You will recall that at Auckland Airport last month Mr Fraser indicated that he regarded a successful outcome of the current market integration studies as most important.1 Mr Fraser seemed to regard New Zealand's ability to respond positively as a touchstone of our willingness to make a realistic contribution to the development of a mutually satisfactory economic relationship. He at least implied that progress with NAFTA in the conventional way, through additions to Schedule A, was not on. You will recall that he discounted, mentioning the problem of 'credibility', Sir Frank Holmes' suggestion of a commitment by both governments to free all trade within a specified time.
- Clearly we have to take notice of Mr Fraser's attitude. There are indications that many influential Australians see the NAFTA relationship as being of decreasing importance. Simply to maintain our present access to the Australian market will very likely require increased effort on our part. The attitude of Australian politicians, particularly Mr Fraser, will be critical. Moreover, the overall relationship seems at present to be viewed by Mr Fraser in terms of New Zealand's credibility in the trade field. It follows that the foreign policy arguments very strongly favour a positive response to the Australians on the market integration question.
- I am copying this note to the Secretary of Trade and Industry.
[ABHS 950/Boxes1221-1226, 40/4/1 Part 16 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]