Welcome to the second issue of Connected Asia Pacific, Chapman Tripp's monthly Brief Counsel focused on developments in international trade, investment and arbitration in the Asia Pacific region.
Connected Asia Pacific is intended to assist exporters, importers and investors from or to New Zealand to make the most of the rules which increasingly regulate their cross-border activities. We hope you find it helpful and would appreciate any feedback which would help us to target it toward your needs and interests.
FEATURE - The milk wars resume?
Getting to grips with dairy export subsidies
On 22 May 2009, the US announced the reintroduction of dairy export subsidies, claiming that its hand was forced by similar EU measures from January 2009. The New Zealand media responded with indignant protests against "protectionism": the Dominion Post headline declared "Trade Wars: Kiwis' standard of living at risk". Both the New Zealand Herald and the Otago Daily Times reiterated fears of a costly trade war between the US and the EU, with New Zealand caught in the middle.
Is this hyperbole or a bona fide disaster? In this feature we look closer at what the US has done, whether it is legal and what are its implications for the world trading system.
Select Committee recommends AANZFTA Bill enactment
In last month’s edition, we noted that the Foreign Affairs, Defence and Trade Committee of the New Zealand Parliament had reported back on the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA).
The Committee has now considered the Omnibus Bill intended to incorporate the AANZFTA into New Zealand law. The two pieces of legislation requiring amendment are the Tariff Act 1988 (which will need to reflect the preferential AANZFTA tariffs and the transitional safeguards regime) and the Customs and Excise Act 1996 (which will allow the designation of certified bodies for customs and certificate of origin purposes). In practice, the Bill will be divided at the committee of the whole House stage before the third reading.
NZ concludes FTA with Malaysia
On 2 June 2009, Trade Minister Tim Groser announced that New Zealand had concluded a new FTA with Malaysia. Malaysia and New Zealand are both party to the AANZFTA, but the new bilateral FTA contains further concessions relating to goods and services access which do not apply to other AANZFTA members. The text of the Agreement has not yet been publicly released.
Submissions sought on Anti-Counterfeiting Trade Agreement
Since late 2008 New Zealand has been involved in discussions, led by the US and Japan and including Australia, Canada, the European Union, Japan, Korea, Mexico and Switzerland, over the development of Anti-Counterfeiting Trade Agreement.The premise of these discussions is that existing multilateral institutions regulating intellectual property rights, such as WIPO and the WTO TRIPs Agreement, have failed to provide adequate protection.
Private Equity / Venture Capital Paper
On 15 May 2009, the New Zealand Private Equity and Venture Capital Association released a report highlighting suggested changes which would improve the New Zealand regulatory environment for venture capital and private equity investment. The report’s recommendations, arrived at after extensive consultation, are wide-ranging.
Trans-Tasman litigation - a case to bear in mind
Last month we offered an update on the Trans-Tasman Court Proceedings and Regulatory Enforcement Treaty signed in July 2008 (Trans-Tasman Treaty). In Article 8, this Treaty sets out an open-textured approach for New Zealand and Australian Courts to use in determining whether or not to accept jurisdiction over a dispute with Trans-Tasman elements.
In considering how this test may be applied, it is interesting to revisit the High Court of Australia's November 2008 decision in Puttick v Tenon Ltd (formerly Fletcher Challenge Forests Ltd)  HCA 54.
New MED anti-dumping investigation
On 24 April 2009, the Ministry for Economic Development’s Trade Rules, Remedies and Tariffs Division initiated a sunset anti-dumping review into the import of galvanised steel from Malaysia. This was based upon an application by a division of Fletcher Steel and follows the imposition of anti-dumping duties in 2004, which expired on 27 April 2009, but will now remain in place until the end of the sunset review. Under the AANZFTA, the normal tariff on this product (5%) is due to be phased out by 2012 (for one type of steel) and 2017 (for another type). Submissions are presently being sought.
For those not commercially interested in galvanised steel, the report announcing the initiation of the review (which, although not yet on MED’s website, is available upon request) provides a clear description of the MED’s methodology in deciding whether to impose anti-dumping duties.
China’s global FDI grows, bucking global recession trend
A recent study by the Vale Columbia Centre on Sustainable Investment has found that although global foreign direct investment fell by around 20% in 2008, outward FDI from China nearly doubled and that this disparity is likely to continue in 2009 and 2010 as China invests even more overseas. Having averaged only US$453 million a year in 1982-1989 and US$2.3 billion in 1990-1999, China’s FDI rose to US$5.5 billion in 2004, US$12.3 billion in 2005, US$17.6 billion in 2006 and US$24.8 billion in 2007. Preliminary figures for 2008 show a rise to US$40.7 billion. If financial FDI (not counted before 2006) is included, the 2008 total was US$52.2 billion, nearly double the US$26.5 billion in 2007.
China’s direct investments in Australia alone reportedly rose from US$1.4 billion in the first quarter of 2008 to US$13 billion in the same period this year. Chinalco’s US$19.5 billion bid for 18% of Rio Tinto, reported today as having collapsed, would have been the largest overseas acquisition by a Chinese company. On a smaller scale, on 28 May 2009 China’s Haier Group announced that it would take a 20% stake in New Zealand’s Fisher & Paykel for roughly US$20 million.