119 Telegram from New Zealand High Commission in Canberra to Ministry of Foreign Affairs

Canberra, 23 April 1980

No 1207. RESTRICTED IMMEDIATE

Australia - New Zealand Economic Relations: Visit of FFNZ Delegation

In view of the forthcoming visit of Federated Farmers leaders next week we thought it might be useful to prepare a few notes for briefing purposes in the event that you may wish to discuss the visit with FFNZ before the delegation leaves. The following reflects discussions we have had over the past few days with officials and the NFF executive here.

  1. We understand FFNZ will shortly have the complete programme for their trip 26 April to 2 May. The discussions in Canberra will include appointments with Mr Anthony, Mr Nixon and Senator Scott, as well as talks with DPI and BAE officials, and a luncheon with Bruce Lloyd's (Federal NCP member) Government Rural Committee.
  2. We understand FFNZ will shortly have the complete programme for their trip 26 April to 2 May. The discussions in Canberra will include appointments with Mr Anthony, Mr Nixon and Senator Scott, as well as talks with DPI and BAE officials, and a luncheon with Bruce Lloyd's (Federal NCP member) Government Rural Committee.
  3. Over the last few days the ADFF have circulated a document amongst Federal Members of Parliament (our 1159) which makes the following points: New Zealand exports of cheese to Australia have increased dramatically since 1973 from 1200 tons to 4800 tons in 1978/79. New Zealand 'uses the proceeds from preferred markets in USA and the EEC to subsidise exports to other countries including sales of cheese to Australia.' To contain 'unreasonable' penetration of the Australian cheese market by New Zealand a quantitative limit of 4800 tons should be set geared to market share and increased in proportion to the Australian domestic market for cheese.
  4. Elsewhere in the same document the ADFF acknowledges that 'official representations and negotiations' have resulted in 'restraint' on the part of New Zealand which in tum has lead to a levelling off in the growth of New Zealand's share of the market. (This comment is in the context of the line that imports from other countries have moved into the vacuum created by New Zealand's restraint.)
  5. This position represents a major advance on the Federation's earlier somewhat unrealistic efforts to contain the NZ share of the market to around 4,000 tons (the average of the preceding three years), but the form of restraint which the ADFF is seeking, namely quantitative restrictions, is not one which finds general favour. It was not canvassed as one of the options in the lAC report, and goes rather further than Mr Anthony's 'voluntary restraint' proposal.1 It is difficult to assess how wedded the ADFF is to QRs: if they can be encouraged to believe that there could be other equally successful means of containing New Zealand's share of the growth in the market, it may be that they would be prepared to abandon it. What is clear, it seems to us, is that those politicians who are pressing the dairy farmers case (Simon, Lloyd, and Nixon) are not prepared to go any further than the ADFF is prepared to go publicly, and that if the ADFF could be persuaded to accept an 'industry-to-industry' arrangement, the politicians would go along with it. As a more general point, it seems to us in any event that it is pretty important at this stage that this farmers mission does not exacerbate any further some of the more paranoid fears which Australian dairy farmers have about our intentions in this market. They could, however, without dwelling too much on the past, stress that the NZDB has lifted its prices and that the ADC, as we understand it, is happy with its present pricing policies.
  6. In considering means of longer term cooperation between the NZFF2 and FFNZ it may be useful to canvass the possibility of some form of regular consultative arrangement between the two organisations along the lines of the annual consultations between the CAI and MANFED. For its part the NFF, as we have previously reported, is prepared to be as positive as it can about the prospect of closer economic relations with New Zealand, but it should probably be borne in mind that while the ADFF and the AHGC are affiliates of the NFF they are less committed to the NFF's general free trade approach.
  7. For Melbourne and Sydney: We understand that the VGFA and the LGPA are making arrangements in Melbourne and Sydney respectively.

[ABHS 950/Boxes1221-1226, 40/4/1 Part 27 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]