Cabinet Economic Committee
The Chairman of the Officials Economic Committee recommends as set out in the copies of the cables1 sent to the Prime Minister and Mr Templeton that the Committee:
- note the terms of the New Zealand Manufacturers' Federation communication;
agree, subject to Australian acceptance of the safeguards provisions negotiated by officials, that Australia be informed the New Zealand Government can accept:
- 31 March 1988 as the terminal date for performance based export incentives with phasing to commence after 31 March 1985;
- 30 June 1985 as the terminal date for quantitative restrictions;
- agree that Australia be informed that at the time of the 1988 review of CER New Zealand will wish to establish that substantial progress has been made on all aspects affecting the liberalisation of trade including state purchasing and harmonisation of standards.
CHAIRMAN, CABINET ECONOMIC COMMITTEE
Attached are copies of cables which have been sent to the Prime Minister and Mr Templeton tonight.
The first and major cable contains the following recommendations which officials now put to the Committee:
Attachment  TELEGRAM FROM SENIOR OFFICIALS TO MULDOON AND TEMPLETON3
Wellington, 19 May 1982
No 3299. CONFIDENTIAL IMMEDIATE
For Prime Minister from Clark/Hensley
ANZCER: MANFED Position
This morning in response to a MANFED invitation Clark and Hensley visited MANFED Executive meeting before the Executive arrived at any decisions on the major CER issues. Purpose of visit was to respond to one or two points of clarification arising from the exposure draft which had been handed to the Executive yesterday on a confidential and informal basis. At that meeting it was clear that MANFED, as they had at the Sydney meeting with CAl remained concerned about non-tariff barriers, particularly State purchasing and the harmonisation of standards. They seemed inclined to want to link any acceptance of terminal date of 1995 for import licensing with obtaining assurances that Australia would 'deliver' on above issues.
This afternoon Stevens and Christie called on Clark and delivered following paper which sets out the Federation's response.
- As stated in our letter of 19 March to the Prime Minister the NZMF sees a CER as part of a whole in relation to the future policy for the development of New Zealand industry and appropriate protection policies related to that development.
- NZMF therefore sets considerable importance on the Prime Minister's reply of 22 April as we see a direct correlation between our understanding on the protection issue in its wider context and our ability to respond positively on the outstanding CER issues. Our position would have been greatly assisted if these discussions had already been held.
Coming to the major issues under CER we would comment as follows:
- We do not see a problem in accepting 31 March 1988 as the phasing-out date for performance related incentives.
- As far as quantitative restrictions are concerned we do not believe that a terminal date at this stage is in the best interests of New Zealand manufacturers or for that matter of New Zealand as a whole.
However if the Government finally decides to accept 1995 as a terminal date for the elimination of all quantitative restrictions both ways, we believe that the degree of acceptance of such a date by manufacturers will of necessity be conditioned by:
- The quality of assurance NZMF can obtain from Government on safeguards during the transition and post-transition period.
- The extent to which the Australians are seen to deliver in respect of non tariff barriers such as State purchasing and the harmonisation of standards. We appreciate that constitutional problems are involved as far as the Federal Government is concerned but the fact remains that these matters are of very real importance to many New Zealand exporters. We believe therefore that Australian performance in these areas must be taken into consideration at the 1988 review.
- We would therefore need a firm assurance that at the 1988 review New Zealand's ability to deliver 'in toto' by 1995 must have regard to the Australian performance in respect of (b) above.
- In explaining the foregoing paper Stevens said that the first three paragraphs were a formal statement of MANFED position. But the remainder (paras 4 a to c) represented 'advice' intended to be helpful to the Government. Officials responded that steps had already been taken to reorder certain parts of the exposure draft to give greater prominence to New Zealand concerns on Government purchasing and standards in light of comments made at the morning meeting. Stevens thought such changes would be helpful.
- On para 4(c) officials pointed out to Stevens that it would be very difficult to introduce the sort of linkage proposed at this stage in the negotiations and to get it into the formal language of the draft Heads of Agreement or exposure draft. That was not to say however that it could not be the subject of an informal 'understanding' with the Australians. Stevens said that the assurances were needed now and might not appear to be quite so important once trade under CER began to flow. For that reason MANFED was not insisting upon an explicit agreement between Governments in respect of 4 (c) and wanted it understood that it was more an assurance from the New Zealand Government to the Federation that was required. It would have to be of sufficient 'quality' to bring along doubters.
The following recommendations will go before Cabinet Economic Committee at 9 am tomorrow (Thursday). Ministers to:
TELEGRAM FROM SENIOR OFFICIALS TO MULDOON AND TEMPLETON
Wellington, 19 May 1982
No 3298. CONFIDENTIAL IMMEDIATE
For Woodfield/Groser-Please show to Prime Minister
- Clark this morning briefed Federated Farmers (Elworthy, Senior Vice President, in absence abroad of Storey) of state of play on ANZCER. Briefings covered decisions of CEC on approach to horticultural products and Government's acceptance in principle of industry-to-industry agreement on carpets (subject to Wool Board's response).
- Elworthy indicated that Federation had taken the clear position in favour of CER in the broad sense. He could not say there would not be some discontent in the Federation's meat and wool section at the prospect of synthetic carpets gaining a place in the New Zealand domestic market but that would not swing Federated Farmers away from their overall support for CER and they would not come out in opposition to the carpets arrangement. Elworthy indicated that he would talk to the Wool Board about it today. He did not say he would seek to persuade the Board to favour the inter-industry agreement but we would expect his intervention to be generally helpful.
- Federated Farmers have raised no problems concerning horticulture. We are giving a separate briefing to Vegetable Growers Federation.
- At conclusion of briefing Elworthy commented helpfully that Federation would like earliest possible advice of contents of 'exposure draft' after 1 June in order that the Federation could publicly adopt a position of support for CER agreement.
- Clark has talked to Douglas, FOL, but it has not yet been possible to arrange a time for a briefing meeting with the FOL.
[ABHS 950/Box 1228, 40/4/2 Part 4 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]