A preliminary report released by the productivity commissions of both Australia and New Zealand has been welcomed by business on both sides of the Tasman, as it recommends cutting trade tariffs to just 5% and eliminating regulatory burdens.
The recommendation comes months after Prime Minister Julia Gillard announced alongside New Zealand Prime Minister John Key that businesses would be able to invest more money in each country before reaching mandatory regulatory checks.
Ian Murray, executive director of the Australian Institute of Export, told SmartCompany the current trade agreement negotiated decades ago has been seen as one of the strongest in the world – and reducing tariffs would be a step in that same direction.
“I think the more we reduce tariffs and barriers, the better off it’s going to be for everyone.”
The discussion draft recommends 20 policy initiatives that can be introduced, including abolishing “rules of origin” for all items with tariffs under 5%, while reducing tariffs to 5% overall, along with developing common systems for quarantine, and working towards broader air services policies.
The draft also recommends removing competition exemptions for international sea freight ratemaking agreements, and developing data collection and monitoring of ports’ performance.
Other recommendations include investigating the possibility for a trans-Tasman tourist visa for foreigners who are visiting both countries, and developing further benchmarking initiatives.
In a statement, Australian Productivity Commission member Gary Banks said the relationship between the two countries has been strong, and it should continue for some time, with both countries able to cooperate in a number of key areas.
“While a single economic market provides the ‘direction of travel’ for the bilateral relationship, how far future policy initiatives go ultimately must emerge from good public policy processes focused on achievement of net benefits.”
Murray says the original Closer Economic Relations agreement between the two countries has been recognised as “one of the best free trade agreements in the world”, partly because it was organised with a positive attitude between the two countries.
“The two economies are very closely linked, and there is a need for both countries to have a working relationship that is positive.”
“Everyone agrees tariffs should be coming down – it can be an enormous help.”
The Productivity Commission is accepting submissions on the draft report.