.aseansec.org.)
ASEAN is in the early stages of negotiations with the EU. (For more information on ASEAN's other FTAs see www.aseansec.org.)
Trade negotiations carried out under the WTO framework, involving all WTO members, remain the top trade priority for New Zealand. Such multilateral negotiations offer the largest potential gains for New Zealand and in terms of global welfare. The number of parties and interests involved in WTO negotiations however, means that progress can be slow and fitful.
FTAs can open up important new opportunities for New Zealand exporters in a shorter timeframe than through the WTO. They allow New Zealand to accelerate progress towards more open markets by partnering with countries that share our same level of determination for progress.
Comprehensive and good quality FTAs can also usefully act as a ‘building block' to the multilateral trading system. They can contribute to moving the WTO and APEC processes forward by highlighting the benefits of liberalisation. Moreover, Closer Economic Partnerships and FTAs are under negotiation by most of our trading partners and have proliferated around the world - particularly in the Asia region. It is essential that New Zealand is part of this activity to strengthen economic links and obtain improved access to markets.
The AANZFTA agreement is a comprehensive FTA. Significantly, this is the first time that ASEAN has agreed to negotiate an FTA as a ‘single undertaking‘, i.e. one that simultaneously spans goods, services and investment, as well as the other subjects covered in a modern FTA such as intellectual property, electronic commerce and competition policy. The agreement also includes a bilateral dispute mechanism, chapters on Sanitary and Phytosanitary issues (SPS), Standards, Technical Regulations and Conformity Assessment Procedures (STRACAP), trade remedies, customs procedures, movement of natural persons and economic cooperation. In conjunction with the AANZFTA agreement bilateral treaties with the Philippines covering labour and environmental cooperation have also been concluded. They are not explicitly linked with the AANZFTA agreement, but they have been concluded in the context of it.
The overriding objective of the FTA is to open up economic opportunities for New Zealand business in ASEAN and to strengthen commercial ties with our third largest combined export market. The AANZFTA agreement:
As with all of New Zealand's FTAs, the AANZFTA agreement can be expected to deliver an increase in trade with the region and positive economic growth in New Zealand. This should result in higher living standards on average for all New Zealanders.
Economic modelling undertaken as part of the Joint FTA Study in 2000, suggested that positive GDP growth, trade and welfare gains could be realised for New Zealand through the negotiation of a balanced, commercially meaningful FTA.
Following the signing of the AANZFTA agreement, a whole-of government programme, led by the Ministry of Foreign Affairs and Trade (MFAT) and New Zealand Trade and Enterprise (NZTE), is being implemented to ensure that New Zealand stakeholders understand the content of the Agreement and what it means from a commercial perspective. There has also been a focus on working with the private sector to build capability for the challenges and opportunities of doing business in ASEAN.
We are committed to working with the private sector on this, both in New Zealand and through our network of off-shore embassies and consulates.
This website, live since the time of signature, provides businesses and the public alike with ready access to detailed information on the Agreement. The site also provides comprehensive material on doing business in ASEAN countries.
These activities are part of an ongoing series of initiatives designed to facilitate New Zealand business activity in the ASEAN region and to ensure we are doing all we can to help businesses engage and improve their prospects of success. We will also be organising promotional activities in ASEAN countries and in New Zealand to maximise opportunities for the New Zealand business sector.
Tariff rates faced by New Zealand exporters to ASEAN vary amongst ASEAN country members. Most of New Zealand's exports to the region previously faced tariffs of around 5 percent. There were, however, some significantly higher tariffs on products of export interest to New Zealand in particular countries:
In many cases, New Zealand exporters also faced the risk that ASEAN members could increase their tariffs above the current rates.
The AANZFTA agreement provides for a two-year work programme on non-tariff measures. The Agreement also contains provisions relating to rules of origin (ROO), customs procedures, sanitary and phytosanitary (SPS) measures, and standards, technical regulation and conformity assessment procedures (STRACAP). These frameworks are designed to facilitate trade access through binding commitments and to promote communication and cooperation between the competent authorities of all Parties.
The FTA establishes a framework for countries to work towards accepting each other's technical regulations as equivalent, where appropriate, and accepting the result of each other's procedures for sampling, testing and inspecting goods (conformity assessment procedures). Where they are not equivalent the Agreement establishes a framework for cooperation to help Parties lift their technical regulations to an international standard.
The Agreement also establishes a framework to avoid SPS issues arising, a mechanism to encourage countries to recognise each others' SPS measures as being equivalent, and cooperate on adaptation to regional conditions including pest or disease free areas. SPS measures are those relating to the protection of human, animal or plant life or health by preventing the introduction of pests and diseases, and to help ensure food is safe for consumption.
The Agreement's framework on Customs procedures provides mechanisms for facilitating trade and customs processes, thereby helping to reduce the likelihood of problems for New Zealand exports at ASEAN borders.
New Zealand will benefit from the eventual elimination of tariffs on 99 percent of exports to our four key markets of in ASEAN - Indonesia, Malaysia, the Philippines and Viet Nam. On full implementation, this will equate to an annual duty saving of approximately $50 million based on current trade. The four countries highlighted were deemed priority markets in the negotiations as New Zealand at that time already had FTAs with Singapore, Thailand and Brunei (Trans-Pacific-Strategic-Economic-Partnership-Agreement). An FTA has now been concluded with Malaysia. The Least Developed Country members of ASEAN (Cambodia, Laos and Myanmar), were not accorded the same priority as New Zealand has little to no current trade to these markets.
The tariff elimination outcome for each ASEAN country is as follows:
Indonesia: New Zealand exports to Indonesia were valued at $930 million in 2010, making Indonesia New Zealand's largest export market in ASEAN. Under the AANZFTA, the percentage of New Zealand exports that are duty free increases from 36 percent in 2005, to 64 percent in 2010 and to 99 percent by 2020.
Philippines: New Zealand exports to the Philippines were valued at $729 million in 2010. This makes the Philippines New Zealand's fifth largest export market in ASEAN. In 2005, only 2 percent of New Zealand's exports to the Philippines entered duty free; this increases to 74 percent in 2010 and to 99 percent in 2020.
Viet Nam: Viet Nam is a rapidly growing export market. In 2010, New Zealand exports were valued at $420 million, which is around three times the value of exports in 2005. The percentage of New Zealand's trade that is duty free increases from 28 percent in 2006 to 83 percent in 2016, with more trade becoming duty free each year until 99 percent of New Zealand exports are duty free in 2020.
Malaysia: Malaysia, accounted for $776 million of New Zealand exports in 2010. The Agreement provides for the elimination of tariffs on 97 percent of New Zealand's trade by 2012 and growing to 99 percent by 2020.
Singapore: The AANZFTA reconfirms New Zealand exporters’ duty free access (previously secured in the New Zealand-Singapore Closer Economic Partnership (CEP) to the Singapore market, where exports were valued at $826 million in 2010.
Brunei: New Zealand has an existing FTA with Brunei (the Trans-Pacific Strategic Economic Partnership Agreement) which provides for the elimination of almost all tariffs by 2015. New Zealand's exports to Brunei were valued at NZ$4 million in 2010.
Thailand: New Zealand has an existing Closer Economic Partnership (CEP) with Thailand (the New Zealand-Thailand CEP) which provides for the elimination of all tariffs over a twenty year time frame, or by 2025. New Zealand exports with Thailand were worth $679 million in 2010.
Lao PDR, Cambodia and Burma: Total New Zealand exports to these countries were $22 million in 2010. As these three countries have least developed status, their exports have entered New Zealand duty free since 2001. The AANZFTA provides for tariff elimination on between 85 and 88 percent of tariff lines between 2021 and 2024. Given their least developed status, and little to no New Zealand commercial interest, these countries were not a primary focus in these negotiations.
The AANZFTA agreement will make New Zealand exports more competitive in the ASEAN region. Similarly, the removal of restrictions around investment and the supply of services will deliver new opportunities for New Zealand businesses. For instance consider the positive outcome in education, one of New Zealand's priority services sectors. The Agreement includes new commitments in the sector by Indonesia, Malaysia, the Philippines, Thailand and Viet Nam, as well as giving New Zealand education exporters greater certainty and confidence to enter these markets and invest (in terms of resources and effort) in building a market presence in ASEAN countries.
New Zealand's top exports to ASEAN include dairy, meat, forestry, horticulture and manufactured products. The tariff elimination outcome for each of these is outlined below.
Dairy: By 2010, tariffs will be eliminated on whole milk powder, butter and cheese in Indonesia; and casein, milk powder, cheese and butter milk in the Philippines. Tariffs on key dairy products will be eliminated at various stages between 2011 and 2020 (ie within twelve years at the most).
Meat: Tariffs on key beef exports will be eliminated between 2012 (Philippines) and 2020 (Indonesia). Tariffs on sheep meat will be eliminated in 2010 for the Philippines in 2016 for Viet Nam.
Forestry: Tariffs on key products will be eliminated over a twelve year period between 2010 and 2020.
Examples of products that will be eliminated by 2010 include fibreboard and some paper for Indonesia and less processed wood products for the Philippines. Examples of products subject to tariff elimination include plywood and major paper exports to the Philippines (where tariffs will be eliminated in 2017), newsprint for Malaysia (where tariffs will be eliminated in 2020) and some paper and particle board for Viet Nam (where tariffs will be eliminated in 2020).
Horticulture: Tariffs are eliminated on a wide variety of horticulture products, with some globally significant exports subject to early elimination. Tariffs on apples and kiwifruit for instance will be eliminated in 2010 (Indonesia, Malaysia - apples), 2011 (Philippines), 2012 (Malaysia – kiwifruit) and 2016 (Viet Nam). Tariffs on onions will be eliminated by 2010 for Indonesia, and will be reduced from 40 percent to 5 percent in the Philippines, by 2018.
Manufactured Goods: A key benefit of the AANZFTA agreement for manufacturers is that rules of origin can be met on a regional basis. This means that New Zealand manufacturers will benefit through both improved direct access and also through the ability to include New Zealand materials in the origin assessment of goods manufactured and traded within the region by Australia and the ASEAN manufacturers and exporters. This will allow New Zealand manufacturers to better integrate into regional supply chains.
Examples of manufactured products subject to early elimination include navigational equipment, electrical static converters, air conditioners, commercial refrigerators, toys, road sign equipment and switch board equipment. Tariffs on these products (which can be as high as 15 percent) will be reduced and eliminated between 2010 and 2013, in one or more of New Zealand's key markets (Indonesia, Philippines, Viet Nam and Malaysia).
It is standard practice in trade agreements to phase the removal of tariffs over time, in order to allow the sectors in each country time to adjust to the new trading environment.
Although the Agreement provides for tariff elimination on all key products of New Zealand export interest in major markets, there are instances of products of global export interest to New Zealand that are not subject to tariff elimination outcomes. In these cases, the tariff will either be reduced, bound, or the MFN tariff rate will apply. These include some horticulture, wine, seafood, meat, dairy and steel products. Collectively, exports of such products only constitute one percent of New Zealand's exports to the major markets of Indonesia, Malaysia, the Philippines and Viet Nam with a current trade value of $15 million.
The outcomes in this area reflect the AANZFTA agreement Parties' recognition of each others differing levels of development as established in the FTAs "guiding principles". To reflect this, AANZFTA agreement Parties agreed to differentiated timeframes for tariff elimination, with the developed countries (Australia and New Zealand) expected to undertake earlier tariff elimination than the developing and Least Developed Country (LDC) members of ASEAN. (The Guiding Principles for Negotiation on ASEAN-Australia and New Zealand Free Trade Area can be found on the ASEAN Secretariat's website)
New Zealand has retained the ability to take trade remedy actions against unfairly traded imports from ASEAN countries which are dumped or subsidised and injure New Zealand producers, consistent with our WTO rights and obligations.
The ability to take a WTO Global Safeguard action is also retained under the FTA. WTO Global Safeguard measures are temporary measures designed to slow imports of a particular product from all countries, to enable a domestic industry to adjust to heightened competition from foreign suppliers. However the FTA provides for the possibility of excluding imports from the other Party if such imports are non-injurious.
The Agreement also contains additional transitional safeguard measures for commitments undertaken in the FTA. Under these measures, countries will be able to revert to higher tariffs for a limited period (of no more than 3 years) where there is 'serious injury' or the threat of serious injury to domestic industries caused by increased imports due to tariff reductions under the FTA. A provisional safeguard measure (for 200 days) may also apply in limited circumstances, before an investigation has been completed. In New Zealand, the Ministry of Economic Development has the responsibility for carrying out such investigations.
Products from any country need to meet relevant standards in New Zealand. This applies whether or not we have an FTA with the country of origin of the product concerned.
Decisions on matters affecting New Zealand biosecurity and food safety will continue to be made and enforced strictly in accordance with our existing regulatory regime, and international obligations.
An FTA, however, can provide a framework for increased cooperation between regulators in enhancing standards and their compliance. The FTA has procedures for resolving Sanitary and Phytosanitary (SPS) issues when they arise. SPS issues relate to the protection of human, animal or plant life or health by preventing the introduction of pests and diseases.
The FTA also establishes a framework to avoid SPS issues arising, creating a mechanism for encouraging the AANZFTA Parties to improve transparency, communication and consultation on SPS issues and to strengthen cooperation of equivalence in accordance with 'international standards, guidelines and recommendations.'
New Zealand businesses have operated in a relatively open economy for a number of years and have worked to shape their businesses to compete in a competitive global economy.
The views of New Zealand businesses were sought throughout the negotiating process and their interests with respect to ASEAN are diverse. Manufacturers that export directly to the region, or who use imports from the region as inputs into their products, will benefit from the elimination of tariffs on both sides.
Some manufacturers are concerned about the prospect of increased competition from ASEAN in the New Zealand market. The way New Zealand has taken these concerns into account in previous agreements is through the phased removal of tariffs over time to help smooth any adjustment process. To this end, New Zealand will eliminate tariffs on all products originating from ASEAN partners, with longer transitional periods of up to twelve years for some goods in import-sensitive manufacturing sectors (such as clothing, footwear, carpet, certain textiles, furniture, plasterboard and some steel products).
It is also important to note that outside of FTAs, New Zealand is already committed to a programme of unilateral tariff reductions in areas where tariff barriers remain in place.
Assuming a July 2009 entry-into-force of the Agreement, products with later elimination, in some cases as late as 2020 (ie a twelve year timeframe), include: clothing, footwear, carpet and some textile products; some other manufactured products which include (wooden) furniture, some steel products and plasterboard (gib-board). Tariffs on the most heavily traded items from ASEAN partners, including clothing, footwear and furniture products will be eliminated by 2017 or later.
Goods exported to ASEAN countries require a Certificate of Origin in order to benefit from preferential tariffs under the FTA. The Certificate of Origin system will facilitate trade by providing New Zealand exporters with the ability to access the tariff benefits negotiated in the FTA if they follow agreed processes. The certificates of origin will be issued by Issuing Bodies and notified to ASEAN secretariat.
A Certificate of Origin shall remain valid for 12 months from the date of issue.
The AANZFTA Certificate of Origin system will involve some small additional costs for New Zealand exporters if the new FTA with China is any guide (where a similar system is in force). Any additional documentation costs however, will be considerably outweighed by the tariff-preference benefits derived from the AANZFTA Agreement.
New Zealand does not require that imports into this country be accompanied by certificates of origin. This has been standard policy since the 1970s.
In accordance with long-established practice, New Zealand will not require that certificates of origin accompany imports from ASEAN countries. Normal risk management techniques in this area will provide sufficient assurance that under the rules of origin, only goods originating in an AANZFTA Party will receive the benefits of the FTA tariff preference.
A certificate of origin will not be required when goods originating in a Party have a value of US$200 or a lesser amount.
Only goods which qualify as originating from New Zealand (and, with minor exceptions, are covered by a Certificate of Origin) will benefit from the preferences available under the FTA.
In general a good can qualify as 'originating' under the Agreement if:
A good which complies with the origin requirements is eligible for preferential tariff treatment if exported to an AANZFTA Party. Eligibility is retained if the good is subsequently re-exported to another AANZFTA Party.
The Agreement therefore provides 12 manufacturing bases from which to source input materials. There are twofold benefits:
For any good to qualify for preference it must be consigned directly between the AANZFTA agreement Parties. If transport involves transit through one or more other countries which are not Party to the AANZFTA agreement, the goods must not enter trade or commerce there or undergo anything more than simple logistical processes, such as unloading and reloading, repacking, or any operation required to keep them in good condition.
For products that contain third party inputs, the Agreement provides alternative pathways for determining origin:
The option of either the CTC of RVC approach varies for some products. For motor vehicles and automotive parts, the rule is a 40 percent RVC rule only. For some textiles, the RVC option is replaced by an alternative process rule, while for carpets and footwear there is no RVC option. For a limited number of products, the CTC rule is supplemented with a minimum RVC requirement of 35 percent FOB.
Trade in services covers areas such as tourism, education and professional services. Services can be supplied:
For sectors listed in the services schedules to the FTA (and subject to the restrictions specified in the schedules), the FTA establishes the general obligation of ‘market access' and ‘national treatment'.
The national treatment obligation means that each country will treat service suppliers from the other countries no less favourably than it treats domestic suppliers in like circumstances.
The market access obligation means that each country should not be able to restrict access to their market in the form of limitations on foreign capital or on the:
As well as market access and national treatment, the Agreement improves on WTO Agreement on Trade in Services (GATS) disciplines in relation to transparency, domestic regulation and administrative processes and in the inclusion of investment protections for the supply of services by a service supplier through commercial presence.
8 of the 10 ASEAN partners have made services commitments that expand on their previous commitments. The two that have not are Cambodia (which has only recently acceded to the WTO and therefore did not offer improvements over and above those it has recently agreed with WTO members) and Lao PDR (which is not currently a WTO member and does not therefore have any existing GATS commitments - as a consequence all of Laos' commitments represent a net benefit to New Zealand). New commitments made by ASEAN countries are in the following sectors:
Indonesia and Malaysia have also made GATS-plus commitments on the establishment of commercial presence (Mode 3) that will apply to all sectors in their respective schedules.
The FTA contains a range of GATS-plus outcomes for education services. This includes new commitments in the sector by Indonesia, Malaysia, the Philippines, Thailand and Viet Nam. These outcomes provide valuable gains in terms of transparency and certainty (i.e., that access conditions cannot be made worse than current commitments). This is a benefit education exporters from other countries will not have in ASEAN markets. The certainty that ‘the rules of the game won't change for the worse' will give New Zealand education exporters greater confidence to enter these markets and invest in a building a market presence in ASEAN countries.
In addition to a general review clause to renegotiate services commitments with the aim of further improving commitments within three years of entry into force of the FTA, Viet Nam has committed to provide ‘Most Favoured Nation' (MFN) treatment to New Zealand for mode 1 higher education services (i.e. distance learning, mostly internet-based). This means that any improvements Viet Nam provides to a future partner in an FTA (involving ASEAN) in this area will be automatically extended to New Zealand as well. This helps future-proof New Zealand education service providers interests in a key and growing regional market.
The AANZFTA agreement includes specific annexes on telecommunications and financial services that introduce a number of commitments that expand on existing ASEAN commitments in the GATS in these areas.
The Agreement includes a schedule of specific commitments from each of the Parties on the temporary entry and stay of particular categories of business people, investors and service suppliers. Some of the key improvements on GATS commitments are:
New Zealand's commitments are within New Zealand's existing immigration policy parameters and provide for the entry of ASEAN member country business visitors and installers/servicers for up to three months in any calendar year. Executives, managers and specialists, as intra-corporate transferees, are permitted to enter for up to three years. ASEAN member country Independent Professional Service Suppliers are permitted entry for up to one year, subject to labour market tests.
Yes, the Agreement will provide greater security for New Zealand investors and investments in ASEAN markets.
ASEAN Partners have committed to providing New Zealand investments approved and established in their countries the same level of treatment and protection as they provide nationals of their own countries. This applies subject to market access commitments, which Parties are scheduled to negotiate within five years of entry into force.
The FTA provides for additional protections for New Zealand investors in ASEAN countries. These include protection from arbitrary expropriation, compensation for losses owing to armed conflict, civil strife, or state of emergency, provisions to allow the free transfer of payments relating to a covered investment, and a commitment to accord covered investments minimum international law standards of fair and equitable treatment and full protection and security.
The Agreement includes provisions to enhance the transparency of investment regimes, including by requiring the publication of a country's international investment agreements and domestic investment measures. It also includes provisions for the compulsory settlement of disputes between foreign investors and the country in which the investment is made. This will give New Zealand investors recourse to international procedures beyond the domestic legal system in certain circumstances. These procedures can be accessed only if a dispute cannot be settled through consultation and negotiation, and unless the Parties to the dispute agree otherwise.
The Agreement ensures that the intellectual property rights of New Zealand businesses are protected and can be enforced according to international standards.
The FTA recognises the importance of cooperation in the promotion of competition, economic efficiency, consumer welfare and the curtailment of anti-competitive practices. It offers the prospect of facilitating over time the development of competition policy frameworks amongst AANZFTA agreement Partners through cooperation and capacity building.
Yes. The FTA establishes a framework for economic cooperation designed to directly support implementation of the Agreement and to enable all Parties to maximise the benefit they receive from the Agreement.
To this end, an Economic Cooperation Work Programme (ECWP) has been established that sets out objectives and indicative cooperation activities for supporting the implementation of FTA.
The nine areas of activity covered by the ECWP include: rules of origin and implementation of tariff commitments, SPS measures, technical barriers to trade, trade in services, investment, intellectual property, sectoral integration, competition and customs.
As in New Zealand's previous agreements, the FTA maintains New Zealand's ability to take measures it deems necessary to accord more favourable treatment to Māori, including in fulfilment of its obligations under the Treaty of Waitangi.
The FTA does not preclude New Zealand from taking measures necessary to protect national treasures or specific sites of historical or archaeological value or to support creative arts of national value.
In addition to the exceptions relating to the Treaty of Waitangi and creative arts, the FTA contains exceptions to ensure that each government retains decision-making powers in areas of national importance.
Provided that such measures are not used for trade protectionist purposes, the FTA will not prevent New Zealand from taking measures necessary to:
The FTA will not prevent New Zealand from taking any actions necessary to:
Taxation measures are also largely excluded from the Agreement and there are limits on the requirements to disclose information if to do so would be contrary to public interest or to law.
The FTA includes a robust and transparent dispute settlement mechanism for the avoidance or settlement of disputes between the Parties arising out of the Agreement. This includes a provision for the establishment of an arbitral tribunal should consultations fail to settle a dispute.
The dispute settlement mechanism applies to all commitments made under the Agreement excluding those made under Economic Cooperation, Competition, Electronic Commerce and Sanitary and Phytosanitary Measures Chapters.
A general review of the FTA is scheduled to take place in 2016, and every five years thereafter. This review provides the opportunity to accelerate or expand the commitments under AANZFTA.
New Zealand already has labour and environment instruments negotiated in the context of FTAs with Singapore, Brunei Malaysia and Thailand.
As ‘least developed countries’, pursuing labour and environment instruments with Vietnam, Cambodia, Laos and Myanmar was seen to offer little of mutual benefit at this time.
Of the remaining ASEAN partners, New Zealand has concluded labour and environment instruments with the Philippines. A reason for focusing on the Philippines is that they were a partner with which negotiations on labour and environment instruments were judged to be feasible and where they were able to offer mutual benefit.
As with the Trans-Pacific Strategic Economic Partnership Agreement and the New Zealand-China FTA, the MOAs signed with the Philippines in the broad context of AANZFTA agreement are binding inter-governmental treaty-level instruments.
The purpose of the MOA on Labour Cooperation is to improve dialogue and conduct cooperative activities on labour matters.
The MOA recognises that it is inappropriate to set or use labour laws, regulations, policies and practices for trade protectionist purposes, or to encourage trade or investment by weakening or reducing the protections afforded in domestic labour laws, regulations, policies and practices.
Each country will designate a contact point to facilitate communication between the two countries. A Labour Committee shall also be established to oversee a programme of cooperative activities, serve as a channel for dialogue on matters of mutual interest, review the operation and outcomes of the MOA, and provide a forum for resolving differences. Parties will provide funding to support mutually agreed cooperative activities.
The MOA provides opportunities for governments to seek input on implementation from union representatives and non-government organisations and make provision for public participation in cooperation activities.
Under the MOA on Environment Cooperation, the Philippines and New Zealand have agreed to cooperate on mutually agreed environmental issues.
Each country recognises that it is inappropriate to set or use environment laws, regulations, policies and practices for trade protectionist purposes as well as to encourage trade or investment by weakening or reducing the protections afforded in domestic environment laws, regulations, policies and practices.
Each country has agreed to designate a contact point to facilitate communication between the two countries. An Environment Committee shall also be established to oversee a programme of cooperative activities, serve as a channel for dialogue on matters of mutual interest, review the operation and outcomes of the MOA, and provide a forum for resolving differences.
The agreement on environmental cooperation provides opportunities for governments to seek input on implementation from non-government sectors and other organisations in identifying potential areas for cooperation. The Parties may invite the participation of non-government sectors and other organisations in undertaking cooperative activities as mutually agreed between the Parties.
The AANZFTA agreement does not cover employment. However in conjunction with the AANZFTA agreement negotiations, but not as part of the FTA itself, New Zealand has entered into separate arrangements of less than treaty status for temporary employment entry into New Zealand with the Philippines and Viet Nam. These arrangements provide for entry as employees for up to three years dependent upon the employment agreement, without labour market testing and subject to specified qualifications requirements that are designed to avoid these commitments being used to displace New Zealand workers. They are:
100 registered nurses;
20 farm managers; and
20 engineering professionals.
100 chefs; and
100 engineering professionals.
The skill-based and numerical limits on the commitments, together with the requirements that prospective employers observe New Zealand labour market conditions (including wage rates) are intended to mitigate the risk of displacing New Zealand workers while offering economic opportunities to key ASEAN partners.
New Zealand has also reached joint understandings to enter into negotiations on reciprocal working holiday schemes with the Philippines and Viet Nam (as with the arrangements on temporary employment entry, these understandings do not form part of the FTA itself).
New Zealand attaches importance to dialogue with all countries on human rights. We discuss human rights and rule of law matters regularly and using a variety of channels. It is also important to note that FTA considerations do not constrain the dialogue we have with counties on human rights.
In bilateral and multilateral forums New Zealand has consistently condemned human rights abuses including the absence of national reconciliation or genuine reform in Burma.
Burma's membership of ASEAN, as with its membership of the WTO however, has required New Zealand to deal with them in that context. This has not extended to bilateral engagement or direct negotiation during the negotiating rounds. More generally, New Zealand's approach remains that it is not in New Zealand's wider interests to suspend the regional negotiation with all ASEAN member states based on the issues specific to one member country.
Last updated: 19 January 2012