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WORLD TRADE ORGANIZATION ORGANISATION MONDIALE DU COMMERCE WT/TPR/M/216/Add.1 28 July 2009 ORGANIZACIÓN MUNDIAL DEL COMERCIO (09-3670) Trade Policy Review Body Original: English/ 10 and 12 June 2009 anglais/ inglés TRADE POLICY REVIEW NEW ZEALAND Record of Meeting Addendum Chairperson: H.E. Mr. István Major (Hungary) This document contains the advance written questions, and replies provided by New Zealand.1 __________________________________________________________________________________ Organe d'examen des politiques commerciales 10 et 12 juin 2009 EXAMEN DES POLITIQUES COMMERCIALES NOUVELLE-ZÉLANDE Compte rendu de la réunion Addendum Président: H.E. M. István Major (Hongrie) Le présent document contient les questions écrites communiquées à l'avance et les réponses fournies par la Nouvelle-Zélande.1 __________________________________________________________________________________ Órgano de Examen de las Políticas Comerciales 10 y 12 de junio de 2009 EXAMEN DE LAS POLÍTICAS COMERCIALES NUEVA ZELANDIA Acta de la reunión Addendum Presidente: Excmo. Sr. István Major (Hungría) En el presente documento figuran las preguntas presentadas anticipadamente por escrito, junto con las respuestas facilitadas por la Nueva Zelandia.1 1 In English only./En anglais seulement./En inglés solamente. WT/TPR/M/216/Add.1 Page 3 REPLIES PROVIDED BY NEW ZEALAND (FIRST SESSION) BRAZIL Q1 The Government Report affirms that the Agreement establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) will include as benefit for New Zealand exporters "the phased elimination of trade barriers, greater certainty and transparency, and reductions in associated transaction costs". Will the mentioned elimination of trade barriers encompass trade defence measures such as anti-dumping and countervailing duties as well as safeguards"? If so, please explain how their application within the AANZFTA will be phased out. Answer: There is no phased elimination of trade defence measures such as anti-dumping, countervailing and safeguards under the agreement. Each Party to the agreement therefore retains its rights and obligations under the relevant WTO trade remedy agreements. The agreement does include a transitional safeguard mechanism which can be used in certain circumstances over a transition period which, for each particular good, is the period from entry into force of the agreement until 3 years after the customs duty on that good is to be eliminated or reduced to its final commitment. CHINA Q1 Would the Delegation of New Zealand please share its views on New Zealand's economic prospect in the background of global financial crisis? What are the effects of these measures taken by the previous Government and new Government on New Zealand's economy? Would New Zealand take further steps to counter the effects of the current crisis in the future? Answer: In the 2009 Budget (released 28 May) the New Zealand economy is forecast to contract by 0.9% in the year to March 2009 and by 1.7% in the following March year. In the year to March 2011 growth is expected to return to 1.8% as the world economy recovers and as the economy responds to monetary and fiscal stimulus. New Zealand has responded to the global economic crisis with both monetary and fiscal policy. New Zealand was in a relatively strong position to respond as there was considerable scope to loosen monetary policy and the Government's gross debt was less than 20% of GDP at 30 June 2008, following more than a decade of fiscal surpluses. In the 2009 Budget, the Government announced a number of measures to curb expenditure growth and control net debt. The Government has reduced its allowance for new operating spending to a maximum of $1.1 billion in 2010/11, increasing by 2% per annum, down from $1.75 billion previously. With these changes, gross government debt is projected to peak at 43% of GDP in 2016/17 and to decline after that as the Government's accounts return to surplus. The New Zealand Government has $5.8 billion of new spending planned over the next five years to help maintain economic activity and to support jobs. Over the next year, the focus will be on rebuilding business confidence and ensuring that young people remain connected with the workforce and improve their skills. In the medium term, however, the focus is on reducing debt. This is viewed as essential if the Government is to maintain public services and preserve family assistance, superannuation and welfare entitlements at their current levels. Q2 Would the Delegation of New Zealand please clarify whether the Grants or the help by the NZTE are available to both domestic and foreign companies? WT/TPR/M/216/Add.1 Page 4 Answer: We can confirm that grants are available to foreign companies, as long as the company or one of its subsidiaries has a presence in New Zealand and meets other standard grant requirements that apply equally to domestic companies. Q3 Would the Delegation of New Zealand please elaborate how the NZTE helps to promote and increase business and exports in the three targeted sectors, for example the creative industries? Answer: NZTE uses its onshore and offshore networks to provide advice and expertise to firms working in those sectors. NZTE also works to provide marketing and networking opportunities for its clients through sponsoring trade shows, conferences, and in trade delegation visits. Specific information regarding NZTE's activities can be found at: http://www.nzte.govt.nz/About-NZTE/Documents/NZTE-Annual-Report-complete-2008.pdf. Q4 Would the Delegation of New Zealand please explain the specific policies concerning the finance and tax concessions under the Film Co-production Agreement or Arrangements, which have been indicated in New Zealand’s MFN exemptions for audio-visual services? Answer: A key provision of Film Co-production Agreements or Arrangements is that co-production films – defined widely to include, inter alia, videos, documentaries, mini-series or television dramas - will be considered to be national films entitled to all the benefits provided to such films by the legislation of each country. In New Zealand the main benefit accruing to national films is qualification to apply for financial assistance pursuant to section 18 of the New Zealand Film Commission Act 1978. Partner countries will likewise make any film subsidies, tax breaks, or other financial incentives open to a co-production film. Q5 Would the Delegation of New Zealand please explain the main methods and relevant programs through which the New Zealand Tourism Board and its operational entity, Tourism New Zealand promote New Zealand internationally? Answer: Tourism New Zealand (TNZ) is the trading name for the New Zealand Tourism Board (a Crown Entity). Its role is to market New Zealand as a visitor destination overseas. TNZ has nine overseas offices, including an office in Shanghai, which opened in 2000. TNZ promotes New Zealand worldwide using a number of different methods. These include marketing and promotional work, such as advertising and public relations activity. It works with the local travel trade, who sell New Zealand holidays, to develop better tourism products and to provide them with more information about New Zealand. It also works with local media and celebrities, encouraging them to visit New Zealand and then to write or broadcast stories about their experience. TNZ also provides information to tourists thinking of visiting New Zealand through its website www.newzealand.com. Q6 Would the Delegation of New Zealand please specify the main international standards which have been applied in New Zealand's private services sector? Answer: The reference to "international standards" in the Report was intended to highlight the liberal nature of New Zealand's services market compared to the extent of liberalization in markets in other countries. It did not mean that we apply international standards to foreign services suppliers. WT/TPR/M/216/Add.1 Page 5 TURKEY Q1 Could New Zealand elaborate on the reasons behind the low labour and capital productivity? Answer: The answers regarding labour and capital productivity are best taken separately. Labour productivity It is important to distinguish between the level of labour productivity and its rate of growth. New Zealand has a relatively low level of labour productivity (measured by GDP per hour worked); according to the OECD, New Zealand's labour productivity level in 2007 was 22nd among OECD countries and was over 40% below U.S. labour productivity and around 30% below Australian labour productivity. Estimates of New Zealand's labour productivity growth vary depending on whether GDP per hour is used (e.g. as by the OECD) or more narrow, but more accurate figures based on the "measured" part of the economy are used. New Zealand's GDP per hour worked grew at an annual average rate of 1.1% between 1995 and 2006 compared to the OECD average of 1.9%. However, its labour productivity for the "measured" part of the economy grew over the same period at an annual average rate of 1.9%. The reasons for New Zealand's low level and moderately low growth rate of labour productivity include: - New Zealand's geographical characteristics of distant location from markets and small size. These make trade more costly, reduce the intensity of competition and reduce flows of investment and knowledge. The OECD has estimated that distance from markets reduces New Zealand's GDP per capita by around 10% and explains around three quarters of its gap compared to the OECD average. - The strong rise in labour utilisation by about 1% per year from 2001 to 2006 could have depressed average annual labour productivity growth by as much as 0.4 percentage points over this period (OECD Economic Survey of New Zealand, 2009). While growth in labour utilisation is a good thing (and raises GDP per capita) it needs to be recognised that many of the new entrants to employment have below- average skills and hence exert a downward influence on the growth of labour productivity.