4 - Early Years of ANZCERTA

Summary

Consistent with the desire to make a fresh start, ANZCERTA was a “negative list” agreement, in contrast to the “positive list” approach of its predecessor agreement. In its initial form, however, ANZCERTA was a cautious, even timid agreement. This was a reflection of the very strong opposition faced by both governments to the lowering of manufacturing protection, especially in New Zealand. The “negative list” consisted of a large number of manufactured products subject to “modified arrangements”. In some cases the modification was designed to accommodate industry plans in one or both countries, either by lengthening the timetable for phasing out trade restrictions on the products concerned or by deferring the commencement of the phasing out of trade restrictions until an industry plan could be finalized. In other cases exceptions were made to allow the continuation of existing support schemes and trade restrictions. Special arrangements for some sensitive agricultural products (dairy products, wheat, sugar and tobacco) in effect constituted forms of “managed trade”.

For products not subject to the “modified arrangements”, tariffs were to be phased out over a five-year period ending in 1988, while quantitative restrictions (that is, restrictions imposed by New Zealand's import licensing system) were to be phased out over a twelve-year period, with special ldquo;Australia only” import licenses to be made available in annually increasing levels in order to permit progressive increases in the level of imports from Australia. Export incentives applying to bilateral trade were to be phased out by 1987. No attempt was made to create a customs union. There were significant differences in the tariff structures of the two countries at this time. For example, New Zealand typically allowed duty-free and quota-free entry of intermediate goods used as inputs in its manufacturing industries, ostensibly with the aim of promoting efficient manufacture in those industries, and apparently in blissful ignorance of the very high resulting rates of effective protection, with their obvious implications of very inefficient resource use. Australia, on the other hand, was concerned about promoting the domestic production of intermediate as well as finished goods, applied protective tariffs to imports of some intermediate as well as finished goods.