Tax on water exports would breach NZ trade agreements says top Mfat official

Ministry of Foreign Affairs and Trade deputy secretary trade and economic group Vangelis Vitalis. Photo/ supplied

The new Government's plans to introduce a royalty on exports of bottled water would breach trade agreements signed by New Zealand, a leading trade negotiator has told MPs.

Among them is the China free trade agreement signed under a past Labour government as well as the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), the revised TPP.

Labour and New Zealand First's coalition agreement specifically includes a provision to "introduce a royalty on exports of bottled water."

Vangelis Vitalis, Foreign Affairs deputy secretary for the trade and economic group, said such payments would breach existing trade agreement.

"We are not in a position to apply an export tax on water as a consequence of some of our existing free trade agreements," he said while being questioned on CPTPP at the foreign affairs and defence select committee today.

"The new agreement contains the same prohibition of export taxes," he said.

The use of water in New Zealand was still protected. The Government's right to regulate around that was still protected. The issue that concerned the TPP negotiation was export taxes.

Many countries around the world had export taxes including on agricultural products and that affected prices.

"So one of our key objectives in many of our negotiations has been to try to restrict because of the impact it has on global prices, including a range of products that we do care about."

"The policies that you'd use to manage water would be based around the Resource Management Act and thee consents that we might have on the use of water.

Vangelis said there had been no date set for the signing of CPTPP, but it could be in the first quarter of next year.

Many of the questions centred on changes to the Investor State Dispute Settlement provisions under the CPTPP to reduce the circumstances in which the arbitration procedures can be invoked.

National has said it will support the deal but former Foreign Minister Gerry Brownlee argued that the change had been overstated, while Labour MPs argued that much had changed.

Four outstanding issues are yet to be resolved.

The CPTTP is an agreement among 11 countries, New Zealand, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, and Vietnam.

About 20 provisions of the original TPP agreement have been suspended pending a decision by the United States to rejoin.