211 Cablegram from Australian C.E.R. Delegation, Wellington, to Department of Trade and Resources

Wellington, 8 October 1982

0.WL13942 CONFIDENTIAL

CER: JWP discussions

For Trade—Please ensure appropriate departments alerted.

On the basis of discussion to date New Zealand officials are preparing a paper for consideration by Cabinet Economic Committee (CEC) on Tuesday 12 October.

Our objective has been to provide New Zealand officials with clear statement of Australian position on issues where Australia is seeking specific improvements/modifications in existing package in order that they can seek CEC mandate. Hopefully this will lead to a basis for agreement being reached by JWP in discussions next week, leaving a limited number of issues for consideration, and looking to a Permanent Heads meeting in Canberra on 18-19 October.

  1. We have not specifically addressed the two terminal date issues. However, in knowledge of Mr Muldoon's 7 October letter1 rejecting possibility of earlier terminal dates and without prejudice to Australian Ministerial reaction, we have foreshadowed that Australia would be looking for 'substantial increase' in initial access. As a delegation, we have not felt able to venture a view as to what Australia might judge as an acceptable increase in this regard without further instruction from Canberra. New Zealand officials need to obtain a negotiating mandate from Tuesday's CEC if this issue is to be progressed. It seems desirable that CEC should be able to consider either a firm Australian proposal or some 'ball park' indication of what we would be seeking.
  2. In conversation outside the meeting New Zealand officials have indicated they were thinking along lines of dollars NZ 300,000 being the minimum or taking the 18 month figure proposed in the 'revised access offer list' as the basis for 10 percent annual increases.
  3. There are a number of possible opening positions which might be put to the New Zealand officials to obtain a reaction. One option would be 'a doubling of present access provisions'. This would mean a dollars 400,000 minimum or 10 percent of the market, whichever the lesser and a doubling of the annual growth rate to 20 percent. Such a proposal would result in a doubling of access every four years. A less controversial approach in terms of likely New Zealand reaction would be a dollars 500,000 minimum and no change to the other elements.
  4. We would appreciate guidance on the approach we should adopt. Advice by close of business Monday New Zealand time would be the latest for Tuesday's CEC.
  5. Discussion on performance-based export incentives revealed that New Zealand Ministers do not see the phasing offered by Mr Muldoon when initially proposing a 1989 termination date at the April Ministerial meeting as an element in the subsequently agreed package date of 1987. We have assured New Zealand officials that Mr Anthony was of the very firm view that phasing remained an essential element of New Zealand's offer. Other Australian Ministers and indeed State Governments and industry had been advised on this basis. As far as Australia was concerned, phasing is part of the existing package.
  6. In view of Mr Muldoon's response on terminal date we have suggested to New Zealand that significant front end phasing-out performance-based export incentives would need to be offered before Australia could see any improvement in the package as it currently stands. We have suggested that they give serious consideration to effecting a major reduction of benefits available on 1 April 1985 or to commencing a more gradual phase down prior to 1985 to achieve the same result.
  7. Discussions on cash securities/countervailing threw up a further significant issue relating to export incentives. New Zealand officials have presented the view that agreement on the removal of export incentives within CER obviates the justification for Australia resorting to countervailing action in the meantime. We have left them in no doubt that as provided in para 13.04 of the D. H. 0. A. we regard countervailing measures as a legitimate recourse available to Australian industry under CER. Indeed, we had frequently drawn attention to this fact when seeking to reassure parties critical of the export incentives termination date during the consultations held in Australia.

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