191 Letter from Anthony to Francis

Canberra, 24 May 1982

I refer to your letter of 20 May 19821 informing me of the decision by the New Zealand Cabinet Economic Committee on proposals to be put to Australia in relation to key outstanding elements of the CER package.

At the outset I wish to stress that, as I pointed out to Prime Minister Muldoon in Wellington, my Cabinet colleagues had been very reluctant to accept 1987 as a terminal date for export incentives. Indeed, their view was that incentives should cease with the expiry of existing New Zealand legislation in 1985. They finally accepted 1987 only because that terminal date had previously been put forward by Australia in terms of harmonisation of incentives between the two countries.

For these reasons I wish to express my very deep concern in relation to the offer being made on the question of export incentives and ask that you convey my views to your Prime Minister as a matter of urgency.

At their meeting in Sydney on 10 May the representatives of the Confederation of Australian Industry and the New Zealand Manufacturers Federation confirmed their earlier agreement to the phasing out of significant disparities in export incentives across the Tasman from 1 April1985 to 30 June 1987. In a more recent briefing of Australian national industry associations it was very evident that Australian industry attitudes on the question of a date for final abolition of performance-based incentives had hardened considerably.

Australian industry representatives generally accept that the legislative commitment in New Zealand to 1985 sets a time limit to the commencement of any removal of incentives by New Zealand. However against the background of the lAC inquiry into the Australian export incentives and Australia's adherence to the GATT Code on Subsidies and Countervailing Duties, industry associations are forcefully expressing views that any extension of New Zealand incentives beyond 1985 would be inequitable. This view is reinforced by their apprehension that performance-based export incentives may not be extended beyond 1983. It is important that the position agreed on trans-Tasman export incentives under CER should not be seen as unnecessarily prolonging the inequity. This will be particularly important when viewed in the light of the decision which the Australian Government will take in the next few months on the future of export incentive arrangements.

To enable me to bring the proposal to Cabinet on 1 June prior to my departure for overseas, I would request that New Zealand urgently reconsider its proposal on the terminal date for export incentives. If this is not satisfactorily resolved, I do not believe that I could recommend to my Cabinet colleagues, or that they would accept, a proposal which allowed for the continuation of performance­ based export incentives in trans-Tasman trade beyond 1 April 1987.

I am sure you would share my concern that we should have come so close to achievement only to see all the work founder on a question of 12 months in time. I can only repeat that, from our side, 1987 as an elimination date for performance based incentives in trans-Tasman trade has been stated as an essential prerequisite since discussions started.

As to other elements of the package, and in the light of the recent Ministerial meeting in Wellington, I am pleased to have confirmation that New Zealand can agree to 30 June 1995 as the termination date for quantitative restrictions subject to Australian acceptance of the safeguards provisions negotiated by officials. I note the importance that New Zealand places on substantial progress on all aspects affecting the liberalisation of trade including State Government purchasing and harmonisation of standards is the context of the 1988 review

[NAA: A1313/116, 84/2288, i]