Rules of origin under the Australia-New Zealand closer economic relations trade agreement
report
Rules of origin under the Australia-New Zealand closer economic relations trade agreement
Research report
The research report, Rules of Origin under the Australia – New Zealand CER Trade Agreement, was released on 11 June 2004.
Two supplements to the report were subsequently released.
Download this publication
Rules of Origin under the Australia - New Zealand Closer Economic Relations Trade Agreement (PDF 990.0 KB) 
Rules of Origin under the Australia - New Zealand Closer Economic Relations Trade Agreement (ZIP 1.3 MB)
Rules of origin (RoO), such as those in the CER Agreement between Australia and New Zealand, are required to confine access to trade concessions to goods from member countries.
RoO are discriminatory. They provide an incentive for producers to purchase inputs from suppliers in member countries rather than from other, lower-cost, sources. The additional costs can outweigh the gains from more liberal trading arrangements.
The global increase in the number of preferential trading agreements (PTAs) will result in diverse RoO, adding to the complexity and compliance costs of engaging in trade.
- Origin rules based on the change in tariff classification model adopted in most non-CER PTAs differ significantly in detail. The benefits for traders from adopting this model for all of Australia's PTAs would consequently be minor.
CER RoO are relatively 'clean' and simple. Nevertheless, they have some shortcomings, primarily because they have not kept pace with changes in technology and the organisation of production. The shortcomings:
- reduce efficiency; and
- add to compliance and administration costs.
Trade concessions available under CER have declined in value as tariffs have been reduced and the relevance of origin rules has consequently diminished.
- Over half of the value of trans-Tasman trade is in items with a most favoured nation tariff rate of zero and is unaffected by RoO.
- A further 35 per cent of that trade is in items with a tariff rate of 5 per cent or less and is not significantly affected by RoO.
- The remaining 12 per cent or so is in items with a tariff rate of more than 5 per cent and is more likely to be affected by RoO.
In view of the maturity of the CER agreement and the significant limitations of the alternative models, the basic framework of the CER RoO should remain unchanged.
The most fruitful approach to addressing problems with CER origin rules would be:
- to implement, as soon as practicable, some relatively minor changes to reduce operational problems; and
- to liberalise the current rules by applying a waiver to provide duty free entry for CER goods manufactured in Australia or New Zealand which face trans-Tasman tariff differences of 5 percentage points or less.
These proposals are consistent with the intent of the CER Agreement, particularly the goal of eliminating barriers to CER trade. They would alleviate the present regulatory burden and would not impose significant adjustment costs.
The proposals also are consistent with recent initiatives by both governments to develop a single economic market comprising Australia and New Zealand.
