Closer Economic Relations - Future Prospects

Future Prospects

Continuing down the path of economic integration, the next step for the Australian and New Zealand governments is to create a customs union through a common external tariff and a common competition policy. New Zealand and Australia already have a common competition policy but are unlikely to have a common external tariff.

Interestingly, both governments agreed to implement a single economic market in 2004 before talk of a customs union, which would indicate that New Zealand and Australia's move through economic integration is not sequential.

Addressing the New Zealand Parliament in February 2011, Australian Prime Minister Julia Gillard said:

Now it’s time to write the next chapter as we journey towards a Single Economic Market. During my visit, I’ve been pleased to discuss with Prime Minister Key the excellent progress being achieved on the SmartGate project to create borderless travel between our two countries. A joint study will commence this month to examine how we create a truly “domestic-like” aviation experience.

There has been a call from within both the Australian and the New Zealand business communities to extend the CER to other Pacific Island nations, harmonising the CER and the Pacific Regional Trade Agreement (PARTA) so as to move toward a single market and allowing the free movement of people and goods.

Creating a supranational structure similar to the European Union is also seen as a way to stabilise the region, reducing security threats and political unrest. One possibility is to create a Pacific Union, composed of the member-states of the Pacific Islands Forum but with a common charter, institutions and currency.