2 Report on Talboys' Visit

Canberra, April 19781

Customs Union with New Zealand: General Briefing to Ministers and Possible Press Presentation

During his discussions with Australian Ministers, Mr Talboys outlined the economic problems facing New Zealand, especially on the trading front. He informed Ministers that New Zealand was having to consider various options for development of its economic relations overseas including those with Australia.

  1. Mr Talboys mentioned that these options might at some future stage, include a customs union with Australia. There was no suggestion, however, that New Zealand was proposing such a union at this time, rather that this was one of a number of options which might merit some consideration.
  2. Australia has traditionally had and continues to maintain very close relations with New Zealand, including important, specific economic ties..The trade and investment flows between the two countries are considerable and have significance especially for particular sectors of Australian and New Zealand manufacturing and rural industry. The major institutional link between the two countries is the New Zealand -Australia Free Trade Agreement. This differs from the concept of a customs union in that the latter, as exemplified in such agreements between other countries, would presumably aim at a complete freeing of trade within the union and at creating a common external tariff system.
  3. Ministers agreed with Mr Talboys that consideration of such a new departure in relations either now or in the future would need to take the most careful account of almost the entire range of economic and social interests on both sides of the Tasman including the different sizes and natures of the Australian and New Zealand economies. The present international environment was a factor limiting both countries' freedom to manoeuvre in trade matters. Trade matters would, however, be discussed in detail at the forthcoming annual NAFTA Ministerial meeting in the context of the important gains in the economic relationship achieved recently through agreement on extension of the NAFTA to the end of 1985 and negotiation of a more enduring Agreement on Tariffs and Tariff Preferences. Both Australia and New Zealand declared their commitment to the long-term development of the trade relationship.

[NAA: A1838, 370/1119/18, i]