173 Brief for Fraser's Meeting with Muldoon

Canberra, September 19811

CONFIDENTIAL

Proposed Closer Economic Relationship between Australia and New Zealand (ANZCER)

1. Present Position

Studies and consultations to develop a mutually acceptable ANZCER in accordance with the agreement between Prime Ministers have been proceeding since March 1980.

Mr Anthony's meeting with Mr Muldoon and other senior New Zealand Ministers in May was the first joint Ministerial review of the detailed studies which have been undertaken by Australian and New Zealand officials

  • the meeting confirmed that there is a great deal of common ground between the two sides and a determination to work positively towards resolving outstanding issues.

The major outstanding issues still requiring specific solutions are

For Australia

  • Import Licensing (we are seeking a timetable for the elimination of New Zealand quantitative import restrictions on trans-Tasman trade more in keeping with the agreed timetable for the elimination of tariffs)
  • Export Incentives (although New Zealand has joined the GATT Subsidies Code we are still seeking a commitment from them on the timetable for the termination of their performance based export incentive schemes in trans-Tasman trade)
  • on wine we are concerned at New Zealand's intention to defer this product from ANZCER trade liberalisation principles for at least five years, and the lack of any specific arrangements for its inclusion in a ANZCER package. Industry officials talks are proceeding
  • on horticulture we are concerned at the impact on some of our industries (e.g. frozen peas and beans and processed potatoes) of New Zealand system of export incentives and of other measures of assistance
    • we fear an expanded New Zealand industry without trans-Tasman industry co-ordination could result in entrenched excess production and pressure by New Zealand to keep steel out of the ANZCER in the long term.

For New Zeland

  • Dairy Products New Zealand accepts our view that any growth in trans-Tasman dairy trade must be orderly and based on inter-industry co-operation but are seeking specific solutions on how this objective may be achieved.
  • Government Purchasing New Zealand is concerned that their objective of domestic supplier status in State government purchasing has not been advanced following their approaches to the States.

2. Future Timing

It has been agreed by officials that the earliest practical implementation date for an agreement with New Zealand would be 1 January 1983.

If this is to be achieved it will be necessary for the two Governments to have reached agreement on the Heads of Agreement as basis for public presentation by the end of March 1982.

The subsequent steps would involve

  • public scrutiny and comment, any final adjustment and formal agreement of Heads of Agreement by 30 June 1982
  • a six month formal grace period from 1 July 1982 during which time legal drafting of the agreement would take place
  • signature of final agreement in November 1982.

3. Consultations

New Zealand officials have adopted the view (apparently endorsed by their Ministers) that in view of the extensive consultations they have held with interested parties throughout they seen no need for public presentation and consultation after Heads of Agreement formulated in March 1982.

In your statement to Parliament in March last year you said that

  • no decisions will be taken until the studies have been completed and there has been full consultation with interested parties in both countries
  • the details of any proposed new arrangements emerging from the studies and consultations will be made public before substantial decisions are taken.

Australian officials have been consulting with Australian industry and State Government interests during the progress of the negotiations

  • and have taken the view that in accordance with your statement no final commitment can be taken by the Australian Government until the 'details' are completed and made public
    • public scrutiny must also provide a real opportunity for the views of interested parties to be taken into account (i.e. the possibility of changes being made to the 'detail' must be left open).

In these circumstances the Government's options in the face of any criticism received would seem to be

  • proceed as agreed, should objections be only minor
  • seek to agree with New Zealand on modification of the package should objections be of more substance. This may be achieved by seeking to accommodate the points in the drafting of the agreement text without changing the Heads of Agreement.

We cannot guarantee that problems of a significant magnitude will not confront the Government at this final stage. However, the process of continuous consultation and negotiation is designed to result in a package which in the judgement of the Government is capable of being made public without creating pressures which would require significant modification.

[NAA: A1313/lll, 8112446, iii]