International Law Year in Review

E ngā mana, e ngā reo, e rau rangatira mā.   Tēna koutou, tēna koutou, tēna koutou katoa.

Good afternoon everyone.  It is always a pleasure to participate in the international law year in review session alongside counterparts from the Australian Department of Foreign Affairs and Trade, New Zealand Crown Law and the Australian Attorney-General’s office.

One of the rewarding aspects of being a foreign ministry international lawyer, especially working for a small outward-looking country like New Zealand, is the way in which we get work on all the different stages or layers of international law:

• we help create the rules, through treaty negotiations and other means;
• we take the rules from the international level and implement them in national law;
• we advise the government on the interpretation of the rules and their implications; and
• when needed and when possible, we enforce the rules through international dispute settlement. 

I will run through some key achievements of the year, starting with New Zealand’s involvement in international dispute settlement cases.

New Zealand’s WTO case dispute against Indonesia

On 9 November 2017, the WTO's Appellate Body confirmed that a number of Indonesian agricultural trade barriers are inconsistent with global trade rules.

New Zealand and the United States initiated the case in 2013 in response to a range of next-generation agricultural “non-tariff” barriers applied by Indonesia to imports since 2011. They include import prohibitions, behind-the-border use and sale restrictions on imports, restrictive import licensing, and a domestic purchase condition.

Last month New Zealand and the United States reached agreement with Indonesia on a compliance timeframe. Under this agreement, Indonesia has committed to bringing 17 regulatory barriers into compliance by later this month. The sole remaining barrier is legislative and will be brought into compliance by 22 June 2019.

This WTO case illustrates the value that New Zealand, as a small country, gains from international trade rules. The last WTO case that New Zealand brought to the WTO challenged an Australian ban on our apples, which we initiated in 2007.

These barriers affect opportunities for many New Zealand agricultural exporters, including producers of onions, apples and beef. The restrictions are commercially significant for those exporters, and are estimated to have now cost the New Zealand beef sector close to a billion dollars of lost exports into an important market.

14 countries or WTO Members, including Australia, joined the case as “third parties”. Indonesia’s approach to the WTO case has been exemplary throughout and the tone has been collegial and constructive. The trade disagreement is only a small part of that broader bilateral relationship, which is very positive.

Canada Wine WTO dispute

New Zealand has participated as a third party in the consultations phase of two WTO disputes initiated by the United States and Australia against Canada. These disputes challenge a range of distribution, licensing, and sales measures in Canada that discriminate against wine imports in breach of WTO rules.

The disputes are important for New Zealand because we have a significant commercial interest in the Canadian wine market. It is our fourth largest wine export market, behind the United States, United Kingdom and Australia, and is worth NZ$124 million a year.

WTO dispute on tobacco plain packaging

New Zealand was a supportive third party in Australia’s WTO defence of its plain packaging measures.  The WTO case was launched in 2014, and New Zealand strongly advocated during the legal proceedings, alongside Australia and many other countries, that the WTO rules provide full flexibility for countries to take tobacco-control measures to protect public health.

New Zealand was delighted to receive the Panel Report in the WTO dispute on Australia’s tobacco plain packaging regime, released on 28 June 2018. 

The WTO Panel has upheld the right to regulate for public health purposes through tobacco plain packaging.  This is an impressive and important result for Australia, but also those third parties like New Zealand that filed submissions and appeared before the Panel in support of Australia.

The result is important in view of our own tobacco plain packaging legislation, The Smoke-free Environments (Tobacco Standardised Packaging) Amendment Act 2016, which was brought into force earlier this year.  All tobacco products in New Zealand now have to be sold in standardised packaging. 

We understand an appeal is likely in the WTO case. If this ensues, New Zealand will once again appear as an active third party in support of Australia’s case before the Appellate Body.

WTO Appellate Body impasse

As many in this room will be aware, there are some challenges to the dispute settlement system itself at the moment. The Appellate Body impasse risks a situation where, by potentially as early as September 2018, the WTO will no longer be able to hear appeals for lack of judges.

New Zealand Minister for Trade and Export Growth David Parker has acknowledged this is a worry for small countries like New Zealand, as it is often the only way to resolve trade disputes. Delays in appointing Appellate Body members threaten the efficient and effective functioning of the dispute settlement system, and have the potential to undermine the broader rules-based multilateral trading system. 

In April 2018 New Zealand, along with a large group of other countries, supported a proposal in the WTO Dispute Settlement Body to move ahead with the three selection processes needed to replenish the Appellate Body judges, but this was not accepted by the United States. We see the maintenance of the WTO’s dispute settlement system, described as the “jewel in the crown” by former WTO DG Mike Moore, as a key priority and will work with other countries on solutions to the impasse.

Regional Fisheries Organisation dispute: Convention on the Conservation and Management of High Seas Fishery Resources (SPRFMO)

An unexpected international dispute settlement case that both New Zealand and Australia were involved in was the objection lodged by Ecuador to the SPRFMO Commission’s allocation of jack mackerel for 2018. Ecuador was not satisfied by the Commission’s decisions and Ecuador filed an objection under the Convention’s streamlined procedure.  A Review Panel was established with New Zealand international lawyer Don MacKay as Chairperson to consider whether the decision objected to by Ecuador discriminated in form or in fact against Ecuador, or was inconsistent with the Convention or other international law.

The hearing was held under the auspices of the Permanent Court of Arbitration in The Hague on 23 May.  New Zealand provided written and oral submissions to the Review Panel. New Zealand does not participate in the jack mackerel fishery so our views were provided in the spirit of a constructive and engaged member of the Commission. New Zealand presented legal arguments to the effect that the Commission’s allocation was not discriminatory and was not inconsistent with the Convention or other relevant international law.

The Review Panel published its findings on 5 June, just over two months after Ecuador had notified its objection, upholding the Commission’s decision, but also providing constructive advice on how Ecuador’s ambitions in the fishery can be accommodated in future.  The full proceedings including the findings are available on the website of the Permanent Court of Arbitration.  This is a good example of how a well-designed objection procedure can provide a swift resolution to disagreements within treaty regimes, in this case in time for fishing season.

Turning now to New Zealand’s implementation of international law, there are a number of developments to report on.

Maritime Crimes Amendment Act 2017

The Maritime Crimes Amendment Act 2017 was enacted in December 2017 in order to ratify New Zealand’s obligations under two international conventions.[1]  The Act amends the Maritime Crimes Act 1999 and creates new offences relating to the use of a ship or a fixed platform to commit a terrorist act; the illegal transportation of biological, chemical or nuclear weapons or materials; and the transport of terrorist fugitives by ship. The Act also implements a regime for boarding vessels suspected of involvement in maritime terrorism activities.  We deposited instruments of ratification for the Protocols with the International Maritime Organization on 26 February 2018.

Brokering (Weapons and Related Items) Controls Act 2018

The Brokering (Weapons and Related Items) Controls Act 2018 was enacted on 21 May 2018. The Act establishes a registration and permit system for New Zealand individuals and entities wishing to broker arms and military equipment. Brokering involves negotiating, arranging or facilitating the international transfer of weapons or military equipment from one foreign country to another.

The Act supports New Zealand’s compliance with the Arms Trade Treaty which regulates the international trade in conventional arms. Under the Treaty, New Zealand is required to regulate the brokering of conventional arms that takes place within our jurisdiction. It also supports our commitments as a participant in the four international export control regimes[2] for conventional weapons and weapons of mass destruction-related goods and technologies. 

Individuals that wish to engage in brokering activity must:

• Register as a broker with the Secretary of Foreign Affairs and Trade, and
• Obtain a permit for each brokering activity.

Brokering permits will be granted if the proposed brokering activity is consistent with New Zealand’s international obligations and would not prejudice the security, defence, or international relations of New Zealand.

Given the cross-border nature of brokering, the regime will have extraterritorial effect and apply to New Zealanders, ordinary residents of New Zealand and New Zealand-based entities operating offshore.

The Act will come into force on 1 February 2019 allowing MFAT time to put in place the necessary regulatory frameworks to implement the Act.

Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)

New Zealand signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 8 March 2018 in Santiago, Chile, alongside Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, and Viet Nam. 

The CPTPP includes many of the elements that were negotiated as part of the Trans-Pacific Partnership (TPP), but with some significant differences. Participants agreed to suspend 22 items from the original TPP agreement. This means outcomes that were of concern to New Zealanders in the original agreement in the areas of investment, intellectual property and health will not apply.

Last week, Mexico was the first country to ratify the agreement, with Minister Parker receiving their ratification in New Zealand’s capacity as depositary for the agreement.  

The Trans-Pacific Partnership Agreement (CPTPP) Amendment Bill will make the legislative changes necessary for New Zealand to ratify the CPTPP. The Bill had its first reading on 28 June 2018 and has been referred for Select Committee consideration. Prior to this, CPTPP underwent parliamentary treaty examination: the Foreign Affairs, Defence and Trade Select Committee (FADTC) reported to the House on CPTPP on 24 May 2018, and FADTC’s report was debated in the House on 14 June 2018. The FATDC report noted that New Zealand concluded and signed the CPTPP for strategic, commercial, and sustainability reasons.

PACER Plus

New Zealand signed PACER Plus, a landmark trade and development agreement, on 14 June 2017. Following signature, PACER Plus went through New Zealand’s parliamentary treaty examination process. The Foreign Affairs, Defence and Trade Select Committee reported back to the House of Representatives on the Treaty on 4 August 2017.

The Tariff (PACER Plus) Amendment Bill will implement New Zealand’s obligations under PACER Plus. The Bill had its first reading on 8 May 2018 and is currently under consideration by the Foreign Affairs, Defence and Trade Select Committee.

Maritime Powers Extension Bill

Last week the Government introduced the Maritime Powers Extension Bill to the House.

The Bill aims to further implement article 108 of the UN Convention on the Law of the Sea – the obligation to cooperate in the suppression of the illicit trafficking of drugs on the high seas – and article 17 of the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotic Substances – which provides a basis in international law to interdict foreign vessels on the high seas that are suspected of trafficking drugs.

The Bill provides NZ Customs with a statutory basis for interdicting vessels on the high seas that are suspected of trafficking drugs consistent with article 17. The Bill also creates new criminal offences to enable the prosecution in New Zealand of those who are arrested pursuant the exercise of those powers.

The use of small craft to smuggle drugs into New Zealand and in the South Pacific region has grown over the last two years. The numbers of these cases will always be small but they are typically at the very highest end of offending and involve larger volumes. The Bill gives NZ Customs an additional option to consider when suspected drug smuggling activities are detected in international waters.

New Zealand in Outer Space

New Zealand has recently joined a small number of countries with space launch capability with the private company Rocket Lab offering small satellite launch services from the Mahia Peninsula, on the East Coast of our North Island.

This has required a regulatory regime to govern our developing space industry and meet international obligations. The Outer Space and High Altitude Activities Act 2017 came into force on 21 December 2017. The Act governs the launch of space objects such as rockets and satellites into outer space from New Zealand, and by New Zealanders overseas. The Act also introduces a regime to manage certain activities conducted at high-altitudes, such as super pressure balloons. 

The Act will enable safe, secure and responsible outer space and high altitude launches from New Zealand, and enabled New Zealand to accede to the Convention on Registration of Objects Launched into Outer Space 1976 in January 2018. As a launching State, New Zealand is required to establish and maintain a register of space objects launched into outer space and to agree with other States Parties on who should register, and retain jurisdiction and control over a space object. 

As a member of the UN Committee on the Peaceful Uses of Outer Space, New Zealand continues to engage in international policy discussions on outer space and participated in negotiations on the ‘Guidelines for the long-term sustainability of outer space activities’ which concluded in June. New Zealand will continue to advocate for ensuring sustainability of space for all and strengthening the international legal regime governing outer space.

United Nations sanctions

Over the course of the last year, the Ministry of Foreign Affairs and Trade has worked to bring New Zealand’s sanctions regulations up-to-date. We have introduced new sanctions regulations related to Mali, amended the sanctions regulations relating to Libya and Somalia, and revoked the sanctions regulations related to Liberia and Côte d’Ivoire. 

We have also implemented significant new sanctions measures against North Korea after the Security Council adopted three North Korea sanctions resolutions during 2017. The Security Council’s resolutions have imposed increasingly complicated and comprehensive measures, which now target over 90% of North Korea’s reported exports. Amendments to our North Korea sanctions regulations came into force on 28 June, which means we have implemented all of the UN sanctions measures, except for one maritime measure that requires some further policy work.

The first-ever prosecution in New Zealand for a breach of United Nations sanctions regulations took place last year. In October 2017, New Zealand-based company Pacific Aerospace Limited entered guilty pleas to three charges in relation to the indirect export of aircraft parts to North Korea and was fined $74,805 for breaching the prohibition on the export of luxury goods to North Korea. The prosecution has highlighted the need for New Zealand exporters to be aware of their sanctions obligations and the Ministry has been working to raise awareness of the sanctions regime.
 

I will now touch upon new treaties and treaties under negotiation.

Trade agreement negotiations

On 21 June, New Zealand Minister for Trade and Export Growth David Parker and European Union Trade commissioner Cecilia Malmstrom launched negotiations for a free trade agreement between New Zealand and the European Union. The first round of negotiations will take place in Brussels this month. Both New Zealand and the EU are aiming for a comprehensive and high-quality agreement that will serve as a model for progressive and inclusive trade. 

Earlier this year, the New Zealand Government announced that it will consult with New Zealanders on the creation of a progressive and inclusive “Trade for All” Agenda. Trade for All will help ensure that the benefits of trade reach all New Zealanders, and that New Zealand’s trade policy contributes to addressing global and regional issues of concern. Trade for All will be developed through a wide-ranging process of consultation with the New Zealand public, and the outcomes of this new trade agenda will be reflected through New Zealand’s future Free Trade Agreements, including the EU-NZ Free Trade Agreement.

New Zealand is involved in the following other ongoing negotiations on free trade agreements:

• Pacific Alliance (Mexico, Chile, Colombia and Peru);
• Regional Comprehensive Economic Partnership (RCEP), a 16 country Free Trade Agreement that includes partners such as China, Japan, Korea, India, Australia, and the Association of South East Asian Nations (ASEAN);
• Talks to upgrade the China-New Zealand Free Trade Agreement; and
• Negotiations for an Enhanced Partnership between New Zealand and Singapore (which seeks to deepen cooperation in the areas of trade and economics, security and defence, people-to-people links and science research, technology and innovation and includes an upgrade to our Closer Economic Partnership).

Treaty on the Prohibition of Nuclear Weapons

A major development in the last year was the conclusion and signature of the Treaty on the Prohibition of Nuclear Weapons in July 2017, just after last year’s ANZSIL conference. The Treaty establishes the first global prohibition on nuclear weapons, and matches the prohibitions already in place for chemical and biological weapons. We see it as a necessary first step towards the elimination of nuclear weapons which, over time, will strengthen the norm against nuclear weapons.

It is a welcome and necessary progression of the Nuclear Non-Proliferation Treaty and a practical step in implementing the Article VI undertaking on nuclear disarmament. The Treaty also complements the Comprehensive Nuclear Test Ban Treaty, as well as the network of regional nuclear weapon-free zones, including our own South Pacific Nuclear Free Zone Treaty.

New Zealand was one of the 122 states that voted in favour of the adoption of the Treaty, and was among the first states to sign the treaty on 20 September 2017. To date, 59 states have signed the Treaty and 10 have ratified, signalling their commitment to a nuclear weapon-free world.

The Government has now decided to ratify the Treaty and it is now going through the Parliamentary treaty examination process.[3]

UN negotiations towards an agreement on marine biodiversity beyond national jurisdiction

The UN General Assembly agreed in December 2017 to launch a diplomatic conference to negotiate a new treaty on high seas and deep seabed marine biodiversity. New Zealand and Mexico co-chaired negotiations on the UNGA resolution launching this conference, following the conclusion of a two-year Preparatory Committee last July.  After much hard work behind the scenes, States adopted the UNGA resolution by consensus, although the Russian Federation disassociated itself from this consensus. Treaty negotiations start this September. This week the Conference President, Ambassador Rena Lee of Singapore, released an ‘aide to discussions’ for the September session aimed at putting the Conference on a path to the preparation of a zero draft of the treaty.

This is the first global treaty process related to the ocean in over two decades and the only one targeted specifically on the conservation and sustainable use of marine biodiversity.  New Zealand is actively participating in the negotiations, as are Australia and Pacific Island Forum countries, which are being supported by a regional interagency technical group. The region has been working together to ensure that the hard-won rights under UNCLOS and the 1995 UN Fish Stocks Agreement are protected. We share an interest in developing a new treaty that fills gaps to ensure the effective conservation and management of marine biodiversity in areas beyond national jurisdiction, while recognising the roles of existing regional and sectoral bodies with mandates for activities in these areas.

Progressive development of international law: sea level rise

Finally, I would like to mention a significant project we have under way relating to sea level rise.

The New Zealand Government has recently agreed to a long term approach to assist Pacific island states in meeting the challenges of climate change. This sits within the context of the Pacific Reset, endorsed by Cabinet in February, as well as the Government’s ambition to position New Zealand as a global leader on climate change.

As part of this approach officials are developing a strategy to champion the progressive development of international law to protect coastal state rights to maritime zones in the face of sea-level rise. The concern is that as baselines (that provide the starting point for all maritime zones) shift inwards due to sea-level rise, states’ maritime zones may reduce in size. The current rules under the UN Convention on the Law of the Sea do not appear to adequately address this.

This work is intended to help ensure that Pacific Island countries (and small-island developing states more generally) retain existing rights to their maritime zones (such as access to fisheries in their Exclusive Economic Zones). New Zealand is looking to engage with other countries that share this objective, and particularly Pacific states over the coming months to understand other states’ views on these issues. Officials are due to report back to Cabinet on progress made in implementing this action (and others) by the end of 2018.

[1] Protocol of 2005 to the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation and the Protocol of 2005 to the Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf.

[2] Nuclear Suppliers Group, Wassenaar Arrangement, Australia Group and Missile Technology Control Regime.

[3] New Zealand is able to ratify the Treaty without legislative change as existing laws, along with other existing policy and administrative measures, provide an acceptable basis for implementing the Treaty’s provisions.