171 Letter from Anthony to Fraser

Canberra, 4 June 1981

As agreed in Cabinet on 5 May, I met with the New Zealand Prime Minister Mr Muldoon and other senior New Zealand Ministers in Wellington on 11-12 May 1981 for discussions on the question of a closer economic relationship between the two countries.

I pointed out that the meeting was the first joint Ministerial review of the detailed studies which have been undertaken by Australia and New Zealand officials in accordance with the guidelines established by yourself and Mr Muldoon in March 1980,1 and it was not my objective to obtain formal agreement or endorsement of any specific proposals. I suggested that the approach should be to seek to advance discussion of the concept by reviewing progress of the work undertaken by officials, isolating the areas of difference, and obtaining a clearer picture of the considerations underlying these differences. This approach was accepted by New Zealand Ministers.

Early in the talks it was confirmed that the two sides are on common ground in respect of a number of the topics which were put to study last year, including the formulae for the progressive elimination of duty and licensing barriers, measures for handling intermediate goods problems, and appropriate consultation and safeguard provisions.

There was every indication during the discussions that the New Zealand Prime Minister and his colleagues were of a mind to work positively towards resolving outstanding issues. In respect of agriculture some progress was made on the question of New Zealand's monopoly import arrangements for wheat and certain fresh fruits and I believe that a satisfactory solution will be possible on this issue. On dairy and wine, scope is seen for industry to industry discussions, and in fact the two wine industries have already been brought together. There seems to be acceptance that the existing measures governing the import of sugar and sugar products into each country need not be disturbed. In addition I have alerted the Australian sugar industry to the possibility that New Zealand might seek an arrangement guaranteeing supplies at prices equivalent to those applying under the Australian domestic system.

There has been recognition by New Zealand Ministers that, in the long term, retention of performance based export incentives would be inconsistent with a closer economic relationship.

New Zealand Ministers have also agreed that some acceleration of the general formulae could be contemplated to meet Australia's concerns on whitegoods and specific proposals are being explored by officials.

On the issues of particular concern to the New Zealand Prime Minister, Mr Muldoon has publicly confirmed that the banking and financial issue has been satisfactorily resolved and a New Zealand mission, led by the Minister of Trade and Industry, is currently in Australia discussing with State Premiers and Ministers the question of State Government purchasing.

There is still some way to go on key issues before any package can be considered and we agreed in Wellington on the need for additional time to explore possible solutions more fully before further Ministerial negotiations. Given the need for further work to be completed, for consultation and full public presentation, it seems unlikely that the matter can be brought to finality until next year and March 1982 could well be the appropriate time for the next Ministerial meeting.

In the meantime discussions will proceed between officials and with industry as appropriate. Also a group of officials is currently visiting State Capitals for a further round of consultations. These are designed to bring the States up to date and to exchange views on the implications of the package which is taking shape.

[NAA: A1209, 19811508, iii]