Closer Economic Relations
Encyclopedia
Closer Economic Relations (CER) is a free trade
agreement between the governments of New Zealand and Australia. It is also known as the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) and sometimes shortened to (CERTA). It came into force on 1 January 1983, but the actual treaty was not signed until 28 March 1983 by the Deputy Prime Minister of Australia
and Minister for Trade
, Lionel Bowen
and the New Zealand High Commissioner
to Australia, Laurie Francis in Canberra
, Australia.
CER built on the earlier New Zealand Australia Free Trade Agreement (NAFTA), which was signed on 31 August 1965 and came into force on 1 January 1966. NAFTA had removed four-fifths of the tariff
s between the two countries and quantitative restrictions on trade across the Tasman Sea
. However, it came to be seen as too complex and bureaucratic, and in March 1980, a joint Prime Ministerial communiqué was released that called for "closer economic relations".
The two major sticking points in the negotiations were New Zealand's wish for better access for its dairy product
s in Australia and Australia's wish for New Zealand to remove export incentives and quantitative restrictions. After the two hurdles were overcome, the Heads of Agreement
was signed on 14 December 1982 and came into force on 1 January of the following year.
One of the most important results of CER was the Protocol on the Acceleration of Free Trade in Goods, which resulted into the total elimination of tariffs or quantitative restrictions between the two countries by 1 July 1990, was five years ahead of schedule.
Other parts of CER include:
The CER is complementary to the Trans-Tasman Travel Arrangement
.
, the next step for the Australian and New Zealand governments is to create a customs union
through a common external tariff
and a common competition policy. New Zealand and Australia already have a common competition policy but are unlikely to have a common external tariff.
Interestingly, both governments agreed to implement a Single Economic Market in 2004 before talk of a customs union, which would indicate that New Zealand and Australia's move through economic integration is not sequential.
Addressing the New Zealand Parliament in February 2011, Australian Prime Minister Julia Gillard said:
There has been a call from within both the Australian and the New Zealand business communities to extend the CER to other Pacific Island nations, harmonising the CER and the Pacific Regional Trade Agreement (PARTA) so as to move toward a single market and allowing the free movement of people and goods.
Creating a supranational structure similar to the European Union
is also seen as a way to stabilise the region, reducing security threats and political unrest. One possibility is to create a Pacific Union
, composed of the member-states of the Pacific Islands Forum
but with a common charter, institutions and currency.
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
agreement between the governments of New Zealand and Australia. It is also known as the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) and sometimes shortened to (CERTA). It came into force on 1 January 1983, but the actual treaty was not signed until 28 March 1983 by the Deputy Prime Minister of Australia
Deputy Prime Minister of Australia
The Deputy Prime Minister of the Commonwealth of Australia is the second-most senior officer in the Government of Australia. The Deputy Prime Ministership has been a ministerial portfolio since 1968, and the Deputy Prime Minister is appointed by the Governor-General on the advice of the Prime...
and Minister for Trade
Minister for Trade (Australia)
The Australian Minister for Trade has been Dr. Craig Emerson since 14 September 2010.-Portfolio:Currently the Minister for Trade administers the Department of Foreign Affairs and Trade jointly with the Minister for Foreign Affairs, although prior to 1987 there was a separate Department of Trade...
, Lionel Bowen
Lionel Bowen
Lionel Frost Bowen AC , Australian politician, was a senior Labor Party figure, serving in the ministries of Gough Whitlam and Bob Hawke...
and the New Zealand High Commissioner
High Commissioner
High Commissioner is the title of various high-ranking, special executive positions held by a commission of appointment.The English term is also used to render various equivalent titles in other languages.-Bilateral diplomacy:...
to Australia, Laurie Francis in Canberra
Canberra
Canberra is the capital city of Australia. With a population of over 345,000, it is Australia's largest inland city and the eighth-largest city overall. The city is located at the northern end of the Australian Capital Territory , south-west of Sydney, and north-east of Melbourne...
, Australia.
CER built on the earlier New Zealand Australia Free Trade Agreement (NAFTA), which was signed on 31 August 1965 and came into force on 1 January 1966. NAFTA had removed four-fifths of the tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s between the two countries and quantitative restrictions on trade across the Tasman Sea
Tasman Sea
The Tasman Sea is the large body of water between Australia and New Zealand, approximately across. It extends 2,800 km from north to south. It is a south-western segment of the South Pacific Ocean. The sea was named after the Dutch explorer Abel Janszoon Tasman, the first recorded European...
. However, it came to be seen as too complex and bureaucratic, and in March 1980, a joint Prime Ministerial communiqué was released that called for "closer economic relations".
The two major sticking points in the negotiations were New Zealand's wish for better access for its dairy product
Dairy product
Dairy products are generally defined as foods produced from cow's or domestic buffalo's milk. They are usually high-energy-yielding food products. A production plant for such processing is called a dairy or a dairy factory. Raw milk for processing comes mainly from cows, and, to a lesser extent,...
s in Australia and Australia's wish for New Zealand to remove export incentives and quantitative restrictions. After the two hurdles were overcome, the Heads of Agreement
Heads of Agreement
Heads of Agreement may refer to:* Heads of agreement , a non-binding document outlining the main issues relevant to a tentative agreement...
was signed on 14 December 1982 and came into force on 1 January of the following year.
One of the most important results of CER was the Protocol on the Acceleration of Free Trade in Goods, which resulted into the total elimination of tariffs or quantitative restrictions between the two countries by 1 July 1990, was five years ahead of schedule.
Other parts of CER include:
- A good that can be legally sold in one country can also be legally sold in the other. Anyone registered to practise an occupation in one country may practise in the other (with some exemptions including medical practitioners)
- Service providers may provide services in either country (except in certain areas such as airway services)
The CER is complementary to the Trans-Tasman Travel Arrangement
Trans-Tasman Travel Arrangement
The Trans-Tasman Travel Arrangement is an informal agreement between Australia and New Zealand to allow for the free movement of citizens of one nation to the other.- Treaty history :...
.
Future Prospects
Continuing down the path of economic integrationEconomic integration
Economic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place within the borders of each state...
, the next step for the Australian and New Zealand governments is to create a customs union
Customs union
A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas...
through a common external tariff
Common external tariff
When a group of countries form a customs union they must introduce a common external tariff. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which country within the area they are entering...
and a common competition policy. New Zealand and Australia already have a common competition policy but are unlikely to have a common external tariff.
Interestingly, both governments agreed to implement a Single Economic Market in 2004 before talk of a customs union, which would indicate that New Zealand and Australia's move through economic integration is not sequential.
Addressing the New Zealand Parliament in February 2011, Australian Prime Minister Julia Gillard said:
There has been a call from within both the Australian and the New Zealand business communities to extend the CER to other Pacific Island nations, harmonising the CER and the Pacific Regional Trade Agreement (PARTA) so as to move toward a single market and allowing the free movement of people and goods.
Creating a supranational structure similar to the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
is also seen as a way to stabilise the region, reducing security threats and political unrest. One possibility is to create a Pacific Union
Pacific Union
The Pacific Union is a proposed development of the Pacific Islands Forum, suggested in 2003 by a committee of the Australian Senate, into a political and economic intergovernmental community. The union, if formed, will have a common charter, institutions and currency...
, composed of the member-states of the Pacific Islands Forum
Pacific Islands Forum
The Pacific Islands Forum is an inter-governmental organization that aims to enhance cooperation between the independent countries of the Pacific Ocean. It was founded in 1971 as the South Pacific Forum...
but with a common charter, institutions and currency.
See also
- Australia-New Zealand relationsAustralia-New Zealand relationsRelations between Australia and New Zealand, also sometimes referred to as Trans-Tasman relations due to the countries being on opposite sides of the Tasman Sea, are extremely close with both sharing British colonial heritage and being part of the Anglosphere...
- Comprehensive Economic Partnership for East AsiaComprehensive Economic Partnership for East AsiaThe Comprehensive Economic Partnership for East ASIA is a Japanese led proposal for trade co-operation, free trade agreement, among the 16 present member countries of the East Asia Summit.- Countries involved :The 16 countries are:...
- Foreign relations of New ZealandForeign relations of New ZealandThe foreign relations of New Zealand are oriented chiefly toward developed democratic nations and emerging Pacific economies. The country’s major political parties have generally agreed on the broad outlines of foreign policy, and the current coalition government has been active in promoting free...
- Foreign relations of AustraliaForeign relations of AustraliaThe foreign relations of Australia have spanned from the country's time as Dominion and later Realm of the Commonwealth to become steadfastly allied with New Zealand through long-standing ANZAC ties dating back to the early 1900s, and the United States throughout the Cold War, to its engagement...
- Australia-Chile Free Trade AgreementAustralia-Chile Free Trade AgreementThe Australia–Chile Free Trade Agreement is a trade agreement between the countries of Chile and Australia. It was signed on July 30, 2008 and went into effect in the 1st quarter of 2009...
- Australia-United States Free Trade AgreementAustralia-United States Free Trade AgreementThe Australia – United States Free Trade Agreement is a preferential trade agreement between Australia and the United States modelled on the North American Free Trade Agreement . The free trade agreement was signed on 18 May 2004, ratified by the U.S. House of Representatives on 14 July 2004 by a...