Knowledge Highlights 13 January 2020
On 1 January 2020, the upgraded Agreement between New Zealand and Singapore on a Closer Economic Partnership (“ANZSCEP”) entered into force. The upgraded ANZSCEP provides for improved trade rules and provisions that are in line with the more recent Free Trade Agreements (“FTAs”) that Singapore and New Zealand are parties to.
The Ministry of Trade and Industry (“MTI”) stated in a press release issued on 30 December 2019 that the swift ratification and entry-into force of the upgraded ANZSCEP signals both countries’ commitment to upholding an open and rules-based trading system.
The ANZSCEP, which entered into force on 1 January 2001, is Singapore’s first and New Zealand’s second bilateral FTA. Singapore was New Zealand’s sixth largest investor as of end-2017.
The upgraded ANZSCEP includes two new chapters on E-Commerce and Regulatory Cooperation, and eight upgraded chapters. The key features of these chapters are set out below.
The addition of the new E-Commerce Chapter to the ANZSCEP introduces provisions related to data, among others. Companies will be able to access data freely and will not be required to locate computing facilities in a market to do business there. The chapter also contains forward-looking provisions on cooperation in logistics and e-invoicing. Singapore and New Zealand hope to build upon these provisions in future negotiations.
The new Regulatory Cooperation Chapter creates a mechanism for raising and resolving issues that companies face in the course of trade between the two countries. Trade issues are pre-empted with (i) the promotion of good regulatory practices and (ii) encouraging regulators of both countries to cooperate in various aspects on goods, services and other trade-related matters.
Trade in Goods
The upgraded Trade in Goods Chapter incorporates new provisions that address both tariff and non-tariff barriers to trade. These provisions aim to streamline customs procedures and reduce costs of trade for businesses. They include provisions which ensure (i) non-discriminatory treatment of remanufactured goods, and goods which have undergone repair and alteration, and (ii) the enhancement of non-tariff measures such as administrative fees and formalities, and import licensing.
Rules of Origin
The upgraded ANZSCEP Rules of Origin (“ROO”) take into consideration modern business production patterns and help companies qualify more easily for preferential tariff treatment in sectors such as electronics, pharmaceuticals, chemicals and processed food. The ROO also demonstrate the desire between the two counties to forge a larger, trilateral trade area with Australia in the future.
Sanitary and Phytosanitary Measures
The upgraded Sanitary and Phytosanitary Measures Chapter ensures Singapore’s food imports are subject to stringent and robust food safety requirements through the incorporation of comprehensive disciplines from recent FTAs Singapore has entered into (e.g. the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”)).
Technical Barriers to Trade
The two countries concluded a Mutual Recognition Agreement (“MRA”) on Conformity Assessment which provides a framework for negotiation of MRAs on various sectors going forward. The two countries have agreed to their first MRA on Good Manufacturing Practice (“GMP”) inspections of manufacturers of medicinal products. Quicker access to medicinal products for patients is ensured with the savings in time and resources by the pharmaceutical industry from the avoidance of duplication of GMP inspections.
The Technical Barriers to Trade Chapter has been updated, incorporating key provisions from the Trans-Pacific Strategic Economic Partnership (TPSEP or the P4) and the CPTPP, including provisions to (i) enhance transparency of technical measures, (ii) promote the use of international standards, (iii) pursue equivalency of technical regulations, and (iv) facilitate the acceptance of conformity assessment conducted in Singapore.
The ANZSCEP has also been updated with the CPTPP Annexes on Cosmetics, Medical Devices, and Pharmaceuticals to ensure transparent and business-facilitative marketing authorisation procedures.
Customs Procedures and Trade Facilitation
The upgraded Customs Procedures and Trade Facilitation Chapter aims to reduce trade transaction costs and time for business and customs administrations. In particular, provisions in seven out of the 10 articles of the chapter contain provisions that are more facilitative than comparable provisions in the World Trade Organization Trade Facilitation Agreement (WTO TFA).
Both countries have agreed to (i) release goods that reach the respective borders within 24 hours of arrival, and (ii) release express consignments within four hours of submissions of necessary customs documentation to respective customs authorities. These release times for goods and expedited shipments are the shortest under Singapore’s existing FTAs and it is expected to reduce costs for Singapore exporters through a more efficient customs process.
Strong disciplines and protections that enhance stability and predictability for investors have been updated in the Investment Chapter. Among the provisions introduced are those that (i) shield investors against serious instances of arbitrary, discriminatory or abusive conduct by the State, and (ii) contain commitments to compensate investors if the State appropriates or causes unnecessary damage or destruction to their investments during armed conflict or civil strife.
To further the cooperation in trade in services, a side letter was concluded between the two countries on mutual recognition of professional qualifications, with a focus on accounting. It is intended that the support and encouragement to ongoing cooperation between the accounting bodies of both countries will smooth the flow of professionals in the accounting sector between Singapore and New Zealand.
Competition and Consumer Protection
The article in the original ANZSCEP which primarily sets out broad principles for competition policy has been replaced by the upgraded Competition and Consumer Protection Chapter. Under this chapter, Singapore and New Zealand are obliged to adhere to principles of transparency, non-discrimination and procedural fairness. The chapter provides for a basis of cooperation between the two countries. The provisions in the chapter ensure that businesses compete on a level playing field and contain protections for businesses against anti-competitive practices.
With the inclusion of an article on “Consumer Protection” in the chapter, both countries are required to have laws to protect consumers against misleading and deceptive conduct.