I am writing to comment on the stage we have reached in the negotiation with New Zealand of a new trade agreement to succeed NAFTA, in the light of your letter of 30 August to the Prime Minister.1
I have welcomed the degree of compromise reflected in the package of proposals which we agreed to release for public discussion early in June, and I agree with you that it would be exceedingly difficult to obtain specific improvement on the termination dates for New Zealand's import licensing and export incentive arrangement as they affect trans-Tasman trade. The consultation period has however revealed continuing and deeply-felt dissatisfaction among Australian industry groups and it is clear that, to achieve public acceptance of a new agreement, we shall have to seek some definite improvements from the New Zealanders to the current package. I agree with the terms in which you propose to raise these matters with Mr Muldoon.
The New Zealand Government and press will almost certainly react strongly to our taking up the concerns which have been expressed in Australia and we may be accused of backing away from an agreed position or seeking to undermine the whole processes. Nevertheless I see no alternative to seeking to make the agreement more acceptable to Australian interests.
On timing I believe it could be desirable not to press to finalise a new package by the end of this month. This seems as if it would be a difficult task in the negotiating context in any event. But I also have in mind that such a timetable may coincide with other strains in our relations over the Commonwealth Games. It seems likely that New Zealand may find itself isolated over its policy on sporting contact with South Africa at a Commonwealth Games Association meeting to be held in Brisbane on 27 September and potentially, this is an issue which could cause considerable strains in our relations. It would obviously not be desirable to be pressing New Zealand on CER at that time.
I hope nevertheless that the renegotiation can be completed in time for the new trade agreement to come into effect on 1 January 1983 as originally proposed. Further delay would create a different set of disadvantages for Australian interests by leaving us with nothing to replace the existing outdated and disadvantageous NAFTA. Moreover it would be desirable for the focus in the relationship to move on to other objectives envisaged as part of a CER, and to co-operation on wider international economic and political issues.
I am sending copies of this letter to the Prime Minister and the Ministers for Industry and Commerce and Primary Industry.
[NAA: A1838, 37011/19/18, xxxii]