VZCZCXRO1320
RR RUEHNZ
DE RUEHWL #0878/01 3110156
ZNR UUUUU ZZH
R 070156Z NOV 06
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 3464
INFO RUEHBY/AMEMBASSY CANBERRA 4599
RUEHNZ/AMCONSUL AUCKLAND 1000
RUCPDOC/USDOC WASHDC 0089
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 07 WELLINGTON 000878 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/ANP - DAN RICCI 
STATE PASS USTR FOR BWEISEL AND GBLUE 
COMMERCE FOR ITA/MAC/AP/OSAO 
TRASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN NZ
SUBJECT:  NEW ZEALAND - 2007 NATIONAL TRADE ESTIMATE REPORT 
 
REF:  State 136302 
 
¶1. Following is post's input for 2007 National Trade Estimate Report 
on New Zealand per request reftel.  We assume that Washington 
agencies will provide updated trade and investment data. 
 
¶2. Begin text of NTE submission: 
 
--------------- 
IMPORT POLICIES 
--------------- 
 
In general, tariff rates in New Zealand are low as a result of 
several rounds of unilateral tariff cuts that began in the mid-1980s 
and continued until the current Labour government, elected in 1999, 
froze further reductions until July 2005.  The New Zealand 
government announced in September 2003 that it would resume 
unilateral tariff reductions starting July 1, 2006.  Under this 
unilateral tariff reduction programme New Zealand has begun 
implementing gradual reductions of its highest tariff rates 
(currently 17 percent), which will take these tariffs to 10 percent 
by July 1, 2009.  These top rates apply mostly to clothing, 
footwear, and carpet.  Ad valorem tariffs on all other dutiable 
goods will reduce to 5 percent by July 1, 2008. 
 
--------------------------------------------- - 
STANDARDS, TESTING, LABELING AND CERTIFICATION 
--------------------------------------------- - 
 
Biotechnology Regulations 
------------------------- 
 
New Zealand's Environmental Risk Management Authority (ERMA), an 
independent body, reviews applications for the release of new 
organisms, including biotechnology products that contain living 
organisms.  Using a risk management approach, ERMA assesses 
applications on a case-by-case basis and can issue three types of 
approvals:  contained field test, conditional release with 
conditions, and full, unconditional release.  The Ministry of 
Agriculture and Forestry (MAF) enforces compliance of field tests 
and conditional release approvals.  To date, ERMA has only approved 
a small number of contained field tests.  There have been no 
applications for either a conditional or a full release of 
genetically modified organisms in New Zealand. 
 
Containment approvals include those conducted in enclosed 
laboratories, glasshouses and outdoors in field test situations. 
When assessing an application for a containment approval, ERMA 
focuses on the adequacy of containment and, if an escape should 
occur, the effect of the organism on the environment.  ERMA recently 
received an application from Crop and Food Research to conduct a 
contained field test for broccoli, cabbage and cauliflower 
genetically engineered for pest resistance.  Three years ago, ERMA 
approved an application from the same organization to field test 
genetically engineered onions. 
 
Release approvals include both conditional release, where controls 
can be placed on the organism to manage risks, and full release 
where no controls are imposed, which makes it extremely unlikely 
that a full release would be granted for a biotechnology product. 
The process for GM field test or release applications is much more 
onerous than for a full, non-field test containment application. 
Among other things, applicants for a conditional or full release 
must provide ERMA with detailed information and analysis that 
enables them to conduct a full scale risk assessment that takes into 
account a broad range of scientific and economic factors in the 
decision making process.  This includes the possible impact of a 
release on New Zealand's clean green image and the organic sector. 
 
 
Until October 2003, New Zealand maintained a voluntary two-year 
moratorium on the introduction of all biotechnology products, which 
precluded applications for the commercial planting of biotechnology 
crops, the commercial importation of genetically modified seeds, the 
release into the environment of genetically modified animals and, to 
a lesser extent, some human and veterinary medicines containing 
biotechnology products.  The moratorium, however, did not apply to 
the use and sale of processed genetically modified foods and 
ingredients.  With the moratorium's expiration and the report of the 
Royal Commission on Genetic Modification, Parliament amended the 
Hazardous Substances and New Organisms Act 1996 to make the 
regulation of biotechnological research more workable and to 
facilitate controlled release of biotechnology products.  The 
amendment, the New Organisms and Other Matters Bill of 2003, 
introduced the conditional release category for approval of new 
 
WELLINGTON 00000878  002 OF 007 
 
 
organisms. 
 
Biotechnology Food Approval 
--------------------------- 
 
Imported genetically modified foods for sale in New Zealand must be 
assessed and approved by Food Standards Australia New Zealand 
(FSANZ), which is the bi-national food regulatory authority for New 
Zealand and Australia.  FSANZ is responsible for the development of 
regulations in the Australia - New Zealand Food Standards Code (the 
Code). The New Zealand Food Safety Authority (NZFSA) is responsible 
for implementation and enforcement of the Code within New Zealand. 
 
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 
biotechnology unless such food has been assessed by FSANZ and listed 
in the food code standard.  As of November 2006, FSANZ has received 
a total of 38 applications for assessment of bioengineered foods. Of 
these, 31 applications had been approved and five are under 
assessment.  Two requests had been withdrawn. 
 
Biotechnology Food Labeling 
--------------------------- 
 
Mandatory labeling requirements for foods produced using gene 
technology took effect in December 2001.  With few exceptions, a 
food in its final form that contains detectable DNA or protein 
resulting from genetic modification must be so labeled.  Meeting New 
Zealand's biotechnology food labeling regulations can be burdensome 
and is especially relevant for U.S. agricultural exporters who deal 
primarily in processed food.  New Zealand wholesalers and retailers 
frequently demand biotechnology-free declarations from their 
suppliers.  This effectively places liability for any biotechnology 
labeling non-compliance on 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. 
 
The NZFSA conducts periodic compliance audits.  Violators of 
food-labeling requirements can be assessed penalties under the Food 
Act 1981.  The New Zealand government is reviewing penalties 
stipulated under the Act to ensure that they represent an adequate 
economic deterrent.  The effect of these regulations is to 
discourage New Zealand food retailers from carrying biotechnology 
food products. 
 
Sanitary and Phytosanitary Measures 
----------------------------------- 
 
New Zealand maintains a strict regimen of sanitary and phytosanitary 
(SPS) controls for virtually all imported agricultural products. 
The United States and New Zealand continue to discuss specific SPS 
issues that negatively impact trade in products supplied by the 
United States. 
 
In 2006, New Zealand implemented new processes for undertaking risk 
analyses and developing import health standards.  This initiative is 
intended to streamline existing processes and provide consistency in 
the way New Zealand undertakes these tasks. 
 
As of July 1, 2006, New Zealand also implemented a new system for 
funding and managing the development of import health standards. 
The new system is intended to be more transparent, direct government 
resources to the highest priorities, and increase the resources 
available for developing import health standards. 
 
During the 2006 Trade and Investment Framework Agreement 
discussions, the USG requested that New Zealand develop an import 
standard for Pacific Northwest (PNW) stone fruit (plums, peaches, 
nectarines and apricots).  In response to the U.S. request, New 
Zealand has added PNW stone fruit to their 2006-2007 import health 
standard development work program.  Details on the timing for 
issuing the import health standard will be confirmed once the work 
has commenced.  The 2006-07 work program also includes a review of 
import requirements for citrus from the United States. 
 
New Zealand recently completed a risk assessment of U.S. chilled 
pork.  To date, this product has been subject to a pre-cooking 
requirement because of the presence of Porcine Reproductive and 
Respiratory Syndrome (PRRS) in the United States.  While the 
analysis confirmed that there is a risk of PRRS disease entering NZ, 
the Ministry of Agriculture and Forestry (MAF) is recommending that 
high value chilled cuts of pork be allowed entry without any 
 
WELLINGTON 00000878  003 OF 007 
 
 
sanitary treatment.  To date, MAF has received 44 submissions, 
including two from the United States.  All submissions must be 
reviewed and considered before MAF can move to the next phase, which 
is drafting an import health standard. 
 
New Zealand's import health standard for wood packaging material 
came into effect in May 2006 and enforcement of the standard was 
phased in over the following two months.  However, New Zealand 
retained a pre-existing requirement that all wood packaging 
materials be bark-free.  The United States has requested that New 
Zealand suspend the implementation of the bark-free requirement 
until the findings of on-going international research on the risk of 
pest transmission through bark is released.  However, New Zealand 
maintains that freedom from bark needs to be met to gain biosecurity 
clearance, which could take the form of debarking at destination. 
The USG continues to address this issue with New Zealand. 
 
The New Zealand Food Safety Authority (NZFSA) requires case-by-case 
assessment of U.S. bovine products before importation due to 
concerns over Bovine Spongiform Encephalopathy (BSE).  NZFSA has 
completed an assessment of the U.S. BSE regime and has indicated 
that it will lift that restriction once both sides agree on 
certification language that must accompany meat imports. 
Discussions are currently underway on the revised certification 
language. 
 
Imports of U.S. poultry meat (except canned product) remain 
suspended due to restrictions on countries that have infectious 
bursal disease. 
 
--------------------------------------------- 
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION 
--------------------------------------------- 
 
The New Zealand government has proposed amendments to strengthen its 
copyright and patent laws and enhance the country's protection of 
intellectual property rights.  With proposed amendments to the 
Copyright Act 1994, the government aims to address developments in 
digital technologies and international developments in copyright law 
and to bring New Zealand law into closer conformity with the WIPO 
Copyright Treaty (WCT) and the WIPO Performances and Phonograms 
Treaty (WPPT).  The amendments are expected to be reviewed and 
approved by the Cabinet before they are introduced in Parliament by 
end of 2006.  If this legislation is enacted, the New Zealand 
government then will determine whether to accede to the WCT and WPPT 
treaties. 
 
The Ministry of Economic Development in December 2004 released draft 
legislation that is intended to replace the Patents Act 1953 and to 
bring New Zealand's patent law into closer conformity with 
international standards.  This draft would keep the maximum patent 
term at 20 years, but would tighten the criteria for granting a 
patent, from a patentable invention being new in New Zealand, to 
being new anywhere in the world and involving an inventive step. 
The Government hopes to introduce the legislation by the end of 
¶2006. 
 
The U.S. music industry opposes a proposed amendment to the New 
Zealand Copyright Act that would legalize the duplication of sound 
recordings in other formats for a purchaser's private use.  The 
government says this would enable consumers to employ new digital 
technologies and would legalize what already is common practice. 
The government also notes the amendment would limit copying to one 
copy per format, specify that the original sound recording must be 
legitimate, and exclude making copies from borrowed or rented 
recordings.  The music industry warns that such an exception to 
copyright protection would make copyright infringement difficult to 
enforce, send the wrong message to consumers and cost the industry 
in sales revenue and profits.  The industry adds that the exception 
would discourage the development of music products that would permit 
home copying under contractual arrangements between the consumer and 
the provider. 
 
In the absence of a broad fair use provision in the New Zealand 
legislation, the government maintains that a specific exception is 
required to allow New Zealand consumers to engage in format shifting 
afforded U.S. consumers.  The New Zealand government believes the 
proposed exception is arguably narrower than that covered under the 
fair use doctrine, as it specifically limits copying to one copy per 
format, specifies that the original sound recording must be 
legitimate and explicitly excludes making copies from borrowed or 
hired recordings.  The music industry has, nevertheless, opposed the 
exception, and the Associate Minister of Commerce, Judith Tizard, 
who has portfolio responsibility for intellectual property, has been 
engaged in an on-going dialogue with the industry.  The government 
 
WELLINGTON 00000878  004 OF 007 
 
 
was flexible on the drafting of the proposed exception and added a 
sunset clause and a condition that the exception would be overridden 
by any license provision in an attempt to address industry 
concerns. 
 
Additionally, the industry favors a wider approach to technological 
protection measures (TPMs) than that provided in the governments 
proposed amendments.  The government's proposal would prohibit the 
supply of devices or the means or information to circumvent TPMs 
that would result in infringing any of the copyright owner's 
exclusive rights, and not just copying as now specified in the 
legislation.  The industry says the act of circumventing a TPM also 
should be illegal.  It also wants protection against the 
circumvention of TPMs that control access to copyright material, in 
addition to TPMs that control copying. 
 
U.S. industry also has expressed concern over a proposed exception 
to the Copyright Act that would allow the unauthorized delays for 
virtually all works communicated to the public.  The industry warns 
that the exception would discourage rights holders from developing 
new approaches to meeting consumer demand for electronically 
delivered materials and reduce access and choice for New Zealand 
consumers to these materials.  The Act currently provides an 
exception (section 84) for time shifting of broadcasts or cable 
programs for private and domestic use and solely for the purpose of 
watching or listening at a more convenient time.  The government has 
decided that, in line with the policy of technological neutrality, 
this section should be amended to cover all communication works, 
except those available on demand.  The exception explicitly relates 
only to watching or listening at a more convenient time.  It does 
not allow home users to build up a collection or "library" of films 
or music for ongoing and repeated use.  Where the exception does not 
apply, copying without the copyright owner's permission will 
continue to constitute infringement. 
 
Some U.S. industries, particularly producers and distributors of 
music and software, have voiced concerns about New Zealand law that 
allows parallel imports of certain copyrighted goods, saying such 
imports make it more difficult to detect and combat piracy and erode 
the value of their products in New Zealand and third-country 
markets.  The New Zealand Parliament in October 2003 enacted a ban 
on the parallel importation of films, videos and Digital Video Discs 
(DVDs) for the initial nine months after a film's international 
release, but the ban does not apply to parallel importation of 
music, software and books.  The ban is scheduled to sunset in 2008, 
unless extended. 
 
The October 2003 legislation, which amended the Copyright Act 1994, 
makes it easier to challenge copyright violations in court by 
shifting the burden of proof in certain copyright infringement cases 
to the defendant, who must prove that an imported film, sound 
recording or computer software is not a pirated copy. 
 
In New Zealand's draft patents legislation, a prohibition of patents 
for methods of medical treatment concerns some pharmaceutical 
companies.  The industry also is concerned by the Cabinet's decision 
in mid-2004 to halt a study on the economic impact of extending 
patent terms for pharmaceuticals.  The draft patents bill fails to 
address the issue of patent terms for pharmaceuticals. The 
pharmaceutical industry group, Researched Medicines Industry 
Association of New Zealand, contends that New Zealand's effective 
patent life for pharmaceuticals has substantially eroded.  It 
asserts that extending the effective patent term would be in line 
with international best practices. 
 
The pharmaceutical industry also is concerned by an amendment, 
enacted in December 2002, to the Patents Act 1953.  This amendment 
states that it is not a patent infringement for a person to make, 
use, exercise or vend an invention for purposes related to gaining 
regulatory approval in New Zealand or other countries.  This 
provision can be used to effectively expedite, or "springboard," the 
approval process for generic competition to products whose patents 
are expiring.  The pharmaceutical industry strongly opposes this 
legislation. 
 
----------------- 
SERVICES BARRIERS 
----------------- 
 
Local Content Quotas 
-------------------- 
 
Radio and television broadcasters have adopted voluntary local 
content targets, but only after the New Zealand government made it 
clear that it would otherwise pursue mandatory quotas.  Although New 
 
WELLINGTON 00000878  005 OF 007 
 
 
Zealand government officials have said they are sensitive to the 
implications of quotas under the WTO General Agreement on Trade in 
Services (GATS), they reserve the right to impose them. 
 
Telecommunications 
------------------ 
 
U.S. industry has expressed concern about the fees charged for 
completing calls using mobile networks in New Zealand, which are 
among the highest in the world.  After a year-long investigation 
into mobile termination rates, the New Zealand regulating authority 
determined in June 2005 that mobile network operators were able to 
set unreasonably high rates because of limited market competition, 
and called for such charges to be regulated.  The Communications 
Minister in August 2005 agreed with the authority's position that 
the termination rates should be significantly reduced, but asked the 
authority to reconsider its recommendations by examining several 
issues, including commercial offers by New Zealand's two mobile 
phone service providers for rate reductions and how best to ensure 
that end users benefit from reductions in wholesale rates.  On 21 
April 2006, the Minister received the Commission's reconsideration 
final report on the Schedule 3 Investigation into Regulation of 
Mobile Termination.  The Commission recommends regulation of the 
termination of voice calls made from fixed home or business phone 
lines to all mobile networks, including those using 3G technologies. 
 Under the Telecommunications Act 2001 the Minister may accept the 
Commission's reconsidered recommendation, reject the Commission's 
reconsidered recommendation, or request the Commission to reconsider 
again its recommendation.  In August 2006 the Ministry of Economic 
Development sought cross-submissions on the submissions and a 
proposed "industry solution" regarding a Commerce Commission report 
that recommends regulation of mobile termination rates.  The 
Ministry is advising the Minister of Communications who, under the 
Telecommunications Act, may accept, reject, or require the 
Commission to reconsider its recommendation. 
 
Competitors of the formerly state-owned monopoly, Telecom, were 
disappointed by the New Zealand government's decision in May 2004 
against unbundling the local loop.  Although under competitive 
pressure, Telecom still dominates the market.  The Communications 
Minister accepted the regulator's recommendation against ordering 
Telecom to open its national fixed-line network to competitors. 
Saying he aimed to increase competition in broadband services, the 
Minister also agreed with the regulator's recommendation to require 
bitstream unbundling, or access to Telecom's equipment by service 
providers in order to sell their own broadband services. 
TelstraClear, Telecom's primary land-line competitor, in November 
2004 asked the regulator to determine the terms and conditions for 
access to Telecom's unbundled bitstream service. 
 
On May 3, 2006, the New Zealand Minister of Communications announced 
a comprehensive package of reforms to improve the telecommunications 
regulatory environment.  This package of measures was developed as 
part of an overall review of the telecommunications sector 
commissioned by the Minister of Communications in December 2005, and 
led by the Ministry of Economic Development.  A draft 
Telecommunications Amendment Bill is currently before parliamentary 
Select Committee for consideration. 
 
The key changes to be introduced through the Bill include: 
- new processes, and enhancements to existing ones, to address 
specific problems encountered in the implementation of the original 
Act; 
- enhanced enforcement disciplines to facilitate more effective 
implementation of regulatory and statutory requirements; 
- further regulated services in order to promote competition in the 
supply of key telecommunications services for the long term benefit 
of end users; and 
- information disclosure and accounting separation framework to 
address information asymmetries between access providers, access 
seekers and the regulator. 
 
The key amendments that the Bill introduces are, in summary: 
- introduction of a standard terms determination process and a 
formal undertakings regime to ensure that access terms and 
conditions for regulated services are set in an effective and timely 
manner; 
- empowering the Commerce Commission to continuously monitor the 
performance of the telecommunications sector and thereby enhance the 
Commission's ability to promote effective competition in the 
sector; 
- addition of regulated local loop unbundling and support services 
and amendment of the existing regulated bitstream service to remove 
performance restrictions and clarify that it can be purchased as 
"naked DSL"; 
 
WELLINGTON 00000878  006 OF 007 
 
 
- introduction of enhanced enforcement mechanisms and an information 
disclosure regime to ensure compliance with statutory and regulatory 
obligations; 
- introduction of accounting separation requirements for Telecom to 
increase the transparency of its wholesale and retail operations; 
- enhancing the opportunity for access seekers to apply for the 
supply of designated and specified regulated services; 
- changing the provisions mandating automatic expiry of regulated 
services to instead require that the Commission periodically review 
the need for regulation of services; and 
- empowering the Minister to be able to make regulations to 
establish an independent telecommunications consumer complaints 
process and to set requirements relating to the provision of 
emergency call services. 
 
------------------- 
INVESTMENT BARRIERS 
------------------- 
 
Investment Screening 
-------------------- 
 
New Zealand screens certain types of foreign investment through the 
Overseas Investment Office (OIO).  Amid growing public concern about 
purchases of coastal properties by foreigners, the New Zealand 
government enacted legislation in August 2005 that increased 
screening and monitoring of land purchases, but raised the minimum 
threshold for scrutiny of proposed business purchases.  Under the 
legislation, the threshold for screening non-land business assets 
has increased from NZ $50 million to NZ $100 million, where a 
foreigner proposes to take ownership or control of 25 percent or 
more of a business.  Government approval is required for purchases 
of land larger than 5 hectares (12.35 acres) and of land in certain 
sensitive or protected areas.  Any application involving land in any 
form must meet a national interest test.  For land purchases, 
foreigners who do not intend to live in New Zealand must provide a 
management proposal covering any historic, heritage, conservation or 
public access matters and any economic development planned.  That 
proposal would have to be approved and generally made a condition of 
consent.  In addition, investors would be required to report 
regularly on their compliance with the terms of the consent. 
Overseas persons also must demonstrate the necessary experience to 
manage the investment.  The OIO, part of Land Information New 
Zealand, took over the functions of the Overseas Investment 
Commission in August 2005.  The United States has raised concerns 
about the continued use of this screening mechanism.  New Zealand's 
commitments under the GATS Agreement of the WTO are limited as a 
result of New Zealand's screening program. 
 
-------------- 
OTHER BARRIERS 
-------------- 
 
Pharmaceuticals 
--------------- 
 
The U.S. Government continued to raise concerns about New Zealand's 
pharmaceutical sector policies, which do not value innovation and 
discourage investment in the research and development of innovative 
pharmaceutical products.  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 and the reimbursement paid for each 
pharmaceutical under the national health care system.  The schedule 
also specifies conditions for prescribing a product listed for 
reimbursement.  PHARMAC accounts for 73 percent of New Zealand's 
expenditures on prescription drugs.  The government also supports 
hospitals' pharmaceutical expenditures, bringing its share of total 
spending on prescription drugs in the country to about 80 percent. 
To counter the assertion that the Government does not value 
investment in pharmaceutical research and development, District 
Health Boards (DHBs - responsible for determining the allocation of 
public funds for pharmaceuticals and other aspects of health care) 
and PHARMAC have established a fund for the health sector that is 
administered by the Health Research Council. More broadly, companies 
invest $20-40 million in New Zealand-based pharmaceutical research, 
in addition to the $73 million Health Research Council funding. 
This is part of the more than half a billion dollars the Government 
invests in research and science each year. 
 
New Zealand does not directly restrict the sale of non-subsidized 
pharmaceuticals in the country.  However, private medical insurance 
companies 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 out of pocket.  Thus, PHARMAC's decisions have 
 
WELLINGTON 00000878  007 OF 007 
 
 
a major impact on the availability and price of non-subsidized 
medicines and the ability of pharmaceutical companies to sell their 
products in the New Zealand market.  The Government counters that 
the coverage of pharmaceuticals by private health insurance is a 
matter for those insurers to determine.  The Government does not 
take decisions about insurance coverage.  The Government assumes 
that insurers consider both affordability and cost-effectiveness of 
individual pharmaceuticals when determining the coverage of their 
policies. 
 
The U.S. government has serious concerns regarding the transparency, 
predictability and accountability of PHARMAC's operations.  U.S. 
pharmaceutical suppliers maintain that the methodology used to 
determine Pharmaceutical Schedule decisions lacks transparency. 
Meanwhile, PHARMAC is reviewing the way it decides funding for 
high-cost medicines.  Efforts have been made by PHARMAC and the 
Government in recent years to increase transparency and clarify the 
integrity of the appointment process to the Pharmacology and 
Therapeutic Advisory Committee.  PHARMAC has also recently consulted 
on its methodology for cost-utility analysis and its Operating 
Policies and Procedures. 
 
Also, the Labour Party, in an agreement to form a new government in 
October 2005 with support from the United Future party, agreed to 
review the nation's long-term medicines strategy, including 
PHARMAC's role.  The next stage of this work is the post-Cabinet 
release of a consultation document.  The Ministry notes that this 
work is looking within existing systems and policy settings to 
identify where improvements can be made to ensure the best health 
and disability support gains from medicines over the coming years. 
 
The New Zealand and Australian governments signed a treaty on 
December 10, 2003, to create a joint agency to regulate medical 
devices, prescription and over-the-counter medicines, dietary and 
nutritional supplements, and cosmetics such as sun creams.  Aside 
from prescription pharmaceuticals, New Zealand does not currently 
regulate market entry of these products.  Implementing legislation 
is expected to be introduced by end of 2006.  The bill is expected 
to grandfather products that are already lawfully on the market at 
the time of the implementation of the legislation.  The bill would 
grant an interim license valid for a transition period of three 
years.  Discussion is ongoing as to possibly extending the term of 
transition to five years.  It is expected that the new agency will 
charge full cost-recovery fees to register products and require 
additional documentation and assessments for certain products, even 
if they already have U.S. Food and Drug Administration approval. 
Each country's government will continue to separately determine 
funding of prescription medicines.  U.S. manufacturers and 
distributors of non-pharmaceutical therapeutic products in New 
Zealand have expressed concerns that those requirements will be 
overly burdensome and costly, and could serve to discourage exports 
of their products from the United States to New Zealand.  END TEXT. 
 
McCormick