Enclosed are copies of the papers which constituted the Australian brief and the documents which represent the product of the meeting earlier this week.1
The meeting went very well. The only really acrimonious notes were sounded on import licensing (when it was first discussed) and civil aviation. Discussion of the former became a little heated following comments by the Australian side to the effect that for the health of the New Zealand economy import licensing should be totally abolished. The New Zealand side felt that this sort of remark showed a total lack of appreciation of New Zealand political realities. Harry Clark got up a head of steam and some of the old NAFTA animosities surfaced. However Jim Scully moved quickly to defer further discussion. He and Lough had dinner together that evening and thrashed out the import licensing compromise.
The civil aviation spectacle had to be seen to be believed. The two Secretaries for Transport battled the united front of all other ANZ permanent heads and denied to the wider group the right to scrutinise the civil aviation relationship. Jim Scully argued forcefully that the charter of the permanent heads group was to look at ways of promoting closer co-operation in all fields of the relationship. However the two Transport heads toughed it out and claimed that civil aviation was separate and that nothing should be done to prejudice the conclusion of the current bilateral negotiations (incidentally Halton said that the study by the two carriers had revealed a 'disbenefit' in QANTAS' favour). The discussion ended inconclusively but without the Transport heads making any concessions. Edwards' colleagues were not very happy about the position he took as I understand that he had been told in Wellington that civil aviation was on the agenda like everything else. (There was also a difference of opinion within the New Zealand delegation over whether or not there was a problem with split freight charter approvals-Mike2 may like to follow this up.)
The two agreed pieces of papers to come out at the meeting are the draft declaration3 and the permanent heads report.4 The New Zealand draft communique was not considered at the meeting and is still under study by Departments. Our side did not table its draft confidential statement of understanding5 although Scully served notice that it would be necessary to have something along this line in addition to a declaration and a communique. The ANZAC pact exercise has been laid to rest hopefully.
The package reflected in the report of the permanent heads is a messy one and has yet to be sold to Ministers. However it probably is sufficient to justify a Prime Ministerial Meeting. The sticky points of course will be
- the size of the third category and the type of produce included
- the formula to get around the import licensing problem
- agricultural support measures and
- the intermediate goods problem.
I only have time for these few comments at this stage. I hope to provide you with a better assessment of the outcome from our side next week.
[NAA: A1838, 37011119/18, xv]