17 Message from Muldoon to Fraser1

Wellington, 10 May 1979

RESTRICTED

Begins:

Thank you very much for your letter of 1 May 1979.2 Iwas very glad of the opportunity to hear Doug Anthony's thoughts when he was over here, on the economic and political environment which is likely to face both our countries in the 1980s, and to discuss with him in a general way the future of the Australia - New Zealand relationship. I found it a stimulating exchange.

Since the talks you and Brian Talboys had just over a year ago a number of arrangements have been made to open up dialogue and strengthen co-operation between us. I agree that the time has now come to make a broad reassessment of the longer term relationship between the two countries. I think that it is essential that we begin now to do some solid work on the options, so that we can make our choices in the light of the best information that is available.

This does not, of course, mean that we can shelve the immediate problems we have in the sensitive trade area. We must continue to work out specific solutions to ensure that the relationship does not go backwards while we are considering how best to move it ahead. The difficulties our delegations found in the last round of the NAFTA talks are themselves a clear sign that we must have a long and careful look at where we go from here.

For all these reasons, I was pleased to hear that you are undertaking a study parallel to our own. The subject will certainly not be allowed to wither on the vine here. I do not wish to prejudge the conclusions of our studies nor of course the decisions that we may want to consider as a result. A good deal of thorough work will be needed but once we have had a chance to consider the results I will write to you about how we might continue our dialogue on this issue.

Ends.

ORIGINAL FOLLOWS BY BAG.

[NAA: A1838, 37011/19118, i]