I am writing to you in the light of my request at our meeting on 27 January 1982 to list closer economic relations (CER) with New Zealand on the agenda of the forthcoming meeting of the Australia- New Zealand Joint Industry Consultative Committee (nCC) in Melbourne on 15 February 1982.
To assist you in this matter, I have set down below seven conditions which I outlined in my speech to the Australian Agricultural Council meeting in Melbourne on Monday, 8 February 1982, as forming a basis for progressing the dairy issue in discussions with New Zealand.
- The Australian Government must retain the power to prevent domestic prices from falling in times of depressed world prices. It must be possible to prevent disruptive short-term trade diversion. This is an integral part of our domestic stabilisation policy.
- Specific provision must be included to ensure that product is not dumped in Australia (otherwise product would be diverted from the lowest returning New Zealand markets even when Australian domestic prices were equal to average international levels).
- New Zealand should be seen as the preferred supplier in times of domestic shortfall.
- Specific approaches should be developed to encourage co-operation in third markets (in recognition of the fact that both countries have efficient dairy industries, when compared with the rest of the world).
- In determining acceptable price levels for any sales of New Zealand product in Australia, due regard must be given to the 'package' offered, including credit terms accompanying sale and any agreements regarding promotion.
- Any agreement must not be in conflict with the spirit of CER. In other words, the effect of any agreement must not reduce trade below current levels; and, trade should be allowed to develop in both directions where there is economic benefit to both countries.
- Provision should be made for operating domestic policies so as not to confer an unfair competitive advantage to either industry.
I would advise that Officers of my Department and the Department of Trade and Resources will be available to discuss this matter with you and other members of the Australian delegation to the nee, plus one or two other industry representatives, in Melbourne on Thursday, 11 February 1982.
In the light of developments at the forthcoming nee meeting, I will review the position reached and consider further the basis for progressing dairy products in a CER context.
I have enclosed a copy of my speech to Agricultural Council so that you might appreciate the underlying considerations which were influential in my assessment of the dairy position.
[NAA: A1313/113, 82/1381, iii]