Trade and Investment

  • Susy Frankel, Meredith Kolsky Lewis, Chris Nixon and John Yeabsley “The Web of Trade Agreements and Alliances, and Impacts on Regulatory Autonomy” in Susy Frankel (ed) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). This research proposes that New Zealand needs to ‘up its game’ as far as trade policy negotiations are concerned. With the increased complexities that a global world has placed on domestic policy settings, New Zealand needs to develop a range of strategies and tactics to ensure the best possible outcomes when partaking in trade deals. The paper navigates the challenge of regulatory autonomy and new trade issues within this dynamic trade environment, via patent law, the ASEAN + 6 and the Trans-Tasman Partnership negotiations. It explores what approaches might be appropriate to ensure that any costs New Zealanders may have to ‘swallow’ on these complex trade deals, are subsequently offset by potential benefits.

  • See also Susy Frankel and Meredith Kolsky Lewis “Trade Agreements and Regulatory Autonomy: The Effect on National Interests” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011).

  • Chris Nixon and John Yeabsley in “The Challenges and Opportunities of Conformity in the Wider Asia – Pacific Context: Tiny Steps on a Long Road” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). This paper discusses the possibility of setting up open regulatory cooperative frameworks that could potentially be used to more tightly integrate the wider Asian economic region. Members of a community that are at different stages of economic development have institutions of uneven strength set in different political systems. The chapter explores how these differences can exist even with integration. This investigation throws up the strengths and weaknesses of various broad approaches that could be employed to more closely integrate ASEAN + 6 economies. The focus for continuing analysis is how can New Zealand effectively look towards a set of conditions under which such international cooperation would be positive overall for New Zealand and the conditions under which it would be negative.

  • Daniel Kalderimis “Regulating Foreign Direct Investment in New Zealand –Further Analysis” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). It is proposed that New Zealand should actively seek to harness the connections and know how provided by FDI in order to grow high-value export and outward direct investment (ODI) businesses, especially in the Asia Pacific region. This objective is distilled from the following propositions: (1) New Zealand does not have a coherent and integrated FDI policy. New Zealand's FDI regime essentially consists of screening rules subjecting investments in some resource sectors – sensitive land and fishing quota – to a national benefit test (the NBT), combined with occasional incentives offered by the government. (2) New Zealand's key investment problem is not insufficient FDI, but insufficient ODI. As a distant, small, export-oriented economy, the main advantage of FDI is in creating spillover benefits[5] to assist New Zealand businesses to internationalise and move up the value chain. In this way, FDI has a distinctive potential advantage over other forms of financing. (3) In this way, FDI spillover benefits are particularly important for exportable industries (such as food production) and less important for non-exportable industries (such as energy production).[6]

Trans-Tasman Relationship

  • Susy Frankel, Chris Nixon, Megan Richardson and John Yeabsley “The Challenges of Trans-Tasman Intellectual Property Coordination” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). This paper considers three areas of intellectual property law; a single trade mark regime, shared patent examination and parallel importing regulations in relation to the regulatory approaches of harmonisation and coordination in a trans-Tasman context. The purpose of the paper is to analyse which approach, or combination of approaches, are most likely to benefit New Zealanders and the subsequent regulation they may be subject to. The paper clearly outlines the advantages and disadvantages of harmonisation and coordination for New Zealand in each area and uses a decision criteria and a set of questions to measure which approach is more appropriate. A counterfactual base case is then used to compare against the decision making criteria, which in all cases is the ‘current regulatory setting’. This process, once worked through in the paper, results in an enlightening discussion on regulation in these areas and recommends harmonisation for a single trade mark regime and parallel importing regulations and coordination for shared patent examination.

  • Susy Frankel and Megan Richardson “Trans-Tasman Intellectual Property Coordination” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). Here the authors examine the similarities and differences between Australian and New Zealand intellectual property law and discuss when and how the law might be harmonised and when they probably ought to be different because of national interests. Part of the trans-Tasman SEM programme includes the regulatory coordination of certain parts of intellectual property registration. This includes moving towards one trade mark regime, and one application and common examination of patents, between the two countries. This chapter discusses those initiatives and whether the administrative savings will lead to harmonisation. The authors question whether these goals are in New Zealand’s interests. Using specific examples in intellectual property law the chapter examines whether harmonisation and the SEM goals are in fact worthwhile.

  • Chris Nixon and John Yeabsley in “Australia New Zealand Therapeutic Products Authority: Lessons from the Deep End of Trans-Tasman Integration” in Susy Frankel (ed) Learning from the Past Adapting to the Future: Regulatory Reform in New Zealand (LexisNexis, 2011). This paper examines the negotiations to set up a therapeutics agency (ANZTPA) as a supranational regulator of medicines in New Zealand and Australia, which started in 2003. The proposed agency (that did not come into being), was intended to ensure that alternative medicines, over-the-counter, and some prescription medicines, and food supplements met safety standards that consumers could rely on. This chapter examines the course of the ANZPTA initiative in the light of other more successful integration efforts and examines the factors that contributed to the failure to establish the agency. Using the ANZTPA example, the chapter looks toward developing a set of approaches that could be applied more generally to trans-Tasman integration. This is particularly pertinent as the ANZTPA negotiations have at the time of writing begun again. The next stage of the project will test those suggested set of approaches further.

Ways to think about NZ Uniqueness and Regulation

  • Richard P Boast and Susy Frankel “Defining the Ambit of Regulatory Takings” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). In this chapter we explore the ambit of so-called regulatory takings of property and related issues further. Our focus in this chapter is to anchor the issues firmly to New Zealand's own political and legal contexts. The problem of defining the acceptable boundaries between legitimate public action by the state and the protection of private property rights and interests is anything but straightforward, and is characterised by a diverse range of responses in a number of countries. The pivotal problem is not that of direct compulsory acquisition for public purposes, which New Zealand, like most other equivalent jurisdictions, regulates strictly, and which has long been fully compensable at market values – putting to one side for the present the particular problems associated with interests in Māori freehold land.[3]

  • Derek Gill “Applying the Logic of Regulatory Management to Regulatory Management in New Zealand” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Some fundamental forces that will continue to shape New Zealand are local manifestations of globally occurring phenomena, including the internationalisation of policy, climate change, population ageing, the shift in economic and political power from west to east and globalisation.[27] New Zealand cannot impact these global forces of change in any significant way, although it can choose how to respond. Other influences that will contribute to shaping New Zealand are unique to its heritage and geography. These influences include: New Zealand's unique geography, including the relative isolation, size, geology and extensive exclusive economic zone and continental shelf; and New Zealand's unique constitutional arrangements, including one house of Parliament, concentration of power in the central government executive and the role of Māori as parties to the Treaty of Waitangi.

  • Daniel Kalderimis “Regulating Foreign Direct Investment in New Zealand –Further Analysis” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). New Zealand's small size (which limits our domestic capital); New Zealand's geographical isolation (which makes it hard for us to penetrate foreign markets without local assistance); and the importance of land to our national identity – both Māori and Pākehā (which makes us wary of permitting foreign investment in land). These three factors are presently seen by many as three separate problems. The first two, however, neatly combine into a single solution – foreign capital can complement New Zealand's domestic capital markets and also build bridges to foreign markets. The sticking point is how to address land issues.

  • Paul Scott “Competition Law and Policy: Can a Generalist Law be an Effective Regulator?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). In terms of mergers and some restrictive trade practices, the Commerce Act allows authorisation of these when the public benefit outweighs any detriment.[13] The courts' focus has been on efficiency benefits, which again is good for the overall benefit of the economy. This is relatively unique to New Zealand as there is no authorisation process in the home of competition law – the United States. Gal has argued that small economies cannot adopt measures of market power such as the Herfindahl-Hirschman Index (HHI) used in United States merger analysis.[14] New Zealand competition law, like others, has taken this advice. Some commentators have argued that small economies should not make use of per se rules such as those against price fixing and boycotts.[15] They argue that agreements to fix prices can be welfare-enhancing as the prices fixed form ceilings rather than floors. The New Zealand Parliament and courts have ignored this advice. Price fixing has been and is per se illegal. Indeed Parliament, following most of the rest of the world, is criminalising naked cartels.[16] Given that naked cartels are unambiguously inefficient and damage consumers the call for elimination of per se rules will go unheeded. In any event if a price fixing agreement is efficient as claimed then the parties can seek authorisation. While New Zealand is a small market economy, this has not impacted section 36. Gal claims small market economies with high levels of concentration need more robust monopolisation provisions.[17] I do not agree that there should be any difference in monopolisation laws between large and small economies.

  • Kate Tokeley “Consumer Law and Paternalism: A framework for policy decision making - Further Analysis” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). New Zealand society has historically been relatively open to legal paternalism. Australia and New Zealand, for example, were the first countries in the world to introduce mandatory helmets for pedal cyclists in 1990.[12] Further, along with Australia, the United Kingdom and Europe, New Zealand is noted for its welfare state provisions such as a public health system and an extensive benefit regime. The ideals of the welfare state are compatible with an acceptance that the government has a role to play in paternalistically protecting consumers. In comparison, the United States is not generally considered a welfare state because there is less of a safety net provided by the government and more reliance on the market.

  • Kate Tokeley “Consumer Law and Paternalism: A framework for policy decision making - Further Analysis” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Another possible unintended consequence of a paternalistic regulation is excessive costs both to the government and to suppliers. Costs to the government include the costs of formulating, monitoring and enforcing the legislation. These costs are passed on to the New Zealand taxpayer. In some cases it might be decided that these costs are not worth expending for the potential benefits of the regulation. Costs to suppliers include compliance costs and those associated with attempts to reduce regulatory compliance costs. These are likely to be passed on to consumers and divert resources away from product innovation.[87] The small scale of the New Zealand economy might mean that excessive regulation in some industries could stifle innovation altogether.

  • Kate Tokeley “Consumer Law and Paternalism: A framework for policy decision making - Further Analysis” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). Policy makers should proceed with caution when applying overseas research on regulatory issues to the New Zealand context however. Some overseas findings will not apply to the specifics of the New Zealand situation.

  • Daniel Kalderimis “Regulating Foreign Direct Investment in New Zealand –Further Analysis” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The real political stumbling block is not the issue of foreign investment in general, but the issue of foreign land ownership in particular. Land ownership has strong historical and cultural associations for both Māori and Pākehā. The genesis and layers of these associations are outlined in the general history books by James Belich[85] and Michael King.[86] They are also addressed more specifically in Richard Boast's 2008 book Buying the Land, Selling the Land.[87] To vastly oversimplify, for Māori, land ownership has a spiritual and symbolic, as well as an economic, element. The land represents both a source of identity and belonging, as well as the historical narrative of progressive and widespread land alienation.[88] For Pākehā, land ownership in small titles held by families was a chief objective of settlers leaving parliamentary enclosures in feudal Britain – and taking with them protestant belief systems which regarded developing farmland as a form of moral imperative.[89] The strength of Māori and Pākehā land associations were in play – and diametrically opposed – in the bitter political battle over the foreshore and seabed legislation, which culminated in the Marine and Coastal Area (Takutai Moana) Act 2011. That Act – and its innovative notion of public domain ownership[90] – was a symbolic solution to a political problem. Two Australian researchers have emphasised the distinctive importance of land ownership in New Zealand in a comparison of the role of cultural norms in the regulation of FDI in Australia and New Zealand.[91] That context may explain, perhaps, the resonance of the slogan that New Zealanders do not want to be "tenants in our own land".

Features of NZ Uniqueness and their role in regulation

  • Susy Frankel and John Yeabsley “Features of the Uniqueness of New Zealand and their Role in Regulation” (Cross-cutting theme paper prepared for the NZ Law Foundation Regulatory Reform Project, 2013). There are undoubtedly several ways in which New Zealand is unique and, aside from the contribution to making its inhabitants different, and maybe even feel good, there are legal and economic implications. On the economic side there are many ways in which business interests can utilise notions of uniqueness to their advantage. For instance, one driver of trade is the quest to gain by seeking to swap the familiar for the strange. Part of New Zealand’s uniqueness is its global connectedness. This occurs through relationships in the business and personal realms, as well as a more pervasive, but less well understood, general legal and cultural inheritance from other places. On the face of it, it is unclear just what impact any aspect of uniqueness could, and should have, on the various stages of the regulatory development process, including: regulatory policy, design, content, enactment, implementation and evaluation. In the process of regulatory design, for example, there are claims made that something has to be done a particular way, or a particular rule should be created or not adopted from elsewhere, because New Zealand is different. Similarly, frequent and related to claims of uniqueness, are claims that sovereignty is at stake. Indeed, all sovereign nations can claim to be unique in some way or another (even if only by not being any of the others). While uniqueness normally means different from others and sovereignty is about retaining power, the purpose in many debates of highlighting uniqueness is so that it can be retained; and the ability to retain uniqueness is thought by some to be achievable by, or at least strongly tied to, the question of retaining sovereignty. The goal of this research paper is to analyse how those engaged in the regulatory process might be able to discuss and indeed respond to uniqueness-of-New-Zealand style arguments in a productive way. This paper begins a dialogue and suggests an analytical framework in which these issues can be discussed. The authors ask can “whatever it is that makes New Zealand unique” or, not so unique, be incorporated appropriately within the processes of: policymaking, drafting, the Parliamentary process (including select committees), implementing, enforcing and evaluating regulation? The authors suggest that New Zealand’s unique features should be used to achieve desirable regulatory outcomes, rather than as hurdles to those outcomes. In essence this requires a balance between the tension of unfettered adoption of the results of global connectedness and the costs and risks of using New Zealand’s own tailored practice. That tension is the heart of the issues addressed in this paper. The paper provides a framework that can be used to address those issues.

  • Susy Frankel and John Yeabsley “Features of the Uniqueness of New Zealand and their Role in Regulation” (Cross-cutting theme paper prepared for the NZ Law Foundation Regulatory Reform Project, 2013).