177 Extracts from Minute from Anderson to Anthony

Canberra, 26 January 1982

CONFIDENTIAL

Meeting with Executive of the Australian Dairy Farmers Federation: Closer Economic Relations with New Zealand

You have agreed to meet the executive of the ADFF on Wednesday, 27 January at 2.30 p.m. to discuss the proposed closer economic relationship with New Zealand

  • they will be seeing Mr Nixon at 10.30 a.m.

Their approach is likely to be similar to that taken when they met with you in May 1981

  • you explained the Government's firm intention was that dairy would be included.

Subsequently, you have indicated that the Australian industry should consult with the New Zealand industry with a view to finding a way to ensure that the Australian industry would not be exposed to unfair competition.

  • in particular, you advised Mr Manners, Executive Director of ADFF and also Secretary of ADIC that Mr Muldoon had agreed that inter-industry discussions should take place. (NZ acknowledges that any further access should be gradual and without disruption to the Australian industry.)

Substantive inter-industry discussions have not been held so far, largely because a meeting of the Joint Dairy Industry Consultative Committee (JDICC) has been deferred from November 1982 to mid February 1982.

We plan to meet with key industry representatives before that meeting takes place. We also expect to take part in a meeting in DPI late Wednesday afternoon with the same ADFF delegation and envisage that a range of possible options for covering dairy in CER will be canvassed.

Our reading is that the dairy farmers are still opposed to any imports of New Zealand butter and are considering campaigning against CER

  • moreover, some industry representatives seem ready to argue their case against CER on the basis of their particular interpretation of selected extracts from the BAE study of comparative efficiency1 of the two industries (published late last year).

Talking Points

The ADFF delegation is likely to urge that New Zealand be given no better access than they currently enjoy and that no NZ butter will be allowed to come in

  • in view of the unfair advantage which the NZ industry would gain in the Australian market as a result of the differing support/stablilisation arrangements operating in the two countries.

Suggest you say

  • repeat assurances that have already been given to the industry that the differences in NZ and Australian industry arrangements must be taken into account in any CER arrangement on dairy and will not be permitted to unfairly disadvantage the Australian industry.

At the same time if there is to be a CER, dairy must be included and that this will mean some increased trans-Tasman trade in dairy products.

Issue now is for industries to come to a mutually satisfactory arrangement consistent with the basic principles underlying CER.

The Government has yet to consider in any detail what options it considers may be suitable and is looking to the industry for positive suggestions.

[matter omitted]

If the delegation seeks to draw on the BAE study to support its argument that NZ receives significantly greater support than the Australian industry you could say:

The Government is well aware of differences in the nature of support measures available to the respective industries and had taken the BAE study fully into account before it was released publicly.

Do not wish to enter technical discussions of BAE paper

  • there are aspects of the BAE's study which highlight conditions which can be interpreted as implying increased opportunities for access to NZ products in a free trade situation
  • however, the Federation will appreciate that in overall terms the BAE has observed that support for the industries (including the consumer transfer to the Australian industry flowing from high domestic prices for dairy products in Australia) was roughly equivalent, and that the different means by which that support is provided is a key consideration in the CER exercise.

As a general observation, could remind ADFF executive that Australia has to be consistent in its policy approaches when dealing with questions of trade liberalisation

  • international credibility (including that of dairy industry) is prejudiced if we pursue policies and practices similar to those about which we complain to our dairy trading partners (e.g. EEC trade barriers and export subsidies, US Section 22 quota restrictions, Japanese price and access limiting devices, Canadian cheese import restrictions).

Moreover it does harm to dairy industry's image here and overseas when industry itself promotes the idea that it is inefficient and uncompetitive.

[NAA: A1313/113, 8211381, iii]