Foreign Minister Winston Peters and Trade Minister David Parker appear at odds over the legal position of the planned royalty on water exports.
Mr Peters plans to ignore the advice of top officials at the Ministry of Foreign Affairs and Trade and will introduce the royalty which was promised in the coalition agreement.
He said the view of Mfat deputy secretary and chief TPP negotiator that it breaches New Zealand's trade deals was "an opinion.''
Asked if he thought it would be a breach, Peters said "No, I don't.''
He would introduce it anyway.
"We are a sovereign nation and you are seeing a restoration of our sovereignty.''
Mr Peters said it was not a foreign policy matter.
"It is to do with our domestic economy and who runs our economy and who has propriety over our resources.''
Labour and NZ First's coalition agreement specifically includes a provision to "introduce a royalty on exports of bottled water.''
Foreign Affairs trade and economic group deputy secretary Vangelis Vitalis said yesterday such payments would breach existing trade agreement.
Mr Parker backed Mr Vitalis.
He said export taxes were prohibited by all of New Zealand's trade agreements "so we have got to find a remedy that is consistent with those obligations.''
"There is more than one way for us to meet our ambition. If we were to have a distortionary tax on the export of water, that would breach our trade agreements.''
Mr Parker would not elaborate on the other routes he could take to achieve the same policy other than saying there were regulatory routes involving the Resource Management Act.
Mr Vitalis made his comments while briefing the foreign affairs and defence select committee on the Comprehensive and Progressive Agreement for Trans Pacific Partnership, the revised TPP.
"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.
