WORLD  TRADE  
ORGANIZATION  WT/TPR/S/216/Rev.1 
10 July 2009  
 
(09-3367) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
NEW ZEALAND 
 
Revision 
 
 
 
 
 
This report, prepared for the fourth Trade Policy Review of New Zealand, has 
been drawn up by the WTO Secretaria t on its own responsibility.  The 
Secretariat has, as required by the Agreement establishing the Trade Policy 
Review Mechanism (Annex 3 of the Ma rrakesh Agreement Establishing the 
World Trade Organization), sought clarification from New Zealand on its trade 
policies and practices. 
 
Any technical questions arising from this report may be addressed to 
Mr. Sergios Stamnas (tel:  022 739 5382). 
 
Document WT/TPR/G/216/Rev.1 contains the policy statement submitted by 
New Zealand. 
 
 
 New Zealand WT/TPR/S/216/Rev.1 
 Page iii 
 
 
CONTENTS 
 
  Page 
SUMMARY OBSERVATIONS vii 
 (1) E CONOMIC ENVIRONMENT  vii 
 (2) T RADE POLICY FRAMEWORK  vii 
 (3) T RADE POLICY DEVELOPMENTS  viii 
 (4) S ECTORAL POLICY DEVELOPMENTS  x 
 (5) O UTLOOK  xi 
I. ECONOMIC ENVIRONMENT 1 
 (1) I NTRODUCTION  1 
 (2) R ECENT ECONOMIC DEVELOPMENTS  3 
 (3) M ACROECONOMIC POLICIES  6 
 (i) Monetary and exchange rate policies 6  (ii) Fiscal policy 7 
 (4) S
TRUCTURAL MEASURES  8 
 (i) Tax reforms 8  (ii) Financial sector reforms 8 
 (iii) Pension reform 9 
 (5) B
ALANCE OF PAYMENTS  10 
 (6) D EVELOPMENTS IN TRADE  12 
 (i) Composition of trade 12  (ii) Direction of trade 12 
 (7) T
RENDS AND PATTERNS IN FOREIGN DIRECT INVESTMENT  12 
 (8) O UTLOOK  15 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 17 
 (1) O VERVIEW  17 
 (2) G ENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK  17 
 (3) T RADE POLICY FORMULATION , IMPLEMENTATION , AND EVALUATION  18 
 (4) T RADE POLICY OBJECTIVES  19 
 (5) T RADE LAWS AND REGULATIONS  19 
 (6) T RADE AGREEMENTS AND ARRANGEMENTS  22 
 (i) WTO 22 
 (ii) Preferential trade agreements 24 
 (7) F OREIGN INVESTMENT REGIME  31 
III. TRADE POLICIES AND PRACTICES BY MEASURE 35 
 (1) I NTRODUCTION  35 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  36 
 (i) Procedures 36 
 (ii) Customs valuation and clearance 37 WT/TPR/S/216/Rev.1 Trade Policy Review 
Page iv 
 
 
  Page 
 
 (iii) Tariffs 37 
 (iv) Rules of origin 44  (v) Other taxes 45 
 (vi) Import prohibitions, restrictions, and licensing 45 
 (vii) Contingency measures 45  (viii) Standards and conformity assessment 48 
 (ix) Sanitary and phytosanitary measures 51 
 (x) Government procurement 53  (xi) Local content 55 
 (xii) State trading 55 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  55 
 (i) Procedures 55 
 (ii) Export prohibitions and restrictions 56 
 (iii) Duty and tax concessions 56  (iv) State trading 57 
 (v) Export finance, insurance, and guarantees 57 
 (vi) Export promotion and marketing assistance 58 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  58 
 (i) Taxation 58  (ii) Industrial development policies 60 
 (iii) Role of state-owned en terprises, and privatization 62 
 (iv) Competition policy 63  (v) Corporate governance 66 
 (vi) Intellectual property rights 68 
IV. TRADE POLICIES BY SECTOR 73 
 (1) I
NTRODUCTION  73 
 (2) A GRICULTURE , LIVESTOCK , AND FISHERIES  74 
 (i) Overview 74  (ii) Border protection 74 
 (iii) Domestic support 76 
 (iv) Other agriculture policies 76  (v) Fisheries 77 
 (3) E
NERGY   79 
 (i) Electricity 80  (ii) Hydrocarbons 81 
 (4) M
ANUFACTURING  82 
 (5) S ERVICES  84 
 (i) Features 84 
 (ii) Banking and insurance 84  (iii) Telecommunications 89 
 (iv) Transport 91 
 (v) Tourism 94  (vi) Education 95 
REFERENCES   97 
APPENDIX TABLES  101 
 
 New Zealand WT/TPR/S/216/Rev.1 
 Page v 
 
 
CHARTS 
Page 
I. ECONOMIC ENVIRONMENT 
 I.1 Exchange rates, 2003-08   7 
I.2 Product composition of merchandise trade, 2003 and 2008   13 
I.3 Direction of merchandise trade, 2003 and 2008  14  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 III.1 Distribution of MFN tariff rates, 2008  40 
III.2 MFN tariff escalation by 2-digit ISIC industry, 2002 and 2008   41 
III.3 Average applied MFN and bound tariff rates, by HS section, 2002 and 2008  42 III.4 Anti-dumping cases, Januar y 2003 to December 2008   46 
 
IV. TRADE POLICIES BY SECTOR  
IV.1 Bank net interest margins, March 2003 to June 2008  87 
 
TABLES 
 
I. ECONOMIC ENVIRONMENT 
 
I.1 Selected macroeconomi c indicators, 2003-08  1 
I.2 Basic economic indicators, 2003-08  4 
I.3 Productivity growth, 1990-2008  5 
I.4 Balance of payments, 2003-08  10 I.5 Inflows of foreign direct investment, 2003-08  15 
I.6 Outflows of foreign direct investment, 2003-08  15 
 II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES  
 
II.1 Status of selected notifica tions to the WTO, March 2009  21 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
 III.1 New Zealand's tariff structure, 2002-09  39 
III.2 Preferential trad e agreements, 2009  43 
III.3 Anti-dumping measures, 31 December 2008  47 
III.4 New Zealand standards, 2002-08  49 
III.5 Structure of direct and indirect tax revenue, 2002-08  59  
IV. TRADE POLICIES BY SECTOR 
 IV.1 New Zealand banks' market share and ratings, June 2008  85 
IV.2 Banking sector statistics, December 2003 to June 2008  86 
 WT/TPR/S/216/Rev.1 Trade Policy Review 
Page vi 
 
 
APPENDIX TABLES 
 
I. ECONOMIC ENVIRONMENT 
 AI.1 Merchandise exports by product group, 2003-07 103 
AI.2 Merchandise imports by product group, 2003-07 104 
AI.3 Merchandise exports by destination, 2003-07 105 AI.4 Merchandise imports by origin, 2003-07 106 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
AIII.1 Enforcement action by the Commerce Commission, 2001-08 107 
 
 New Zealand WT/TPR/S/216/Rev.1 
 Page vii 
 
 
SUMMARY OBSERVATIONS 
 
(1) ECONOMIC ENVIRONMENT  
1. Since it's previous Trade Policy 
review in 2003, New Zealand has remained 
among the more open economies in the world.  Prudent macroeconomic policies together with liberalization and restructuring contributed to steady real GDP growth averaging 3.2% 
between 2003/04 and 2007/08, mainly 
attributable to growth in domestic consumption, and a fall in the unemployment rate to 3.7%.  However, GDP growth is expected to slow down significantly in 2008/09 owing to a recession in the first three 
quarters of the current fiscal year.  Moreover 
New Zealand's growth potential, and thus its ability to raise living standards, is hampered by declining productivity growth in the economy, to the detriment of the international 
competitiveness of its firms.  Growth could 
also be undermined by macroeconomic imbalances, i.e. the current account deficit and the level of external debt. 
2. Between 2004 and 2007, New Zealand 
maintained a tight monetary policy so as to 
contain growth in domestic consumption and 
the resulting inflation.  Consequently, inflation was kept within the Reserve Bank of New Zealand's medium-term target range of 1% to 3%.  More recently, there has been a 
considerable easing of monetary policy as a 
result of the economic slowdown.  Nonetheless, during the period under review, an asset price bubble seems to have been created in the real estate sector, financed 
mainly by foreign capital inflows.  This sector 
seems particularly vulnerable in the current economic downturn and prevailing international credit crunch.  New Zealand registered a fiscal surplu s in each of the years 
under review.  Recent budgetary reform has 
focused on increased spending geared towards 
removing infrastructure bottlenecks, as well as on tax cuts.  Tax reform is aimed at delivering growth through an improved business and investment climate, and ensuring that growth 
dividends are distributed fairly. 3. New Zealand's current account deficit 
rose to 8% of GDP in 2007/08.  This development reflects a widening of the gap between gross domestic investment and 
national saving, attributable mainly to growth 
in domestic consumption.  On account of considerable foreign investment inflows, the capital and financial account remained in surplus.  As a result, foreign exchange reserves 
rose to over NZ$19 billion, equivalent to 
approximately four m onths of imports and 
16% of New Zealand's short-term debt (both public and private).  
4. New Zealand's trade in goods and 
services rose from 57.8% of GDP in 2003/04 
to around 58.6% in 2007/08.  Primary 
commodities accounted for the bulk of exports (69.7% in 2008);  their share increased during the period under review owing mainly to higher commodity prices (although these have 
experienced a sharp decline recently).  
Australia, the EC, the United States, and Japan remain New Zealand's main export destinations. 
5. Inward foreign direct investment 
(FDI) is critical to New Zealand in addressing 
issues such as the small size of its economy, 
the need to access fo reign technology and 
know-how, and to build more globally competitive firms.  Inward FDI increased marginally from NZ$4.1 billion 2003/04 to 
NZ$4.2 billion in 2007/08.  This increase has 
been driven largely by mergers and acquisition activity and capital restructuring.  Foreign investment legislation was amended in 2005;  it continues to screen investment in a few areas 
of "critical" interest, namely certain sensitive 
types of land, strategic infrastructure projects on sensitive land, "significant business assets" other than land, and fishing quotas.  Subsequently, an amendment to the Overseas Investment Act in March 2008, resulted in the 
failure of a bid by foreign investors to acquire 
shares in the Auckland airport in April 2008.  
(2) T
RADE POLICY FRAMEWORK  
6. New Zealand is an original Member of 
the WTO.  It grants at least MFN treatment to WT/TPR/S/216/Rev.1 Trade Policy Review 
Page viii 
 
 
all its trading partners.  The framework for 
trade policy formulation, implementation, and evaluation in New Zealand has remained largely unchanged since its previous Trade 
Policy Review. 
7. New Zealand has maintained its 
support for, and commitment to, the strengthening and liberalization of the multilateral trading system, and for the 
successful conclusion of the Doha Round 
negotiations.  Nevertheless, New Zealand considers that its overseas network of preferential trade agreements (PTAs) complements its wider trade strategy, by creating new trade opportunities in a shorter 
timeframe and improving access for its 
exporters of goods and services to key markets.  Consequently, New Zealand has pursued bilateral or plurilateral PTAs intensively with major trading partners 
(notably Thailand, China, and ASEAN 
countries) and is continuing or planning negotiations to establish PTAs with several other main trading partners (e.g. Gulf Cooperation Council, India, Japan, Korea, Malaysia).  Most of these agreements, which 
have been notified to and reviewed at the 
WTO, include goods, services, and investment.  All goods of least-developed country origin have qualified for duty-free entry into New Zealand since 1 July 2001;  
unilateral tariff preferences for less developed 
countries have been eliminated, or eroded by MFN tariff reductions and other developments (including the status of beneficiaries).  
8. New Zealand attaches high priority to 
making its laws transparent and readily 
accessible;  many are available online.  New Zealand has long been considered on the cutting edge of pro-competitive regulatory reform efforts and cons istently ranks among 
the world's leading economies as regards the 
quality of its domestic regulatory regime and 
institutions;  current work is focused on proposals that are likely to have a significant impact on economic growth, and a new regulatory review programme is intended to 
identify and remove inefficient and 
superfluous regulation.  New Zealand has taken steps to meet its transparency obligations 
at the multilateral level by, inter alia,  meeting 
most of its WTO notification requirements, though submission of its tariff and trade data 
was somewhat delayed, and information on 
state-trading activities has not been notified since 2004. 
9. New Zealand provides Aid for Trade 
relating to:  trade-relate d capacity building and 
trade facilitation;  supply-side constraints 
issues;  and support for trade policy and regulatory capacity building.  New Zealand considers that the TPRM should be utilized more to assess the impact of OECD Members' trade policies on developing countries' 
economic prospects as well as on their 
progress in implementing any Aid for Trade scheme. 
(3) T
RADE POLICY DEVELOPMENTS  
10. The customs tariff remains 
New Zealand's main trade policy instrument as 
well as a significant (and rising) source of tax revenue (1.5% of total tax revenue in 2007/08).  Under a unilateral tariff reduction programme, New Zealand's average applied MFN tariff dropped from 4.1% (2002) to 2.5% 
(2008);  it is expected to drop further to 2.4% 
(July 2009).  The tariff structure was simplified considerably and consists mainly of three ad valorem  rates (zero, 5%, 12.5%) and 
six specific rates;  "alternative specific" tariff 
rates were eliminated in 2005.  Peak 
ad valorem  rates (19% in 2002) have dropped 
considerably and will be 10% by July 2009.  Agriculture faces relatively low tariff rates, compared with non-agricultural items (WTO 
definition).  Although 99.6% of tariff lines are 
bound, the average gap of 9.1 percentage points between applied and bound MFN rates (9.7 percentage points for agricultural items) still imparts a degree of unpredictability to the tariff regime and provides scope for the 
authorities to raise applied rates within the 
bindings.  During the period under review, however, New Zealand has not taken advantage of this gap.  Tariff concessions are granted whenever suitable alternative goods 
are not available from local manufacturers or New Zealand WT/TPR/S/216/Rev.1 
 Page ix 
 
 
the domestic content of the locally produced 
item is less than 25% of its ex-factory cost of production. 
11. New Zealand maintains some of the 
most advanced customs and trade facilitation 
procedures, a means for upholding the economy's commitment to free and open trade.  During the period under review, New Zealand has changed its preferential rules of origin 
criteria under bilatera l and plurilateral 
agreements from an approach based on the regional value content (RVC) to the change in tariff classification (CTC) method. 
12. No import restrictions or prohibitions 
are operated on commercial grounds;  no 
import licensing requirements have been in 
place since 1992.  Nonetheless, imports of animal and plant products are subject to relatively strict sanitary and phytosanitary laws.  In the area of food safety, institutional 
changes have been undertaken and provisions 
are being reviewed.  Some products, notably non-pasteurized cheese, live poultry, and fresh eggs, may not be imported until their risk to human, animal and plant health is assessed.  Most standards are voluntary, and the share of 
those not equivalent to international standards 
has dropped. 
13. Most anti-dumping investigations 
have been taken against imports involving paper articles originating in Asia, and have led 
to the adoption of final measures in 11 out of 
17 cases;  long-standing anti-dumping and countervailing measures in place affect, inter alia,  canned peaches.  Anti-dumping 
actions may not be taken on goods covered by 
the Australia New Zealand Closer Economic 
Relations Agreement (ANZCERTA);  instead, prohibitions on the misuse of market power, under each country's competition law, are extended to the other's market.  Changes to the safeguards regime are under way.  
14. New Zealand has no barriers to 
exports except for those maintained for health and safety reasons or those necessary to comply with international obligations.  Exporters benefit from export credit insurance and the promotional activities provided by a 
state-owned institution;  government funding is fully recovered from recipients.  Drawbacks and refund of border and internal taxes (tariffs, 
excises, Goods and Services Tax) collected on 
imported goods is availa ble for exporters and 
based on a visible audit trail;  during the review period, total drawbacks more than tripled, and reached an average rate of 5.94% 
of the f.o.b. export value.   
15. Domestic support is aimed at 
promoting economic transformation and business exports through innovation and public-sector-led R&D:  direct funding and income tax incentives (including for R&D 
from 2007/08 to April 2009) are being used.  
New Zealand does not appear to provide direct subsidies for any sector-specific activities; under its 2007 notifica tion in accordance with 
Article 25 of the WTO Agreement on 
Subsidies and Countervailing Measures, 
New Zealand indicated 13 support schemes, including refund of the excise duty for fuel used for commercial purposes.  Under its bilateral and plurilateral agreements, New Zealand, an observer to the WTO 
Agreement on Government Procurement since 
December 2008, is committed not to discriminate between suppliers of goods and services;  nevertheless, government departments have been instructed to require 
origin and local-content information in all 
offers to supply goods.  Until recently, New Zealand has maintained a decentralized government procurement system;  a set of Mandatory Rules for Procurement was 
endorsed in 2006 and plans are under way for 
the progressive implementation of a single procurement policy across the state sector.  Assistance is provided to domestic enterprises, government departments and bodies to identify major procurement opportunities that can be 
fulfilled through competitive local supply.  
Privatization has been at a standstill and re-nationalization has occurred. 
16. During the period under review, 
intellectual property rights protection was 
strengthened with legislative amendments in 
the areas of trade marks and copyright;  WT/TPR/S/216/Rev.1 Trade Policy Review 
Page x 
 
 
implementation in the area of geographical 
indications was delayed.  New Zealand has remained a non-party to most WIPO treaties, but progress is expected with respect to 
treaties relating to trade marks protection by 
2010 after passing new domestic legislation in this area.  
17. Minor changes have been made to the 
substantive provisions of New Zealand's 
generic competition legislation.  
Comprehensive amendmen ts have been made, 
inter alia,  to the regulatory control provisions, 
including in industry-specific competition legislation.  As from November 2004, a Leniency Policy and a new Co-operation 
Policy have proved effective, inter alia,  at 
breaking  cartel behaviour.   
(4) S
ECTORAL POLICY DEVELOPMENTS  
18. During the period under review, total 
factor productivity growth in agriculture 
exceeded that of the wider economy and the 
sector remains internationally competitive.  Agriculture was responsible for approximately 59% of New Zealand's merchandise exports in 2008.  The sector receives only limited government support, with the Producer 
Support Estimate (PSE) being 0.7%.  Average 
applied MFN tariffs in agriculture have declined, while statutory marketing boards were "disestablished" during the review period.  Reform of state-trading enterprises 
(STEs) in recent years virtually eliminated 
their influence on exports of major agricultural products, except for kiwifruit, for which one state-trading enterprise (Zespri) has almost exclusive rights.  Amending legislation was 
passed in 2007 providing for the allocation of 
access rights amongst various dairy processors, other than the Fonterra Cooperative Group, to certain restricted dairy markets overseas.  Competition policy concerns arise due to Fonterra's dominance in 
the dairy market. 
19. The electricity sector is characterized 
by significant state involvement.  Approximately 60% of the electricity sold is generated by state-owned companies;  the sole transmission company is also government 
owned.  Despite electricity trading being liberalized at the wholesale and retail level, there are flexible price caps in certain 
transmission and distribution services.  The 
review period also saw the establishment of a gas industry regulator and the introduction of an emissions trading scheme. 
20. Manufacturing's importance in the 
economy continues to be eroded, as the 
sector's shares of GDP, employment, and exports are all declining.  The Government has increased budgetary allocations for skills and market development as a measure of support for manufacturing. 
21. Overall, the services sector has 
remained relatively liberal and competitive, with low barriers to entry.  New Zealand has commitments in 90 of the 155 sectors under GATS and has an MFN exemption only for 
film co-production agreements.  However, 
there is still to be state involvement in the aviation sector, where the Government is the majority stake holder in the largest airline.  Aviation is subject to a foreign investment cap.  Despite deregulation in the 
telecommunications sector with the 
unbundling of the local loop, tariffs remain relatively high.  Continued reform of the financial sector, such as the implementation of the Basel II capital adequacy framework, has 
seen banks' balance sheets improve.  
Nonetheless, the financial sector remains vulnerable as most of the banks' funding is from external sources, and this is affected by variations in the worl d economic and financial 
regime.  Another factor adding to the 
vulnerability of the banking sector is the banks' significant exposure to the real estate market.  Thus, deteriorating economic conditions in the housing market could give rise to defaults and thus rising non-performing 
loans (NPLs).  To ensure continued confidence 
in the banking system, the New Zealand has introduced deposit guarantees (up to NZ$1 million) for the first time in its history.  New Zealand WT/TPR/S/216/Rev.1 
 Page xi 
 
 
(5) OUTLOOK  
22. By and large, New Zealand's 
economic fundamentals remain sound.  Nevertheless, sustained growth depends on the 
Government addressing macroeconomic 
imbalances such as h eavy reliance on foreign 
borrowing, and on boosting productivity growth.  Another challenge is to achieve a balance between policy measures taken to  
 address the economic downturn without 
undermining the effectiveness or credibility of the longer term macroeconomic policy framework.  Despite the emphasis placed on 
PTAs, a successful outcome to the ongoing 
negotiations at the WTO would improve the outlook for a small open economy like New Zealand, by providing market access opportunities overseas.