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### Viewing cable 08WELLINGTON379, NEW ZEALAND - 2009 NATIONAL TRADE ESTIMATE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08WELLINGTON379 | 2008-11-07 05:05 | 2011-04-28 00:12 | UNCLASSIFIED | Embassy Wellington

`

    VZCZCXRO5201
    RR RUEHNZ
    DE RUEHWL #0379/01 3120503
    ZNR UUUUU ZZH
    R 070503Z NOV 08
    FM AMEMBASSY WELLINGTON
    TO RUEHC/SECSTATE WASHDC 5522
    INFO RUEHNZ/AMCONSUL AUCKLAND 1781
    RUEHBY/AMEMBASSY CANBERRA 5309
    RUEHDN/AMCONSUL SYDNEY 0748
    RUEHRC/USDA FAS WASHDC 0391
    RUEHRC/DEPT OF AGRICULTURE WASHDC
    RHHMUNA/CDR USPACOM HONOLULU HI
    RUCPDOC/USDOC WASHDC 0262
    RUEATRS/DEPT OF TREASURY WASHDC

` `

    UNCLAS SECTION 01 OF 07 WELLINGTON 000379

    SIPDIS

    STATE FOR EAP/ANP, EB/TPP/BTA, STATE PASS TO USTR
    BWEISEL, GBLUE AND DBELL, COMMERCE FOR ITA/MAC/AP/OSAO,
    TREASURY FOR OASIA, PACOM FOR J01E/J2/J233/J5/SJFHQ

    E.O. 12958: N/A
    TAGS: ECON ETRD EFIN APEC PGOV PREL NZ
    SUBJECT: NEW ZEALAND - 2009 NATIONAL TRADE ESTIMATE
    REPORT

    REFTEL) STATE 88685

    ¶1. (U) Following is Post's submission for the 2009
    National Trade Estimate Report (NTE) regarding New
    Zealand per request reftel.  We understand that
    Washington agencies will provide updated trade and
    investment data.

    ¶2. Begin text of NTE submission:

    IMPORT POLICIES

    Tariff rates in New Zealand are generally low as a
    result of several rounds of unilateral tariff cuts that
    began in the mid-1980s and continued through the
    current Labour government, first elected in 1999.  The
    government suspended additional reductions until July
    ¶2005.  The New Zealand government announced in
    September 2003, that it would again resume unilateral
    tariff reductions starting July 1, 2006.  Under this
    unilateral tariff reduction program, New Zealand has
    reduced its highest tariff rates to 12.5 percent
    beginning July 1, 2008 and will further reduce these
    tariffs to 10 percent by July 1, 2009.  These top rates
    apply mostly to clothing, footwear, and carpeting.  Ad
    valorem tariffs on all other dutiable goods were
    reduced to 5 percent beginning July 1, 2008.

    STANDARDS, TESTING, LABELING, AND CERTIFICATION

    Regulations on Genetically Modified Organisms

    New Zealand's Environmental Risk Management Authority
    (ERMA), an independent agency, is responsible for
    assessing and deciding on applications to introduce new
    organisms, including genetically modified organisms
    (GMOs), into New Zealand.  ERMA assesses applications
    on a case-by-case basis and can issue four types of
    approvals: 1) initial development in containment (such
    as in a laboratory or glasshouse), 2) outdoor
    development of field tests (in containment), 3)
    conditional release, and 4) full, unconditional release
    (with no controls).

    ERMA makes decisions on the importation and domestic
    use of GMOs on the basis of a thorough assessment of
    the potential risks and benefits posed by the
    organisms, under the stringent requirements of the
    Hazardous Substances and New Organisms (HSNO) Act 1996.
    If approval is given for development in containment, or
    for importation into containment, further approval must
    be given before an organism can be field tested,
    conditionally released or fully released.  Approval is
    only given if, in the opinion of ERMA, the benefits of
    the GMO outweigh the risks.

    Since 1998, ERMA has granted approximately 15 approvals
    for contained field trials of genetically modified
    crops.  Of these, approximately five have been
    completed, six are still ongoing, and the remaining
    approvals have either ceased or were unused for various
    reasons.  However, to date, there have been no
    applications for either a conditional or a full release
    of products derived by the use of biotechnology in New
    Zealand.  Many attribute this to the onerous, costly
    and unproven nature of the GM regulatory framework,
    which includes a lengthy public consultation process.
    As the first applicant for a GM release will likely
    come under intensive public scrutiny and pressure from
    a number of different groups, some New Zealand
    companies have opted to go through the regulatory
    approval process in other countries.

    The most recent approval granted by ERMA was in May
    2007 for Crop and Food Research to conduct a contained
    field test for broccoli, cabbage, cauliflower, and
    forage kale derived by the use of biotechnology and
    engineered for pest resistance.  Three years ago, ERMA
    approved an application from the same organization to
    field test onions derived by the use of biotechnology.

    WELLINGTON 00000379  002 OF 007

    The United States has raised concerns about New
    Zealand's regulatory policies regarding genetically
    modified organisms in meetings under the United States-
    New Zealand Trade and Investment Framework Agreement
    (TIFA) and other fora and will continue to press New
    Zealand on these issues.

    Genetically Modified Food Approval

    Foods with genetically modified content can be offered
    for sale and consumption in New Zealand after being
    assessed and approved by Food Standards Australia New
    Zealand (FSANZ). FSANZ, a statutory authority operating
    under the Food Standards Australia New Zealand Act
    1991, was established in 2002.  FSANZ is responsible
    for setting food standards that govern the content and
    labeling of foods sold in both New Zealand and
    Australia.  The standards cover food composition,
    labeling and contaminants, including microbiological
    limits.  In New Zealand, the New Zealand Food Safety
    Authority (NZFSA) enforces these standards.

    A mandatory standard for foods produced using modern
    biotechnology came into effect in mid-1999.  The
    standard, which was established under the Food Act of
    1981, prohibits the sale of food produced using genetic
    modification unless such food has been assessed by
    FSANZ and listed in the food code standard.  As of July
    2008, FSANZ has received a total of 43 applications for
    the assessment of genetically modified foods.  Of
    these, 35 applications had been approved and 6 are
    under review.  Two requests had been withdrawn.

    Labeling of Genetically Modified Food

    Mandatory labeling requirements for genetically
    modified (GM) foods took effect in December 2001.  With
    few exceptions, a food in its final form that contains
    detectable DNA or protein derived from genetic
    modification must be so labeled.

    Meeting the requirements of New Zealand's food labeling
    regulations places a burden on manufacturers, packers,
    importers, and retailers to take reasonable steps to
    determine if the food is genetically modified or has a
    GM ingredient and to ascertain if the GM food is
    approved.  The importer usually has the primary
    responsibility for ensuring the accuracy of the label
    and compliance with GM food labeling requirements.
    Wholesalers and retailers usually demand GM-free
    declarations from their supplier, which passes
    liability in the event of GM labeling non-compliance
    back to the importer.  New Zealand food legislation
    requires businesses to exercise due diligence in
    complying with food standards, which usually is defined
    as maintaining a paper or audit trail similar to a
    quality assurance system.

    Sanitary and Phytosanitary Measures (SPS)

    New Zealand maintains a regime of SPS controls for
    virtually all imported animal and plant products.  The
    United States and New Zealand continue to discuss
    specific SPS issues that impact trade in both
    directions as part of the annual TIFA dialogue and in
    other fora.

    In July 2006, Biosecurity New Zealand adopted a new
    system for the funding and management of import health
    standards.  While the new system is more transparent,
    it is resource intensive and Biosecurity New Zealand is
    still only able to complete only about 10% of the
    requests for new import health standards.  Biosecurity
    New Zealand announced in 2007 that it would only take
    applications for the development of import health
    standards from the competent authorities of exporting
    nations and not from domestic constituents.  It is
    currently conducting a review of current procedures
    with a view toward changing them in the future.

    WELLINGTON 00000379  003 OF 007

    At present, Biosecurity New Zealand is working on
    several import health standards for U.S. products
    including stone fruit (plums, peaches, nectarines, and
    apricots) from the Pacific Northwest, pork, cherries
    and lemons.

    On March 3, 2006, the United States requested market
    access for stone fruit from the Pacific Northwest.
    (Stone fruit from California is currently allowed entry
    into New Zealand.)  Biosecurity New Zealand put the
    U.S. request on its work program in 2007 and expects to
    announce a draft import health standard in early 2009.

    New Zealand currently maintains restrictions on U.S.
    pork meat and meat products due to concerns related to
    the Porcine Reproductive and Respiratory Syndrome
    (PRRS) virus.  Having concluded a draft import health
    standard, New Zealand is proposing an import standard
    that will allow unrestricted importation of uncooked,
    consumer-ready, high-value cuts of pork meat from the
    United States.  However, New Zealand is maintaining
    restrictions on other types of pork meat and meat
    products, as it asserts that the PRRS virus risks
    associated with these products is non-negligible.  The
    import health standard is expected to be finalized in
    ¶2009.

    New Zealand continues to suspend imports of US poultry
    meat (except canned product) due to its restrictions on
    countries that have infectious bursal disease - a
    foreign animal disease to New Zealand that is present
    in most poultry exporting countries of the world.

    NZFSA requires case-by-case assessment of U.S. bovine
    products before importation due to concerns over Bovine
    Spongiform Encephalopathy (BSE).  In February 2007
    NZFSA announced a move to modernize its food safety
    importing requirements for beef and beef products in
    light of the new science that surrounds BSE.  Among
    other things, the new measures enable New Zealand to
    categorize the BSE risk status of countries exporting
    to New Zealand.  Once these measures are finalized, the
    current requirement to assess U.S. products on a case-
    by-case basis is expected to be eliminated.

    On December 6, 2007, New Zealand filed a WTO case
    against Australia with respect to Australia's
    phytosanitary import requirements for New Zealand
    apples.  The United States has entered the dispute as a
    third party.

    GOVERNMENT PROCUREMENT

    New Zealand is not a signatory to the WTO Government
    Procurement Agreement but has recently applied for
    observer status at the WTO Committee on Government
    Procurement.  The New Zealand Government is keeping the
    issue of its participation in the Government
    Procurement Agreement under review.

    INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION

    Copyrights

    The Copyright (New Technologies) Amendment Act 2008 was
    passed April 15, 2008.  Most of its provisions came
    into force in October 2008.  There were a number of
    changes made to the Bill following its report back from
    the Parliamentary Select Committee and prior to its
    final passage by Parliament.  In particular, changes
    were made to the Internet Service Providers' (ISP)
    liability provisions in response to concerns raised by
    industry.  Key changes were:

    -- That an ISP will not be protected from liability if
    it has reason to believe that material on its clients?
    websites is infringing, regardless of whether they have
    received a notice from a rights-holder to that effect;

    WELLINGTON 00000379  004 OF 007

    -- A requirement for ISPs to have and reasonably
    implement a policy for termination of the accounts of
    repeat infringers was reinstated into the Bill; and

    -- The offence provision for sending false or
    misleading notices to ISPs which was inserted at Select
    Committee was removed from the Bill.

    The provisions relating to technological protection
    measures (TPMs) are largely unchanged.  The government
    of New Zealand maintains that the Act reflects the
    concern that TPMs should not be protected to the extent
    that they restrict acts which are not protected by
    copyright law.  The provisions of the Act dealing with
    TPM have been drafted to accommodate access to a work
    for non-infringing purposes, including the exercise of
    a permitted act, is retained.  The U.S. maintains that
    the TPM provisions inadequately protects against the
    distribution of circumvention (hacking) devices and
    only prohibits trafficking in circumvention devices
    where the trafficker has knowledge, or reason to
    believe, that the device will, or is likely to be, used
    for infringement.

    Patent Protection

    The grant of patents in New Zealand is governed by the
    Patents Act 1953.  A new Patents Bill was introduced to
    Parliament on July 9 2008 and will, when enacted,
    replace the 1953 Act.  It is expected that the Bill
    will be referred to a Select Committee, which will
    likely seek public submissions as part of its
    consideration of the Bill in early 2009.

    The Patents Bill (2008) requires that, to be
    patentable, an invention must be a "manner of
    manufacture", be novel, involve an inventive step, and
    be useful.  The Bill excludes certain subject matter
    from patent protection:

    -- Human beings and biological methods for their
    generation;

    -- Methods of treatment of human beings by surgery or
    therapy, or methods of diagnosis practiced on human
    beings;

    -- Inventions whose commercial exploitation would be
    contrary to morality or public policy;

    -- Plant varieties.

    The "prior art base" for novelty and inventive step
    includes all material made available to the public in
    any form anywhere in the world.  This replaces the
    "local" novelty standard applied under the 1953 Act.
    Patent applications will be examined for inventive step
    and utility; there is no examination for these criteria
    under the 1953 Act.

    The Patent term will remain at twenty years from filing
    with no provision for extension.  The Bill will remove
    the 1953 Act provision for pre-grant opposition and
    will introduce a "re-examination" provision which can
    be invoked at any time after acceptance of an
    application.  Re-examination will be limited to issues
    of novelty and inventive step based on documentary
    prior art.  The 1953 Act post-grant opposition
    provisions will be expanded and it will be possible to
    invoke post-grant opposition at any time during the
    patent term.  The current provision for revocation of a
    patent through the courts will be retained.

    The Bill also provides for the establishment of a Maori
    Advisory Committee to advise the Commissioner of
    Patents where patent applications involve traditional
    knowledge and indigenous plants and animals.

    The New Zealand Medicines and Medical Devices Safety
    Authority (Medsafe), a business unit of the Ministry of

    WELLINGTON 00000379  005 OF 007

    Health, regulates therapeutic products in New Zealand.
    Completed applications for marketing approval for
    prescription medicines received by Medsafe since August
    2006 have taken an average of 198 days to process.  On
    average, 66 days of this time was taken by companies to
    respond to queries raised by the regulator.

    The New Zealand pharmaceutical trade association -
    Researched Medicines Industry (RMI) expressed its
    concern that pending patent legislation would allow
    under the "specific experimental use exception" what it
    perceives to be an infringement.  While RMI admits that
    it is uncertain of the intention or scope of the
    provision they believe there is a potential for the
    property rights of pharmaceutical companies to be
    compromised by patented product data being accessed by
    generic drug manufacturers and others under the guise
    of "experimental use."

    SERVICES BARRIERS

    Media

    Radio and television broadcasters have adopted
    voluntary local content targets after the New Zealand
    government made it clear that it would otherwise pursue
    mandatory quotas.  New Zealand government officials
    have said they are sensitive to the implications of
    quotas under the GATS, but nonetheless they reserve the
    right to impose them.

    Telecommunications

    New Zealand has, over the past decade, moved from
    relying primarily on the courts to regulate the
    telecommunications sector under general antitrust
    statutes (that proved time consuming and ineffective)
    to the introduction of enforceable sector specific
    rules.  New Zealand amended the 2001 Telecommunications
    Act in 2006 (the Act), separating Telecom New Zealand
    (Telecom) into separate access network services,
    wholesale, and retail business units.  The separation
    is aimed at promoting competition in the
    telecommunications market.  The Act requires Telecom to
    operate its Access Network Services unit on a stand-
    alone basis and its wholesale and retail units at arms-
    length from one another.  As part of the operational
    separation process, the Minister of Communications and
    Information Technology (Minister for Communications)
    issued a determination on September 26, 2007, requiring
    Telecom to prepare a draft separation plan.  Telecom
    submitted a plan that was opened for public comment in
    January 2008.  Taking into account comments received,
    the Minister for Communications approved Telecom's
    amended Separation Plan on 30 March 2008.  The
    determination also set requirements for providing
    Access Network Services over existing copper, and
    future fiber and wireless access networks to ensure
    comprehensive service coverage and a forward-looking
    approach.

    Other key features of the Act require Telecom to
    provide unbundled local loop and unbundled bit stream
    access, "naked" DSL services, and unbundled backhaul
    services; improve transparency of Telecom's costs and
    pricing by requiring separate wholesale and retail
    accounting; and enhance the Telecommunications
    Commissioner's ability to enforce effective and timely
    access to regulated services.  The Act also empowers
    the Commerce Commission to set terms and conditions of
    supply for regulated services and to resolve supply
    terms and conditions for regulated services, rather
    than only for individual operators.  It empowers the
    Telecommunications Commissioner to initiate
    determinations of the terms and conditions of regulated
    multi-network services.  In addition, the Act requires
    Telecom to make relevant services, especially unbundled
    local loops and unbundled bit stream, available to all
    market participants on equivalent terms.

    WELLINGTON 00000379  006 OF 007

    With respect to mobile termination rates, the Economic
    Development Minister announced in April 2007 that he
    would accept voluntary and separate binding commitments
    from Vodafone and Telecom to reduce such rates to more
    reasonable levels.  The commitments also require
    operators benefiting from such reductions to pass
    through reductions to their customers.  Based on such
    commitments and over a five year period, Telecom has
    offered to reduce its mobile termination rate from 20
    New Zealand cents per minute (cpm) to 12 cpm, and
    Vodafone has offered to reduce its mobile termination
    rate from 20 cpm to 14 cpm.  This outcome contrasts
    with the 2005 Commerce Commission recommendation that
    rates be reduced immediately to 15 cpm by 2006, which
    was not implemented due to legal challenges brought by
    mobile operators.

    INVESTMENT BARRIERS

    Investment Screening

    New Zealand maintains investment screening
    requirements, and has not blocked any foreign
    investment approvals for business investment since
    ¶1984.  New Zealand's Overseas Investment Office (OIO)
    screens foreign investments that exceed NZ$100 million
    and represent 25 percent or more of the equity in a New
    Zealand enterprise, foreign investments in land defined
    as sensitive within the Overseas Investment Act 2005,
    and foreign investment in fishing. In August 2005, the
    New Zealand government enacted The Overseas Investment
    Act that liberalized the investment screening regime by
    refocusing screening on assets of critical interest.
    The review also strengthened the monitoring and
    enforcement of conditions of consent made under the
    Act.  Investors are also required to satisfy an
    "investor test."  In particular, an investor must be of
    good character, must not be excluded from entering New
    Zealand under the Immigration Act, and must be able to
    display both financial commitment and business acumen.
    The United States has raised concerns about the
    continued use of this screening mechanism.

    OTHER BARRIERS

    Pharmaceuticals

    The U.S. Government continues to raise concerns
    regarding the level of New Zealand Government support
    for research and development of innovative
    pharmaceutical products.

    Medicines must be approved by the regulator, Medsafe,
    before they can be marketed in New Zealand, or
    considered for subsidy by the New Zealand government.
    New Zealand's Pharmaceutical Management Agency
    (PHARMAC), a stand-alone Crown entity, administers a
    Pharmaceutical Schedule that lists medicines subsidized
    by the New Zealand government.  The schedule also
    specifies criteria for prescribing a product listed for
    reimbursement.  PHARMAC accounts for the majority of
    New Zealand's expenditures on prescription drugs.  The
    New Zealand government also supports hospitals'
    pharmaceutical expenditures, bringing its share of
    total spending on prescription drugs in the country to
    about 80 percent.

    New Zealand does not restrict the sale of non-
    subsidized pharmaceuticals.  Most private medical
    insurance companies, however, will not cover the cost
    of non-subsidized medicines and doctors are often
    reluctant to prescribe them to patients who would have
    to pay the cost themselves.  As New Zealand's Primary
    Health Care Strategy is designed to improve access to
    health services through measures including cost
    reduction, practitioners are encouraged to prescribe
    subsidized medicines.  PHARMAC's decisions, by virtue
    of the agency's functions, have a major impact on the
    price of subsidized medicines, while pharmaceutical
    companies' pricing policies influence the price of

    WELLINGTON 00000379  007 OF 007

    unsubsidized medicines.  Pharmaceutical companies may
    choose not to market a medicine in New Zealand if it
    does not receive a government subsidy.  This may
    reflect the small size of the New Zealand market.  U.S.
    industry continues to have concerns about the
    transparency, predictability, and accountability of
    PHARMAC's processes.

    The New Zealand pharmaceutical trade association -
    Researched Medicines Industry (RMI) has expressed its
    concern that New Zealand lags in the desired level of
    investment in innovative medicines relative to other
    OECD countries.  As a result, RMI feels that
    pharmaceutical companies have largely withdrawn from
    clinical trials due largely to the "harshness" of the
    market.  RMI points to a drop in levels of investment
    noting that 10 years ago over NZ$100 million was
    invested annually in clinical trials which has
    currently sunk to NZ$15 million per year.

    In October 2005, the United Future Party announced that
    it had secured an agreement from the Labour Party to
    develop a national medicines strategy as part of
    Labour's coalition negotiations to form a government.
    Following extensive consultation, the Government
    released the medicines strategy (Medicines New Zealand)
    and an associated action plan in December 2007.  The
    strategy is intended to provide a framework to support
    sound decision-making over time.  It is based on
    principles (equity, effectiveness, confidence, value
    for money, affordability and transparency), and aims to
    deliver a transparent and coherent approach to
    medicines issues in New Zealand.  The outcomes sought
    from the action plan are quality, safe and effective
    medicines for New Zealanders; access to medicines; and
    optimal use of medicines.  A portion of the plan was
    implemented in 2008 with a NZ$17 million increase in
    PHARMAC's budget but the full implementation is
    expected in 2011.

    END TEXT.

    McCormick

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