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