Blackburn Consulting Ltd

Blackburn Consulting Ltd

Topical Issues

Implementation of the PACER Plus Agreement

The PACER Agreement on Closer Economic Relations (PACER Plus) is a trade and economic integration agreement that aims to create jobs, raise standards of living and encourage sustainable economic development in the Pacific Region.  It builds on existing trade agreements – the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) and the original PACER Agreement (2001). 

Whereas SPARTECA is a non-reciprocal Agreement (there is no requirement for the PICs to make concessions, tariff reductions etc to Australia and New Zealand) PACER Plus will involve concessions being made on each side.  The negotiations cover sanitary and phytosanitary measures, technical barriers to trade, Customs procedures, Rules of Origin, trade in goods, trade in services, investment, economic and development cooperation and labour mobility. 

In addition to Australia and New Zealand, the Agreement has been signed by the following parties:

  • Cook Islands

  • Federated States of Micronesia (FSM)

  • Kiribati

  • Nauru

  • Niue

  • Palau

  • Republic of Marshall Islands (RMI)

  • Samoa

  • Solomon Islands 

Australia, New Zealand and Samoa have ratified the Agreement.  For the Agreement to come into force, at least eight countries must ratify.  It is hoped this will occur by the end of 2019.    Work has commenced on establishing an Implementation Unit.

Australia and New Zealand announced a joint A$7.7 million Readiness Package to be available to signatories between signature and entry into force, including Customs, revenue, legislative and communications support to address policy and administrative implications of PACER Plus commitments during the ratification process.

NZ-EU FTA Negotiations

New Zealand and the European Union have announced their agreement to start the process for free trade agreement negotiations.  New Zealand and the EU have a longstanding and close relationship, cemented in the recently concluded Partnership Agreement on Relations and Cooperation.  Agreement was reached in October 2015 to begin working towards a deep, comprehensive and high-quality FTA.

The FTA will be an extension of the previously negotiated Partnership Agreement on Relations and Cooperation (PARC). PARC focuses on political and sectorial cooperation but leaves a gap in the areas of trade, investment and economic cooperation. The European Union is New Zealand's third largest trading partner overall, with trade valued at over NZD19.6 billion for both goods and services for the year to June 2015.

Technical Barriers to Trade, Sanitary and Phytosanitary Standards (SPS) legislation and Intellectual property (GIs, Counterfeit products) are among the key barriers identified and New Zealand’s plant health measures impede some exports from the EU.  Special attention should also be given to trade in services, public procurement and investment.  There will not be an Investor State Dispute Settlement clause in this Agreement.  MFAT is seeking input from the private sector.

The Fifth Round of Negotiations took place in Brussels in July. 

Customs and Excise Act 2018

The new Customs and Excise Act 2018 took effect from 1 October 2018.

Numerous amendments which are relevant to importers have been introduced.  A non-comprehensive list includes:

  • Importers will be able to include a provisional Customs value in certain circumstances.  Duty can be refunded where the final Customs value is lower than the provisional value.   

  • A definition of “sold for export to New Zealand” is introduced which clarifies that when there are multiple sales in a supply chain, the sale that determines the value of goods is the sale prior to the importation of goods into New Zealand.

  • Importers will be able to request a binding Customs ruling for valuation. 

  • An alternative review process is introduced. Any decision of the Chief Executive of Customs to amend an assessment can be reviewed using a new administrative review option, (or appeal to the Customs Appeal Authority as was previously the case). 

  • A new provision extends administrative penalties to cover exports.  Also included is a definition of a “materially incorrect” error or omission for an excise entry and an export entry.

  • Changes have been made to the provisions which authorise the import, manufacture and movement of excisable goods within New Zealand. 

New GST Rules for Low Value Imported Goods

From 1 December 2019, overseas businesses that sell goods valued at $1000 or less to consumers (private individuals) in New Zealand may need to register for, collect and return, goods and services tax (GST).

The new rules require non-resident merchants, operators of electronic marketplaces and redeliverers (referred to collectively as “suppliers”) to register and return GST on these supplies if they exceed, or are expected to exceed, NZ$60,000 in total over a 12-month period. 

The NZ$1000 threshold is based on the customs value of the goods. This means transport and insurance costs are excluded when determining if GST needs to be charged. 

All consignments valued NZ$1000 or less can be cleared on an Inward Cargo Report (ICR), a Simplified Import Declaration (SID) or a standard Import Declaration.

Consignments or goods valued over NZ$1000 must be cleared on a standard Import Declaration, and the Import Entry Transaction Fee (IETF) and MPI’s BSEL will be charged.

There is no change to the current processing of consignments over NZ$1000 – the standard GST and duty calculation will be applied. Where GST has been prepaid under the Offshore Supplier Registration scheme GST would only be payable on the duty amount.

Judicial Reviews of Recent Trade Remedies Decisions of MBIE

Recent Judicial Review proceedings taken against the decisions of the Minister (effectively the Ministry of Business, Innovation and Employment) in separate dumping and subsidy investigations have been successful.  MBIE has been ordered by the High Court in two separate investigations to undertake a reconsideration of specific issues arising out of both investigations.

This is the first time since the introduction of the Dumping and Countervailing Duties Act 1988 that successful Judicial Review proceedings have been taken against the Minister.  We understand that the decisions are being appealed to the Court of Appeal. 

Inquiry into New Zealand’s Aid to the Pacific

The Foreign Affairs, Defence and Trade Committee has opened an inquiry into New Zealand’s aid to the Pacific.  The terms of reference for this Inquiry will focus inter alia on evaluating the effectiveness of existing programmes such as the Pacific Reset, Aid for Trade and PACER Plus.  Public submissions have been called for.