42 Telegram from Muldoon to Talboys

Lusaka, 7 August 1979 (from NZ CHOGM delegation)

No 024. CONFIDENTIAL

Australia- New Zealand Relations

For Talboys1 from Prime Minister

Australia- New Zealand Relations

I had a very useful conversation with Malcolm Fraser yesterday. You will have seen in an earlier message the statement I issued afterwards. After my initial presentation, Fraser told me they were willing to respond in a very forthcoming manner. Neither of us knew exactly where the work we were doing would lead or the extent of the problems that it would throw up; but we lived in an increasingly difficult world and it made no sense for us to preserve rigidly two separate economic units. We should be looking for ways to maximize the economic cooperation between us.

Both of us agreed that it had become difficult to make very much more of NAFTA. This did not mean that it should be wound up, but that it no longer seemed to be an adequate vehicle for progress in our economic relationship. We listed the possibilities ranging from free trade areas to economic and finally monetary union and we agreed that our studies, at least at the initial stages should be broad in scope and should not exclude any of them. They should look at a generous time-scale and should be conducted in a positive spirit.

We noted the other areas of possible cooperation-energy policies, industrial development, consultation on markets and the like-which could either be picked up in the context of one or the other of the broad options, or be considered in their own right. We decided that these too could be studied with advantage.

We set a timetable for our work. I suggested to Fraser a ministerial meeting either late this year or, more likely, early next, so that we could review the work that had been done, and identify the areas in which it should be carried forward. He in turn proposed that officials should give each other a note on what they were looking at by late September, and meet shortly afterwards for a preliminary discussion. After they had reported, a time could be fixed for Prime Ministers and their respective Ministers to meet. It would in any case be no later than February 1980.

Fraser expressed again his concern that Australia should not appear to be making a big brother take-over, and that the initiative should therefore come from the New Zealand side. I told him I thought we had already dealt with this problem in New Zealand, which was where the potential sensitivity lay, and that to my recollection we had described the initiative simply as one which arose out of the difficulties of NAFTA. He wished, however, for a note-half a page or so-on the way we had presented it so that he could take the same line, and I undertook to give it to him before he left Lusaka. I do not have with me the papers, which would establish exactly what has been said each time the matter has been discussed, but I see no particular reason why we should cast ourselves, quite artificially, as the demandeur. Unless you have a contrary view, therefore, I propose to give him a note which expresses the impulse behind our present discussions simply as one which arose out of our ordinary negotiations.

[ABHS 950/Boxes1221-1226, 40/4/1 Part 19A Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]