Note: Advance written questions by WTO Members and replies provided by the Government of
New Zealand are reproduced in document WT/TPR/M/115/Add.1 and will be available online
at:  http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm.WORLD TRADE
ORGANIZATIONWT/TPR/M/115
17 June 2003
(03-3195)
Trade Policy Review Body
12 & 14 May 2003
TRADE POLICY REVIEW
NEW ZEALAND
Minutes of Meeting
Chairperson:  H.E. Mrs. Mary Whelan (Ireland)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF NEW ZEALAND 4III. STATEMENT BY THE DISCUSSANT 7
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 9
V. REPLIES BY THE REPRESENTATIVE OF NEW ZEALAND AND ADDITIONAL
COMMENTS 21
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 24WT/TPR/M/115
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The third Trade Policy Review of New Zealand was held on 12 and 14 May 2003.  The
Chairperson (H.E. Mrs. Mary Whelan) welcomed the delegation of New Zealand, headed by
H.E. Mr. Tim Groser, Ambassador of New Zealand, and the discus sant H.E. Dr. Manzoor Ahmad
(Pakistan).  As usual, the discussant would spea k in his personal capacity and, in accordance with
established procedures, he had made available in advance a broad outline of the themes he intended to
raise (document WT/TPR/D/94).
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The Report by the Government of New Zealand was contained in
document WT/TPR/G/115 and that of the Secret ariat in document WT/TPR/S/115.  Copies of
advance written questions, submitted by Indonesia;  India;  Switzerland;  Canada;  Colombia;
Hong Kong, China;  Argentina;  Japan;  Chinese Taipei;  Korea;  European Union;  Norway;  Brazil;
Chile;  and the United States, had been transmitted to the delegation of New Zealand.  These
questions and the replies provided by the delegation of New Zealand are reproduced in
WT/TPR/M/115/Add.1.
3. She had read with great interest the reports prepared by the Government of New Zealand and
the Secretariat for this Review.  Both reports had highlighted the fact that radical macroeconomic and
structural reforms, including trade liberalization, in the 1980s and 1990s had transformed
New Zealand into one of the most open economies in the world.  The outcome had been a marked
improvement in New Zealand's economic performance, which had enabled it to withstand recenteconomic shocks, including the 1998 Asian financial crisis.  Notwithstanding this improved
performance, New Zealand's real per capita income remained below the OECD average.  She noted
that in the hope of raising New Zealand's GDP per capita to the top half of the OECD ranking and
thereby making up for ground lost during the past few decades, the Government had been re-
examining some of its previous reforms.  In partic ular she mentioned the freeze in unilateral tariff
reductions, the halt to privatization, and a shift from a largely "passive" to more "proactive" approach
to economic policy.  She was sure Members would be interesting in learning from the New Zealand
delegation how such policies might contribute to moving New Zealand's GDP per capita back up the
OECD ranking.WT/TPR/M/115
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF NEW ZEALAND
4. The representative of New Zealand said his delegation was pleased to participate in the
review and he thanked the Secretariat for its careful work.  New Zealand was a strong supporter of the
WTO Trade Policy Review Mechanism because it promoted domestic transparency and helped
economies work towards the WTO goal of free and open trade in goods and services.  New Zealandwas committed to transparent, stable macroeconomi c policies.  The TPRM also highlighted Members'
liberalization efforts and their impact on the multilateral trading system, which was also a useful
forum for Members to set out their wider economic and development needs in the context of their
particular trade policy ambitions.
5. In 1975, New Zealand had the highest effective rate of protection (ERP) in the OECD.  It was
twice as high as the ERP of the second most high ly protected country in the OECD.  So, while New
Zealand was currently ranked by the 2003 Index of Economic Freedom, compiled by the Wall StreetJournal and the Heritage Foundation, as the third freest economy out of 156 surveyed, it had not
always been the case.  New Zealand had come a long way from the severely distortive policies that
had caused it to slip from its position of what most economic historians believed to be the richest or
second richest country in the world in 1900;  as recently as 1950, New Zealand was the third richest
country in the world in per capita terms.  The main cause of the decline in incomes was the massivedistortion in New Zealand's own policies, and protectionism against its temperate climate agricultural
products.
6. Since its last Trade Policy Review, New Zealand had weathered natural disasters, an Asian
economic crisis, and the economic downturn after 11 September, having put in place sound
institutions, very few subsidies, and low tariffs.  In 2002, the economy grew in real terms by 4.4% anda little under 3%, on average, since 1996.  Growth of around 4% was expected for 2003.  Inflation
remained low, at 2.8%, and within the Reserve Bank’s target range, compared with around 15% per
year during the period 1973/74 to the mid-1980s.  Unemployment had declined to 4.9%, the lowest
rate in 15 years.  New Zealand was also experiencing strong net inward migration as economic,
security, and lifestyle factors worked in its favour.
7. Tariff and non-tariff barriers to trade had been greatly reduced since the 1980s through a very
significant period of economic reform.  New Zealand was the only developed country to have had a
comprehensive system of import licensing, to keep out competitive imports, until it was finally
abolished in the late 1980s.  The only remaining restrictions had nothing to do with protection, but
with SPS measures or social objectives.  Tariffs had also been reduced, from an average rate of
around 30% in the late 1980s to 4.1%.  The extent of liberalization had been recognized in the last
TPR, conducted in 1996, when the Chair's concluding remarks stated, "the overall depth andradicalism of the reform process was positively assessed and was seen as offering useful lessons for
the economies of other WTO Members".
8. Since then, the Government had chosen to focus on reciprocity for any further remaining
liberalization.  New Zealand felt that it had done the hard work and wanted to preserve what was left
for the negotiations.  Enormous internal gains had been made from unilateral liberalization following
the initial phase of negotiation through a comprehensive free-trade area with Australia signed in 1982,
which was the first real liberalization by New Zealand.  New Zealand had gone as far as it chose to for
the time being and awaited the outcome of negotiations, whether multilateral, New Zealand's top
priority, or bilateral or regional negotiations presently under consideration.
9. New Zealand had not stepped back from its trade and economic reforms.  The economic
fundamentals were firmly in place, trade liberalization was one of the components that had led to
successful and sustainable economic growth.  The quality of the regulatory framework and
coordination of policies was also very important, especially for small and medium enterprises, whichWT/TPR/M/115
Page 5
were the majority of New Zealand businesses and a new framework had been launched to develop
innovative solutions for the future through the Growth and Innovation Framework (GIF).
10. As an isolated island nation, New Zealand was particularly interested in ensuring a good
outcome to the Doha Development Round.  For a small country a rules-based system was crucial for
supporting and safeguarding its trade interests.  New Zealand had a strong interest in promotingmarket access liberalization, particularly in light of its own substantial liberalization and due to the
very high restrictions on its main export:  agriculture.  Agricultural exports accounted for around 48%
of New Zealand's total exports, around six times  the OECD average, and around 15% and 16%,
respectively, of GDP and employment.  Accordingly, the Doha Development Agenda (DDA) was the
Government’s top trade priority.
11. New Zealand's focus on agriculture was hardly surprising given the structure of its economy.
Moreover, every economic study conducted during  the Uruguay Round showed that New Zealand
would, in relative terms, gain more than any other country in the world from comprehensive
multilateral agricultural reform because its exports were concentrated in the most highly protected
area of international trade.  Thus the damage to the New Zealand economy from restrictions imposed
by other WTO Members had been enormous.  The Uruguay Round, even though liberalization in
agriculture achieved through it was relatively small, did reverse some of the damage done over theyears and therefore New Zealand expected to achieve significant progress from the implementation of
the DDA.
12. New Zealand’s focus was, however, significantly wider than agriculture and, in
November 2002, it had submitted a proposal to remove all remaining tariffs on non-agricultural
products as an outcome of the negotiations.  For those who believed the statement in the SecretariatReport that said New Zealand was no longer prepared to unilaterally liberalize the average 4.1% tariff
in the future, he reminded them that New Zealand position was the most pro-trade-liberalization of
any WTO Member.  The proposal was made despite domestic opposition.  New Zealand had also
submitted, on time, and in the face of domestic opposition, a credible and substantive offer on
services.  By meeting this deadline he hoped that momentum could be built for liberalization in allareas, not just agriculture.
13. A recent article in The Economist  listed New Zealand as the third most development-friendly
country in the world, based not just on trade policy but on migration and other issues.  In its trade
policy, New Zealand strongly supported the DDA development objectives and wished for improved
opportunities for developing countries.  New Zealand believed that trade liberalization was central to
economic development and was pleased to have seen an explosion in south-south trade over the last
15 years.  As developing countries had opened their markets to each other, and had taken advantage ofthese open markets, New Zealand was determined to support them in attacking the remaining
developed-country restrictions on their exports including in agriculture and labour-intensive sectors.
New Zealand sympathized with de veloping countries and supported proposals to liberalize market
access restrictions of interest to them, and to attack subsidies, which they could not afford.  With
regard to least developed countries, New Zealand had already shown that it was prepared to do its partby removing tariffs on all imports from this source on 1 July 2001.
14. The original bilateral trade agreement between New Zealand and Australia, the NAFTA, was
signed in 1965.  This had been the perfect expression of protectionism, and was designed to protect
both markets.  Since them, the bilateral relationship had changed significantly with both countries
having liberalized to a high degree.  New Zealand was a good example of why high quality regionalagreements could assist, politically and economically, in multilateral liberalization.  The original
NAFTA agreement between New Zealand and Australia was an obstacle to multilateral trade
liberalization.  Because New Zealand was much mo re protected than Australia in the early 1970s, a
decision was made to liberalize regionally because of the strong opposition to multilateralWT/TPR/M/115
Page 6
liberalization in New Zealand.  The regional agreement was a stepping stone to multilateral
liberalization.
15. New Zealand had recently concluded another such agreement, the CEP with Singapore, and
was engaged in efforts to expand this bilateral relati onship to Chile, in the "Pacific three" agreement.
New Zealand was also committed to successfully concluding negotiations with Hong Kong, China.Thus, there were two principle drivers of liberalization in New Zealand's trade policy framework:  the
most important was the multilateral process and, at a distant second, New Zealand's regional policy,
which was used as long as it was consistent with multilateralism.  One could pursue aggressive
multilateral and regional liberalization at the same time.
16. He reaffirmed New Zealand's commitment to the TPRM and to multilateralism and to doing
whatever it could as a small but very active player in the negotiations, and ensuring that the promise
of the Doha Development Agenda was brought to fruition in the months ahead.WT/TPR/M/115
Page 7
III. STATEMENT BY THE DISCUSSANT
17. The Discussant (H.E. Dr. Manzoor Ahma d), made his comments under macroeconomic
environment, trade policy regime, and sectoral policies.
Macroeconomic environment
18. New Zealand's macroeconomic and structural reforms since the mid 1980s had made it one of
the most open economies in the world.  Substantially improved growth and macroeconomic stability
had ensured success in withstanding recent shocks such as the global slowdown in 2001 and adverse
climatic conditions. The 4.1% real GDP growth fo recast for 2003 compared favourably with global
growth forecasts of 3.2%;  other indicators such as employment and inflation had also improved
markedly.  Despite this, New Zealand was concerned about its slippage in the OECD per capita GDP
rankings and had implemented new policies, including a freeze in tariff reductions and further
privatization of state assets, and a more proactive government policy.
19. Possible reasons for growth not being as high as expected included:  heavy reliance on
agricultural exports, for which demand had grown relatively slowly and which faced highly protected
and distorted world markets;  distortions in Ne w Zealand's agricultural sector, including export
monopolies held (until recently) by state trading enterprises, which could have had a negative impact
on productivity;  and concentration on agriculture, in which it had comparative advantage, which mayhave prevented diversification into more innovative manufacturing and services activities.  Other
possibilities included New Zealand's small size and geographical distance from major markets,
limiting the ability of firms to exploit economies of scale and to export; insufficient private
innovation; and relatively high capital cost due to inadequate national savings.
Trade policy regime20. New Zealand had a highly transparent policy-making framework including extensive public
consultation.  Any papers considered by Cabinet had to demonstrate such consultation.  The foreign
direct investment (FDI) regime was relatively ope n, although FDI in land was subject to "national
interest" provisions.  Additional criteria applied to farmland, including that the investment result in
"substantial and identifiable benefits" to New Zealand and that the land first be offered for sale in theopen market to non-overseas persons.  Being hi ghly dependent on FDI, New Zealand was trying to
encourage investment, including through an Investme nt Promotion Agency.  It was also considering
tax measures to attract FDI;  there were no tax incentives for FDI.
21. New Zealand participated actively in the WTO, and had submitted several proposals in the
current negotiations, including in agriculture, non-agricultural goods, strengthening trade rules, and
better integration of WTO rules with other priorities such as sustainable development.  It had already
scheduled several services in the GATS and had included new sectors in its current initial offer.New Zealand's most important bilateral trade relationship was with Australia but it had also signed an
agreement with Singapore and was negotiating agreements with Hong Kong, China, and a trilateral
"Pacific Three" with Chile and Singapore.  The shift from unilateral to reciprocal liberalization was
also reflected in New Zealand's tariff policies and in its commitment to meet the APEC goals of free
trade and investment by 2010 "on the basis of reciprocity".
22. Most import (and export) restrictions had been removed and tariffs reduced significantly.
Tariffs had been reduced mainly unilaterally and were to fall to an average 3% by 2000 and to zero by
2006.  However, in 2000, further reductions were frozen until 2005 pending an ongoing review.  The
simple average MFN rate in 2002 was low, at 4.1%, although there were peaks and escalation
especially in textiles, clothing, and leather products.  Clothing was also subject to alternative specificduties consisting of an ad valorem  and a specific rate, which tended to make the tariff complex and
unpredictable.  MFN tariff concessions were provided, including for humanitarian work, customsWT/TPR/M/115
Page 8
facilitation, trade policy reasons, and industry assistance.  Imports from Australia and Singapore were
tariff free and some imports from Canada and the United Kingdom were granted concessions.
Unilateral tariff preferences were given to developing and least developed countries (LDCs) under its
GSP programme and to the Forum Island countries.  While imports from LDCs were duty free as of
1 July 2001, developing countries were granted a tariff concession of up to 80% for all goods exceptapparel, footwear, and some motor-vehicle parts and accessories.  Import and export restrictions were
mainly maintained under international agreements or for health and safety.  SPS measures applied to
most agricultural products and in effect there were no imports of fresh eggs, poultry, and most
unpasteurized cheeses.
23. The Government declared a freeze in privatization in 1999, re-nationalized Air New Zealand
and the Accident Compensation Corporation, and created Kiwibank, owned by New Zealand Post, a
public sector agency.  A "proactive" policy, including to promote high technology activities such asbiotechnology, information and communication tec hnologies, and creative industries, signalled
greater intervention.  The competition law, the Commerce Act, was strengthened, although the
introduction of specific legislation in some sectors, suggested that the Commerce Act may not
adequately address competition.  There were partial exemptions from the Act for some entities and
sectors.
Sectoral issues
24. Agriculture (5.4% of GDP) was an important ex port sector and New Zealand believed growth
could be enhanced if tariff and non-tariff barriers on exports were removed.  The sector was efficient,
and received very little government assistance (New Zealand's producer support estimate—PSE was
the lowest in the OECD area).  Nevertheless, until recently, STEs had dominated agricultural exports.These were gradually being reformed, which was encouraging.  Manufacturing (15.4% of GDP) was
dominated by food products;  other industries in cluded textiles, clothing, and footwear, which were
supported by relatively high tariffs.  The Government was promoting high technology sectors, in
which it believed New Zealand had a comparative advantage.  Services was the largest sector (67% of
GDP);  the main exports included education, professi onal services, travel, and transport.  Exports of
tourism and related services were growing fast.  State intervention was minimal, although government
control was maintained over some companies, incl uding the three main electricity generators, and
there was significant state ownership in transport.
25. He noted that New Zealand's trade and investment regime was one of the most transparent
and liberal in the world.  However, a few issues required clarification:  while there were no quotas on
textiles and clothing and no duties for imports from LDCs, substantial tariff peaks (some involving
rather opaque "specific alternative duties") and escalation impeded imports, including fromdeveloping countries.  The justification for main taining some tariff preferences was not very clear.
For example, there were preferences on imports of motor vehicles from the United Kingdom,
although no preferential agreement with the United Ki ngdom appeared to exist.  While there were few
restrictions on imports other than tariffs, SPS measures appeared to be rather stringent although New
Zealand pushed countries to open their markets to agricultural products.  New Zealand stated that itdid not maintain local-content requirements, howev er, local manufacturers could claim concessions
upon demonstrating that the domestic content of a locally produced product was not less than 25% of
ex-factory cost of production.  During the last  eight years, almost two thirds of anti-dumping
investigations had been terminated with no final measures being taken.  This ratio appeared to be
rather high and he suggested more care and scrutiny might be exercised in initiating investigations.He noted the pause, or roll-back, of certain reforms, in particular, tariff liberalization and privatization
and the change from a "passive" to a rather more "proactive" approach to economic policy.  It was
difficult to understand this change in policy direction given that New Zealand acknowledged the
significant contribution of reforms to arresting its relative economic decline.  Any halt or roll-back of
reforms would appear to send a signal that tari ff cuts, privatization, and a "hands-off" approach to
policy worked only to a certain degree, and perhaps should not be pursued beyond a certain level.WT/TPR/M/115
Page 9
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
26. Members praised New Zealand for its radical economic and structural reforms, which had
made it possible to withstand external and climatic shocks.  As a result, New Zealand was one of the
world's most open economies and continued to grow rapidly in the face of a global economic
slowdown.  They appreciated New Zealand's solid support for a rules-based multilateral tradingsystem.  Several Members praised the head of the delegation in his role as Chair of the negotiating
group on Rules and for moving negotiations forward, and the delegation of New Zealand for ensuring
New Zealand's effective participation at the WTO.  A number of Members had raised questions in
writing and appreciated the written responses provided by New Zealand.
27. The representative of the Philippines representing ASEAN noted the good bilateral and
regional economic and trade relations with New Zealand.  He also highlighted the joint Ministerial
Declaration on the AFTA-CER Closer Economic Pa rtnership (CEP) in 2002 by ASEAN, Australia,
and New Zealand.  The CEP was ambitious and ai med to double trade and investment by 2010.  He
also commended New Zealand's radical macroeconomic and structural reform, leading to substantially
improved economic performance, despite the Asian crisis and the global slowdown in 2001.
28. New Zealand’s average applied MFN tariff rate had fallen to 4.1%.  However tariff peaks in
some sectors remained a potential source of distortion. Although tariffs for agriculture were relativelylow, average rates for textiles and clothing were significantly higher at 9.5% and the sector exhibited
escalation.  This was of concern to a number of ASEAN countries as these products were excluded
from GSP schemes.  He urged New Zealand to review these rates as they impeded efficient resource
allocation and were an obstacle to developing countries' exports.
29. New Zealand's SPS measures were based on risk analysis consistent with international
standards.  However, they had led to an effective ban on imports of most unpasteurized cheese, eggs,
and poultry, suggesting that they were unduly restrictive and worthy of re-examination.  ASEAN was
also concerned that some of its members had be en the subject of anti-dumping investigations.
Although the majority of these investigations were terminated without final measures being taken, in
most cases trade was disrupted due to their chilling effect and he urged prudence in initiating suchinvestigations.
30. The representative of India noted that although New Zealand had successfully withstood the
Asian crisis and the global economic slowdown, its per capita GDP remained below the OECD
average, leading to a reassessment of previous reforms.  A number of these reforms, like unilateral
tariff liberalization and privatization of state assets, had been frozen.  Under the "Growth and
Innovation Framework", the Government had assumed a more proactive role.  He asked which factors
and circumstances had led the Government to shun its laissez faire policies.
31. New Zealand believed that free-trade agreements (FTAs) had the potential to remove tariff
barriers on a preferential basis and to deepen economic integration, and that regional initiatives could
contribute to moving the WTO process forward.  The representative hoped that steps would be taken
to ensure that such agreements did not lead to unpredictability in market access for third countries
through trade diversion.
32. While New Zealand's actions to liberalize agricultural trade were noteworthy, there was a
slight paradox in its highly stringent quarantine and SPS/TBT regime.  This had adverse effects on
market access for agri-products, a sector of export interest to many developing countries.
New Zealand's bio-security policy effectively banned the import of most non-pasteurized cheese,
fresh eggs, and poultry.  Such a conservative and stringent quarantine policy could not be reconciledwith the objective of agricultural trade liberalization.  India urged New Zealand to ensure that these
regulations did not become disguised trade restrictions.  Despite generally low tariffs, tariffs on
products of export interest to developing countries,  like textiles, clothing, and footwear, were high.WT/TPR/M/115
Page 10
Tariff peaks and escalation were also high in these three sectors.  Moreover, clothing was subject to
"alternative specific tariff rates" where importers paid the higher of the ad valorem  or specific rate of
duty.  This unduly penalized low value exports and made the system complex and unpredictable.  In
the spirit of the Doha Declaration, India requested that these tariffs be lowered and simplified.
33. India appreciated New Zealand's active and constructive participation in the WTO and was
encouraged by its statement of strong support for the centrality of development issues in the Doha
round.  The Report by the Government discussed New Zealand's commitment to labour aspects of
trade negotiations.  India strongly opposed any direct or indirect inclusion of labour issues in WTO
work.  At Singapore, Ministers had decided that the International Labour Organization (ILO) was the
body "to set and deal with" the labour issue.  It would not be appropriate to bring it up in the context
of trade negotiations.  He reiterated India and New Zealand's strong bilateral relations, reflected in a
Joint Business Council (JBC) to review and improve bilateral economic and commercial ties.  He wasconfident that bilateral interactions would widen and deepen further in coming years.
34. The representative of Switzerland stated that mainly as a result of strong domestic demand,
New Zealand's economic growth had continued and was expected to average 4.4% in 2002, one of the
highest among OECD countries.  These results were  accompanied by moderate inflation and healthy
public finances and could be attributed to the openness of the New Zealand economy.  LikeSwitzerland, New Zealand was a small, open economy and believed that a multilateral trading system
based on rules was indispensable for promoting and protecting its trading interests.  Switzerland
welcomed their common position on many subjects in the Doha Round.  Obviously, there were small
disagreements like in many relationships, such as in agriculture, and he hoped these would not perturb
their long-standing good relations.  In this regard, Switzerland could guarantee that it would not askfor protection of geographical indication for "Alinghi".
35. The conclusion of regional and bilateral economic agreements by New Zealand and an
increase in such negotiations showed that its priority was reciprocal trade relations over unilateral
liberalization.  He asked about the current strategy on such agreements.  He regretted that New
Zealand was not a member of the Agreement on Government Procurement and asked whySwitzerland's experience in implementing the agreement nationally and regionally had led to the
strengthening and predictability of markets and procurement procedures;  the experience had been
positive and encouraging.
36. The representative of Canada said that New Zealand remained one of the most open
economies and most active advocates of free trade in the world, with an outward-looking trade policy
perspective.  Although momentum had slowed somewhat recently, there had been a consistent record
of deregulation and trade liberalization over the past decade and a half.  Notably, in 2001, despite amoratorium on unilateral tariff cuts, New Zealand had removed tariffs on imports from LDCs.
New Zealand was seen as a leader in trade liberalization and was well placed to benefit from the
positive outcome of the DDA negotiations.
37. As a key member of the Cairns Group, New Zealand was pragmatic and constructive in
promoting an ambitious outcome on agriculture in the current trade negotiations.  Canada was pleasedto partner New Zealand in efforts to eliminate agricultural export subsidies, substantially reduce trade-
distorting domestic support, and open markets further for agricultural products.  However, elements of
New Zealand’s domestic policy had an impact on international trade and investment.  An indefensible
"temporary" prohibition on imports of trout had been imposed in December 1998, and extended
several times since.  Canada wished to know when the ban would finally be lifted.
38. New Zealand was active regionally and bilaterally;  it had bilateral trade agreements with
Australia and Singapore, three-cornered negotiations with Singapore and Chile, and a study under
way to assess the potential for negotiations with Mexico.  New Zealand extended non-reciprocal trade
preferences to its South Pacific island neighbours.  It was a strong supporter of APEC, especially theWT/TPR/M/115
Page 11
trade liberalization and facilitation agendas.  These were all consistent with New Zealand’s role as a
constructive player in trade liberalization and with its WTO rights and obligations.  It was a pleasure
to work with a WTO Member with such good credentials.
39. The representative of Japan remarked on Japan's good economic relationship with
New Zealand.  Japan was New Zealand's third largest trading partner and the trading relationship was
complementary.  Japan’s cumulative investment in  New Zealand was some $NZ4.3 billion.  Radical
economic and structural reform commencing in the mid 1980s had transformed New Zealand from a
rather closed economy into one of the most open in the world.  Recently, however, this trend appeared
to have been changing.  Since 1999, privatization had been halted, contrasting with efforts in the
1980s and 1990s to reduce state ownership.  In 2000, the unilateral tariff reduction programme
initiated in 1997/1998 was suspended until 2005.  It was not clear how this could improve
productivity and growth and he asked New Zealand's views on this.
40. Japan appreciated New Zealand's efforts to attrac t more FDI, including procedural changes, as
well as considering changes to tax policy.  He welcomed its active participation in WTO discussions
on investment rules.  However, under the Overseas Investment Rules 1995, consent was required by
overseas persons to acquire 25% or more of equity or voting power in a company, if the assets of the
company exceeded $NZ50 million;  this had a potential negative impact on FDI.  He asked for thereasons for this requirement.  He also noted that for overseas investment in farmland, land could be
purchased by overseas persons only when an offer on the open market attracts no New Zealand-based
purchasers.  He asked the rationale for this restriction.
41. Japan appreciated that agriculture was an important export sector for New Zealand.
According to the Secretariat Report, restrictions on some agricultural exports were maintained formarketing reasons.  As a major agricultural importer from New Zealand, Japan asked for details on
these restrictions to ensure stable and predictable imports.  He asked for the definition of "marketing
reasons" and the conditions under which this restriction would be imposed, the initiation procedures,
legislation on which it was based, the governmental agencies and organizations involved, and data on
the initiation of such restrictions since 1996.
42. On intellectual property rights, Japan hoped that New Zealand would accede to the WIPO
Copyright Treaty (WCT) and the WIPO Performance and Phonograms Treaty (WPPT).  He asked
whether New Zealand intended to follow the recent trend in several OECD countries of extending the
period for protection of copyrights to 70 years.
43. Services was the largest sector, around two thirds of GDP in 2001/02.  Japan appreciated New
Zealand's active participation in the services negotiations, as demonstrated by its submission of an
initial offer.  New Zealand had also signed the “Joint Statement on the Negotiations on MaritimeTransport Services” and Japan wished to collaborate with it to move the negotiations forward.   
44. Japan was encouraged by New Zealand’s affirmation that a strong, rules-based global trading
system was vital for a small country with global trad ing interests.  Japan believed that the rules-based
multilateral trading system was a prerequisite for all economies, developed and developing, large and
small, to fully reap the benefits of an ever more globalizing world economy.  The DDA was not aneasy task, and efforts should be redoubled to ensure success in the negotiations, to improve trade and
investment liberalization, and to strengthen the rules aspects of the global trading system.  Japan
looked forward continuing cooperation with New Zealand on the DDA.
45. The representative of Colombia said that New Zealand's trade and economic reforms since the
mid 1980s had set an excellent example for WTO Me mbers, and showed the synergy between trade
liberalization and economic growth.  The reforms had improved economic indicators such as labour
productivity and reduced unemployment and inflation.  The system of public consultation moreover,
showed transparency in the process of formulating trade and investment policy.WT/TPR/M/115
Page 12
46. The Report suggested that despite its comparative advantage in agriculture, New Zealand's
dependence on the sector could have an impact on trade and productivity by impeding diversification
into more innovative sectors and services.  On the other hand, recent World Bank studies had shown
that, under certain circumstances, agricultural exports could stimulate services with higher value
added, such as those related to design, packaging, etc.  However, certain circumstances had impededand distorted foreign trade.  New Zealand's high level of commitment for the Doha Agreement and
the negotiations in Geneva were noted.
47. The new proactive policy was being used to improve real per capita income growth through
higher value added.  Colombia had submitted questions on the policy to understand the incentives
used to encourage new economic activities.  This could serve as a model for developing countries,
such as Colombia, for diversifying production and exports and reducing dependence on the highly
distorted agricultural sector.  The livestock sector had also been subject to trade and economicreforms and remained central to New Zealand's concerns.  Reform of state trading corporations in
dairy activities, and for apples, pears, kiwis, and horticulture, including eliminating their exclusive
export monopolies, and privatization, had increased competition, productivity, and efficiency in these
activities.  The elimination of tariff quotas, proposed by the Cairns Group in the WTO agriculture
negotiations, would further reform the allocation of livestock quotas.  However, tariff peaks, andspecific tariffs and tariff escalation were a concern in textiles, clothing, and leather, in which
developing countries had export potential;  he encouraged their liberalization.  For Colombia, the
potential for trade with New Zealand was still to be developed;  efforts by both countries in the WTO
would increase and diversify their trade linkages.
48. The representative of Hong Kong, China noted his country's  harmonious and strong bilateral
trade relations with New Zealand.  Due to open trade regimes, and notwithstanding its relatively small
economic size, Hong Kong, China was New Zealand’s eighth largest export market.  The distance
across the Pacific Ocean had not deterred a wide-range of investment from Hong Kong, China into
New Zealand's real estate, financial, and other services sectors, making it the fourth largest investor in
New Zealand.  Hong Kong, China wished to improve these bilateral ties through further tradeliberalization and looked forward to a swift conc lusion of negotiations on a CEP with New Zealand.
49. Against a backdrop of sluggish global economic growth, New Zealand’s projected real
growth of 4% in 2002/03 was very impressive and was largely due to its excellent institutions and
relatively open trade regime.  For small, open economies like Hong Kong, China and New Zealand, a
strong, rules-based multilateral trading system was vital to global trade and would provide a level
playing field.  Hong Kong, China was among those trying to build momentum to enable the DDA to
reach its goal despite initial delays.  The Ministerial Conference was just 74 working days ahead andhe looked forward to working with New Zeal and and other Members to make it a success.
50. While appreciating New Zealand’s efforts to cut tariffs and eliminate quantitative restrictions
in its market-oriented reforms initiated in the mid 1980s, he noted that since 2000 New Zealand had
suspended its tariff reductions until at least 2005.  He encouraged New Zealand to step up reforms and
recommence tariff reductions before 2005 to demonstrate its commitment to free trade.  Reducingtariffs on textiles and clothing products could benefit developing countries and was in line with New
Zealand's trade policy emphasis on development.  Ne w Zealand should also take a lead in reducing
the gap between bound rates and applied rates and tackling tariff escalation in some sectors in the
current market access negotiations.
51. The representative of Argentina noted that New Zealand was an active Member of the WTO
and committed to the values and objectives of the multilateral trading system.  He believed that the
success of the Doha negotiations was an essential priority for New Zealand.  New Zealand was one of
the most open economies of the world, resulting from unilateral trade liberalization initiated in the
mid 1980s, and prudent macroeconomic policies and structural reforms.  As a result New Zealand was
able to weather external constraints such as the Asian crisis, and slower world growth, and adverseWT/TPR/M/115
Page 13
climatic conditions.  Growth had not been higher mainly because of the structure of the economy and
its major exports.  He referred to policies adopted to encourage New Zealand companies to increase
export orientation and activities that added value and attracted foreign investment.  These included
programmes such as Industry New Zealand, to enhance the entrepreneurial environment and domestic
and regional economic development;  as well as a modified investment regime, fiscal policy, and theestablishment of Investment New Zealand.  It was also interesting to note the restructuring of state
trading enterprises to increase agricultural exports.
52. Despite these reforms, however, New Zealand, like other WTO Members, faced distortions in
world agricultural markets, which affected exports and therefore revenue and growth.  Argentina
shared in efforts to reduce these distortions and to put agriculture at an equivalent level with trade in
goods.  He reiterated Argentina's advance questions, as these had been in Spanish and there appeared
to have been a slight delay in translation.  The first related to import and export restrictions because ofhealth, safety, and sanitary measures.  The second requested information on the intention to make SPS
measures less trade restrictive, particularly with regard to products such as unpasteurized cheese, fresh
eggs, and poultry.  The third was on the proactive policies of the Export Credit Organization.  The
fourth requested information on the activities and competence of the competition authority in
agriculture.  He asked about the sectors given priority in the proactive industrial policy andinformation on policies to increase productivity and growth.
53. The representative of Chinese Taipei complimented New Zealand on its comprehensive
macroeconomic and structural reforms.  New Zeal and was a vivid example of the long-term benefits
from liberalization in the context of the WTO.  Th e Government Report stated that New Zealand saw
free-trade agreements as "an opportunity to deepen economic integration with its trading partnersacross the wider trade and investment relationship."  New Zealand had signed the Australia New
Zealand Closer Economic Relations agreement (CER) and the Close Economic Partnership (CEP)
with Singapore.  It was pursuing negotiations with  Hong Kong, China, Chile, and the United States,
all of which could lead to the signing of FTAs.  Progress had also been made towards the APEC
Bogor goals through autonomous liberalization, and further liberalization would be on a reciprocalbasis.  He asked whether New Zealand's preference was for multilateral or bilateral liberalization.
Chinese Taipei was fully committed to further cooperation with New Zealand, particularly in
biotechnology, high technology, telecommunicat ions, information technology, tourism, and
education.
54. The representative of Korea noted that New Zealand's real GDP growth of 4.4% in 2002, and
4% expected for 2003, was amongst the highest in the world.  After a series of reforms, which began
in the mid 1980s, the average applied MFN tariff had been reduced sharply, to 4.1% in 2002, andmarginal barriers remained in the exchange market and services sectors.  New Zealand was one of the
Republic of Korea's most important trading partners with bilateral trade reaching almost
US$1.1 billion in 2002.  Investment in New Zealand by Korea was nearly US$55 million and he was
confident that New Zealand would continue to remain a key trading partner.
55. Despite its liberal economic regime, some areas needed to be reviewed.  First, the
Government decided in 2000 to freeze tariff reductions at least until 2005, reportedly based on the
view that unilateral tariff reductions were no longer appropriate.  However, in terms of domestic
reform, as well as trade liberalization, this was not a positive move.  The Secretariat Report showed
that New Zealand's reforms, including tariff reductions, had contributed to its success in withstanding
recent external shocks, and such a freeze could have an adverse impact on the affected sectors.  Hehoped, therefore, that tariff reductions and the momentum towards a more liberal international trading
system would be maintained.  Despite the low average MFN tariff, high rates averaging 9.5% were
applied to textiles, clothing, and leather products, which was about double the average on other
products.  Such tariff peaks could adversely affect the domestic market and foreign exporters and
eventually needed to be phased out.WT/TPR/M/115
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56. The representative of the European Union stated that New Zealand was an important trading
partner for the EU and no doubt in the Pacific region.  He congratulated New Zealand on its solid
economic performance over the last few years.  Of course, many economists viewed 2002 and 2003 as
the peak of New Zealand's economic cycle, depending on their expectations for domestic demand.  In
that respect, trade would have a major role to play and should remain, thus, a fundamental componentof the Government’s broader economic policies desi gned to promote higher sustainable growth.  He
therefore appreciated that trade had been identified as an essential element to strengthen New
Zealand’s prosperity and that the Government was committed to trade liberalization through
multilateral, bilateral, and regional initiatives.
57. New Zealand was an active international player, had a rich European heritage.  For many
decades, agricultural issues had dominated bilateral relations;  they had reached a turning point with
the conclusion of the Uruguay Round, which ensured permanent access for New Zealand to the EUmarket for butter and sheep-meat – an issue that had overshadowed the bilateral relationship for a
long time.  He noted that up to the mid 1980s, New Zealand’s policy was mainly oriented to "Asia
first".  Later, in particular following the economic downturn in Asia, policy shifted to "Asia first, but
not Asia only".  The EU was now among New Zealand’s main trading partners, besides Australia,
Japan, and the United States.  The excellent trade and foreign relations were stressed at the EU-NewZealand Troika Ministerial meeting in Madrid in 2002 with the EU’s aim of taking a more forward-
looking approach to the relationship being met.
58. Good relations were underpinned by specific agreements, such as the Mutual Recognition
Agreement on Standards and Certification, which came into force in 1999 and was aimed at
facilitating trade in industrial products by reducing technical barriers, including assessmentprocedures.  Another agreement, the Veterinary Agreement, was currently being implemented.  A
“road map” on a wine agreement had been submitted to New Zealand, and the Government had
developed new wine legislation and decided to reve rt to the matter at the end of 2003.  The EU and
New Zealand cooperated multilaterally in a mutually beneficial manner.  He welcomed New
Zealand’s strong commitment to the WTO as th e only viable vehicle for multilateral trade
liberalization, its undiminished support for an ope n and transparent world trading system, and the
emphasis on the DDA process;  progress on the DDA constituted New Zealand’s top trade priority.
The slowing global recovery was having an impact on expectations of continued economic success in
New Zealand.  New Zealand was aware that only a high level of ambitio n throughout the DDA could
help it achieve the necessary growth levels.  The EU therefore encouraged it to pursue actively the
objective of a successful round that could deliver substantial benefits to the WTO membership.
59. The EU appreciated New Zealand’s strong support for the WTO rules framework, and its
balance of rights and obligations. Better multilateral rules would benefit an open economy with a high
trading volume like New Zealand.  It was therefore in New Zealand's interest to support multilateral
rules on issues such as investment and competition and he asked how the rule making elements of the
Doha round could be tackled within the Single Undertaking.   He appreciated and supported New
Zealand's initiative to discuss labour standards in the TPRM.  The protection of core labour rightscould benefit the productivity of the national industry and hence its competitiveness in the
international market.  This was often the result of creating a dedicated labour force with a stake in the
future.  He asked for New Zealand's view on the relationship between the promotion of social policy
and the conduct of trade policy at the multilateral and bilateral levels.  He welcomed New Zealand’s
efforts to make its trade policy more development friendly, particularly in addressing the capacityconstraints of developing countries in and outside the round.
60. The representative of Norway noted New Zealand's active and constructive role in the WTO.
Over the last two decades, New Zealand's trade regime had become relatively open, which was one of
the principal reasons for its impressive economic growth during this period.  There was significant
weight placed on international trade in maintaining this trend.  He agreed with the Government that
for a small country with global trading interests, a strong, rules-based global trading system was vital.WT/TPR/M/115
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It was important to clarify and improve WTO anti-dumping and subsidy disciplines in the present
round, an objective shared with New Zealand in the friends of anti-dumping (FANs) group.  In
services, overall market access was fairly liberal and he appreciated New Zealand's desire for further
liberalization in this area.  Cooperation between Ne w Zealand and Norway in the "friends of ships"
group was important and he welcomed its offer on shipping and looked forward to good result in thesenegotiations.  Norway supported New Zealand's goal  of removing tariffs on non-agricultural goods.
61. Integration of the LDCs in the global economic system was crucial for economic growth and
development and he welcomed New Zealand's prov ision in July 2001 of tariff- and quota-free access
for goods from LDCs.  Norway had introduced a similar policy on 1 July 2002 but he wondered
whether imports from LDCs had increased significantl y.  If not, he asked what specific measures New
Zealand would undertake to help them.
62. Negotiations on agriculture were very important to New Zealand and to Norway and
New Zealand's desire for an ambitious outcome was well known.  But expectations needed to be
trimmed to fit the realities of the world.  All parties would have to accept substantial changes, but
could not be expected to implement policies that would eradicate entire agricultural sectors in some
countries.  New Zealand's SPS measures had led to an effective ban on imports of several products.
This seemed to contradict its objective of promoting agricultural trade although it had been easier toexport fish to New Zealand since a review of meas ures a few years ago.  He thanked New Zealand for
its cooperation in the Committee on Sanitary and Phytosanitary Measures and Codex Alimentarius.
He asked for details on New Zealand's efforts to update its current legislation on genetically modified
organisms, the Hazardous Substances and New Or ganisms Act, 1996, and requested information on
labelling requirements for foods using gene technology.
63. The representative of Brazil  congratulated New Zealand on its economic performance in the
last few years and its sound macroeconomic policies and structural reforms.  Brazil also recognized
New Zealand's important role in the WTO in furthering the objectives and principles of the
multilateral trading system.  She commended, in particular, work in the Cairns Group towards
elimination of market access barriers and trade distortive support in agriculture.  Brazil shared NewZealand's emphasis on sustainable development and, like New Zealand, had included the issue of
sustainability in its trade policy.  She was, however, concerned about the use of TBT and SPS
provisions in a way that hindered access for products relevant to developing countries.
64. The representative of Chile said that New Zealand was an example and an inspiration for
other Members, as well as a neighbour.  New Zealand and Chile were separated only by a bit of water
and there were many similarities in their trade policies.  Both were medium-sized countries with
natural resources, and were dependent on foreign trade for development and economic growth.  Theyshared an economic, political, and social vision and had both carried out major reforms over the last
twenty years.  Both were also committed to an op en and equitable multilateral trading system.  In a
globalized world, cultural differences and geographical distances were reduced or removed and
replaced by common interests and visions that gave rise to new alliances.  For more than a decade,
New Zealand had been an important trade partner and investor for Chile.  Both countries hadstruggled for agricultural liberalization in the Cairns Groups, and had promoted free trade in goods,
services, and investment in APEC.  The two countries were also working to open markets in, inter
alia, goods, services, fishing, subsidies, anti-dumping and geographical indications.  This
convergence of views had led to the decision to start negotiations on a closer economic partnership,
planned for the second half of 2003.  Singapore would also be a participant.  The goal was  veryambitious and he hoped that it would be a model for such agreements in the Asia Pacific region.
65. He noted several similarities in their trade policies and measures, including eliminating the
exclusion of air transport services in the GATS.  The Secretariat Report mentioned subsidies for radio
broadcasting, land transport, and tourism services;  He asked for more information on these
programmes, the amounts involved, whether national treatment was given, and any analysis of theirWT/TPR/M/115
Page 16
effect on trade in services.  His delegation, inter alia , had insisted on the need for transparency on
subsidies in services.  He noted that certain requirements for investing in property other than land,
such as appropriate entrepreneurial experience and good character, were difficult to assess
objectively.  Chile had had several other questions but these had already been raised.
66. The representative of the United States commended New Zealand for its steadfast support of
global trade liberalization and the its valuable role in advancing this important agenda.  New
Zealand's commitment to liberalization had made it one of the most open economies in the world.
New Zealand's progressive economic strategy had generated healthy increases in trade and
investment.  Its exports had grown by more than 50% since 1990 and imports by almost two thirds.
The strengthening of the economy had resulted in nearly a trebling of its stock of FDI.  These
developments had generated new employment opportunities for New Zealand and its trading partners,
including the United States.
67. New Zealand's impressive liberalization record and its effective advocacy of the importance
of an open, rules-based trading system for sustained growth had given it a strong and resonant voice
in the WTO.  It had made detailed and constructive proposals in difficult areas, including agriculture,
to find a way forward and successfully conclude the Doha negotiations.  New Zealand's commitment
to advancing the global trade agenda and its attentiveness to the economic challenges ahead wouldensure its future economic growth.  Its developm ent of new policies to promote knowledge-based
industries such as biotechnology, information and communications technologies, and creative
industries, and to attract skilled labour and foreign investment would reduce its reliance on
agricultural exports and increase its future competitiveness and economic growth potential.
68. Despite this impressive record, there were some  areas for improvement.  Elimination of its
remaining trade barriers would help to improve efficiency and competitiveness.  It would also
underscore the importance of trade liberalization and economic reform.  New Zealand's efforts to
encourage new economy industries made a strong IPR regime more important than ever.  She urged
New Zealand to work assiduously to further strengthen IPR protection, including tightening
restrictions on parallel imports, joining the WIPO internet treaties, and considering ways to enhancepatent protection and to address other IPR issues, including enforcement.
69. With New Zealand's designation of biotechno logy as key to future economic growth, she
urged it to ensure that its policies, particularly related to agricultural biotechnology, were clear and
unambiguous and encouraged investment.  New Zealand should eliminate mandatory labelling
requirement for foods using gene technology and instead merely indicate the method of production.
The United States saw no legitimate objective for the current policy and believed it retarded
development of the industry, and should therefore be eliminated.  She also looked forward to listening
to New Zealand's comments on its SPS restrictions on eggs, poultry and cheese.
70. Policies related to pharmaceuticals had discouraged trade and investment in the sector,
exposing a weakness in an otherwise bold strate gy to promote sustainable economic growth and
improvement of living standards.  She urged the elimination of market access barriers and efforts to
ensure transparency to attract trade and investment in an innovative and competitive industry.Services was the largest sector and New Zealand was an active participant in the WTO services
negotiations.  She urged New Zealand to eliminate existing market access barriers, including in the
audio-visual sector and to eliminate uncertainty in the investment approval process.  She asked
whether New Zealand would consider joining the Agreement on Government Procurement.
71. The representative of Singapore said that Singapore's trade relationship with New Zealand
had been deepened through the Singapore-New Z ealand Closer Economic Partnership (CEP).  The
CEP, which came into force in 2001, was a comprehensive bilateral agreement covering goods,
services, and investment.  It was also forward l ooking and a WTO-plus agreement.  Both countriesWT/TPR/M/115
Page 17
had agreed to eliminate all tariffs on goods immediately, and provisions beyond WTO trade rules
were also agreed.
72. Bilateral trade had grown by 4.5% to S$1.09 milli on in 2002, a year after the entry into force
of the CEP.  There had been a high level of interest from Singapore-based companies to venture into
the New Zealand market.  Initiatives resulting from the CEP included the establishment of a NewZealand Technology Sector (NZTC), a platform for New Zealand companies to internationalize using
Singapore as a launch pad, and a proposed broadband link for New Zealand broadband players to
cross deploy, and leverage on Singapore's broadband infrastructure.  There were also discussions on
an MOU for Singapore-New Zealand film co-produc tion, and collaboration in tele-movie productions.
73. Singapore congratulated New Zealand on its comprehensive market-oriented reforms and
efforts to unilaterally reduce trade barriers.  While New Zealand had paused to take stock of the
unilateral tariff reductions, it had not changed its belief in the benefits of trade liberalization, as wasevident from its proposal to pursue tariff elimination in the current WTO negotiations.  She praised
New Zealand's efforts to improve market access for LDCs by removing all tariffs on their exports
from 1 July 2001, as well as for extending preferences to the Forum Island countries under the
regional agreement SPARTECA.  She also commended New Zealand for its efforts in moving the
multilateral process forward and its substantive market access proposals.  It had displayed goodintellectual leadership in the negotiations with its constructive proposals.  Singapore shared New
Zealand's vision of improved market access for all WTO Members looked forward to working
together to this end.
74. The representative of Australia was pleased to participate in the Trade Policy Review of its
close neighbour and major trading partner.  Australia appreciated New Zealand's commitment to the
ambitious Doha mandate and its strong contribution to trade liberalization initiatives.  The two
countries shared a long-standing commitment to the WTO and a keen appreciation of the importance
of ongoing trade liberalization, which had been reinforced when the Prime Minister of New Zealand
chaired the OECD Ministerial Council Meeting recent ly, giving impetus to the work in Geneva.  The
two countries had similar approaches to multilateral trade issues including high priority to improvedmarket access through the Doha negotiations.  Like Australia, New Zealand was a highly efficient
agricultural producer and practiced what it preached on deregulation and domestic support.  New
Zealand had almost completely reformed its agriculture sector, a fact reflected in its producer support
estimate (PSE), which, at close to zero, was consistently among the lowest in the OECD.  New
Zealand played an important role in the Cairns Group and Australia looked forward to working
together towards comprehensive agricultural reform.  Australia also commended New Zealand's
removal of tariffs on imports from LDCs in July 2001.
75. It had been noted that New Zealand had recently concluded bilateral free-trade agreements
with other WTO Members.  In 2003, Australia and New Zealand celebrated 20 years of participation
in what they believed was one of the most comprehensive and open free-trade agreements, the
Australia New Zealand Closer Economic Relations  (CER) Trade Agreement.  The CER had brought
major benefits to both economies, with two-way trade expanding by around 500% since 1983.  Since1990, integration of policies, laws, and regulatory regimes had been deepened through processes of
coordination, mutual recognition, and harmonization.  He agreed with New Zealand that the CER
demonstrated the value of bilateral initiatives pursued in compliance with the WTO framework.  He
underscored the value Australia placed in the close and cooperative working relationship with New
Zealand across a range of multilateral issues and also in the open and integrated trading relationship.New Zealand was a strong example of active pr omotion of trade liberalization through domestic
reform, bilateral engagement, and multilateral participation.
76. The representative of Uruguay paid tribute to New Zealand for its active and constructive
participation in the WTO.  It welcomed New Zealand's commitment to the multilateral trading system,
the engine of trade liberalization, and its advocacy of a free and open economic environment, basedWT/TPR/M/115
Page 18
on rules.  New Zealand was an active defender of fair trade in agriculture in the Cairns Group;  its
goal was to put agriculture on the same footing as other sectors in world trade, thus making the
multilateral trading system more equitable.  New Zealand and Uruguay, as founding members of the
Cairns Group, were working together to defend the legitimate interests of efficient agricultural
exporters against developed country subsidies, which caused distortions in international markets, inorder to improve market access.
77. Although real GDP growth of 4% was expected in 2002/03, GDP per capita remained below
the OECD average;  this could perhaps be explained by New Zealand's dependence on agricultural
exports, which grew slowly because of highly protected and distorted world markets.
78. With regard to bilateral trade relations, Uruguay's exports to New Zealand during 1998-02
were not significant, and were concentrated mainly in wool, fish, and ceramics.  Imports were more
diversified and included paper, boilers, machinery, electric apparatus, seeds, and oilseed products.The overall trade balance showed a net deficit for Uruguay over the last five years;  this had been
further emphasized in the last year.  Uruguay was therefore interested in further diversifying its trade
with New Zealand and in moving into higher-value -added products.  Uruguay also wished to attract
investment from New Zealand in agriculture or in other areas beneficial to both parties.
79. The representative of Mexico said that Mexico attached great importance to its relationship
with New Zealand.  New Zealand was an example of  an economy that had improved the standard of
living of its inhabitants through free and open trade and sustainable development.  Mexico considered
New Zealand a model to follow in finding solutions for its trade policy problems.  Mexico also valued
New Zealand's efforts to achieve good results in the current WTO negotiations.  He congratulated
New Zealand on its reform efforts, especially with regard to state trading enterprises, and the tradeand investment regimes;  and the interesting cohabitation between a very efficient agricultural sector
and high technology companies in, for example, biotechnology, information technology, and
communication.  This showed very clearly that in countries where agriculture was very efficient, the
process of industrial development always began at the capital-intensive and technology-intensive
phases.  As a result, New Zealand had achieved tremendous results including high growth, lower
unemployment, and higher productivity, allowing a sustained improvement in living standards.
80. Some of Mexico's concerns were, for example, the high tariff for clothing, high taxes on FDI,
state monopolies in telecommunications, air transport services, and anti-dumping investigations which
set up trade barriers and which could be discussed further in the Committee on anti-dumping.  Non-
tariff barriers were sometimes more restrictive than strictly necessary to protect health and safety.
81. The representative of Venezuela congratulated New Zealand on its economic performance
and its efficient support for entrepreneurs.  He was particularly struck by certain programmes,
including incentives for enterprises, the investment fund, the regional partnership programme, and
support for research and development.  Venezuela shared many of the goals of these programmes,
including:  the strengthening of business and the creation of new companies able to develop
appropriate projects and ideas;  and the financing of programmes and projects in areas of competitive
advantage that could be further strengthened sustainably and that had large positive externalities.These included regional development, and technological capacity development, including an increase
in research and development by companies and the business environment in order to sustain
competitiveness.
82. Diplomatic relations between Venezuela and New Zealand, established in 1979, had been
very cordial and concentrated mainly on trade, wi th the balance historically being negative for
Venezuela.  Venezuela was very interested in broadening these bilateral relations through technical
and scientific cooperation in agri-industry.  Venezuela was currently implementing a series of
initiatives to diversify its economy and was interested in the lessons New Zealand had derived from
competition in the agriculture sector.  He also noted the academic and institutional exchanges offeredWT/TPR/M/115
Page 19
by the Government of New Zealand for officials in the public sector and non-governmental
organizations.  In the hope of expanding bilateral trade with New Zealand, he asked about the present
scope of the Generalized System of Preferences.
83. The representative of the Czech Republic commended New Zealand for continuing
macroeconomic and structural reforms.  As a result the economy had been performing reasonably well
and was characterized by solid GDP growth, moderate inflation, and relatively low unemployment.
He appreciated New Zealand's role in the WTO:  it was an active Member of the multilateral trading
system with very important stakes in the ongoing negotiations under the Doha Development Agenda.
New Zealand had proved its long-standing commitment to free, rules-based trade and she looked
forward to working to ensure success at the Cancun Ministerial meeting.  Despite the distance
separating the two countries, New Zealand was a significant trading partner for the Czech Republic in
the Asia Pacific region.  Mutual trade continued to grow although a lot of work remained to be doneto maximize trade and economic cooperation.
84. She noted that overall tariff protection was relatively low.  The Report by the Government of
New Zealand stated that the average applied MFN rate was 4.1%.  However, for textiles the average
was 9.5% and the rate exceeded 15% for around 8% of all products.  The Czech Republic believed
that the average tariff for textiles was very high, although it had fallen from 22.4% in 1996 to 14.8%in 2002.  Moreover, the system of customs clearance for textiles, as described in the Report, did not
appear to be sufficiently transparent and more work was needed in this regard.  On the protection of
geographical indications for products other than wines and spirits, and the register, the different
positions of the Czech Republic and New Zealand were well known.  Nevertheless, she was willing to
work with New Zealand to narrow down these differences and to arrive at a mutually acceptablesolution.  she was confident that they would be able to build on positive signals that had emerged
from recent discussions at the OECD Council.
85. The representative of the Slovak Republic noted that despite its size, New Zealand was one of
the most open economies in the world, and appreciated its open and highly transparent trade and
investment regime.  The bilateral free-trade agreements concluded and reinforced by the Governmentof New Zealand could also contribute to further liberalization of the trade regime.  Due to radical
macroeconomic and structural reforms, New Zealand's economic performance had improved
substantially;  real GDP was expected to grow by 4% in 2002/03 and other  indicators, including
unemployment and inflation, had also improved markedly.  He appreciated that trade barriers, in
particular tariffs, had been cut considerably and non-tariff barriers in the form of quantitative
restrictions had been eliminated.  Although the average MFN applied rate had declined to 4.1%, tariff
peaks remained, especially in textiles, clothing, and leather products.  With regard to the alternativespecific duty he questioned the usefulness of specific duties given the complexity and unpredictability
imparted to the New Zealand tariff.  Due to unduly restrictive SPS measures, it appeared that there
were no imports of some agricultural products including unpasteurized cheese, fresh eggs, and
poultry.  He encouraged New Zealand to reconsider the use of such measures.
86. New Zealand was a good example of a small, open economy that believed in the importance
of a rules-based system in promoting and safeguarding its trade interest.  The Slovak Republic
appreciated very much its active participation in the DDA negotiations.  He stressed the good bilateral
relations between the two countries and looked forward to further cooperation.
87. The representative of Peru said that his country attached great importance to its bilateral
relations with New Zealand;  he therefore congratulated New Zealand on its economic development
and stability and urged it to continue its reforms.  Peru and New Zealand had a common vision of
liberalization and a solid and more open multilateral system, not only in the WTO but also within
APEC and through bilateral relations.  Through the liberalization of air transport Peru also
participated with New Zealand in an open skies policy.  Although Peru had not submitted written
questions, he highlighted certain practices that could have a negative impact on trade flows.  InWT/TPR/M/115
Page 20
particular, Peru was concerned about the proactive measures that had been developed as well as tariff
peaks and escalation in textiles and clothing.  He hoped that the use of specific or mixed tariffs or
duties would be reviewed and that there would be greater focus on ad valorem  tariffs, which he
believed were far more stable and transparent.  Peru urged New Zealand to review this area, which
was particularly important for developing countries, especially small suppliers like Peru.  A third areaof interest was SPS measures, which might be more restrictive than necessary.  He asked for details
on how these measures were applied, and hoped that an effort would be made to reduce their impact,
particularly on exports from developing countries.
88. The representative of Morocco noted that despite the geographical distance, Morocco and
New Zealand were traditional trade partners and that dairy and other agricultural products from
New Zealand were well known to Moroccan consum ers.  New Zealand was an important destination
for Morocco's phosphate products.  Despite being a small island, New Zealand was an importantmultilateral actor and he noted its good economic performance in a rather morose world economy.
Morocco hoped that steps could be taken to reduce high tariff peaks in textiles and clothing.
89. He congratulated New Zealand on its active role in technical assistance and capacity building
for developing and least developed countries.  He commended New Zealand on its initiatives to
improve market access for LDCs.  The initiative was especially important for Africa, which had 34 ofthe world's 49 LDCs.  He encouraged New Zealand to maintain this active and constructive
participation to ensure the success of the DDA, particularly for public health and special and
differential treatment.  He also welcomed New Zealand's role as an interlocutor for African countries
in international fora;  its interest in developm ent issues in the present negotiations had been
demonstrated at the recent OECD meeting.
90. The representative of Poland recognized the important and constructive role played by
New Zealand in the multilateral trading system.  Referring to New Zealand's institutional and
regulatory reforms, he said that although Poland’s own reforms had stemmed from a different
background, the final objectives of openness and macroeconomic efficiency were virtually the same.
Therefore he appreciated the difficulties – but also the sense of accomplishment – implicit in suchundertakings.
91. Poland appreciated its good trading relationship with New Zealand but regretted that the
volume of bilateral trade remained low.  The governments of both countries had made substantial
efforts to create a framework for improving trade and individual traders now needed to explore such
opportunities more actively.  According to the Secretariat’s Report about one third of New Zealand’s
technical standards were equivalent to international standards.  He asked what efforts were being
made to align national and international standards, particularly with regard to mandatory technical
requirements.WT/TPR/M/115
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V. REPLIES BY THE REPRESENTATIVE OF NEW ZEALAND AND ADDITIONAL
COMMENTS
Economic environment
92. The representative of New Zealand reminde d Members that when New Zealand began
economic reforms in the 1980s it was characterized by extreme distortions including high tariffs and
import licensing.  The Government made a radical shift in its economic policies.  Clearly the
economic reforms had worked but they had unfortunately taken much longer to bear fruit than
forecast by policymakers.  This in turn had placed a lot of pressure on the political process resulting in
the current policy stance.  However, he emphasized that reforms had worked and while not
necessarily advocating that they would work equally as well for other countries, he believed that one
had to stay with the process in order for reforms to work their course.
93. Regarding the shift from unilateral to reciprocal trade liberalization, he emphasized that trade
liberalization would continue, albeit based on reciprocity.  New Zealand was politically exhausted
with the unilateral process but was fully prepared to go through the last stage of removing its
relatively low tariff barriers, based on reciprocal agreements.
94. The New Zealand economy had had to adjust to two major external shocks, the oil crisis in
the 1970s and the Asian economic crisis in the 1980s.  With regard to the second shock, New Zealandhad adjusted relatively rapidly because the economic reforms had increased flexibility in its economy.
The adjustment had also resulted in greater diversification of exports away from Asian economies to
other markets.  However, the adjustment process would have been easier had New Zealand's trading
partners provided better market access.
95. On FDI policy, New Zealand maintained an open regime, except for a few specific
restrictions.  This included a financial restriction of $NZ50 million, which for an economy the size of
New Zealand, was a significant amount of money.  In  fact, the percentage of  FDI proposals that were
approved was high, at some 99%.  The 1% that was not approved related in part also to the added
condition of "good character".
Trade policy measures96. The representative of New Zealand focused on some of the issues raised by Members,
including tariff peaks in certain sectors and sanitary and phytosanitary restrictions.  While reminding
Members that tariff protection had declined significantly, and that New Zealand maintained no non-
tariff barriers relating to textiles and clothing, he agreed that tariff peaks in the sector, albeit 19%,
was a legitimate concern.  However, as pointed out earlier, New Zealand was willing to reduce these
peaks through reciprocal negotiations, either bilaterally or multilaterally.  He reminded Members that
New Zealand had negotiated a bilateral agreement with Singapore, and an agreement with Chile,when concluded, would also deal with this issue.  Multilaterally, New Zealand had made a proposal to
remove all non-agricultural tariffs and would be willing to negotiate with WTO Members.
97. On SPS measures, New Zealand had taken the initiative of removing unilaterally all
distortions in agriculture, but would protect its domestic agricultural producers from the spread of
disease.  New Zealand's policy on SPS was based on transparency, equivalency, and risk assessmentas set out in the WTO Agreement on SPS.  He reminded Members of Article 5 of the Agreement,
which based risk assessment on, inter alia , the potential damage in terms of loss of production or sales
in the event of entry or spread of a pestor disease.
98. The Discussant appreciated the responses provided by New Zealand to the questions raised, in
particular, on SPS measures, tariff peaks in textiles and clothing, and on the general concern about theWT/TPR/M/115
Page 22
pause in tariff liberalization.  On the last point, New Zealand had reassured Members that tariff
liberalization would be continued.
99. The representative of El Salvador said that New Zealand had one of the most liberalized
economic regimes and had maintained high economic growth despite economic crises and the current
economic slowdown.  El Salvador, like New Zealand, had a small population, and trade was essentialto maintain economic prosperity.  El Salvador shared with New Zealand the desire to sell goods and
services abroad without obstacles and believed that the WTO would facilitate market access and
multilateral trade liberalization.  She therefore highlighted New Zealand's outstanding work in the
DDA and its proposals on greater liberalization of trade in agricultural and non-agricultural goods,
strengthening of trade norms, and greater integration of WTO norms and other priorities on the basis
of special and differential treatment for developing countries.  Like New Zealand, El Salvador
believed in the need to eliminate export subsidies on agricultural products, improved market accessfor agricultural exports, and significant cuts in domestic support, which distorted trade.
Sectoral policies
100. The representative of New Zealand returned briefly to the issue of New Zealand's slippage in
per capita GDP rankings.  He believed that New Zealand had stopped slipping further down the
rankings, a fact that was not insignificant.  New Zealand was now slightly above the OECD trend line
and could slowly start to move back up, if it could sustain its position for a few years.  Thus, New
Zealand was on the right road even though it had taken time.
101. Regarding the export monopoly in agriculture, the International Dairy Agreement, which used
to fix international prices of dairy products, was a poor substitute for disciplines on export subsidies.
The trade distorting effects of import monopolies compared with export monopolies were verydifferent and it was ludicrous to suggest that an export monopoly used by a country that had no tariffs
and exported 90% of its output was "guilty" of the same sins as import monopolies that operated gross
market-access distortions to prevent competitive imports.  Since the Uruguay Round, New Zealand
had systematically removed these export restrictions.  This had been politically quite difficult, but had
been done in order to give New Zealand's trading partners greater competition in world markets.Thus, since 1996, STEs had been removed on kiwifruit, raspberries, wool, meat, and game, hops;  in
the dairy sector, the most important politically, the New Zealand Dairy Board's export monopoly was
removed.  It was now possible for any entity to export dairy products from New Zealand, but for a
transitional period following the abolition of the New Zealand Dairy Board and the merger of the two
largest dairy companies, there were specified exceptions applying to the export of certain products,
such as some milk powders, some cheeses, and butter to certain markets with very high import
restrictions.  If these countries were willing to get rid of some of their import restrictions, he was surethat New Zealand would accelerate the transition period.  Thus the argument for New Zealand to
remove export subsidies did not really work and was not credible.  The only argument that he
considered appropriate related to tariff peaks in non-agricultural products and New Zealand was
proposing to resolve this through the Doha Round or regional trade agreements.
102. The Chairperson reminded Members that written responses were available to most questions.
Some questions had arrived late and New Zealand would provide answers subsequently.
103. The representative of the United States referred to questions on how New Zealand
rationalized its policies on biotechnology with its restrictive labelling and GMO regimes.
104. The representative of New Zealand said that the question was raised late and assured the
United States that a response would be provided at a later date.
105. The Discussant thanked New Zealand for its clarification of questions on export monopolies
in agriculture.WT/TPR/M/115
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106. In response to the EU's question on trade and labour, the representative of New Zealand said
that a formulaic response would be provided, in writing, in due course.  This issue was very sensitive,
but  the TPRB was not a bad forum in which to start addressing it; it was very important, however, not
to undercut the ILO.  New Zealand agreed that there was no intrinsic conflict between proper labour
standards and economic development but was acutely aware that "developing countries should not bedenied the legitimate comparative advantage of lower labour costs".  New Zealand wished to continue
to discuss this issue in a non-heated manner, if possible, through the TPRM, but through consensus.
107. He referred to the comment by the EU regarding New Zealand's trade policy strategy of some
years previously, which was of "Asia first but not Asia first and last", and described the history behind
the phrase.  Following the application of the common agricultural policy, New Zealand lost access to
the European market and had to embrace Asia.  Although New Zealand had benefited enormously
from its relationship with Asia, there had been real bitterness towards Europe.  As a result of theUruguay Round, New Zealand gained access for a certain level of its butter and sheep meat exports to
the EU.   The Communities would move forward on agricultural reform on the basis of a hard cold
analysis of their own interests, and that was entirely understandable and appropriate.  However, there
would be big policy benefits for the Communities through improved relationships, for example with
the Cairns Group and the type of improvement that had occurred with New Zealand could be
replicated slowly.
108. From New Zealand's experience, Trade Policy Reviews were useful both in terms of getting
an understanding of the country under review, but also, particularly for small countries like
New Zealand, in learning what broader lessons could be drawn from these examinations.WT/TPR/M/115
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON
109. We have had a very productive discussion of the trade policies and practices of New Zealand.
We owe this to the full and forthright engagement of the New Zealand delegation, led by Ambassador
Groser, to our discussant, Ambassa dor Ahmad, and to the Members' lively interest in New Zealand's
policies.
110. Members have been impressed by New Zealand's strong economic performance following
wide-ranging macroeconomic and structural reforms initiated in the mid 1980s.  The reform
programme has made New Zealand one of the most open economies in the world and has contributed
to stable macroeconomic performance in the face of adverse external and climatic circumstances.
111. New Zealand's liberal stance is reflected in the WTO where it has been at the forefront of the
efforts to reduce trade barriers to agricultural and non-agricultural products.  In particular, in
July 2001, New Zealand became one of the first countries to grant duty-free access to all productsfrom least developed countries.  New Zealand is also active in pursuing trade liberalization through
regional and bilateral agreements.  In this context, in addition to its long-standing relationship with
Australia under the Australia New Zealand Clos er Economic Relations Agreement (ANZCERTA),
bilateral agreements have been negotiated with Si ngapore, and a "Pacific three" agreement is being
negotiated with Singapore and Chile.
112. New Zealand's economic achievements were praised and it was noted that the Government is
targeting higher economic growth in order to raise per capita GDP.  In order to achieve this goal, the
Government has introduced a "proactive" policy targeting certain high technology sectors, including
biotechnology, information and communication technologies, and creative industries.  A decision has
also been taken to halt any further privatization;   in this connection, Members noted that some
previously privatized companies have recently been re-nationalized.  In order to attract foreign direct
investment, the Government has also made changes to its policies on foreign investment albeit
maintaining a few restrictions, largely on land, considered to be in the "national interest".
113. Members noted that as a result of aggressive liberalization, New Zealand has removed import
licensing and its tariff has declined to an average of 4.1% in 2002.  Concern was expressed, however,over the tariff freeze.  Several Members also raised questions about tariff peaks and escalation,
especially in sectors such as textiles and clothing, which were important to developing countries;
however, such peaks are relatively low by international standards.  These sectors are also excluded
under New Zealand's GSP programme for developing countries.  The use of "alternative specific"
tariffs, moreover, renders the tariff opaque and it was suggested that these mixed rates be replaced
with ad valorem  tariffs.  Some Members had questions on New Zealand's intellectual property rights
legislation and its intention to join recent international intellectual property rights agreements.
114. On sectoral issues, while noting that barriers to New Zealand's agricultural exports have been
a major impediment to more rapid trade and economic growth, Members had queries regarding New
Zealand's export policies and its heavy reliance on agriculture;  they also expressed the view that SPS
measures are perhaps more stringent than necessary, resulting in an effective ban on imports of some
products.  With regard to manufacturing, questions were raised on how exactly New Zealand plans toimplement its proactive policies in the targeted sectors.
115. Members also sought clarification on several more specific issues including:
- the role of the Investment Promotion Agency in attracting foreign investment and
FDI policies and procedures;
- participation in regional and bilateral trade liberalization agreements;- import and export prohibitions;
- contingency measures;WT/TPR/M/115
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- subsidies;
- standards and conformity assessment;
- genetically modified organisms and labelling requirements;
- government procurement procedures and accession to the WTO Agreement on
Government Procurement;
- local-content requirements;
- export promotion and finance;
- intellectual property rights including legislation on patents, copyright, trade marks,
geographical indications, and protection of undisclosed information;  parallel imports
and enforcement;
- fisheries quota allocation;
- services;  and subsidies for services.
116. Members expressed their appreciation for the oral and written responses provided by the
delegation of New Zealand and look forward to responses to outstanding questions.
117. In conclusion, it is my strong sense that we all highly appreciate New Zealand's liberal stance
and active participation in moving the WTO's trade liberalization agenda forward.  New Zealand
provides a vivid example of the benefits of unilateral market-oriented reform.  However, it is alsoclear from the New Zealand case that the full benefits of reform require a long period of adjustment,
the support of the multilateral system – particularly through liberal market access – and a sustained
effort.  It is in this context that I hope that the DDA will bear fruit and that New Zealand will take the
concerns of Members into account in its participation in the negotiations, especially with regard to
tariff peaks, largely affecting textiles and clothing, and SPS measures.
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