Australia sweetens NZ trade

Australia is set to move on bitter trade disputes with New Zealand over wine and apples which threatened to undermine the push for a transtasman single economic market.

New Zealand wine producers selling into the Australian market are expected to be offered the same tax rebates as their Australian counterparts from July 1 next year, and apple exporters may finally overcome the decades-old fireblight bogey and get their products sold across the Tasman.

But business groups are frustrated at slow process on single-market issues such as taxation, superannuation and migration.

The trade breakthrough came at the annual Closer Economic Relations ministerial meeting in Queenstown over the weekend, after a confidential ministers-only session.

On the New Zealand side were Trade Negotiations Minister Jim Sutton and his parliamentary secretary Winnie Laban, Economic Development Minister Jim Anderton and Commerce Minister Margaret Wilson. On the Australian side: Trade Minister Mark Vaile, Ian Macfarlane (Industry) and Warren Truss (Agriculture).

Sutton maintains he did not directly threaten Australia with a Government legal opinion showing the Budget boost Treasurer Peter Costello gave his domestic wine producers through a controversial tax rebate this year was in breach of both CER and World Trade Organisation commitments.

"For us to take the Aussies to court would be an absolute last resort and I think vice-versa," he said.

Sutton had earlier said New Zealand's wine industry would not tolerate Australia flouting trade rules by giving its winegrowers a tax rebate tilting the playing field in favour of Australia producers.

The Australian Budget this year allowed wine producers to claim a rebate on the 29 per cent Wine Equalisation Tax on up to A$1 million of wholesale sales a year.

Vaile said Australia had undertaken in principle to provide "national treatment" - putting New Zealand on an equal footing.

"We have obviously been analysing the financial impact and the size of that and analysing the size of penetration into the New Zealand market."

The challenge now is to deliver.

Biosecurity Australia has been given the task of making a scientific assessment over the risk to Australia's apple industry if New Zealand apples are allowed in. Australian growers claim this could open the door to fireblight, but most trade experts say the claim is nonsense and backdoor protectionism.

Rules of origin which govern transtasman trade will also be further liberalised.

Other issues on the agenda included a push for New Zealand and Australia to operate together in third markets offshore.

There will be strong collaboration on the upcoming free-trade negotiations with Asean (the Southeast Asian group.)

Business groups present in Queenstown pushed for greater collaboration on wood processing industry issues.