95 Cablegram from Department of Foreign Affairs to Posts

Canberra, 25 March 1980

O.CH881300

Australia- New Zealand Economic Relations

Points to Draw on in Discussion with Other Governments

[matter omitted]

  1. The examination of possibilities for closer trade and economic co-operation between Australia and New Zealand is logical and historical progression in the relationship between the two countries which have similar backgrounds and ideals and which are conscious of a trend elsewhere to regional economic groupmgs.
  2. Against this background, Australia and New Zealand recognise that there is scope for new economic arrangements which can strengthen the bilateral relationship, provide economic benefits to both countries and enable each to cope with greater confidence with the difficult international economic and trading situation.
  3. The examination is influenced in particular by the fact that valuable though the New Zealand Australian Free Trade Agreement has been in promoting the significant growth in bilateral trade which has occurred since the mid-1970s, the agreement in its present form does not seem to be providing sufficient impetus for the type of economic co-operation and development which will best serve the interests of both countries in the changing international environment.
  4. While there has been no attempt to prejudge the outcome of the studies being undertaken on both sides, the two countries are agreed that any new trade and economic arrangements between them should conform to certain broad principles.
  5. In recognition of the relatively limited size of the trans-Tasman market, the continued adjustment pressures which will be faced in an increasingly competitive trading world and the legitimate interests of their regional trading partners, the two countries accept that any new arrangements must reflect an outward-looking approach, based on an efficient allocation of resources and an efficient structure of industry. These principles are in conformity with the economic policy objectives of both countries.
  6. Both countries recognise the importance of encouraging industries to become increasingly efficient and internationally competitive. Both countries recognise the need to provide a better climate for investment decisions if improved rates of economic growth are to be achieved. In line with these objectives, they accept that it would be undesirable to seek to develop bilateral trade under conditions which encouraged restraints on exports from efficient third country producers by high costs imports from the trans-Tasman partner. Such an approach would perpetuate the structural problems which long-term industry policy in both countries is seeking to resolve.
  7. Following from above, Australia and New Zealand are agreed that increased trade and economic co-operation between them ought not to be based on the raising of more barriers against third countries. In particular, they are agreed that any new arrangements should not prejudice the legitimate trading interest and aspirations of developing countries, especially those in the Asia/Pacific region for which the two countries have special responsibilities and interests.

Ends.

[NAA: Al838, 370/1119/18, xvii]