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  • 25 Jun 2015 3:32 PM | Mike Hearn (Administrator)

    WASHINGTON, D.C.-U.S. Chamber of Commerce President and CEO Thomas J. Donohue issued the following statement today regarding final passage of Trade Promotion Authority (TPA):

    "With the bipartisan approval of Trade Promotion Authority, the U.S. Congress has prioritized economic growth and job creation here at home. In doing so, our leaders in Washington proved they could tune out the populists and demagogues of the left and the right and take action on an important measure to put our economy back on track. 

    "The Obama administration and Republican and Democratic leaders in Congress deserve great credit for setting aside partisanship and working together to pass this bill. It should serve as a model for how important things can get done going forward. 

    "The business and agriculture community's near universal support played an important role in the passage of TPA. Members of Congress heard from thousands of small businesses, major exporters with operations across the nation, and firms from every sector-including manufacturers, services providers, and agriculture.? On behalf of these millions of workers, farmers, and entrepreneurs, we're pleased our voice was heard."

    The U.S. Chamber of Commerce is the world's largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

  • 24 Jun 2015 3:14 PM | Mike Hearn (Administrator)
    By Caitlin Sykes Small Business editor of the NZ Herald

    This week, a look at Kiwi small business owners making inroads into the US.

    Adam Bennett is NZTE's trade commissioner for the US West Coast.

    http://www.nzherald.co.nz/small-business-sme/news/article.cfm?c_id=85&objectid=11467963

  • 09 May 2015 9:22 AM | Mike Hearn (Administrator)

    To address the ongoing debate over international investment and investor-state dispute settlement (ISDS), the U.S. Chamber of Commerce has published a primer on the subject as well as a two-page version of the “13 Myths about ISDS” section that appears toward the close of the broader document.

    Cross-Border Investment - International Agreements and Dispute Settlement.pdf

    13 Myths about Investment Agreements and ISDS.pdf

  • 07 May 2015 12:22 PM | Mike Hearn (Administrator)

    Minister of Revenue, Todd McClay today welcomed the release of an officials’ issues paper that seeks feedback on suggestions for helping to ensure that non-resident investors pay an appropriate amount of tax. 

    The focus of the issues paper is the current non-resident withholding tax rules on interest earned in New Zealand by non-residents.

    “The issues paper raises questions around potential weaknesses in the tax treatment of interest earned by non-residents,” Mr McClay says. “The issues paper tests what changes are appropriate.”

    “Non-resident withholding tax has not been significantly reformed since it was introduced in 1964. It was originally designed when financial transactions were much less complex than today.”

    Mr McClay says that without changes to the rules, there is an incentive and ability for non-residents to shift profits out of New Zealand with no or minimal New Zealand tax paid. He says that Inland Revenue’s audit activity had uncovered instances where large multinationals were using sophisticated techniques to defeat the tax rules.

    “This matter is a domestic law issue and is consistent with the aims of the OECD’s action plan to tackle base erosion and profit shifting.  Acting to remedy this deficiency in our tax laws is part of New Zealand’s response to the issue of multinational tax avoidance” Mr McClay says.

    “The Government has already taken steps to tighten the thin capitalisation rules to stop foreign firms from artificially loading debt onto their New Zealand operations in order to minimise their New Zealand tax. New Zealand has also signed and ratified the OECD multilateral tax assistance convention which, together with a growing network of bilateral tax treaties, allows information sharing with other countries to limit tax avoidance opportunities.”

    “We’ll continue to support the OECD work to eliminate opportunities for companies to avoid paying tax” says Mr McClay.

    The issues paper, NRWT: related party and branch lending can be found at www.taxpolicy.ird.govt.nz 

  • 29 Apr 2015 11:08 PM | Mike Hearn (Administrator)

    The American Chamber of Commerce is delighted to announce the launch of the 2015 AmCham – DHL Express Success & Innovation Awards, held in conjunction with Hawaiian Airlines. The awards celebrate business achievement between New Zealand and the United States. 

    Two-way trade between New Zealand and the USA hit a new high in the last year of $11.22 billion, an increase of 29.81% on 2014 and accounts for 11.2% per cent of New Zealand’s total earnings from overseas trade.

    AmCham works closely with its members and companies trading with the USA to enhance and expand business and trade relationships within the private and public sectors.

    "The annual Success & Innovation Awards provide an opportunity to showcase those companies that have demonstrated imagination, innovation and entrepreneurship, as well as honour and celebrate their achievements." says AmCham Executive Director Mike Hearn.

    Awards categories are:       

    -         Exporter of the Year to the USA - with export revenues to the USA up to NZ $500,000

    -         Exporter of the Year to the USA - revenues from NZ $501,000 to NZ $5 million and

    -         Exporter of the Year to the USA - revenues over NZ $5 million

    -         Importer of the Year from the USA

    -         Investor of the Year for New Zealand companies investing in the US, as well as US companies investing in New Zealand

    -         The Eric & Kathy Hertz Award for Citizen Diplomacy

    A Supreme Award winner is selected from winners of each of these awards. 

    AmCham also makes an award to the Supporter of the Year. 

    The winners of the importer and exporter awards receive between $1,000 and $2,000 of free shipping with DHL Express and 100,000 air miles from Hawaiian Airlines

    Award winners will be announced at a gala awards & 50th Anniversary dinner at the Pullman Hotel Auckland on 20th August.

    Companies interested in entering the 2015 awards can find further information at www.amcham.co.nz or by contacting Mr Hearn – email mike@amcham.co.nz   or phone 09 309 914009 309 9140.  Entries close at 5.00 pm on 29 May. Finalists will be announced on 14 July and the winners announced at the black tie awards dinner on 20 August.  

    Previous winners of the Supreme Award have included ZESPRI International, Peace Software, Airways Corporation, HumanWare, Tenon, Zeacom, Specialist Marine Interiors, Fonterra and Christchurch Engine Centre, Buckley Systems, Vista Entertainment, Greenshell New Zealand and Orion Systems International.

    In addition to AmCham, DHL Express and Hawaiian Airlines, the awards are supported by: ASB Bank, Baldwins, Fonterra Co-operative, Prescient Marketing & Communications, the Pullman Hotel Auckland and The Business Herald


    APPLICATION FORM

    If you have any questions contact

    Mike Hearn

    Tel 09-309-914009-309-914009-309-914009-309-9140

    mike@amcham.co.nz

  • 16 Apr 2015 7:39 PM | Mike Hearn (Administrator)

    Air New Zealand to fly direct to the heart of Texas - the gateway to southern hospitality

    Air New Zealand has today announced it will start flying to Houston, Texas from December this year, opening up a direct connection between New Zealand and America’s South for the first time.

    Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida.

    The new route is set to become the fastest way for Kiwis to get to popular East Coast and Midwest destinations, such as New York and Chicago.

    Today’s announcement means Air New Zealand will soon be offering direct services to five popular North American destinations – Los Angeles, San Francisco, Vancouver, Hawaii and Houston.

    Air New Zealand Chief Executive Officer Christopher Luxon says the airline is hugely excited to be adding Houston to its list of international destinations, particularly as the move comes hard on the heels of the airline’s recent announcement that it will also begin flying to Buenos Aires, Argentina, in December.

    “We are absolutely committed to expanding our Pacific Rim network. Houston offers our customers direct access into the heart of the American South and a world of new tourism experiences. Not only is Houston home to NASA’s Johnson Space Center and Mission Control and one of the world’s largest livestock shows and rodeos, it’s a great jumping off point for the home of country music in Nashville, Tennessee; the jazz capital of New Orleans; and the resorts, theme parks and beaches of Florida. Houston is also a key gateway for Mexico and the rest of Central America and the Caribbean.

    “The great American road trip features on many bucket lists. The addition of Houston to our network will mean our customers can fly direct to Texas and then set out to explore one of the most vibrant and fascinating parts of American culture and experience down home southern hospitality through the food, music and sights of Texas and the American South. It’s a great part of the USA for visitors to immerse themselves in and I know it’s going to have tremendous appeal for our customers.

    “We also look forward to welcoming more visitors to New Zealand from the southern and Midwest states and major East Coast cities where the option to connect through Houston will effectively make New Zealand’s tourism proposition more accessible than ever before.”

    Air New Zealand will code share from Houston to other key USA domestic destinations as well as Mexico, Central America and the Caribbean with Star Alliance partner United Airlines, which has a large Houston based hub. United will code share on the Air New Zealand flight from Houston to Auckland and points beyond.

    Tickets are expected to go on sale next month, with flights commencing mid December.

  • 09 Apr 2015 1:37 PM | Mike Hearn (Administrator)

    Assistant Secretary of State Daniel R. Russel remarks on TPP to the National Bureau of Asian Research Roundtable

    As prepared

    Thank you, President Ellings, for the kind welcome, and for bringing together this distinguished group.

    It’s good to be in Seattle, and with the National Bureau of Asia Research. Congratulations on NBR’s 50th anniversary. For half a century now, you have provided high quality, independent research on issues facing the U.S. and the world, from energy trade to security strategy and beyond. The strength of America’s academic community and think tanks is envied around the world. It’s particularly beneficial to have institutions like NBR around the country, so that the voices in our national foreign policy conversation reflect the diversity of views across our land. So thank you for all that you do.

    Let me start by telling you about why I’m here in Seattle. It’s crunch time for the Trans-Pacific Partnership. Secretary Kerry has asked his team to get out around the country, talk to people who are interested in trade with Asia, address any concerns folks may have, and spread the word about TPP’s benefits. So, in addition to meeting with you, I’m talking with major exporters, including member companies of the Business Council for International Understanding, and meeting with local press. I’m also giving remarks later tonight at the University of Washington Jackson School to talk about the larger context of U.S. relations with Asia, beyond trade.

    So here, I’ll summarize that context briefly and then focus on trade.

    The Asia-Pacific region – and you know the U.S. is a Pacific power – is one of the world’s most dynamic regions. It contains the top four most populous countries, the three largest economies, many of the world’s fastest growing economies, and a rapidly growing middle class of over half-a-billion consumers. U.S. trade with the Asia-Pacific region was $2.9 trillion in 2013.

    Nations across the region face choices: Are they going to move toward greater political freedom and respect for universal rights and values? Are they going to open their economies while protecting workers, investors, and the environment? Are they going to strengthen the international and regional system of rule of law to treat all countries fairly? And by doing that, avoid conflict that could lead to loss of life and crippling economic consequences for all of us?

    We can’t take the answers to any of these questions for granted, and they’re all interconnected. Our ability to shape the answers depends on our economic, diplomatic, and military strength. So when we lead on trade and investment, it helps us across the board. Free trade agreements, like the ones we have with Australia, Singapore, and the Republic of Korea, benefit many American businesses and our relationships with those countries.

    Trade is good for your local economy, as you know. Goods exports support about 402,000 jobs in this state – the third highest of any state, according to the Department of Commerce’s most recent estimate – so you’re very well-integrated into the global economy. Of your exports, thirty-six percent already go to Asia, including over $2.6 billion in exports of goods. And in a recent five-year stretch, jobs in Seattle based on the export of services, like software, grew 54%.

    Concluding TPP is essential to President Obama’s top priority of creating good jobs in America. It also is the most important thing we can do for U.S. relations with Asia this year.

    This agreement will include 11 other countries that already account for 33 percent of your state’s goods exports, worth $26 billion (average from 2012 to 2014). It will grow America’s overall exports by more than $123 billion by 2025, according to a study by the renowned independent Peterson Institute. And those exports will support many more high-paying jobs.

    Just consider the barriers that our workers and businesses are currently facing in the Asia Pacific, the world’s fastest-growing region. American autoworkers are handicapped by tariffs that can reach 30 percent in Malaysia. American farmers are forced to contend with tariffs as high as 40 percent on poultry in Vietnam. Meanwhile, foreign competitors have struck trade deals that give their own exporters an advantage, getting their products to consumers in those same markets with significantly lower or even no tariffs.

    TPP also gives us the opportunity to protect workers and the environment with the highest and most enforceable standards of any trade agreement ever. The TPP will include groundbreaking new commitments to protect our oceans, forests, and wildlife. And it will allow us to address specific concerns about labor conditions in certain TPP countries, bringing improvements on the ground to workers across the region.

    In addition, TPP will allow us to tackle a number of issues that have never been addressed in trade pacts - for instance, it will help ensure that state-owned enterprises compete fairly with our private companies.

    It also will ensure that Americans whose businesses and jobs depend, either directly or indirectly, on innovation, invention and creativity enjoy the benefits of that work. This includes 40 million workers across the country, and a lot of them are here in Seattle. We have focused a lot of attention on ensuring strong outcomes in the TPP that will promote the digital economy and ensure a free and open Internet. We also have developed strong and balanced intellectual property rules that protect and promote invention and the creation of new products and services, while enabling consumers to access the full benefits of scientific, technological, and medical innovation, as well as new media and the arts.

    Our competitors’ growing number of FTAs in the region promote rules that reflect their values, vision of the future, and competitive strengths—not ours. This doesn’t promote sustainable, shared economic growth, intellectual property rights, or maintenance of a free and open Internet. These other rules don’t tackle the growing problem of unfair competition from state-owned enterprises.

    In short: We need TPP to promote economic growth and support high-paying jobs, and to advance our values and show that our ongoing commitment to the region extends beyond security. TPP is important to the long-time partners I mentioned with whom we already have FTAs. It’s important to new partners like Vietnam and Malaysia as they seek to further reform and develop their economies. And it’s important to Japan as Prime Minister Abe works on structural reforms, the “third arrow” of his domestic economic recovery programs. While we have more work to do with Japan, to resolve differences in areas such as agriculture and autos, we’re confident we can get this done.

    TPP is about giving Americans a fair shot in these markets. Because we know one thing beyond doubt: with a level playing field, when trade is fair, our workers; our businesses do very well. And the businesses and workers here in the Seattle-Tacoma area and in Washington State prove that each and every day.

    As my friend and colleague Ambassador Mike Froman, our U.S. Trade Representative, has said, “the finish line for TPP negotiations is in sight.” Negotiators are meeting around the clock, and countries are moving on issues that seemed intractable months ago.

    More good jobs and a stronger American middle class are on the table. So I hope we can count on your support, and the support of people around Seattle and across Washington for the Trade Promotion Authority we need to bring this agreement home, and for the TPP agreement itself.

    We also see TPP as the best pathway to a larger Free Trade Area of the Asia-Pacific. But in the meantime, we’re continuing to move forward with partners outside the TPP. The biggest, of course, is China.

    Exports from the Seattle-Tacoma area to China went up nearly $5 billion from 2009 to 2013 alone. And we’re working to help you increase that number.

    Our diplomacy with China has allowed us to expand the areas where we work together, while managing our clear differences. And that diplomacy over many years, including bringing China into the WTO, has supported China’s economic rise, enabling trade and increased exports to China. In 2014 alone, we made important progress in at least four specific ways:

    Let’s start with the Joint Commission on Commerce and Trade meetings in Chicago. There, Commerce Secretary Penny Pritzker and U.S. Trade Representative Mike Froman made great progress in getting China to open to imports of U.S. biotech corn and soy; medical devices and pharmaceuticals; and to give fair treatment to U.S. businesses facing the competition regulators.

    Second, at the 2014 Strategic and Economic Dialogue, our biggest bilateral annual gathering, we intensified negotiations on a Bilateral Investment Treaty. The “negative” list is next, and we’re asking that it be very high quality – narrowly tailored and widely open to foreign investment, especially since our openness to Foreign Direct Investment (FDI) has allowed new Chinese FDI into the U.S. to surpass our FDI in China.

    While we remain concerned about China’s recent tightening of its foreign investment climate and its seeming disregard of certain principles of a free and fair market, we strongly believe that a U.S.-China Bilateral Investment Treaty holds the promise of further opening China’s market to foreign investors and creating an improved investment environment for U.S. companies.

    Third, during President Obama’s trip to Beijing, we reached a key agreement to expand visa validity for business visitors to ten years, a boon for our tourism industry and a win for our companies with interests in China. We also achieved an important bilateral understanding to help the WTO’s International Technology Agreement move forward. We subsequently suffered a setback and there’s still a lot of work to do, but we remain hopeful.

    Fourth, our landmark climate progress, also during the trip, is important for long-term public health, and economic health, and it supports the green economy.

    As you can see, we have a very full economic docket with China, and as I’ll detail in my remarks this evening, a much broader agenda in our bilateral relationship. Together the United States and China have launched a range of new initiatives to boost clean energy research, make carbon capture and storage a reality, link up our cities as they pursue low-carbon solutions, and promote green trade between our countries.

    All of you, and the entire Seattle area, have many important roles to play in America’s economic relationship with Asia. Seattle’s impact reaches well beyond the quantity of your trading and investments – many of your companies are known and lauded for the quality of your relationships, the ethical standards you adhere to, and work to instill throughout your supply chains. It’s not just protecting workers, it’s providing them with skills training while protecting the environment and countering corruption.

    And later tonight, I’ll speak to Seattle’s role beyond economics – as a center of academic research, a welcoming host of students from the region, and a home to vibrant Asian diaspora communities. With your continued help, the U.S. and Asia will continue to grow and prosper together.

    Thank you. Let’s open it up for discussion.

  • 24 Mar 2015 1:16 PM | Mike Hearn (Administrator)

    Senator Warren raises some important questions about an element of the Trans-Pacific Partnership (TPP) called Investor-State Dispute settlement, or ISDS.

    There are good answers.

    The purpose of investment provisions in our trade agreements is to provide American individuals and businesses who do business abroad with the same protections we provide to domestic and foreign investors alike in the United States.  

    ISDS is an arbitration procedure – similar to procedures used every day by businesses, governments, and private citizens across the globe – that allows for an impartial, law-based approach to resolve conflicts and has been important to encouraging development, rule of law, and good governance around the world. ISDS does not undermine U.S. sovereignty, change U.S. law, nor grant any new substantive rights to multinational companies. 

    The reality is that ISDS does not and cannot require countries to change any law or regulation. 


    ISDS has come under criticism because of some legitimate complaints about poorly written agreements. The U.S. shares some of those concerns, and agrees with the need for new, higher standards, stronger safeguards and better transparency provisions. Through TPP and other agreements, that is exactly what we are putting in place.

    It is an often repeated, but inaccurate, claim that ISDS gives companies the right to weaken labor or environmental standards, for example, suggesting that a trade agreement could result in the United States having to lower its minimum wage.

    The reality is that ISDS does not and cannot require countries to change any law or regulation. Looking more broadly, TPP will result in higher levels of labor and environmental protections in most TPP countries than they have today. If TPP is passed by Congress, it will also create strong, enforceable new labor protections that would allow the United States to take action – on its own, or on the basis of a petition from labor unions or other interested parties – against TPP governments that don't honor their labor commitments. The same is true for enforcing environmental commitments.  

    Similarly, the investment provisions under TPP are designed to protect American investors abroad from discrimination and denial of justice.

    Under our Constitution, the Government has wide powers to regulate on behalf of the public interest even if that impacts private property. But when government takes its citizen’s property from them – be it a person's home or their business – the government is required to provide compensation. This is a core principle reflected in the U.S. Constitution and recognized under international law and the legal systems of many countries.

    Unfortunately, foreign courts have not always respected this principle, and U.S. investors often face a heightened risk of bias or discrimination when abroad. That’s why governments have looked to international arbitration to resolve such disputes for centuries. Earlier in our history, the United States used gunboat diplomacy, sending our military to defend our economic interests abroad. The decision was made by our predecessors that it was better to rely on neutral arbitration instead.

    Over the last 50 years, 180 countries have entered into more than 3,000 agreements that provide investment protections, the vast majority of which have some form of neutral arbitration. European countries are party to more than 1400 of those agreements. The U.S. is party to about 50.

    Those thousands of agreements contain a wide range of standards, some that strongly protect a government’s right to regulate, others that do not. The U.S. has been at the leading edge of updating, upgrading and clarifying these standards; protecting the right to regulate; and drawing lessons from previous agreements to ensure that our agreements have the highest possible standards. TPP incorporates and builds on those efforts and goes beyond them by:

    • Further raising the standards: TPP will make it absolutely clear that governments can regulate in the public interest, including with regard to health, safety and the environment, and narrowing the definition of what kinds of injuries investors can seek compensation for.
    • Adding safeguards: TPP will include the ability to dismiss frivolous claims quickly and award fees against the claimant to deter such suits; making it possible for governments to provide binding direction to the arbitrators; and creating additional filters for cases having to do with financial services.
    • Closing loopholes: For example, TPP will prevent sham corporations from accessing the investment protections provided by the agreement.
    • Creating transparency: All arbitration proceedings under TPP will be open and non-parties, including labor unions and civil society organizations, will be able to file briefs to inform the outcome of cases.

    There have only been 13 cases brought to judgment against the United States in the three decades since we’ve been party to these agreements. By contrast, during the same period of time in our domestic system, individual and companies have brought hundreds of thousands of challenges against Federal, state, and local governments in U.S. courts under U.S. law.

    We have never lost an ISDS case because of the strong safeguards in the U.S. approach.

    And because we have continued to raise standards through each agreement, in recent years we have seen a drop in ISDS claims, despite increased levels of investment.


    Through TPP, we can set a new, higher set of standards, stronger safeguards and better transparency provisions.


    The truth is that it is difficult for a claimant to win under our agreements and, if they have a legitimate claim, they tend to bring it under our domestic court system.

    Senator Warren alludes to a number of specific cases, most of which are not under U.S. agreements and based on different standards, but each one of which is instructive:

    • In the only U.S. case alluded to in Senator Warren’s op-ed, a regulation was adopted banning a chemical used in gasoline additives made only by a Canadian company. An arbitration panel found in favor of the government and underscored the right of governments to regulate for public purposes, including regulation that imposes burdens on foreign investors, and noted that investors cannot expect that environmental or health regulations will not change.
    • The French-Egyptian case is instructive for two reasons.  First, we don't know much about it because the facts and briefs are not public. Our proposal creates transparency to address that issue.  Second, the information currently available on the case suggests it is not based on the fact that there was an increase in the minimum wage, but rather on a claim that the government has not honored its contract to pay a fixed percentage of the operating costs.
    • The Swedish suit against Germany is also instructive. Here, too, details on the case are not public, unlike cases under U.S. agreements. But available information suggests that the case is not about whether Germany can change its national energy policy to do away with nuclear power, but whether Germany needs to provide compensation for abrogating its existing commitments. German domestic courts have upheld claims relating to these issues in cases filed by Germany's domestic energy companies under German law. This case is also instructive because the Swedish company is pursuing claims both in German domestic courts and through neutral arbitration. Our reforms would prevent this kind of forum shopping.
    • In the case of the Dutch bank’s lawsuit against the Czech government, the investment agreement at hand had a different standard than what we are proposing in TPP. Our approach is more demanding and, among other things, would affirm the right of governments to take prudential measures to protect the financial system.

    Senator Warren also questions the integrity of the arbitrators who decide cases, suggesting that they are biased against governments. In fact, ISDS panels more frequently side with respondent governments. The U.S. government, for example, has won every single case concluded against it.

    The arbitration rules used under TPP require the independence of arbitrators and provide for challenge and disqualification in the event of conflict of interest or bias. They also provide a central role for the government being sued to determine which arbitrators hear the case.

    We share a number of the theoretical concerns Senator Warren raises. But we disagree with her suggestion that we leave it to the free market to put in place basic rule of law and protections. That hasn't worked in the past and government has a role to play.  

    We can’t change the standards in the more than 3,000 agreements among other countries. Most of those agreements will continue to exist, with or without TPP. But through TPP, we can set a new, higher set of standards, stronger safeguards and better transparency provisions.

    That's exactly what we're doing.

    Learn more about ISDS and it's role in our trade agreements here.

    Below are copies of letters sent by a number of Congressmen to USTR Ambassador Michael Forman and from the Governor of Virgina to Froman, Ag Secretary Thomas Vilsak and Sec of Commerce Penny Pritzker on the issue.

    02 20 2015 TPP Froman Pritzker Vilsack Letter.pdf

    Amb Froman TPP-Tobacco 2015 FINAL.PDF 


  • 24 Mar 2015 12:49 PM | Mike Hearn (Administrator)
    "An apple. A swoosh. Two golden arches. Most citizens of the world equate those three iconic symbols with a brand.

    Branding is essential for the economy and provides a fundamental service to the consumer, differentiating competing products from one another. This differentiation has several benefits; it makes producers accountable for their own goods, it ensures that consumers can find the quality products they seek, it helps protect consumers choose the products they trust and it helps distinguish legal from black market goods. Customers will go to great lengths to access brands they like and trust.

    Unfortunately, brands are under attack. Legislation recently passed in Ireland and the UK that will eliminate trademarks – vital to brand integrity – on tobacco packaging. Proponents of the effort cite similar legislation in other countries and a perceived drop in smoking rates. However, the facts are not on their side, and such action does an enormous disservice to consumers who value choices and choosing the brands they trust.

    While we welcome efforts to reduce smoking, eliminating one of the tools consumers search for when looking for a brand they trust is the wrong approach. Two years ago, Australia enacted a plain packaging law for cigarettes that for the first time denied manufacturers of a legal product the ability to distinguish their product from those of their competitors through trade dress.  The unintended consequence of that policy decision has been to drive consumers not away from smoking but into the unregulated black market for cigarettes, which makes it easier for criminal enterprises – which thrive on the black market – to enter the legitimate supple chain.

    Three studies make the case that plain packaging is not meeting the public health objectives of the law and is having an impact on the black market:

    First, a study by the London Economics group (“An Analysis of Smoking Prevalence in Australia”) analyzed the impact of plain packaging on smoking prevalence among Australians, and found that “the data do not demonstrate that there has been a change in smoking prevalence following the introduction of plain packaging and larger health warnings despite an increase in the noticeability of the new health warnings.”

    A second study, by KPMG (“Illicit Tobacco in Australia, 2013 Full Year Report”), shows significant increase of illicit branded manufactured cigarettes following the implementation of Australia’s plain packaging laws.

    And the KPMG report from last year (“Illicit Tobacco in Australia, 2014 Full Year Report”) found that since the enactment of plain packaging, the decrease in the consumption of legal cigarettes has been counterbalanced by an increase in consumption of illegal cigarettes. Perversely, the only place an Australian smoker can go today to buy a branded cigarette is to the black market. It’s illogical.

    As the KPMG reports remind us, legal cigarette volumes have been steadily declining for many years in Australia, but this historic rate of decline has eased following plain packaging implementation. The increase in illegal tobacco has been greater than the decline of legal tobacco, leading to an overall increase in the consumption of tobacco in Australia.

    The lesson here is that two wrongs never make a right. Australia’s efforts to reduce smoking, while understandable, have been ill-served by the choice of policy tools that deny consumers access to a legal product, remove the important consumer protection given by branding, and drive consumers to the unsecure black market.

    Plain packaging has not only demonstrably failed to work in Australia, but it has arguably put Australia in violation of international trade rules intended to protect the rights of brand owners in the global marketplace.  Currently, the Australian measure is being challenged by five of its trading partners at the World Trade Organization (WTO), with 35 more countries weighing in as interested parties. The measures recently adopted in the UK and Ireland will likely face similar challenges in the courts. Lawmakers need to take a long look at the cautionary tale of Australia’s plain packaging fiasco and not fall victim to a similar situation. New Zealand, for example, has chosen to wait until the WTO issues its ruling on whether or not plain packaging violates international trade law, rather than recklessly push forward with an initiative that may soon be found in violation.

    Brands matter, and consumers demand them. While today’s debate is about tobacco “plain packaging” there have been similar calls for plain packaging of spirits and wine. No doubt there will be other candidates down the road.

    That’s one of the reasons why more than 145 prominent global business organizations joined the U.S. Chamber of Commerce in signing a joint statement in opposition to trademark destruction through plain packaging.

    There are better ways for governments to educate consumers about the ramifications of smoking than by denying them appropriate choices and trusted brands.  Consumers deserve better".


  • 05 Feb 2015 4:58 PM | Mike Hearn (Administrator)

    by Geoff Popham, Business Development Manager, Burnard International Limited - Geoff@burnard.co.nz

    Congestion in Los Angeles-Long Beach has reached a crisis stage with 20 container ships stuck at anchor Tuesday 3rd Feb in the largest U.S. port complex — and no relief in sight.

    The Marine Exchange of Southern California reported that the vessels at anchor increased by four since Monday. Shipping lines say vessels in recent weeks have been sitting at anchor for seven to 14 days, and when they proceed to berth, it takes another six to eight days to work the ships. Vessels in the trans-Pacific have been thrown so far off schedule that at least one line has no vessels available to carry containers from Asia because all of its ships are stuck on the West Coast.

    Meanwhile, contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association appear to be going nowhere. Significant progress was made when the PMA on Jan. 26 confirmed that a tentative agreement was reached that would allow ILWU mechanics to inspect all chassis before they leave the marine terminals.

    However, with hopes raised that a settlement could be forthcoming in a matter of weeks, ILWU negotiators reportedly stunned employers by returning to the bargaining table the next day with a dozen new demands, some of which are considered to be highly controversial.
    A teleconference between the parties is scheduled for today, with media to be present.

    Arrivals and departures in New Zealand are continuing to be seriously delayed, as lines struggle with schedule integrity in the US – NZ – AU – Asia loops which are all connected.

    We suggest our clients, both importers and exporters – discuss with suppliers and customers, ways and means to add at least 10 - 14 days to current lead time expectations.
    We hope the parties will soon reach agreement.