Police have now been given the power to remove protestors if a visiting foreign official deems them "offensive".
The new guidelines violate the Bill of Rights allowing freedom of expression and freedom of assembly, according to top human rights lawyer Tony Ellis.
Police spokesman Jon Neislon said the recommendations were made by Select Committee about how protests are to be policed.
"One recommendation stated that where protesters were deemed to be behaving in a manner that would embarrass a visiting VIP then police should have the authority to remove those protesters.
"This would be made at the discretion of the senior officer in charge of the protest scene."
Wellington-based Ellis said that if police actually use this ability it would fundamentally undermine New Zealand's democratic freedoms.
"It seems to be a recipe for just repeating what happened with the Tibetans when the president of China was here," he said. During the APEC conference held in Auckland in 1999, police stood on Tibetan flags so that they were out of view when then-Chinese president Jiang Zemin's motorcade passed.
Police also removed a group of around 20 protestors from the front of the Royal Park Hotel, now called the Intercontinental, on the request of Chinese officials.
The Police Complaints Authority (PCA) recently ruled that the protest during APEC was peaceful and police actions had been inappropriate.
Five protestors, who were arrested at the time for obstruction and minor assault, each received an out-of-court settlement from the police of $10,000 and an apology.
"It just struck me as bizzare that the Police Complaints Authority should be reporting in 2007 what happened in 1999," Mr Ellis said.
He questioned the PCA's independence as the Government's police watchdog, because no individual members of the police have been held accountable for the incidents in 1999.
He said the entire incident was an "appalling undermining of the fundamental rights of a nation. The public should be aware of the fundamental attack on our democratic rights."
Mr Neilson said police cannot comment on the decision made by Select Committee, but that police now have "the responsibility to enact this directive".
A spokesman of Minister of Police Annette King said the Minister would not comment on operational issues.
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