Title

PROTOCOL ON INVESTMENT TO THE NEW ZEALAND - AUSTRALIA CLOSER ECONOMIC RELATIONS TRADE AGREEMENT

Preamble

New Zealand and Australia (the Parties),

Conscious of their longstanding friendship and close historic, political, social, economic, and geographic ties and the special nature of the relationship that has developed on the basis of these ties;

Building on the deep and evolving closer economic relationship established under the Australia New Zealand Closer Economic Relations Trade Agreement done on 28 March 1983 (Agreement), and furthered by, inter alia, the Protocol on Trade in Services done on 18 August 1988 (Services Protocol);

Recognising the joint commitment of the two governments to work towards achieving a trans-Tasman Single Economic Market by progressively removing or minimising impediments to trans-Tasman business;

Acknowledging the extensive degree of trans-Tasman investment and desiring to promote further the flow of investment between the Parties, and contribute to the aim of a Single Economic Market by concluding a protocol on investment to the Agreement (Protocol);

Conscious of their rights and obligations under the WTO Agreement, and other multilateral and bilateral trade and economic agreements and arrangements;

Recognising that expanding the closer economic relationship between the Parties to include a protocol on investment can assist in promoting sustainable development, including social development, economic development, and environmental protection;

Have agreed as follows:

Body

Article 1. Definitions

For the purposes of this Protocol:

(a) covered investment means, with respect to a Party, an investment in its territory of an investor of the other Party, in existence as of the date of entry into force of this Protocol or established, acquired, or expanded thereafter;

(b) enterprise means any entity constituted or organised under applicable law, whether or not for profit, and whether privately-owned or governmentally-owned including any corporation, trust, partnership, sole proprietorship, joint venture, association or similar organisation, and a branch of an enterprise;

(c) enterprise of a Party means an enterprise constituted or organised under the law of a Party, and a branch located in the territory of a Party and carrying out business activities there;

(d) freely useable currency means a freely useable currency as determined by the International Monetary Fund under the Articles of Agreement of the International Monetary Fund and amendments thereafter, or any currency that is used to make international payments and is widely traded in the international principal exchange markets;

(e) investment means every kind of asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include the following:

(i) an enterprise;

(ii) shares, stocks, or other forms of equity participation in an enterprise, including rights derived therefrom;

(iii) bonds, including government-issued bonds, debentures, loans and other forms of debt, including rights derived therefrom (1);

(iv) futures, options, and other derivatives;

(v) rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;

(vi) claims to money or to any contractual performance related to a business and having economic value (2);

(vii) intellectual property rights and goodwill;

(viii) rights conferred pursuant to law or contract such as concessions, licences, authorisations, and permits (3); and

(ix) any other tangible and intangible, movable and immovable property, and any related property rights, such as leases, mortgages, liens, and pledges.

For the purposes of this definition, investment may Include a return. A return that is invested shall also be treated as an investment and any alteration of the form in which an asset is invested or reinvested shall not affect its character as an investment. An investment may be owned or controlled by an investor of a Party, notwithstanding the fact that the investment was made through an enterprise duly incorporated, constituted, set up or otherwise duly organised under the law of a non-Party;

(f) investor of a Party means a Party or a natural person of a Party or an enterprise of a Party that seeks to make, is making, or has made an investment in the territory of the other Party;

(g) measure includes any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action, practice, or any other form;

(h) measure adopted or maintained by a Party includes measures taken by:

(i) central, regional, or local governments or authorities; or

(ii) non-governmental bodies in the exercise of powers delegated by central, regional, or local governments or authorities; (i)

(i) natural person of a Party means any natural person possessing the nationality or citizenship of, or right of permanent residence in, that Party under its laws and regulations;

(j) person means a natural person or enterprise;

(k) return means an amount yielded by or derived from an investment, including profits, dividends, interest, capital gains, royalties, payments in connection with intellectual property rights, and all other lawful income;

(l) territory of a Party, consistent with Paragraph 2 of Article 2 of the Agreement:

(i) with respect to Australia, does not include any Australian territory other than internal territories; and

(ii) with respect to New Zealand, means the territory of New Zealand but does not include the Cook Islands, Niue, and Tokelau, unless the Parties have exchanged notes agreeing the terms on which this Protocol shall apply;

(m) TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, which is part of the WTO Agreement; and

(n) WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.

Article 2. Objectives

The objectives of the Parties in concluding this Protocol are:

(a) to strengthen further the economic relationship between the Parties and advance the ongoing evolution of the Agreement and work towards development of a trans-Tasman Single Economic Market;

(b) to liberalise barriers to investment between the Parties;

(c) to encourage and promote investment between the Parties; and

(d) to establish a framework of transparent rules conducive to increased investment between the Parties and to ensure the protection and security of covered investments within each Partys territory.

Article 3. Scope

1. This Protocol applies to measures adopted or maintained by a Party relating to:

(a) investors of the other Party;

(b) covered investments; and

(c) with respect to Article 7 (Performance Requirements), all investments in the territory of the Party.

2. A requirement by a Party that a service provider of the other Party post a bond or other form of financial security as a condition of providing a service into its territory does not of itself make this Protocol applicable to the provision of that cross-border service. This Protocol applies to that Partys treatment of the posted bond or financial security.

3. For greater certainty, the provisions of this Protocol do not bind either Party in relation to any act or fact that took place or any situation that ceased to exist before the date of entry into force of this Protocol.

Article 4. Relationship to Services Protocol

In the event of any inconsistency between the rights and obligations in the Services Protocol and the rights and obligations in this Protocol, the rights and obligations in this Protocol shall prevail to the extent that this provides more favourable treatment for investors of the other Party or covered investments.

Article 5. National Treatment

Each Party shall accord to investors of the other Party and covered investments treatment no less favourable than that it accords, in like circumstances, to its own investors and their investments with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.

Article 6. Most Favoured Nation Treatment

1. Each Party shall accord to investors of the other Party and covered investments treatment no less favourable than that it accords, in like circumstances, to investors of any non-Party and their investments with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.

2. For greater certainty, this Article does not apply to dispute settlement procedures.

Article 7. Performance Requirements

1. Neither Party may, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment of an investor of a Party or of a non-Party in its territory, impose or enforce any requirement, or enforce any commitment or undertaking: (4)

(a) to export a given level or percentage of goods or services;

(b) to achieve a given level or percentage of domestic content;

(c) to purchase, use, or accord a preference to goods produced in its territory, or to purchase goods from persons in its territory;

(d) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment;

(e) to restrict sales of goods or services in its territory that such investment produces or supplies by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;

(f) to transfer a particular technology, a production process, or other proprietary knowledge to a person in its territory; or

(g) to supply exclusively from the territory of the Party the goods that it produces or the services that it supplies to a specific regional market or to the world market.

2. Neither Party may condition the receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in its territory of an investor of a Party or of a non-Party on compliance with any of the following requirements:

(a) to achieve a given level or percentage of domestic content;

(b) to purchase, use, or accord a preference to goods produced in its territory, or to purchase goods from persons in its territory;

(c) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment; or

(d) to restrict sales of goods or services in its territory that such investment produces or supplies by relating such sales in any way to the volume or value of its exports or foreign exchange earnings.

3. Nothing in Paragraph 2 shall be construed to prevent either Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of a Party or of a non-Party, on compliance with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory.

4. Paragraph 1(f) does not apply:

(a) when a Party authorises use of an intellectual property right in accordance with Article 31 (5) of the TRIPS Agreement, or to measures requiring the disclosure of proprietary information that fall within the scope of, and are consistent with, Article 39 of the TRIPS Agreement; or

(b) when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal, or competition authority to remedy a practice determined after judicial or administrative process to be anticompetitive under the Party's competition laws. (6)

5. Paragraphs 1(a), (b), and (c), and 2(a) and (b), do not apply to qualification requirements for goods or services with respect to export promotion and foreign aid programmes.

6. Paragraphs 1(b), (c), (f), and (g), and 2(a) and (b), do not apply to government procurement.

7. Paragraphs 2(a) and (b) do not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas.

8. For greater certainty, Paragraphs 1 and 2 do not apply to any requirement other than the requirements set out in those Paragraphs.

9. This Article does not preclude enforcement of any commitment, undertaking, or requirement between private parties, where a Party did not impose or require the commitment, undertaking, or requirement.

Article 8. Senior Management and Boards of Directors

1. Neither Party may require that an enterprise of that Party that is a covered investment appoint to senior management positions natural persons of any particular nationality.

2. Neither Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Party that is a covered investment, be of a particular nationality, or resident in the territory of the Party.

3. Neither Party may require that less than a majority of the board of directors, or any committee thereof, of an enterprise of that Party that is a covered investment, be of a particular nationality, or resident in the territory of the Party, where that requirement would materially impair the ability of the investor to exercise control over its investment.

Article 9. Non-conforming Measures

1. Articles 5 (National Treatment), 6 (Most Favoured Nation Treatment), 7 (Performance Requirements), and 8 (Senior Management and Boards of Directors) shall not apply to:

(a) any existing non-conforming measure that is maintained by a Party at:

(i) the central or regional level of government, as set out by that Party in its Schedule to Annex I; or

(ii) the local level of government;

(b) the continuation or prompt renewal of any nonconforming measure referred to in subparagraph (a); or

(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 5 (National Treatment), 6 (Most Favoured Nation Treatment), 7 (Performance Requirements), and 8 (Senior Management and Boards of Directors).

2. Articles 5 (National Treatment), 6 (Most Favoured Nation Treatment), 7 (Performance Requirements), and 8 (Senior Management and Boards of Directors) do not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors, or activities, as set out in its Schedule to Annex II.

3. Neither Party may, under any measure adopted after the date of entry into force of this Protocol and covered by its Schedule to Annex II, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.

4. Articles 5 (National Treatment), 6 (Most Favoured Nation Treatment), and 8 (Senior Management and Boards of Directors) do not apply to:

(a) government procurement; or

(b) subsidies or grants provided by a Party, including government supported loans, guarantees, and insurance.

Article 10. Transfers

1. Each Party shall permit all transfers into and out of its territory relating to a covered investment to be made freely and without delay in a freely usable currency at the market rate of exchange at the time of transfer. Such transfers include:

(a) contributions to capital, including the initial contribution;

(b) profits, dividends, interest, capital gains, royalty payments, management fees, and technical assistance and other fees;

(c) proceeds from the sale of all or any part of the covered investment or from the partial or complete liquidation of the covered investment;

(d) payments made under a contract, including payments made pursuant to a loan agreement;

(e) payments made pursuant to Articles 13 (Compensation for Losses) or 14 (Expropriation);

(f) payments arising out of the settlement of a dispute; and

(g) earnings and other remuneration of personnel engaged from abroad in connection with that investment.

2. Notwithstanding Paragraph 1, a Party may prevent or delay a transfer through the equitable, non-discriminatory, and good faith application of its laws relating to:

(a) bankruptcy, insolvency, or the protection of the rights of creditors;

(b) issuing, trading, or dealing in securities, futures, or derivatives;

(c) criminal or penal offences;

(d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;

(e) ensuring compliance with orders or judgments in judicial or administrative proceedings; or

(f) social security, public retirement, or compulsory savings schemes.

Article 11. Measures to Safeguard the Balance of Payments

1. Notwithstanding Article 10 (Transfers), where a Party is in serious balance of payments and external financial difficulties or under threat thereof, it may adopt or maintain restrictions relating to transfers to which Article 10 (Transfers) applies.

2. Restrictions adopted or maintained under Paragraph 1 shall:

(a) be consistent with the Articles of Agreement of the International Monetary Fund;

(b) avoid unnecessary damage to the commercial, economic and financial interests of the other Party;

(c) not exceed those necessary to deal with the circumstances described in Paragraph 1;

(d) be temporary and be phased out progressively as the situation specified in Paragraph 1 improves; and

(e) be applied on a national treatment basis and such that covered investments and investors of the other Party are treated no less favourably than investors and investments of any non-Party.

3. Any restrictions adopted or maintained by a Party under Paragraph 1, or any changes therein, shall be notified to the other Party within 14 days from the date such measures are taken.

4. The Party adopting or maintaining any restrictions under Paragraph 1 shall commence consultations with the other Party within 45 days from the date of notification in order to review the measures adopted or maintained by it.

Article 12. Minimum Standard of Treatment

1. Each Party shall accord to covered investments treatment in accordance with the customary international law minimum standard of treatment, including fair and equitable treatment and full protection and security.

2. The obligation in Paragraph 1 to provide:

(a) fair and equitable treatment includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process;

(b) full protection and security requires each Party to take such measures as may be reasonably necessary to ensure the physical protection and security of the covered investment.

3. For greater certainty, the concepts of fair and equitable treatment and full protection and security do not require treatment in addition to or beyond that which is required by the customary international law minimum standard, and do not create additional substantive rights.

4. A determination that there has been a breach of another provision of this Protocol, or of a separate international agreement, does not establish that there has been a breach of this Article.

Article 13. Compensation for Losses

1. Notwithstanding Paragraph 4(b) of Article 9 (Non-Conforming Measures), each Party shall accord to investors of the other Party and to covered investments, with respect to measures it adopts or maintains relating to losses suffered by investments in its territory owing to armed conflict or civil strife, treatment no less favourable than that it accords, in like circumstances, to:

(a) its own investors and their investments; and

(b) investors of any non-Party and their investments.

2. Notwithstanding Paragraph 1, if an investor of a Party suffers a loss in the territory of the other Party resulting from:

(a) requisitioning of its covered investment or part thereof by the other Partys forces or authorities; or

(b) destruction of its covered investment or part thereof by the other Partys forces or authorities, which was not required by the necessity of the situation,

The other Party shall provide the investor with restitution, compensation, or both, as appropriate, for such loss. Any compensation shall be prompt, adequate, and effective in accordance with Paragraphs 2 to 4 of Article 14 (Expropriation) mutatis mutandis.

3. Paragraph 1 does not apply to existing measures relating to subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance that would be inconsistent with Article 5 (National Treatment) except for Paragraph 4(b) of Article 9 (Non-Conforming Measures).

Article 14. Expropriation