104 Record of Conversation

Canberra, 2 October 1980

RESTRICTED

Record of Conversation with Mr David Morton, Director, International Affairs, Confederation of Australian Industry (CAI) On 2 October 1980 Officers Present: Mr J, E. Monfries, Head, General & Import Policy Section Mr G. L. K. Santer, General and Import Policy Section
MAIN SUBJECT(S) LIASON BETWEEN DFA AND CAI; RELATIONS WITH NEW ZEALAND-DISCUSSIONS BETWEEN CAI AND THE NZMF

Liason between the Department and the CAI

Mr Morton said that the CAl was planning to write to the Department shortly raising the question of closer liaison between the two organisations. The CAI was exploring ways in which each side could help the other by closer consultation and exchange of information. He wondered whether the Department had given any thought to the idea, including, for example, the release to CAI of some of its non-sensitive material. Mr Monfries said that the Department had been looking into the matter of closer liaison including the establishment of consultations with industry organisations and the release of material using a procedure similar to that employed for the distribution of the Backgrounder. He said that the Department would welcome any proposals from the CAI for closer liaison.

Australia- New Zealand Closer Economic Relations (CER)

  1. Mr Morton outlined the discussions which had taken place in Hobart from 29-30 September between the representatives of the CAI and the New Zealand Manufacturers' Federation (NZMF), the 'Quadrilaterals'. He said that the New Zealand side had been taken aback by the Australian insistence on reciprocity of trading opportunities (the 'dollar for dollar deal') and by the termination of the textiles and apparel agreement. He said that these two developments seemed at last to be bringing home to the New Zealanders that they needed Australia more than Australia needed them. This new awareness had led them to the New Zealanders being more forthcoming at this meeting than they had been at the previous meeting in 1979. The New Zealanders were, for example, hoping for a speedy timetable for the introduction of the CER; as indeed were the Australians, but for different reasons. Whereas the New Zealanders were now seeing the CER as a means of reviving their flagging economy the Australian side saw it overcoming what they considered to be the inequities in NAFTA in favour of New Zealand.
  2. The New Zealanders had initially tried to have included in the joint statement two points which were unacceptable to the Australians. Firstly, they asked that the CER be formulated from the combination of individual industry agreements between industry groups from both countries. The Australians pointed out that this would mean that the two Governments would be ruled out of effective participation in the formulation of the CER, a situation which neither the Government nor the CAl could accept since it would reproduce many of the escape clauses which had hamstrung NAFTA.
  3. The New Zealand side had also sought to have inserted in the communique a call on the two Governments not to reach any decisions on CER without first consulting the relevant industry groups, again ensuring that the Governments' hands were tied and forcing the Australian industry groups to consult first their New Zealand counterparts before approaching their own Government. Paragraph three of the attached Joint Statement,1 concerning industry to industry consultation, was diluted as a result of Australian objections to the New Zealand proposal. These objections were voiced most strongly by the Australian textiles and apparel representatives who, after the dissolution of the apparel agreement between the two countries, were not interested in consulting their New Zealand counterparts at the meeting nor in being forced to do so at any future meetings.
  4. Mr Morton agreed that while nothing concrete had been achieved at the meeting in terms of a definite timetable or structure for the CER (compared with the previous meeting when definite proposals, albeit opposing ones, had been submitted by both sides), more had been achieved in terms of progress towards a CER acceptable to both sides, largely because the New Zealanders were now more interested in closer ties. He attributed the New Zealanders' change of heart partly to their realisation that the New Zealand economy was steadily declining and partly to their awareness that the Australians, by their action in scrapping the apparel agreement, were less enthusiastic about the need for closer ties than they were.
  5. On the question of import licensing, the CAl and the NZMF had discussed the progressive liberalisation of Australian access to the New Zealand market by expanding the licences to be issued to Australia according to various formulae. There were found to be problems with expressing the percentage increase in licences in value terms because of exchange rate fluctuations and differences of effect on companies of a liberalisation in these terms since products varied. The Australian side had therefore proposed that the percentage increases in licences be expressed in volume terms. This proposal was now being studied further.
  6. Mr Morton said that the next round of industry consultations between the two countries would take place in mid November. He was not confident that there would be much more progress until the outcome of the officials' studies was known and there had been further consultations between CAl and Australian officials.
  7. Mr Morton said that at the Hobart Meeting he had passed to the Department's representative a number of papers prepared by the CAl on the major issues in the CER, including export incentives, government procurement and intermediate goods. He looked forward to receiving the Department's comments on these papers.2

[NAA: A1838, 370/1/19/18, xix]