On February 16th the Australian Prime Minister Julia Gillard and the New Zealand Prime Minister John Key signed a new Investment Protocol between the two countries, which updates the bilateral Closer Economic Relations (CER) trade agreement held by Australia and New Zealand. The newly signed agreement will align the CER with contemporary free trade agreements, and will cut several investment restrictions between the countries.

The protocol raises the amount that a New Zealander can invest across the Tasman before requiring a screening and approval by the Australia’s Foreign Investment Review Board (FIRB). Additionally, the signed agreement sets out that a New Zealand investor must be treated as well as a local investor when the investment is being appraised. Likewise, the same considerations and restrictions will apply to Australian investors coming to New Zealand.

Under the new protocol New Zealanders investing in Australia will be subject to a AUD 1.005 billion threshold, with investments exceeding the amount being required to seek approval from the FIRB for the venture. Australians wishing to invest in New Zealand will be subject to a NZD 477 million cap. The levels are being raised from AUD 231 million, and NZD 100 million respectively.

John key made a media statement shortly after signing of the agreement, saying that there should be no ill effects from the protocol, and New Zealand will not experience a loss of asset control to Australian investors. He added that if National wins the general elections and carries out its plan to sell off state assets, the new agreement will not results in disproportionately larger number of Australian buyers.

The new protocol will be enacted within 30 days of both countries completing the necessary legal ratification measures. While a date has not yet been forecasted, both governments expect this to occur within 2011.

Photo by tkw954

On May 31st the Government of New Zealand released a statement announcing the commencement of groundwork for the eventual negotiations of a FTA between New Zealand and Russia. The statement was released shortly after a meeting between Tim Groser, Trade Minister of New Zealand, and Elvira Nabiullina, Russian Minister of Economic Development, held in Moscow. Tim Groser summarized the achievements of the meeting, saying, “Russia has agreed to proceed towards a formal trade agreement with New Zealand, subject to a satisfactory outcome of scoping discussions.”

According to a New Zealand Government statement, a FTA with Russia could be of great benefit to New Zealand. Russia currently imports in excess of US 30 billion in food annually, which represents a sizeable market opportunity for New Zealand exporters. In a joint statement released on June 1st, both Ministers claimed that the economies of Russia and New Zealand are complementary, with great prospective for cooperative growth. Tim Groser also pointed to the potential of agritech, clothing, specialized manufacturing, ICT, and tourism firms offering services to a Russian market. Currently, two-way trade between the nations has reached USD 300 million.

The two Ministers are expected to instruct their respective Governments to prepare objectives and scopes for the possible FTA. Both Governments will also call for public submissions on the prospective agreement.

Photo by Velvet Android

The agreement is based on a Joint Study performed by the two countries which explored the benefits of a possible FTA between the two countries. Having reached an agreement that the study indicated definite positives for both nations it has been agreed that negations will commence. While no definite schedule has been released, Tim Goser has said that it is aimed at commencing before the end of 2009.

Tim Goser extolled many benefit of the FTA, specifically the fast growing nature of the Indian economy.

The New Zealand Government has called for submissions on the possibility of a FTA with Korea,
according to Trade Minister Tim Groser in a January 23rd press release. Further, the Korean Foreign Minister, Yu Myung-hwan visited New Zealand over the subsequent weekend. Talks regarding the FTA were scheduled for Sunday.

According to Mr Goser, Korea is the sixth largest trade partner for New Zealand. He also extolled the great benefits that would be found by both countries in today’s economic environment by embracing the FTA possibility. There are also great benefits to New Zealand by forging strong ties with such a well developed and mature economy as Korea. The Korean GDP for 2008 was almost US$954 billion, while New Zealand for the same period was US$128 billion.

New Zealand already has a film co-production treaty signed with Korea.

According to an announcement made by the Chile Foreign Minister Alejandro Foxley, made on the 21st of November at a meeting of trade ministers at the APEC summit, Australia and Peru are currently looking to join the four country FTA in its next round of expansions. A similar announcement was made in regards to the United States in September.

Currently, New Zealand, Singapore, Chile and Brunei hold a free trade agreement, called the Trans Pacific Economic Partnership (although previously named the P4). It was signed in 2005 and came into force 28th of May 2006. The free trade agreement aims to abolish 90% of tariffs for trade between participating countries by 2015.

There are no details yet of how new entrants into the free trade agreement will affect existing members, in fact it is not yet clear which countries will be participating in them. All APEC members are welcome to apply to the agreement before the commencement of the March 2009 negotiations.

The Free Trade Agreement (FTA) between China and New Zealand was signed on the 24th of July. It was passed with a 104 for and 17 votes against in the New Zealand Parliament on the 7th of April. The Trade Minister Phil Goff was quoted as saying that the new FTA offered great opportunity for New Zealand to move into the world’s fastest growing market (China).

The most noticeable effect that will be felt on October 1st, is the abolishment of some tariffs on exports to China. The initial tariff cut was to any tariffs that were at or below five percent, roughly equating to 35% of all exports to China and 38.6% of imports from China. It is intended that the FTA will eliminate tariffs on exports by 2019.

For more details on the exact tariffs under the new agreement can be found in the New Zealand China FTA website .