Business law next target of CER

By DITA DE BONI

Australia and New Zealand have agreed to look at coordinating their business laws.

The further honing of bilateral relations comes before official discussions on enhanced free trade between the two countries and the Asian block kick off later in the year.

Minister of Trade Negotiations Jim Sutton and his Australian counterpart Mark Vaile yesterday signed a Memorandum of Understanding on Harmonisation of Business Law.

It aims to reduce obstacles to business participation between the two countries, reduce administration costs and boost market regulation of transtasman companies.

The ministers were in Auckland for the annual review of the Closer Economic Relations agreement, a pact that Mr Sutton said should be both dynamic and "state-of-the art."

The memorandum will go further than a similar agreement reached in 1988, which pledged "coordination and cooperation" in areas including competition laws, consumer protection and fair trading laws, mutual recognition of registered occupations and cross-investment activity.

Memorandum 2000 seeks to deal more definitively with a growing number of companies doing business on both sides of the ditch.

Officials from both countries will meet in the next few months to look at a range of issues.

They include ways to achieve greater compatibility in disclosure regimes, managing cross-border insolvency, protecting intellectual property rights and greater consistency in legislation affecting electronic transactions.

In what is seen by many as a pre-cursor to a merged stock exchange, the working group will also formulate a framework for sharemarket rules that would be recognised in both countries.

Work has already begun in some areas.

In New Zealand, the proposed Electronic Transactions Bill will be based on a comparable Australian Act, and both are based on a United Nations Model Law on Electronic Commerce.

Ministry of Economic Development senior analyst Lisa Barrett said efforts to coordinate business law would not necessarily mean New Zealand taking on Australian law, or vice-versa, or that new laws would be created.

"The memorandum is not a decision in itself, but is a mechanism for us to look at specific areas where benefits would be derived from coordination.

"And remember, we're not talking in all cases about harmonisation, which is something quite different," she said.

Commerce Minister Paul Swain - also a signatory to the agreement - said the memorandum would present a united market with a stronger international voice.

But he warned that integration would take time as decisions on which laws to integrate would need to be made.

Business groups have contributed to a push for easier and less costly transtasman operation and were, for the first time in the 17-year-old pact, included in some of the ministerial discussions.

Mr Vaile said the ministers' role was to "facilitate the private sector in doing more and better business across the Tasman," and that cooperation in business would assist the CER partners negotiate multilateral agreements with Asean countries.

But he said "it is what we can do together now that consumes more of our energy rather than what we can still do between us."

Many business commentators have long lamented New Zealand's lax regulatory regime.

The Securities Commission, for instance, is relatively toothless in punishing violations of trading law compared with the more-powerful Australian Securities and Investment Commission.

But the Government's new pledge does not impress everyone involved in the area of corporate law and competition.

Simpson Grierson's Peter Hinton said the current initiatives were "easy things to do, and reasonably non-political."

"Things have not failed to get off the ground in the last 10 years because our companies laws are somewhat different.

"If we're really talking about levelling the playing field, what about harmonising the employment laws, for example?"

Others said the gradual morphing of the New Zealand and Australian marketplace had led to an inevitable need to harmonise laws, allowing capital to flow more freely and better addressing market failures.

David Lewis, a founding partner of KPMG legal, said harmonisation was "more beneficial than not" and a necessary precursor to a more uniform stock exchange.

"But it won't be one event.

"It'll be a process and should be constantly under review."