The Australia-New Zealand Leadership, the semi-annual gathering of Ministers and business leaders, has been described as a “successful symbol of trans-Tasman togetherness[1]”.  And the togetherness vibe was certainly present when the Forum gathered in Wellington on 18-19 July, in advance of the two Prime Ministers’ meeting the following week. Top of the agenda was the celebration of 40 years of the Closer Economic Relations (CER) agreement.  At a time when good FTAs are hard to come by, it is good to be reminded of the bold step that was taken back then by Australia and New Zealand and how it can be taken forward.

Just how comprehensive is CER ?

The World Trade Organisation has long regarded CER as the world’s most comprehensive free trade agreement.  CER certainly covers all goods and services between the two countries but it was not so at the beginning – a “Gentlemen’s (sic) Agreement on Dairy Products” restricted dairy trade until 1990 when quotas and tariffs on all goods were eliminated (take note EU!). Services were completely covered by 1989 and investment by 2013.   It would not be until 2000 that New Zealand’s second FTA was signed with Singapore.

CER was very much an agreement of its time.  There is no dispute settlement mechanism, something that obliged New Zealand to seek judgement from the WTO over access for apples.  The “trade and ..” paraphernalia – environment, labour, inclusion –, top of mind in FTAs today, are largely absent. The digital economy was barely heard of in 1983.   But CER has been instrumental in building a Single Economic Market (SEM) across the Tasman by aligning standards and recognising qualifications.  CER is also the basis upon which the two countries have made common cause in the search of global trade liberalisation through several trade agreements including the high quality CPTPP.

So what’s next?

The work of securing even closer economic integration is never finished and the ANZLF has since its inception in 2004 served as an effective ideas-generator and cheerleading squad.  With high-level business involvement, it pushes and prods, including at times when the agenda of the two governments may not be completely aligned.  Today, judging by the warm vibes from the meeting of the two Prime Ministers, the bilateral relationship is stronger than it ever has been.  With a pathway for citizenship for NZers in Australia settled, there is an opportunity to think big again.  That was certainly the message coming from the Forum, the second since the pandemic: CER is now in need of further, urgent upgrading to ensure it can meet the challenges of today’s complex environment.

A new agenda for CER

To this observer four things stood out amongst the raft of recommendations from the Forum:

Sort out the border once and for all:  ANZLF has history in this space having successfully advocated for those smart gates for trans-Tasman travellers, but the pandemic took things backwards and there is now more to be done to remove friction from trans-Tasman air travel.  Happily, the two Prime Ministers got the message and have agreed to take this forward as a priority.

Make it digital: To ensure CER remains gold standard it needs to be brought into the digital age. New Zealand and Australia have negotiated separate digital trade agreements (both of which ironically include Singapore!) and Australia, through its Simplified Trade System, is way ahead of New Zealand in this space. Key elements include systems for paperless trade, aligned digital standards, mutual recognition of digital credentials, and alignment of legislation in new technology areas such as for Generative AI.

Let Indigenous shine: Indigenous business representatives were very much in evidence at the Forum and their agenda for indigenous economic advancement is a world first.  These elements could usefully be incorporated into CER as has been done recently with NZ/UK and NZ/EU FTAs.

Beat climate change: Both countries are now aligned on net zero by 2050.  Recent FTAs have incorporated climate disciplines – can we not go further in CER?

To many 1983 seems an age away and so it was.  New Zealand today is barely comparable to back then and that is due in part to the way a revolutionary trade agreement like CER opened up our hopelessly inward-looking fortress economy.   In CER’s ruby year ANZLF’s togetherness has provided a useful blueprint for the next phase of achievement.

This post was prepared by Stephen Jacobi, Executive Director of the NZ International Business Forum.  Stephen moderated the opening plenary session at the 2023 Forum in Wellington.

[1] Peter Hempenstall, NZAC Research Centre, University of Canterbury, October 2006