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

Wellington, 6 February 1981

No 414. CONFIDENTIAL PRIORITY

ANZ/CER

CEC on 3 February discussed the Permanent Heads report and draft Heads of Agreement,1 together with the agreed side papers, and the other paper on agriculture. The covering paper noted that a further round of negotiations at Permanent Head level is likely to be necessary-probably around end of February/early March-and that ministerial authority and guidance would be sought in preparation for such a meeting. Officials have been instructed to prepare further papers on the outstanding issues, the contents of which will as far as possible take into account the outcome of Australian ministerial consideration of CER.

  1. Ministers were of the view that real progress will have to be made on all of the outstanding issues before a Prime Ministerial meeting could be productive. The large amount of work that they saw as needing to be done in tum generated apprehension on the timing question. Ministers emphasised that because CER questions have significance for many areas of the economy, it is very important that negotiations be out of the way well before election issues begin to attract attention here.2
  2. Among the many outstanding issues that the ministers judged to be of particular importance, were Government purchasing and the finance companies questions. On both of these, question arose as to whether the Australian side appreciated degree of importance that New Zealand attaches to their resolution, and therefore, the need for substantial discussions in advance of any further negotiating round.

Government Purchasing

  1. Ministers here are very concerned at the somewhat stately timetable that appears to apply to Australian handling of this issue. Government purchasing is regarded by ministers to be an issue of particular significance both in assessing the final balance of advantage of a CER and because of the attitudes of manufacturers to CER as a whole. In their side paper on government purchasing Australians note that question of government purchasing has been raised with the States, would be the subject of further discussions, and could be raised at the Premiers' conference in June. Given ministerial concern about timing of CER exercise as a whole, there are serious problems for us in Australian timetable for government purchasing. If there is to be a ministerial meeting on CER within the next month or so, New Zealand side will have to know before then just where individual States stand on government purchasing issue. At last Permanent Heads meeting we informed Australians that we were prepared to pursue government purchase issue with individual States on a bilateral basis. It seems to us that such an approach might now be taken up as a means of injecting momentum into the Government purchase issue. Could you please take this up with Federal officials.

Financial Institutions

  1. Se accompanying telegram).3

Other Issues

  1. Discussion on the other outstanding issues at the meeting underlined the importance which is attached to securing a satisfactory outcome on each before a ministerial meeting, and the following comments will suggest aspects that will have to be explored further.

Category (C)4

  1. Ministers are very concerned at the Australians wish to put several product areas of special interest to New Zealand in the deferred category. They certainly expect that trade possibilities for all products-including any in Category C-should be at least as good under CER as at present but would want to see solutions to the product concerns of special interest to New Zealand (whiteware etc) found through the establishment of formulae that bring the products into schedule A/B. The final content of Category C will weigh heavily in the New Zealand Government's assessment of the overall balance of advantage and thus the acceptability of the total package.

Dairying

  1. New Zealand is waiting for Australia to outline its proposals.

Export Incentives

  1. Ministers were concerned that officials might in fact have gone too far in indicating a willingness even to review existing incentives before 1985 when the Government's commitment to the existing incentives runs out. Ministers indicated they could not accept the formulation of a review of export incentives that in any way prejudged the outcome of such a review.
  2. We would appreciate an indication of where the Australian ministerial consideration of CER now stands and in due course an indication of the outcome of their Cabinet's deliberations, so that these can be taken into account in our own further reporting to ministers.

[ABHS 950/Boxes1221-1226, 40/4/1 Part 33 Archives New Zealandffe Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]