ANZCER: Financial institutions
Message1 passed to Anderson who will discuss it with Treasury. His first response was to ask what it meant. As the Australian side had said last time subject2 was raised, they were prepared to look at specifics any time but thought better longer term approach was to consider any fundamental changes New Zealand might request in light of CER once it was in operation. This would provide Australia with the rationale on which to base any special treatment for New Zealand and to answer those (e.g. Japan) who would be likely to question such treatment as going beyond Australia's current MFN arrangement.
- We do not recall this issue being canvassed in quite the terms Anderson has suggested. Certainly the Australians made clear earlier in the chain of discussion that their treaty obligation with Japan presented difficulties in dealing with financial institutions on a preferential basis in the CER and this aspect was discussed in some detail. But we do not recall the issue being relegated to second generation as Anderson implies. However this interpretation of Anderson's probably does represent the view of the Australian IDC at this stage. As the issue had not been dealt with at all in more recent meetings-and it is not even referred to in the 'other areas' section of the JWP report-the Australians have not given it any more thought and may well have gained the impression we too were prepared to deal with it later after CER had been implemented.
- Now that we have brought the issue forward once again we would imagine the Australians would consider the ball is in the NZ court. As you note, the Australians were told the scheduled review of NZ's exchange control policy could have a bearing on the issue from NZ's point of view. (It will be recalled when the subject was raised briefly during the August officials talks in Canberra, the Australian Treasury representative indicated they could not take their thinking any further until they were apprised of the outcome of the review.) We take it that this review has now been completed and that you are in a position to present specific proposals.
[ABHS 950/Boxes1221-1226, 40/4/1 Part 33 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]