But the Maori Fisheries Commission, Te Ohu Kaimoana, says that is not an excuse to establish a no-take zone.
The proposed sanctuary is a breach of the landmark Fisheries Settlement, Te Ohu says.
It has taken the Government to court over the matter.
Environment Minister Nick Smith and Treaty Negotiations Minister Chris Finlayson have been in talks with Te Ohu over several months to find a resolution.
Smith said today that the Government remained committed to the sanctuary "but would prefer to find a solution with Te Ohu Kaimoana".
He would not comment further.
It is understood that ministers proposed to insert a clause into the Kermadec Ocean Sanctuary Bill which acknowledged the impact of the sanctuary on Maori fishing rights.
That proposal was rejected by iwi, who are now making the counter-offer.
The negotiations are taking place with some urgency.
The Government wants the issue to be resolved by next week, when Conservation Minister Maggie Barry is set to speak about the sanctuary at a global conference in Washington.
Representatives of the two iwi with interests in the Kermadecs, Te Aupouri and Ngati Kuri, are accompanying Barry to the Our Oceans conference.