VZCZCXYZ0003
RR RUEHWEB

DE RUEHWL #0459/01 1662354
ZNR UUUUU ZZH
R 152354Z JUN 06
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 2901
INFO RUCPDOC/USDOC WASHDC 0058
RUEHBY/AMEMBASSY CANBERRA 4449

UNCLAS WELLINGTON 000459 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR-BWEISEL 
STATE FOR EAP/ANP-DRICCI, EB/TPP/MTA-MBGOODMAN AND 
EB/TPP/MTA/MST-TNISSEN 
COMMERCE FOR ABENAISSA/4530/ITA/MAC/AP/OSAO 
 
E.O. 12958: N/A 
TAGS: ETRD PGOV PREL NZ
SUBJECT: NEW ZEALAND TAKING LOOK AT WTO GOVERNMENT PROCUREMENT 
AGREEMENT 
 
 
¶1. (U) Summary:  Urged by members of the New Zealand business 
community, the New Zealand government has agreed to review its 
decision not to join the WTO Government Procurement Agreement. 
However, government officials expect the review to show that the 
government's costs of complying with the agreement would exceed the 
benefits that New Zealand companies could expect to gain through 
increased access to other countries' government procurement markets. 
 End summary. 
 
¶2. (U) According to a Ministry of Economic Development official, the 
WTO Government Procurement Agreement (GPA) is so highly prescriptive 
that it would require New Zealand to re-regulate its already 
deregulated and decentralized public sector management regime. 
Since 1992, New Zealand has had no legislation regarding government 
procurement and, therefore, no requirement that government 
purchasers favor domestic products over foreign-made products, said 
Rory McLeod, manager of the ministry's International Technical and 
Regulatory Coordination Team.  There are no government-wide 
procurement procedures.  Instead, purchasers are guided by 
government policy that advises them to make decisions based on 
"value for money."  McLeod said cost-savings -- not the product's 
origin -- is the determinant of purchasing decisions.  Underscoring 
that principle, department heads must fulfill performance agreements 
that include the containment of costs. 
 
¶3. (U) Thus, New Zealand already provides open access to its 
government procurement market, McLeod said.  By contrast, the GPA is 
less liberal, setting thresholds for the value of purchases covered 
by the agreement and allowing members to bilaterally negotiate 
exclusions of purchasing entities and industry sectors.  In 
addition, the agreement would require procedures that would raise 
New Zealand's administrative and transaction costs.  To join the 
plurilateral agreement, New Zealand would have to engage in 
cumbersome bilateral, sector-by-sector negotiations with GPA 
members.  McLeod doubted that those costs would be outweighed by the 
increased sales that New Zealand companies might realize from 
greater access to foreign government procurement markets. 
 
¶4. (U) Ministry of Commerce policy does require that government 
departments obtain origin and local-content information on all 
offers to supply goods.  The Labour government is funding a "Buy 
Kiwi-Made" program, as part of a post-election agreement with the 
Green Party, encouraging New Zealanders to buy locally made products 
and use local services, McLeod noted.  However, the program would 
not affect government purchases. 
 
¶5. (U) Further complicating the issue, the GPA would apply to 
procurement practices by state-owned enterprises and local 
governments -- practices over which the central government has no 
jurisdiction, McLeod added. 
 
¶6. (U) The Wellington Regional Chamber of Commerce has pushed for 
New Zealand's membership in the GPA.  The chamber's chief executive 
officer, Charles Finny (a former GNZ trade negotiator), contends 
that membership would open a number of restricted government 
procurement markets to New Zealand's exporters, including the U.S. 
federal government's US $200 billion market.  McLeod conceded that, 
because of the chamber's pressure, the government decided to review 
its position on the GPA.  The review is expected to be completed by 
year's end.  Meanwhile, McLeod said the government had no intention 
of becoming an observer to the WTO GPA Committee. 
 
¶7. (U) In its free-trade agreements, New Zealand has won varying 
access to its partners' procurement markets.  As part of their 
Closer Economic Relations, New Zealand and Australia are committed 
to according each other's goods, services and suppliers equal 
treatment in their government purchasing.  In the Trans-Pacific 
Strategic Economic Partnership Agreement between Brunei, Chile, New 
Zealand and Singapore, the parties made the same commitment, but 
specified entities and services covered by the agreement and set 
thresholds.  The agreement applies only to procured goods above a 
value of 50,000 SDRs (IMF Special Drawing Rights, equivalent to 
about US $34,000); services, 50,000 SDRs; and, construction, 5 
million SDRs.  The free-trade agreement between New Zealand and 
Thailand commits them to working toward eliminating barriers related 
to government procurement.  Meanwhile, New Zealand is aiming to 
reach agreement on a multilateral approach to government procurement 
within the WTO system. 
 
¶8. (SBU) While the Embassy has received no complaints from U.S. 
industry regarding access to New Zealand's government procurement 
market, we noted local media reports on the chamber's call for GPA 
membership and asked the Department whether we should raise the 
matter with the government.  Based on the Department's advice that 
the USG encourages all WTO members to join the agreement, we 
 
requested a briefing from the government.  That briefing was 
provided May 19 by McLeod, senior adviser Tim Barber and policy 
analyst Bastiaan van der Scheer of the Ministry of Economic 
Development, as well as by Maria Alcalde, foreign policy officer in 
the Ministry of Foreign Affairs and Trade's trade negotiations 
division.  Embassy will monitor the government's review and report 
developments. 
 
MCCORMICK