Zespri is challenging claims over trading in its shares, intellectual property rights and breaches of World Trade Organisation rules, made by the Independent Kiwifruit Growers Association in its call for an enquiry into the kiwifruit industry – and its single-desk marketer Zespri in particular.

The claims are included in a lengthy IKGA statement supporting its call for the enquiry following the Serious Fraud Office investigation into Zespri and the conviction and fine in a Shanghai court earlier this year of its subsidiary, Zespri Management Consulting Company, and one of its employees on charges of evading customs duties in China.

To view IKGA's claims that growers fear intimidation – click here.

The IKGA statement says in part: 'Zespri does not appear to have any mechanism for dealing with commercial advantages able to be leveraged by directors and their associates in the trading of Zespri shares and within the kiwifruit industry generally from information about Zespri's new kiwifruit varieties or the evolving situation with Psa before such information is available to the industry,” the IKGA statement says.

'To the best of our knowledge, Zespri did not suspend trading in its shares during the period between December 26, 2012, when Zespri first learned of the Chinese customs prosecution and January 11, 2013, when it was made public. An investigation of share trades during that period should be conducted.”

In response to the claim, a Zespri spokesperson says: 'Zespri has numerous policies and procedures in place to ensure directors cannot take commercial advantage of their privileged access to financial information, including: comprehensive approval and disclosure policies and procedures are in place for trading in Zespri Group Limited shares by directors.

'This ensures that directors only complete such transactions in a market where potential stakeholders have had a reasonable opportunity to be fairly informed of knowledge which may affect the price of Zespri shares. Under the terms of this policy, directors may transact: only with the approval of an independent director acting as approval officer; and only when no information which may impact on the share price is known to directors or employees but not known to the industry as a whole

'At the end of each board meeting, the board considers whether there is any price-sensitive information known to the board, which should preclude directors from transacting in securities. Any approvals previously granted are suspended where the board believes that there may be price sensitive information known to the directors. In the 2012-2013 financial year, director trading was suspended a number of times due to various issues, such as new variety licence allocations, forecasts, margin discussions and issues in China.”

IKGA also alleges that New Zealand's kiwifruit export rules breached WTO rules and infringed on the intellectual property rights, stipulated under the International Union for the Protection of New Varieties of Plants. 'The regulations breach reciprocity principles in the way that they have been applied with respect to the commercialisation of new kiwifruit varieties. The operation of the regulations breaches specific reciprocity provisions of the IUPOV treaty governing international Plant Variety Rights.”

IKGA also says: 'Our Prime Minister and Trade Minister have no authority to talk about free trade or push for the inclusion of agriculture as part of the Trans Pacific Partnership agreement when; they continue to support the Kiwifruit Export Regulations and the monopoly given to Zespri; the NZ taxpayer has subsidised a joint venture kiwifruit variety breeding programme to the tune of $35.7 million; NZ law means that US , Chinese, European and other breeders of kiwifruit varieties cannot enforce and exercise their Intellectual Property in their varieties here in New Zealand in the same way that Zespri can (with NZ Government help ) in their own countries; the New Zealand Government describes Zespri as a State Trading Enterprise in its filings with the World Trade Organisation and misleads the WTO by saying that there is an independent regulator that oversees this State Trading Enterprise”.

In response Zespri says: 'the legal view of the assertions in the IKGA paper regarding New Zealand's international trade law obligations are fundamentally wrong in a number of respects”.

'Neither the existing industry structure under the Kiwifruit Export Regulations 1999, nor Zespri's ownership of PVRs [plant variety rights], in any way a breach New Zealand's obligations under the WTO Agreement or international law.

'Ensuring compliance with New Zealand's international legal obligations is the preserve of the New Zealand Government. The industry is entitled to be confident that the Government has ensured that the existing kiwifruit industry structure and related domestic legal regimes comply with WTO rules.”

Zespri is a 'State Trading Enterprise” by virtue of the fact that it enjoys a privileged status as the sole approved exporter under the Kiwifruit Export Regulations 1999.

'The New Zealand Government is entitled to grant such privileges under the existing WTO Agreement. This is by virtue of Article XVII of the former GATT 1947, which was preserved under the 1995 WTO Agreement, with further elaboration as set out in Annex 1A of the WTO Agreement. These provisions are now part of what is known as 'GATT 1994”.

'Nothing in the WTO Agriculture Agreement or GATT 1994 prevents STEs from owning intellectual property rights, including PVRs. There is nothing in New Zealand or international law that prevents an STE from developing, registering, purchasing, owning, exploiting or selling exclusive IP rights such as copyright, patents, PVRs and trademarks in the same way that any other private individual or corporation can.

'On the contrary, the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) obliges WTO Member States to afford equal and fair treatment of IP rights held by each other's private citizens. The ‘monopoly on a monopoly' argument that an STE with export monopoly powers should somehow be forbidden from also owing or controlling intellectual property rights has no basis under the WTO rules.”