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2. Introduction to trade and investment regime
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2.1 Legislation on trade and investment

2.1.1 Legislation on trade administration

Major trade-related laws in New Zealand consist of Commerce Act, Customs and Excise Act, Tariff Act, Imports and Exports (Restrictions) Act, Goods and Services Tax Act, and Standards Act. These laws prescribe in detail the Customs regulations, the levy of tariff, Customs valuation, refund of Customs duties, rules of origin for preferential tariff, import and export restrictions and licensing, and standards on calculation. Legislation affecting trade remedies consists of Dumping and Countervailing Duties Act 1988, Temporary Safeguard Authorities Act.

Major legislation affecting inspection and quarantine includes Biosecurity Act, Agricultural Compounds and Veterinary Medicines Act, Animal Products Act, Food Act, and Wine Act. Besides, Trade in Endangered Species Act and Plant Variety Rights Act provide for the import and export administration over certain species. Apart from the above mentioned legislation, there are other laws affecting trade, such as Patents Act, Trade Marks Act, Designs Act, Geographical Indications Act, Copyright Act, and Fair Trading act.

2.1.2 Legislation on investment administration

Major legislation related to investment consists of Overseas Investment Act and Overseas Investment Regulations, which were amended in 2005. These laws lay down general rules governing overseas investment. Detailed rules governing overseas investment in specific areas are to be found in Reserve Bank of New Zealand Act, Fisheries Act, Fisheries (Quota Operations Validation) Act, and Health Practitioners Competence Assurance Act.

2.2 Trade administration

2.2.1 Tariff system

2.2.1.1 Import Tariff

In New Zealand, the Harmonized Tariff System is adopted. The current tariff system is composed of two sections. Section One deals with standard tariff under which there are normal tariff and preferential tariff. As far as normal tariff is concerned, most of the products subject to normal tariff in New Zealand enjoy Zero Tariff Rate. For those which do not enjoy Zero Tariff Rate, tariff rates are classified into three levels: Low tariff rates, those between 5 percent and 7 percent; Intermediate tariff rates, those between 10 percent and 12.5 percent; High tariff rates, those between 17 percent and 19 percent. Preferential tariff refers to a quite low tariff levied on most of the products from specified countries or country groups which are members of multilateral or bilateral, or regional trade agreements, or from the least developed countries. As China is classified as the less developed country, some products may enjoy the preferential tariff. Section Two deals with concession. Pursuant to Reference 99 Tariff Concessions, the importer may submit an application to the New Zealand Economic Development Department for a tariff concession on commodities that were not produced in New Zealand. The department publicizes in a timely manner the result of the application.

According to the Post-2005 Tariff Review released by the New Zealand Government in 2003, New Zealand decided to freeze the unilateral tariff reduction process which was to make across-the-board reductions of tariffs starting from 2006. Current tariff levels will remain until 1 July 2006 when gradual across-the-board reductions will begin. According to the plan, low and intermediate tariff rates, those between 5 percent and 7 percent and between 10 percent and 12.5 percent respectively, will be gradually reduced to 5 per cent in 2008.

High tariff rates, those between 17 and 19 per cent, will be gradually reduced to 10 percent by July 2009. And there will an across-the-board removal of tariffs by 2010. The plan also includes the immediate removal of alternative specific tariffs on 1 July 2005 and the decision that all clothing imports will consequently pay duty by way of the applicable ad valorem tariff only.

2.2.1.2 Import linkage tax

Apart from import duties, the New Zealand Government also imposes on imported goods a 12.5 percent of GST, to which domestic goods of the same kind are subject. The importer may ask for a refund of the GST if the imported goods are to be exported.

2.2.2 Import and export administration

2.2.2.1 Import

Despite a comparatively low tariff level and no licensing and quota requirements for imports, New Zealand exercises a strict control over the importation of products from other countries. Pursuant to the provisions of Customs and Excise Act, Biosecurity Act, Goods and Services Tax Act, Chemical Weapons (Prohibition) Act, and Smoke-free Environments Act, the importation of certain goods such as some animals and plants, tobacco and weapons is prohibited.

2.2.2.2 Export

The New Zealand Government imposes restrictions and prohibitions on the exportation of many goods by such laws and regulations as Imports and Exports Restrictions Act and Trade in Endangered Species Act. For instance, to provide quality guarantee, exporters must file with the competent supervising agency before the exportation of diary products and kiwifruits; to protect animal and plant species, specific standards have to be met when exporting certain products of animal and plant origin. Besides, prohibited medicines and weapons are also subject to export restriction.

2.3 Investment administration

The New Zealand Government welcomes and encourages foreign investment. There is no control on foreign exchange nor the inflow and outflow of capital. Specific data are kept by the Statistics New Zealand at regular intervals for the purpose of publication and research.

Foreign investors are allowed to acquire interests in sectors other than nuclear and genetic engineering technologies. The New Zealand Government provides investment incentives such as preferential tax treatment to foreign investors investing in sectors including information and communication technologies, biotechnologies, film industry, special manufacturing, wood processing, food and beverages, etc.

Companies Act provides for detailed procedure governing the establishment of foreign-funded businesses. While there are no restrictions regarding the scope of business or registered capital, approval will have to be obtained from the New Zealand Overseas Investment Office if the foreign investor wishes to acquire an interest of 25 percent or more of an existing business of New Zealand, or the investment volume exceeds NZ$50 million, or the investment involves land or fishing quota, etc. Foreign investment involving land, fishery, spectacles making, banking, and some monopolized sectors either requires a review by competent authorities or is subject to restrictions.

2.4 Competent authorities

Competent authorities mainly include the New Zealand Ministry of Foreign Affairs and Trade, New Zealand Trade and Enterprise, the Ministry of Economic Development of New Zealand and the Customs. While the former two bodies are responsible for dealing with macroeconomic aspects such as economic analysis, policy-making, and negotiating with foreign counterparts, the Ministry of Economic Development of New Zealand is in charge of making and implementing industrial and energy policies as well as administering international trade and investment.

The New Zealand Customs monitors the inflow and outflow of goods and travelers and related matters, imposes restrictions on import and export according to national policies, and makes sure that traveling and international trade is conducted in a normal way. Besides, the Customs is also responsible for collecting tariffs, goods and services tax as well as import and export data.

The National Bureau of Standards, representing New Zealand in the International Organization for Standardization (ISO), provides over 3000 kinds of certification involving building, health, environment, business administration, etc. Certain types of certificates are deemed necessary for international trade and investment activities.

The major functions of the Ministry of Agriculture and Forestry are to ensure quality and safety of food and agricultural and forestry exports from New Zealand and protect the agriculture and forestry as well as wild species from the threat of pests and diseases as a result of import. The Biosecurity New Zealand is the agency under the Ministry of Agriculture and Forestry, responsible for inspection and quarantine.

In 2002, the New Zealand Food Safety Authority was co-established by the Food Authority under the Ministry of Agriculture and Forestry and the agency under the Ministry of Health in charge of food administration. The Bureau is responsible for examining the importation and exportation of food and food-related products.

In 2005, the former Overseas Investment Committee was renamed as Overseas Investment Office, which was put under the Ministry of Land and Information, mainly in charge of reviewing proposals of foreign individuals for investing in key projects in New Zealand.

The Reserve Bank of New Zealand functions as a central bank as well as an agency in charge of examining, filing, and handling proposals for the establishment of foreign banks in New Zealand.

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