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RUEHDN/AMCONSUL SYDNEY PRIORITY 0594
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UNCLAS SECTION 01 OF 09 WELLINGTON 000805 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/ANP, EB, STATE PASS TO USTR BWEISEL, GBLUE 
AND DBELL, COMMERCE FOR ITA/MAC/AP/OSAO, TREASURY FO OASIA 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD NZ
SUBJECT: NEW ZEALAND - 2008 NATIONAL TRADE ESTIMATE REPORT 
 
REF: STATE 119765 
 
¶1. Following is Post's submission for the 2008 National Trade 
Estimate Report (NTE) regarding 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 program, New 
Zealand has begun implementing gradual reductions of its 
highest tariff rates (currently 17 percent), which will 
reduce 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 be reduced 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.  ERMA assesses applications on a 
case-by-case basis and can issue four types of approvals: 
initial development in containment (such as in a laboratory 
or glass house outdoor development or field test (in 
containment), conditional release, and full, unconditional 
release (with no controls).  Biosecurity New Zealand, part of 
the Ministry of Agriculture and Forestry (MAF), carries out 
compliance and enforcement of all indoor and outdoor 
containment and conditional release approvals.  When 
assessing a containment application, ERMA focuses on the 
adequacy of containment to mitigate any potential effect of 
the organism on the environment. 
 
Since 1998, ERMA has granted approximately fifteen 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.  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. 
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. 
 
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.  The process for 
outdoor containment, conditional and full release of 
biotechnology products is much more onerous than for an 
indoor containment application.  Among other things, 
applicants 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, economic, cultural and ethical factors in the 
decision making process.  This includes the possible impact 
of a release on New Zealand's clean, green image and the 
potential impact on the Maori culture.  All outdoor 
containment, conditional and full release applications must 
be publicly notified.  In addition, a Maori consultation is 
required. 
 
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 seeds derived by the use of biotechnology, the release 
into the environment of animals derived by the use of 
 
WELLINGTON 00000805  002 OF 009 
 
 
biotechnology 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 foods and ingredients derived by the use of 
biotechnology.  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 organisms. 
 
Biotechnology 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), 
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 (Code).  The New Zealand Food Safety 
Authority (NZFSA) is responsible for implementation and 
enforcement 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 genetic modification unless 
such food has been assessed by FSANZ and listed in the food 
code standard. As of November 2007, FSANZ has received a 
total of 39 applications for assessment of genetically 
modified foods. Of these, thirty-three applications have been 
approved and four are under assessment.  Two requests have 
been withdrawn. 
 
Biotechnology Food Labeling 
 
Mandatory labeling requirements for genetically modified 
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 New Zealand's food labeling regulations for 
genetically modified foods can be extremely burdensome and is 
especially relevant for U.S. agricultural exporters who deal 
primarily in processed food.  New Zealand wholesalers and 
retailers frequently demand GM-free declarations from their 
suppliers.  This effectively places liability for any GM 
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.  As part of the Domestic Food Review, the 
New Zealand Government is reviewing the entire Food Act and a 
new version is expected to be introduced to parliament in the 
first quarter of 2008. 
 
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 as 
part of our annual Trade and Investment Framework Agreement 
(TIFA) dialogue and in other fora. 
 
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 U.S.- New Zealand TIFA discussions, the 
 
WELLINGTON 00000805  003 OF 009 
 
 
United States Government requested that New Zealand develop 
an import standard for Pacific Northwest stone fruit (plums, 
peaches, nectarines and apricots). In response to the US. 
request, New Zealand has added Pacific Northwest stone fruit 
to its import health standard development work program. The 
work program also includes a review of import requirements 
for citrus from the United States. 
 
New Zealand completed a risk assessment of U.S. high-value 
pork in June of 2006.  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 New Zealand, the Ministry of 
Agriculture and Forestry (MAF) is recommending that high 
value cuts of pork be allowed entry without any sanitary 
treatment. In response to the risk assessment, MAF received 
forty-four submissions, including two from the United States. 
MAF completed the review of submissions in June 2007 and is 
expected to announce the draft import health standard by the 
end of the calendar year. 
 
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).  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 will 
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. 
 
New Zealand continues to suspend imports of U.S. poultry meat 
(except canned product) due to its restrictions on countries 
that have infectious bursal disease. 
 
(Note: New Zealand makes a functional distinction between the 
use of the terms biotechnology and genetic modification. End 
note). 
 
INTELLECTUAL PROPERTY RIGHTS PROTECTION (IPR) 
 
Copyright Protection 
 
The New Zealand government introduced the Copyright 
Amendments Bill at the end of 2006, which passed its first 
reading.  In 2007, the legislation was sent to Select 
Committee for a comment period.  The Bill was again taken up 
by Parliament in November 2007 for a second reading but it is 
uncertain whether the Bill in its current form has sufficient 
votes to pass.  If the current Bill form does not pass the 
second reading before the end of this year's legislative 
term, then it is unlikely to be dealt with again until after 
the election period, i.e., 2009. In March 2007, during the 
comment period to the Select Committee, industry argued that 
the draft legislation would put New Zealand at odds with the 
growing international consensus with respect to protection of 
copyright in the on-line environment.  The international 
standards for protection of copyrightable material are 
currently set by the WIPO Internet Treaties (the WIPO 
Copyright Treaty and the WIPO Performances and Phonograms 
Treaty) of which New Zealand is not a signatory.  Industry's 
main concerns regarding the draft legislation relate 
primarily to the following: 
 
The Bill fails to adequately protect Technological Protection 
Measures (TPMs) that prevent unauthorized access to digital 
content.  The viability of many existing and prospective 
business models depend on such TPMs, but the Bill excludes 
protection for the very types of access controls most in need 
of it.  In order to meet the minimum level of protection 
required by the WIPO treaties, both access and copy 
protection TPMs must be protected, separate and apart from 
the remedies available for infringement.  There is inadequate 
protection against the sale of circumvention (hacking) 
devices. In its present form, the Bill would allow the sale 
of circumvention devices as long as the device is capable of 
any "significant application" other than circumvention.  Thus 
the provider of a circumvention device could avoid liability 
so long as the tool performs some other function.  Moreover, 
the Bill only prohibits trafficking in circumvention devices 
 
WELLINGTON 00000805  004 OF 009 
 
 
where the trafficker has knowledge or reason to believe that 
the device will, or is likely to be, used for infringement. 
This allows any trafficker to hypothesize a non-infringing 
use for the tools of his trade as a defense. In this way, a 
proliferation of such devices would be encouraged, thus 
eviscerating any protections for TPMs. 
 
Internet Service Providers (ISPs) are provided a "safe 
harbor" from liability without requiring them to apply a 
repeat-infringer termination policy.  The Bill also allows 
ISPs to escape liability even if they have "reason to know" 
that infringing activity is taking place on their networks, 
yet fail to act.  The only requirement is that they have 
"actual knowledge or awareness" of infringement - which 
constitutes a high burden of proof for right holders, and 
would encourage unlawful activity.  Also of significant 
concern, is the addition of a provision that would make it an 
offense to provide inaccurate information to ISPs regarding 
illegal content on their networks.  This provision further 
adds to the burdens of content owners, who already take care 
and incur significant expense to monitor the use of their 
content on third party networks. 
 
Patent Protection 
 
In 2000, the Government initiated a review of the Patents Act 
of 1953.  Although an initial draft Bill was released in 
early 2005 for consultation, it has yet to have its first 
reading in the legislature.  The stated purpose of the Bill 
is to ensure that New Zealand's patent regime takes account 
of international developments. One such development is the 
international trend for countries to strengthen intellectual 
property protection through patent term restoration. On 
average, the patent and regulatory approval processes for new 
drugs in New Zealand take about twelve years.  As a result, 
many drugs have very few years of patent protection remaining 
after the regulatory authority grants marketing approval. 
Many countries, including the U.S. and EU, have established 
mechanisms to restore patent terms for pharmaceutical 
products to recover time lost due to regulatory delays.  The 
research-based industry has urged the New Zealand legislature 
to amend the current bill to include patent term restoration 
in keeping with international best practices. 
 
The issue of the patent term protection for pharmaceuticals 
was the subject of a consultation exercise by the Ministry of 
Economic Development in 2003.  After considering all 
submissions and available information, the Ministry decided 
that it was not possible to determine whether the benefits of 
extending the patent term for pharmaceuticals would exceed 
the likely costs, and proposed that an economic study be 
carried out to gather more information on the subject. After 
considering the terms of reference for such a study, the 
government decided in 2004 that no further work needed to be 
done on this issue. 
 
Changes to IPR Enforcement 
 
In the copyright legislation currently under Parliamentary 
consideration, there are provisions to strengthen enforcement 
of trafficking in counterfeit goods and pirated works by 
empowering the Ministry of Economic Development to be able to 
investigate and prosecute the criminal offenses for 
manufacturing, importing and selling of counterfeited goods 
and pirated works.  The Government is also reviewing New 
Zealand Customs' border powers to prevent importation of 
counterfeit goods and pirated works.  Additionally, the New 
Zealand has agreed to join negotiations on the 
Anti-Counterfeiting Trade Agreement (ACTA), proposed by the 
U.S. and Japan. 
 
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 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. 
 
 
WELLINGTON 00000805  005 OF 009 
 
 
Telecommunications 
 
In September 2007, the New Zealand government announced that 
it was going ahead with its plan to split Telecom New Zealand 
into three separate operational units to provide retail, 
wholesale and network services.  The determination sets 
requirements for Access Network Services (ANS) to provide 
services over existing copper, and future fiber and wireless 
access networks, ensuring comprehensive service coverage and 
ensuring that the unit is forward-looking. 
 
Telecommunications Regulatory Environment 
 
In November 2005, the Government commenced an assessment of 
the telecommunications sector.  The purpose of the assessment 
was to consider developments of the telecommunications sector 
as a whole over the medium term (three to five years).  The 
stock take found that the local loop (subscriber line, i.e., 
customer to carrier connection) remains an access bottleneck 
that restricts the development of effective competition.  New 
entrants require access on fair and non-discriminatory terms 
to Telecom's network to be able to provide high quality, cost 
effective and differentiated services. 
 
"Last-mile" access for the majority of New Zealand consumers 
is likely to rely heavily on the local copper network for 
sometime.  The stock take analysis also indicated that an 
improved Unbundled Bitstream Service (UBS) would help close 
the gap with other OECD countries on broadband uptake, price 
and quality. 
 
The assessment resulted in the Telecommunications Amendment 
Act 2006.  The Act was passed through Parliament in December 
¶2006.  The main parts of the Act are requiring the 
operational separation of Telecom; extending the range of 
services subject to regulation; enhancing the ability of the 
Commissioner to implement regulated services; and empowering 
the Commissioner to monitor compliance in the sector. 
 
The key features of the Act are: 
 
-- Operational separation of Telecom New Zealand in order to 
promote competition in the telecommunications market (see 
below). 
 
-- Regulating for greater access to Telecom's local loop by 
competitors by introducing new regulated Unbundled Local Loop 
ULL and Unbundled Bit stream Access (UBA), naked DSL services 
and unbundled backhaul services. 
 
-- Improving transparency of Telecom's costs and pricing via 
regulating for the accounting separation of Telecom. 
 
-- Enhancing the Telecommunications Commissioner's ability to 
implement services by ensuring that service providers can get 
effective and timely access to regulated services. 
 
-- Standard terms determination introduced allowing the 
Commerce Commission to set terms of supply for regulated 
services by providing a multilateral process for setting 
these terms.  This will allow the Commerce Commission to 
resolve supply terms for regulated services once, rather than 
for each access seeker individually. 
 
-- Giving the Telecommunications Commissioner the ability to 
initiate multi-network determinations where the Commissioner 
will be empowered to initiate a determination of the terms 
and conditions of regulated multi-network services, rather 
than relying on access seekers to apply. 
 
The Act requires: 
 
-- The separation of Telecom into separate Access Network 
Services, Wholesale and Retail business units; 
 
-- A requirement for Access Network Services to be operated 
on a stand-alone basis and for Telecom Wholesale to be 
operated at arms-length from any retail business units; 
 
-- The establishment of an Independent Oversight Group, 
backed up by Commerce Commission enforcement, to ensure 
Telecom faithfully implements its Separation plan; and 
 
 
WELLINGTON 00000805  006 OF 009 
 
 
-- A requirement that relevant products, especially Local 
Loop Unbundling and Unbundled Bit stream Access, are 
available to all market participants on equivalent terms. 
 
-- As part of the operational separation process, the 
Minister of Communications issued a Determination on 26 
September 2007 of further requirements with which Telecom's 
undertakings must comply. Telecom has 20 working days from 
the Determination date to prepare their draft separation 
plan. 
 
Mobile Termination Rates 
 
At the end of April 2007, the Economic Development Minister 
announced that he would accept voluntary, and separate 
binding deeds from Vodafone and Telecom New Zealand.  The 
deeds provide for each company's performance in passing 
through reductions in mobile termination rates to fixed 
calling customers to be independently audited each year. Each 
deed also contains measures to ensure the independence of the 
verification process. 
 
Under the deeds, Telecom will reduce its mobile termination 
rate from 20 cents per minute (cpm) to 12 cpm and Vodafone 
has offered to reduce its mobile termination rate from 20 cpm 
to 14 cpm, both over the next five years.  These are in line 
with the Commerce Commission's estimate that the cost of 
mobile termination in New Zealand would be 15 cpm trending 
down to 12 cpm in five years time. 
 
INVESTMENT BARRIERS 
 
Investment Screening 
 
New Zealand's Overseas Investment Office (0I0) screens 
foreign investments in: business investments that exceed 
NZ$100 million and represent 25% equity or more and; 
investments in land defined as sensitive within the Overseas 
Investment Act 2005 (the Act); and investment in Fishing 
Quota.  The New Zealand government enacted The Overseas 
Investment Act in August 2005, which 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. 
 
The screening threshold for investments of over 25%, or a 
control interest in, non-land business investments was raised 
from NZ$50 million to NZ$l00 million.  Investors are required 
to satisfy the "investor test" that requires investors be of 
good character, are not excluded from entering New Zealand 
under the Immigration Act and be able to display both 
financial commitment and business acumen. Significantly, no 
business investments have been declined since 1984. 
 
The purchase of land defined as sensitive within the Act 
requires approval.  Examples of sensitive land could include: 
non-urban land of over five hectares, land on certain 
offshore islands, or land that includes or adjoins foreshore 
and seabed.  Most urban land is not screened at all unless 
deemed to be sensitive for other reasons. Investments by 
overseas persons who are not intending to reside in New 
Zealand are required to pass the "investor test" and show 
that the investment will create a benefit for New Zealand. 
In considering whether this benefit exists, consideration is 
required to be given to a range of economic and non-economic 
factors included within the Act.  Where the investor has 
undertaken to generate these benefits (e.g. through 
significant development or investment) the realization of 
these benefits may be included as conditions of consent and 
progress may be periodically monitored. 
 
The United States has raised concerns about the continued use 
of this screening mechanism.  New Zealand's maintain that its 
commitments under the WTO General Agreement on Trade in 
Services are reflected in the OIO screening program. 
 
OTHER BARRIERS 
 
Government Price Controls and Reimbursement for 
Pharmaceuticals 
 
The U.S. Government continued to raise concerns about New 
 
WELLINGTON 00000805  007 OF 009 
 
 
Zealand's support for innovation 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.  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 New Zealand government also supports 
hospitals' pharmaceutical expenditures, bringing its share of 
total spending on prescription drugs in the country to about 
80 percent. 
 
With respect to accountability, PHARMAC (as a Crown Entity) 
is accountable to the Minister of Health and has a Board of 
Directors appointed by the Minister.  PHARMAC also operates 
in practice as an agent of the District Health Boards (DHBs) 
and its capped (notional) pharmaceutical budget is funded by 
the DHBs. 
 
PHARMAC reports both monthly and quarterly to the Ministry of 
Health (acting on behalf of the Minister of Health).  In 
addition, the Minister of Health may at any time ask the 
PHARMAC Board for a "please explain," and has the power to 
dismiss Board Members. PHARMAC staff members are accountable 
to its Board of Directors who scrutinize not just the 
substance of their actions, but also ensure a rigorous 
adherence to the Operating Policies and Procedures (OPPs). 
 
New Zealand does not 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 themselves.  Thus, 
PHARMAC's decisions have 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. 
 
PHARMAC continues to operate stringent cost containment 
strategies, and issues of transparency, predictability and 
accountability remain unresolved in industry's opinion.  New 
Zealand has created a commercially difficult market for 
innovative medicines.  In October 2005, the United Future 
Party announced that it had secured an agreement from the 
Labour Party to develop a national medicines policy as part 
of Labour's coalition negotiations to form a Government. 
This is tantamount to a review of the Government's 
pharmaceutical policy, and includes three areas of focus: 
Access to Medicines; Quality Use of Medicines; and the 
Rational Use of Medicines. The national medicines policy will 
be released through the Ministry of Health and is anticipated 
to be released as a consultation document in December 2007 
with some principles and possible solutions proffered.  There 
will follow a consultation period from the time of release, 
with changes expected to be implemented later in 2008. 
 
Market Access for Pharmaceuticals 
 
The innovative pharmaceutical industry is advocating for the 
following key policy reforms in New Zealand: 
 
-- Patient Outcomes - The National Medicines Strategy (NMS) 
should ensure the provision of quality medicines in a way 
that is responsive to people's needs and achieves optimal 
health outcomes. 
 
-- Comparable Access - The NMS should ensure that New 
Zealanders have at least comparable access to medicines as do 
citizens in other OECD countries. 
 
-- A Core Health Strategy - Medicines play a vital role in 
the prevention, amelioration and treatment of disease and as 
such the NMS is integral to the achievement of all national 
health strategies and should have equal standing and 
priority. 
 
-- Integrity and Public Confidence - The current bundling of 
clinical assessment and procurement decisions creates 
incentives to subordinate clinical judgment to budget 
imperative.  For these decisions to have integrity and 
improve public confidence in the system, determinations about 
which medicines are cost effective and are of clinical merit 
 
WELLINGTON 00000805  008 OF 009 
 
 
must be conducted independently before being used to form 
decisions about which products can be funded. 
 
-- Transparency and Rigor of Processes and Decision Making - 
Public confidence will be enhanced if decision making 
processes are underpinned by openness, fairness, timeliness 
and high standards of consultation and review.  All 
stakeholders must be able to understand the true basis of 
decisions and rationing should be explicit.  What is 
considered 'value for money' should comparable to other OECD 
countries and meet WHO recommendations. Health Technology 
Assessment (HTA) methodologies must be rigorous and up to 
world standards. 
 
-- Recognition of the Value of Innovation - The NMS should 
recognize the value of innovation and innovative 
pharmaceuticals through the adoption of procedures that 
appropriately value the objectively demonstrated therapeutic 
significance of the pharmaceutical. 
 
-- Responsive Budget Management - The pharmaceutical budget 
should be determined by need and access benchmarks. Rather 
than conduct health technology assessments (HTA) of products 
after the capped budget has been set, thus simply creating a 
priority list of new products competing for the limited 
funding available, horizon scanning and HTA should be used to 
establish budget estimates on an annual basis. 
 
-- Partnership - The achievement of timely access to 
medicines, quality use of medicines and other NMS objectives 
is greatly enhanced by the maintenance of a responsible and 
viable industry in New Zealand. Coordination of health and 
industry policies and a consistent and more welcoming 
environment will better enable the industry to effectively 
partner the government and other stakeholders to achieve 
improved health and economic outcomes. 
 
-- Whole of System - The NMS must be a whole of system 
approach. Meaningful and sustainable improvements will only 
be achieved by a comprehensive, system wide, review. 
Selecting and pursing only a limited range of issues will not 
meet public expectations for reform and would negatively 
impact the relevance and effectiveness of the National 
Medicines Strategy. 
 
Therapeutic Products and Medicines Bill 
 
The New Zealand and Australian governments signed a treaty on 
December 10, 2003, with the intent 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, but would have done 
so under proposed regulations.  Implementing legislation 
known as the Therapeutic Products and Medicines Bill was 
introduced at the end of 2006 and barely passed its first 
reading.  After a prolonged political battle, on July 16, 
2007, the State Services Minister put the highly contentious 
Bill "on hold."  The New Zealand Government has shelved the 
legislation, ending any near term prospects of a joint New 
Zealand - Australia agency to regulate prescription and 
over-the-counter medicines and medical devices.  After 
lengthy contentious political debate, the Government could 
not secure enough votes in Parliament to ensure the bill's 
passage into law.  This almost certainly means the Bill's 
prospects of passage are dead until after the 2008 election. 
 
The bill was expected to grandfather products that were 
already lawfully on the market at the time of the 
implementation of the legislation. The Bill would have 
granted an interim license valid for a transition period of 
three years.  It was expected that the new agency would have 
charged 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. 
 
GOVERNMENT PROCUREMENT 
 
New Zealand is not a signatory to the WTO Government 
Procurement Agreement and is not an observer to the Committee 
on Government Procurement. It is important to note that New 
 
WELLINGTON 00000805  009 OF 009 
 
 
Zealand has a unilateral open market procurement policy, and 
does not use government procurement measures as trade 
barriers.  The position regarding participation in the 
Government Procurement Agreement is kept under review. END 
TEXT. 
 
McCormick