138 Cabinet Economic Committee Minute

Wellington, 16 December 1980

E (80) M 47 PART III. CONFIDENTIAL

Australia/New Zealand Economic Relationships Meeting of Permanent Heads1

It was explained by officials that the meeting between New Zealand Permanent Heads of Government Departments and their Australian counterparts on 10-11 December 1980 had been somewhat disappointing in comparison with the progress that had previously been achieved in the discussions on a Closer Economic Relationship (CER) between Australia and New Zealand. There were three principal outstanding issues. The first concerned the Australian reluctance to accord the access to Australia for New Zealand dairy exports which New Zealand was seeking. The second concerned the reluctance on the part of New Zealand to phase out the licensing of Australian imports into New Zealand as rapidly as Australia wished. The third concerned the inability at this stage of the Australian Federal Government to meet the New Zealand wish that the Australian State Government purchasing arrangements should be brought within the ambit of the CER agreement on Government procurement. Officials noted that it was possible for the Government procurement issue to be left out of the CER agreement for subsequent resolution, if this issue was the only one outstanding. In this case, the New Zealand Government would not give Australian manufacturers preference in its purchases until the Australian State Governments, as well as their Federal Government, gave New Zealand manufacturers the corresponding preference in their purchases. On the other hand, the question of the trans-Tasman dairy trade could definitely not be left for later resolution. If this issue was not resolved, then the overall CER agreement would not be signed. It was an integral part of the total package.

Because these and other problems were not being resolved at the speed which initial progress had indicated, the possibility of the CER agreement being concluded by mid-February had diminished somewhat. Nevertheless the Committee was of the view that officials should continue to work in terms of this time horizon. The Committee would soon receive a draft joint report by the Permanent Heads and a draft Heads of Agreement.2 The latter would however at this stage contain the three gaps corresponding to the three issues mentioned above. Australian and New Zealand officials would continue to develop their attitudes on the three outstanding issues and it might be that some progress could be made in narrowing the gap between the Australian and New Zealand attitudes before Ministers were brought directly into the negotiations; thus another negotiating session between Australian and New Zealand officials was a possibility.

The Committee agreed to:

  1. note the report attached to E (80) 2533 on the major topics covered at the meeting of Permanent Heads of New Zealand with their Australian counterparts in Wellington on 10 and 11 December 1980;
  2. refer the report attached to E (80) 253 to Cabinet for its information.

[ABHS 950/Boxes1221-1226, 40/4/1 Part 32 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]