RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG40/3
23 June 1998
(98-2525)
Committee on Regional Trade Agreements Original:  English
AUSTRALIA-NEW ZEALAND PROTOCOL ON TRADE IN SERVICES
Questions and Replies
I. BACKGROUND INFORMATION ON THE AGREEMENT3. Scope
1. Please identify all sectors excluded from the agreement
Article 2.3 of the Protocol on Trade in Services ("the Protocol") states that the Protocol
applies to any measure, in existence or proposed, of a members state that relates to or affects theprovision of a service by or on behalf of a person  of the other Member State within or into the
territory of the first member state.  The Protocol therefore applies to all services not specifically
excluded from its operations.
Article 2.4 states that the Protocol shall not apply to the provision of a service within or into
the territory of a member state of the services inscribed by that member state in the Annex.  Thus, it is
the provision of individual services, rather than entire sectors of member states' services economies,
that is excluded from the obligations of the Protocol.  Furthermore, the Annex to the Protocol
provides that where an activity is described further, the exemption in terms of Article 2.4 applies to
the description only.  In many cases, the member states have taken advantage of this provision and
inscribed only particular policies or regulations which affect the provision of a service.  In these cases
it is only the particular policy or regulation which is excluded from the obligations of the agreement.
It should also be noted that Australia and New Zealand maintain separate lists of inscriptions
in the Annex to the Protocol, and that only the provision of services within (or into) the member state
that has inscribed the particular service/policy/regulation in the Annex is exempted from the
Protocol's obligations.
As at 3 November 1997, the following services, policies and regulations were inscribed by
Australia in the Annex to the Protocol:
Airport Services
Access to provision of airport services is in general subject to policies of the Commonwealth,
the Federal Airports Corporation and local airports owned and operated by local state authorities and
bodies.
Air Services
State governments hold powers to regulate intrastate aviation on economic and public interest
grounds.WT/REG40/3
Page 2
Scheduled passenger and freight services within and between Australia and New Zealand are
governed by an air services agreement which has treaty status and by the Australia-New Zealand
Single Aviation Market Arrangements of 1996.
Coastal Shipping
Cabotage policy.Broadcasting and Television
Limits on foreign ownership as set out in the Broadcasting Act 1942 .
Broadcasting and Television (Short-wave and Satellite Broadcasting)
Basic Health Insurance Services
Third-Party Insurance
Workers Compensation Insurance
Postal Services
The Australian Postal Corporation (Australia Post) has, under section 29 of the Australian
Postal Corporation Act 1989 , the exclusive right to carry letters for reward within Australia and
between Australia and other places outside Australia, i.e. services reserved exclusively for Australia
Post.  Section 30 of the Act sets out a number of exceptions to the reserved services of Australian
Post.  Following amendments to the Act which took effect on 5 December 1994, the main exceptions
to Australia Post's reserved services are letters weighing more that 250 grams; the carriage of letters in
Australia or internationally where the charge or fee is at least four times the standard letter rate; thecollection of mail in Australia for delivery to another country; the movement of documents within
document exchange services; and the carriage of letters between offices of the same organisation by a
third party.
As at 3 November 1997, the following services, policies and regulations were inscribed by
New Zealand in the Annex to the Protocol.
Aviation
Airways Services:  Under the  Civil Aviation Act 1990 , the Airways Corporation of
New Zealand is the sole provider of area control services, approach control services, and flight
information services.  The Civil Aviation Amendment Act 1992  repealed these provisions, but with
effect from a date (or dates) to be specified by Order(s) in Council which may be made only on the
recommendation of the Minister of Transport.  Such recommendation(s) may be made only following
consultation with the Civil Aviation Authority and if the Minister is satisfied that an appropriate
safety regulatory regime is in place in respect of the services concerned.
Postal Services
New Zealand has a statutory monopoly on the carria ge of letters weighing 200 grams or less.
The main exemption to the monopoly is that anyone is able to carry letters 200 grams or less provided
they charge a minimum fee of $(NZ)80 per letter.WT/REG40/3
Page 3
Shipping
Coastal Shipping:  The Maritime Transport Act 1994  allows cargo or passengers (coastal
cargo) to be picked up from one port in New Zealand and carried to another by three categories of
ship.  These are:
- New Zealand ships;- ships coming to New Zealand to load cargo for unloading overseas or to unload cargo
which was loaded overseas;
- ships which the Minister of Transport authorises to trade on the coast when there are
no ships from either of the above two categories available to carry coastal cargo.
Authorisation to carry coastal cargo must be obtained from the Minister of Transport
well in advance of the intended carriage.
Authorisation to carry coastal cargo is subject to compliance with other relevant provisions of
the Maritime Transport Act  and with other law, including the Resource Management Act , the
Immigration Act , and border control legislation.
2. Why have these sectors been excluded?
Australia has included an inscription on airport services in the Annex to the Protocol because
the policies of the Australian Government, the Federal Airports Corporation and other airport
operators may not be consistent with the obligations of the Protocol.
Australia has included an inscription on air servi ces in the Annex to the Protocol because state
governments in Australia continue to hold powers to regulate intrastate aviation, and scheduled
passenger and freight services within Australia and between Australia and New Zealand are governed
by a separate Air Services Agreement and by the Australia-New Zealand Single Aviation Market
Arrangements of 1996.
Australia has included an inscription on coastal shipping in the Annex because the Australian
Government's policy on cabotage at the time that the Protocol was negotiated was inconsistent withthe obligation to provide market access contained in Article 4 of the Protocol.  In 1996 the Australian
Government established the Shipping Reform Group to  report on reform of Australian shipping.  The
Group's Report (known as the "Shipping Reform Group Report") recommends, among things, ending
the cabotage policy.  The Government is currently considering its response to the Report.
Australia has an inscription on broadcasting and television in the Annex to the Protocol
because Australian broadcasting legislation limits foreign ownership and control of commercial
television broadcasting licences and subscription television broadcasting licences.  The legislation
has, among its objectives, the aim of ensuring that Australians have effective control of the more
influential broadcasting services and the promotion of the role of broadcasting services in developingand reflecting a sense of Australian identity, character and cultural diversity.
Australia has included an inscription on basic health insurance services in the Annex to the
Protocol because the Australian Health Insu rance Commission has a statutory monopoly on the
provision of basic health insurance services.
Australia has included an inscription on third party insurance in the Annex to the Protocol
because Australian states and territories continue to regulate the provision of third party insurance.WT/REG40/3
Page 4
Australia has included an inscription on workers compensation insurance in the Annex to the
Protocol because Australian states and territories continue to regulate the provisions of workers
compensation insurance.
Australia has included an inscription on postal services in the Annex to the Protocol because
the Australian Postal Corporation has, under section 29 of the Australian Postal Corporation
Act 1989 , the exclusive right to carry letters within Australia whether the letters originated within or
outside Australia.  Section 30 of the Act sets out a number of exceptions to the reserved service,
including the carriage of letters weighing more than 250 grams; the carriage of letters where the
charge or fee is at least four times the standard letter rate; the movement of documents within
exchange services; and the carriage of letters between offices of the same organization.
The Australian National Competition Council has recently commenced a review of the
Australian Postal Corporation which will included an examination of the remaining limits on
competition.  The review is expected to be finalised in early 1998 and at that time the Government
will consider whether it is appropriate to reduce the level of the Corporation's reserved service.
Airway services and postal services are inscribed by New Zealand because there is a
monopoly supplier in these areas.  Coastal shipping is inscribed because current New Zealand
Government policy in respect of cabotage does not provide for national treatment for foreign
suppliers, including those from Australia.
3. What steps have been taken and what plans do the parties have, to expand sectoral
coverage of the agreement?
Article 10.1 of the Protocol commits the Member States to reviewing (in accordance with
Article 20) the status of services inscribed in the Annex with a view to the liberalization of trade in
such services.
Since 1992 the Member States have reviewed the status of services inscribed in the Annex
annually.  This has resulted in the removal of many services, policies and regulations from the Annex
(in accordance with the procedure laid out in Article 10.2) and a substantial expansion in the coverage
of the Protocol.  When the Protocol entered into force on 1 January 1989 Australia had some
25 services, policies and regulations inscribed in the Annex, however the regular review conducted bythe Member States have seen this reduced to 10.  Similarly, New Zealand has reduced the 10 services
and policies that it had originally inscribed in the Annex to 3.
In the Joint Statement released by the Australian and New Zealand Trade Ministers following
the 1997 review of the Protocol, the Member States confirmed their intention to "press ahead withfurther liberalization of the $1.8 billion annual bilateral trade in services".  The two Trade Ministers
also noted that the "15
th anniversary of the signing of the CER agreement will be celebrated in 1998.
This is a timely opportunity to take stock and to re-focus our shared vision for the further, practical
advancement of the relationship.
4. Please confirm that no modes of supply are a priori excluded from the agreement .
The Protocol does not exclude a priori commercial presence (mode 3).  Specifically,
commercial presence is provided for under the following articles:
• Article 3(b)(ii) states that the provision of services includes rights of establishment;
andWT/REG40/3
Page 5
• Article 7 also specifically accords to persons of member states the right to select their
preferred form of commercial presence in accordance with the applicable laws andregulations of the other member state.
The Protocol is therefore fully consistent wi th the requirements of Article V.1 of the GATS
and is a benchmark for the liberalization of services trade internationally.
5. Are New Zealand services investments exempted from screening?
Under the Protocol, New Zealand services in vestments are not exempt from the Foreign
Investment Review Board screening process in the same way that third parties are subject to the same
in accordance with Australia's horizontal commitments under the GATS.
6. Based on the responses to previous question, please explain whether the agreement has
substantial sectoral coverage.
Under the Protocol sectoral coverage is broad because negative list approach is used and both
Australia and New Zealand maintain very few inscriptions.  Those inscriptions that remain in theAnnex to the Protocol are reviewed regularly with a view to their future elimination.  The practical
emphasis is placed on progressive market liberalization and contrary to the positive list approach, new
services are automatically covered by the Protocol when they become tradeable.  Australia and
New Zealand are also prevented from adding unilaterally to the list of services exempted from the
obligations of the Protocol.
4. Economic and Trade Data
7. Please provide available information on the volume of trade affected by the agreement.
Attached are data from the publication "Trade in Service Australia 1996-97" which analyses
Australia's trade in services for the years 1993/94–1996/97.  The data shows inter alia  that Australia's
exports of services to New Zealand in 1996/97 am ounted to A$1,039 million and that New Zealand's
exports of services to Australia totalled A$753 million.
II. PROVISIONS AFFECTING TRADE IN SERVICES
1. Provisions of the Agreement relating to the elimination of Article XVII inconsistent measures
8. Please explain the intention and effect of the provision in section 2.2 of the services
protocol that its provisions "shall apply subject to the foreign investments policies of the
Member States"?
Australia and New Zealand have non-discrimina tory investments policies and both member
states are parties to the OECD Code of  Libera lization of Capital Movements which requires such
policies.  Article 2.2 of the Protocol is intended to ensure that the member states' investment policies
are not affected by the Protocol.
The effect of Article 2.2 of the Protocol is not to exclude investment from the Protocol but to
ensure that where the obligations of the Protocol are inconsistent with member states' investments
policies, the member states' investment polic ies prevail.  Australia and New Zealand have
progressively liberalized their foreign investment policies since 1986 and there remain few
impediments to trans-Tasman direct investment.  The practical effect of Article 2.2 is therefore
limited.WT/REG40/3
Page 6
9. How does this provision relate to the obligation in Article V:1(b) to eliminate
discrimination, in the sense of Article XVII, between  or among the parties, in such of the sectors
covered by the Agreement?
Article V:1(b) provides for the absence or elimination of substantially all discrimination, in
the sense of Article XVII, between or among the parties through:
(i) elimination of existing discriminatory measures;  and/or(ii) the prohibition of new or more discriminatory measures.Article 8 of the Protocol prohibits the member states from introducing measures that
constitute a means of arbitrary or unjustifiable discrimination against persons of the other member
state or that constitute a disguised restriction on trade in services between the member states.  The
Protocol therefore satisfies Article V:1(b) of the GATS.
In addition, in evaluating whether the conditions  of sub-paragraph 1(b) of Article V is met,
Article V:2 enables consideration to be given to the relationship between an agreement and a wider
process of economic integration or trade liberalization among the countries concerned.  Given the
wider process of economic integration between Australia and New Zealand – including the removal of
all tariffs and quantitative restrictions on trade in goods under the ANZCERTA agreement, the
harmonization of standards under the Agreement Es tablishing the Joint Accreditation System of
Australia and New Zealand, and the mutual recognition of standards under the Trans-Tasman Mutual
Recognition Arrangement – it is clear that the Protocol meets the basic requirements of
Article V:1(b).
10. Please identify all provisions in the agreeme nt that allow for discrimination, in the sense
of Article XVII, between or among the parties, in each of the sectors covered by the agreement.
Article 2.2 of the Protocol only allows for discrimination in the sense of Article XVII of the
GATS, in relation to the services, policies and regulations inscribed in the Annex to the Protocol.
11. Provide an estimate of the volume of trade affected .
It is extremely difficult to estimate the volume of trade affected by Article 2.2 as statistics
collected on services trade between Australia and New Zealand do not separately identify trade
covered by the inscriptions in the Annex to the Protocol.
Attached is a table showing the trade in services between Australia and selected countries
in 1995-96, breaking down the trade by type of service.
12. What plans do the parties have to   eliminate this discrimination?
Please refer to the answer given to question 3 above.WT/REG40/3
Page 7Table 1. Services Credits by Type of Service and Selected Countries – 1995-96 (a)
($ million)
Canada Germany Japan New Zealand Papua New
GuineaUnited
KingdomUnited States of
AmericaOther
CountriesOther(b) Total
Shipment
Freight on exports - 4 459 57 np np np (e)566135 1,221
Insurance on exports - - 6 - - 6 - - - 12
Total - 4 465 57 - 6 - 566 135 1,233
Other  transportation
Passenger services np np np np np np np np np np
Port services etc. np np np np np np np np np np
Total 109 164 1,060 - 51 600 656 2,506 745 5,891
Travel
Students' expenditure 13 7 263 53 25 25 31 2,226 108 2,791
Other 131 315 1,841 646 75 604 679 3,913 12 8,216
Total 144 322 2,104 699 100 629 710 6,179 120 11,007
Other services -
Official 1 - 2 - 46 2 58 181 10 300
Non-official -
Expenditure of foreign governments
and foreign government employeesnp np np np np np np (e)24942 5 3
Expenditure of resident entity
employees6 12 76 57 4 32 28 158 - 373
Financial services 1 5 15 13 - 155 139 73 10 411
Insurance services nes - - 65 14 - 172 261(c)74 32 618
Miscellaneous services(c)
Communication services( d ) n pn p n p n pn pn p n pn p ( e ) 8 9 6 8 9 6
Computer and information services np np 26 17 1 20 36 55 (e)14 218
Research and development services np np np np np 30 42 44(c)81 0 5
Construction services np np np np np np np np (e)67 67
Professional services np np 17 13 12 35 86 109(c)73 345
Rental and operational leasing services np np np np np np np np (a)7 7
Technical services np np 4 12 6 16 35 188 (e)55 316
Management fees between affiliated
companiesnp np 4 87 7 34 237 73 (e)15457
Agricultural, mining and on-site
processing servicesnp np np np np np np np (e)4949
Trade-related  services np np np np np np 24 27 (e)240 290WT/REG40/3
Page 8
Table 1. Services Credits by Type of Service and Selected Countries – 1995-96 (a)
($ million)
Canada Germany Japan New Zealand Papua New
GuineaUnited
KingdomUnited States of
AmericaOther
CountriesOther(b) Total
Personal, cultural and recreational
servicesnp np np np np - 18 66 (e)43 128
Confidential items 23 23 72 71 17 115 259 326 -908 ..
Total miscellaneous services 23 23 123 199 43 230 787 890 560 2,878
Total non-official 30 40 279 283 47 589 1,215 1,444 606 4,533
Total 31 40 281 283 93 591 1,273 1,625 616 4,833
Total services credits 284 530 3,910 1,039 244 1,826 2,639 10,376 1,616 22,964
(a) Care should be exercised in interpreting country data when residual categories for country groupings either "nes" or "unallo cated" and significant.  See footnote (a) on Table 33 for an
explanation of the issue and refer to Table 34 and 35 for an indication to the significant of the residual categories.
(b) Includes international institutions, international capital markets and unallocated.(c) Relative standard errors for these terms are given in Table 66.
(d) Communication services includes other services.
(e) Includes confidential itemsWT/REG40/3
Page 9Table 2. Services Debits by Type of Service and Selected Countries – 1995-96 (a)
 ($ million)
Canada Germany Japan New Zealand Papua New
Guinea United
KingdomUnited States of
AmericaOther
CountriesOther(b) Total
Shipment
Freight on imports -24 -225 -354 -160 -13 -1,051 -487 -1,894 -197 -4,405
Insurance on imports - - -12 - - -12 - - - -24
Total -24 -225 -366 -160 -13 1,063 -487 1,894 -197 -1,429
Other  transportation
Passenger services np np np np np np np np np np
Port services etc. np np np np np np np np np np
Total -87 np -789 np -17 -595 -626 (f)-3,099-396 -5,609
Travel
Students' expenditure -12 -18 -35 -40 -7 -45 69 -242 -1 -469
Other -208 -118 -127 -373 -50 -1,020 -648 -3,240 -181 -5,965
Total -220 -136 -162 -413 -37 -1,065 -717 -3,482 -182 -6,434
Other services
Official
Defense services - - - -1 -1 -11 -65 -12 -5 -95
Financial services - - - - - - - - - -
Miscellaneous services -3 -6 -21 -4 -26 -11 -21 -244 -16 -352
Total official -3 -6 -21 -5 -27 -22 -36 -256 -21 -447
Non official
Expenditure of Australian government
employees-2 -2 -3 -2 -4 -15 -34 -53 -7 -122
Expenditure of non-resident entry
employees-7 -7 -9 -84 -8 -59 -69 -303 -6 -554
Financial services -4 -8 -58 -1 -1 -38 -80 -71 -15 -276
Insurance services nes- -1 -30 -4 -np - -177 -191 -200 (f)-293-896
Miscellaneous services(d)
Communications services np np np np np np np np (f)-1,081-1,081
Computer and information services(e) -4 np -5 -4 -np -52 -108 -29 (f)-2 -204WT/REG40/3
Page 10
Table 2. Services Debits by Type of Service and Selected Countries – 1995-96 (a)
 ($ million)
Canada Germany Japan New Zealand Papua New
Guinea United
KingdomUnited States of
AmericaOther
CountriesOther(b) Total
Research and development services -2 (e)-14-8 -1 - -19 -48 -71 (f)-6 -169
Construction services(c)-5 - - - - -(c)-16 np(c)-7(c)-28
Professional services np np(c)-21 np(c)-3 -117 -78 -47 (f)-51-317
Rental and operational leasing services np np -1 - - -1 -41 -13 (f)-2 -58
Technical services np -30 -8 - np -46 -96 -51 (f)-14-245
Management fees between affiliated
companies-9 -6 -27 -10 - -102 -215 -128 (f)-2 -499
Agricultural mining and on-site
 processing services - - - np -(c)-1 -7 -7 -2 -17
Trade and services -1 np np np np np -17 np (f)-255-273
Personal, cultural & recreational services 2 np - -2 np -6 -29 -7 (f)-19-65
Confidential items -30 -19 -42 -71 -7 -160 -144 -569 1041 ..
Total miscellaneous services -53 -69 -113 -88 -10 -504 -799 -923 -398 -2,957
Total non-official -69 -116 -187 -175 -23 -793 -1,173 15,50 -719 4,805
Total -72 -122 -208 -180 -50 -815 -1,259 -1,806 -740 -5,252
Total services credits -403 -483 1,525 -753 -137 -3,538 -3,089 -10,281 -1,515 -21,724
__________________________________
(a) Care should be exercised in groups designated either "nes" or "unallocated" and significant.  See footnote (a) to Table 33 f or an explanation of the issues, and refer to Tables 34 and 35 for an
indication to the significance of the residual categories.
(b) Includes international institutions, international capital markets and unallocated.
(c) Cells with  relative standard errors greater than 25 per cent.
(d) Relative standard errors for these items are given in Table 66.(e) Communication services includes other services.
(f) Includes confidential items.
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