Trans-Pacific Partnership Agreement Amendment Bill

The Trans-Pacific Partnership Agreement Amendment Bill (the Bill) is an omnibus

Bill introduced in accordance with Standing Order 263(a). The amendments deal with an interrelated topic that can be regarded as implementing a single broad policy.

The Bill amends New Zealand law as part of the implementation of the free trade

agreement named the Trans-Pacific Partnership (TPP) Agreement between New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, the United States, and Viet Nam, signed at Auckland on 4 February 2016 (the Agreement).

Most of the obligations in the Agreement would be met by New Zealand’s existing

domestic legal and policy regime. However, a number of legislative and regulatory

amendments would be required to align New Zealand’s domestic law with certain obligations in the Agreement, and thereby enable New Zealand to ratify the Agreement. The Bill introduces amendments to the following enactments:

• the Agricultural Compounds and Veterinary Medicines Act 1997, so as to extend current data protection from 5 to 10 years for data provided in support of an application for marketing approval for a new agricultural chemical product, as required by the intellectual property chapter of the Agreement;

• the Copyright Act 1994, so as to extend the copyright term from life plus 50 to life plus 70 years, to provide a new regime for protection of technological protection measures, to provide new rights for performers, to provide additional protection for rights management information, to extend the border protection measures to allow the New Zealand Customs Service to detain exports of suspected pirated copyright works where a notice has been accepted from rights holders and to give ex officio powers to Customs officers to temporarily detain suspected pirated copyright works without a notice from rights holders, and to extend the protection of encrypted programme-carrying satellite and cable signals, as required by the intellectual property chapter of the Agreement;

• the Customs and Excise Act 1996, so as to allow the New Zealand Customs Service to issue advance rulings on the valuation of imports to TPP importers, exporters, or producers, as required by the customs administration and trade facilitation chapter of the Agreement;

• the Dairy Industry Restructuring Act 2001 (including Schedules 5A and 5B), so as to implement an export licence allocation system for the country specific quota access received for dairy products in the Agreement for the United States market;

• the Hazardous Substances and New Organisms Act 1996, so as to provide a 60-day comment period on proposed technical regulations that will need to be notified to the World Trade Organization, as required by the technical barriers to trade chapter of the Agreement;

• the Legislation Act 2012, so as to ensure that New Zealand can promptly publish on a single Internet site all central Government subordinate instruments, together with an explanation of their purpose and rationale, to the extent required by the transparency and anti-corruption chapter of the Agreement;

• the Overseas Investment Act 2005, so as to provide a power to make regulations to implement higher investment screening thresholds for overseas investments in significant business assets in order to comply with New Zealand’s obligations under the investment chapter of the Agreement and other related existing international trade agreements (being the Most-Favoured-Nation obligations in New Zealand’s existing trade agreements with China, Chinese Taipei, Korea, and Hong Kong, and the CER Investment Protocol with Australia). Under TPP and existing most-favoured-nation (MFN) obligations the screening threshold for certain non-government investors will increase from $100 million to $200 million. The threshold for Australia is currently $498 million for non-government investors and $104 million for government investors (indexed for inflation), which will remain unchanged;

• the Patents Act 2013, so as to provide for the requirement to provide a 12- month grace period for patent applications and to allow for the granting of patent term extensions to compensate a patent holder if there are unreasonable delays in the Intellectual Property Office of New Zealand granting the patent, or an unreasonable curtailment of the patent term as a result of Medsafe’s marketing approval process for pharmaceutical products, as required by the intellectual property chapter of the Agreement;

• the Tariff Act 1988, so as to enable regulations to be made which apply the preferential tariff rates agreed under the Agreement, to provide for the transitional safeguard mechanism required under the trade remedies chapter of the Agreement, and to provide for the emergency action (safeguards) mechanismand associated procedures required under the textiles and apparel chapter of the Agreement;
• the Trade Marks Act 2002, so as to provide authority to courts to award additional damages for trade mark infringement, to extend the border protection measures to allow the New Zealand Customs Service to detain exports of suspected trade mark infringing goods where a notice has been accepted from rights holders and to give ex officio powers to Customs officers to temporarily detain suspected trade mark infringing goods without a notice from rights holders, and to require the courts in trade mark infringement cases to order the destruction of counterfeit goods except in exceptional cases, as required by the intellectual property chapter of the Agreement;

• the Wine Regulations 2006, so as to introduce a standard that restricts the export of grape wine labelled as “ice wine” which is not made from grapes frozen on the vine as required by the wine and distilled spirits annex of the technical barriers to trade chapter of the Agreement.

A copy of the Agreement can be found at https://www.tpp.mfat.govt.nz/text

During the negotiation of the Agreement, MFAT engaged with Māori through a number of mechanisms in addition to the wider stakeholder activities. The Ministry also met with the Māori Business Facilitation Service at Te Puni Kōkiri to confirm an approach for stakeholder engagement concerning Free Trade Agreements, and the Ministry applied this approach for TPP outreach. The Ministry has also reached out to the Federation of Māori Authorities to engage in consultation as well as to individual Maori business enterprises and specific iwi.  There were also two calls for public submissions on the Agreement in 2008 and 2011.  Some of the submissions received indicated the need for reference to the Treaty of Waitangi in the Agreement and also highlighted other issues of concern to Māori such as the protection of traditional knowledge.

Departments have undertaken analysis of the nature, extent and relative strength of the Māori interest in implementation of the Agreement in the context of designing a strategy for engagement with Māori about implementation.  Departments have come to the view, that the majority of legislative and policy obligations agreed to in TPP are of a general commercial nature (for example tariff rates and customs requirements) and will have no particular impact on Māori interests whether under the Treaty of Waitangi or otherwise. Furthermore, most of New Zealand’s international obligations under TPP are already met by our existing domestic legal and policy regime and therefore will confirm rather than change current legislative and policy settings.  Some of these obligations under TPP may require New Zealand to commit to maintaining these existing policy settings in the future.  Policy-lead departments consider it unlikely that Māori interests will be specifically prejudiced by this type of commitment. Departments recognise that the Agreement contains a number of provisions that are of specific interest to Māori (for example, Article 29.6 – the Treaty of Waitangi exception discussed further below), and have identified a number of other areas where Māori interests are or might be affected by implementation of the Agreement, such as certain intellectual property obligations. Opportunities for Iwi/Māori, as the Treaty Partner, to raise their interests and concerns directly with the Crown is being provided through dedicated information Hui around the country.

Section 7.3.1 of the NIA addresses the content of the Agreement in relation to the Treaty of Waitangi. In summary, the main obligations in TPP have been designed to ensure legitimate public policy is not undermined and that governments can continue to regulate in the public interest. This approach helps ensure that the Government is able to take measures that are in the interests of Maori. In addition, the Agreement, as with all of New Zealand’s other free trade agreements since 2001, includes a Treaty of Waitangi exception that states:

“TPP Article 29.6: Treaty of Waitangi

1. Provided that such measures are not used as a means of arbitrary or unjustified discrimination against persons of the other Parties or as a disguised restriction on trade in goods, trade in services and investment, nothing in this Agreement shall preclude the adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement, including in fulfilment of its obligations under the Treaty of Waitangi.

2. The Parties agree that the interpretation of the Treaty of Waitangi, including as to the nature of the rights and obligations arising under it, shall not be subject to the dispute settlement provisions of this Agreement. Chapter 28 (Dispute Settlement) shall otherwise apply to this Article. A panel established under Article 28.7 (Establishment of a Panel) may be requested to determine only whether any measure referred to in paragraph 1 is inconsistent with a Party’s rights under this Agreement.”

The Treaty of Waitangi exception in TPP applies to the entire Agreement. The exception ensures that successive governments retain flexibility to implement domestic policies that favour Maori without being obliged to offer equivalent treatment to overseas entities.

For the sake of completeness, although not included in the Bill, New Zealand will need to amend the Plant Variety Rights Act 1987 in order to comply with the obligation under Article 18.7.2 and Annex 18-A, within three years of entry into force of TPP, either to accede to the most recent 1991 version of the International Convention for the Protection of New Varieties of Plants (UPOV 91), or under a New Zealand specific approach, implement a plant variety rights system that gives effect to UPOV 91.  When implementing this obligation, New Zealand would be able to adopt any measure that it deemed necessary to protect indigenous plant species in fulfilment of its obligations under the Treaty of Waitangi.  The Bill does not implement this obligation.  The amendments to the Plant Variety Rights Act 1987 would be enacted by passage of implementing legislation after the Agreement enters into force for New Zealand. 

External consultation – question 3.6

Consultations during negotiation of TPP

The consultation process for TPP has been among the most extensive a New Zealand Government has undertaken for any trade negotiation. Throughout the negotiation process MFAT, together with other government agencies, has been active in engaging with a wide spectrum of stakeholders on TPP.

The objective of ongoing consultations on TPP has been to provide the opportunity for stakeholders to seek information and offer their views so that their interests are taken into account. Regular stakeholder sessions have provided a forum to share information about the progress of negotiations and to seek stakeholder input on negotiating goals and approaches. The “TPP Talk” internet column (on MFAT’s website) encouraged feedback on TPP from the public at any stage.As stated at section 3.2, during the negotiation of the Agreement, MFAT engaged with Māori groups through a number of mechanisms in addition to the wider stakeholder activities.

In undertaking consultations for TPP, the Government drew on an existing foundation of information from engagement with stakeholders over the course of previous FTA negotiations. Further information on consultations during negotiations is summarised in section 9 of the NIA.

Consultations on Bill

The majority of the legislative amendments required to implement the TPP Agreement did not require significant policy development before they could be included in the Bill. However, some intellectual property obligations in the TPP Agreement provide significant flexibility in how those obligations are implemented.  On 9 March 2016, the Minister of Commerce and Consumer Affairs announced the release of a consultation document seeking feedback on how the Government proposed to implement certain intellectual property changes required to ratify the Trans-Pacific Partnership (TPP) Agreement. The consultation document sought feedback on the implementation of the TPP obligations to provide:

• civil and criminal prohibitions against people circumventing technological protection measures, including what exceptions and limitations should be provided for;
• an extension of the patent term to compensate the patent owner for any unreasonable delay in the grant of a patent;
• an extension of the patent term, in respect of a pharmaceutical substance that is the subject of a patent, to compensate the patent owner for any unreasonable curtailment of the effective patent term as a result of Medsafe’s marketing approval process;
• a more extensive regime for performers’ rights, including what exceptions and limitations should be provided for in relation to those rights;
• Customs with the power to detain suspected infringing goods on its own initiative (ex officio), without first having accepted a border protection notice from a rights holder.

The Ministry of Business Innovation and Employment received 55 submissions from the public on the consultation document. Submissions were received on all areas of the targeted consultation document, with the majority of submitters’ comments focused on technological protection measures. A significant number of submitters also commented on performer’s rights and patent term extensions. Overall there was support for the approach taken in the targeted consultation document.

The amendments to the Patents Act 2013 to implement obligations to extend the term of a patent were developed in consultation with Medsafe, the Intellectual Property Office of New Zealand and PHARMAC.  The amendments for implementing obligations related to Customs powers at the border under the Copyright Act and Trade Marks Act were developed in consultation with the New Zealand Customs Service.

Clause 44 of the Bill amends the Copyright Act to provide a new regulation making power to enable the addition, modification, or narrowing of any exception to the technological protection measures prohibitions. This will enable the scope of the exceptions for the new technological protection measures regime to be refined in the context of changing technology and circumstances: such changes often being unforeseeable.  The clause also includes a range of safeguards including:

 a) restricting exceptions to uses that do not infringe copyright or specified performers’ rights;

 b)  requiring the responsible Minister to:

            i) consult the public;

            ii) have regard to the purposes of the Act, and  whether the proposed regulation may cause any actual or likely adverse impact on the use of a copy of a work that does not infringe copyright or specified performers’ rights.

Clause 64 of the Bill amends the Legislation Act 2012 (Legislation Act) to introduce new publication requirements on certain defined central government entities. New section 36C(3) of the Legislation Act provides that the Governor General may, by Order in Council, prescribe any other instrument of the Crown for the purposes of the definition of central government entity in new section 36C(2). This power to make delegated legislation is necessary to ensure that, if there are any other relevant instruments of the Crown outside that definition, those instruments will comply with the new publication requirements in the Legislation Act, to the extent required by New Zealand’s obligations under the Agreement.

Clause 69 of the Bill amends the Overseas Investment Act 2005 to provide a new regulation making power to provide alternative value thresholds set by regulations for certain overseas investments in significant business assets, other than the standard threshold of $100 million contained in section 13 of the Act.

There are clear criteria for exercising the power. The alternative value threshold set in regulations can only arise from obligations in the Agreement and other related existed international agreements listed in the new regulation making power. Those agreements have proceeded through the parliamentary treaty examination process.  Also, the Minister recommending regulations be made by the Governor-General in Council will not be able to propose value thresholds higher than those contained in the relevant international agreement.

The regulation making power is necessary as the specified international agreements require different screening thresholds to be applied to different types of investors.  This requires detailed rules setting out technically complex matters that are more appropriately contained in regulations.

Clause 75 of the Bill amends the Patents Act 2013 to, among other things, enable an Order in Council to be made to provide for regulations to specify the period of times that must be disregarded for the purpose of granting extensions of patent term for unreasonable delay in granting of patents.

Clause 81 of the Bill amends the Tariff Act 1988 to enable the Governor-General to declare that a country that is a party to the TPP be specified as a TPP party for the purposes of the Tariff Act. This is necessary because the Tariff Act should only apply in relation to TPP countries that have brought TPP into force, and it is not yet known which economies will bring TPP into force and when.