Prime Minister's Visit: Communique⁽¹⁾

The following Communique was issued by Prime Ministers Fraser and Muldoon at a joint press conference on 21 March.

Begins

At the invitation of the Prime Minister of New Zealand, the Right Hon. R. D. Muldoon, the Prime Minister of Australia, the Right Hon. Malcolm Fraser, visited Wellington on 20-21 March for consultations on the prospects for establishing a closer economic relationship between the two countries.

The two Prime Ministers began their talks with a review of the extent of existing co-operation across the full range of the relationship.

It was clear from this review that Australia and New Zealand had developed a close working relationship based on a common language, a shared tradition of democratic government, and free interchange of their peoples. They already had the habit of co-operation. In addition, they were each other's largest markets for manufactured goods as well as increasingly important markets for a wide range of other products, including agricultural and horticultural produce, and close links existed between the financial, commercial and service sectors. These factors were all evidence of the existence of a special economic relationship.

In the light of their review the Prime Ministers believed it was timely for Australia and New Zealand to take the special relationship between them a step further. The Prime Ministers agreed that an appropriately structured closer economic relationship would bring benefits to both countries and improve the living standards of their peoples. They believed that this could be achieved in a manner consistent with their obligations to the developing countries of the region, enhancing their prosperity as well as that of Australia and New Zealand.

They noted that while NAFTA has promoted significant growth in bilateral trade since the mid-1960s, the free trade agreement in its present form did not seem to be providing sufficient impetus to the kind of co-operation which would best serve the interests of the two countries in the changing international economic environment.

The Prime Ministers therefore agreed on a framework for further detailed exploration and examination of possible arrangements for a closer economic relationship. An outline of the basic approach and scope of these studies is contained in the accompanying Annex.

These studies would be set in train immediately and would involve close consultations in Australia and New Zealand with interested parties including Australian State Governments. Until these consultations had been taken to a further stage, a firm timetable for taking the necessary decisions could not be set. In the meantime, the Prime Ministers announced that the existing agreement on tariff and tariff preferences between Australia and New Zealand, which was due to be reviewed on 30 November 1980, shall continue unchanged for a further period of at least one year.

The Prime Ministers expressed their commitment to an outward-looking approach, based on an efficient allocation of resources. They agreed that any new trade and economic arrangements that were to be considered would need to be consistent with the economic development policies of the two countries. The Prime Ministers emphasised that the success of any closer relationship would depend on the foundation laid by sound economic policies in both countries.

The Prime Ministers noted that while the expansion of trade was central to the further development of the bilateral relationship, the objective of closer economic co-operation would also be served by strengthening important links which already existed across a broad spectrum. Co-operation and consultation now taking place in fields such as tourism, energy, marketing, scientific research, technological development, labour, transport, finance and investment along with free movement of their peoples between the two countries were clear evidence of the special nature of the Tasman relationship. The Prime Ministers agreed that the decisions taken in all these fields must be framed to ensure that they assisted in developing the special economic relationship.

In support of this and as testimony to the importance which they attached to the further development and diversification of the economic relationship, the Prime Ministers endorsed the following principles:

1. The freest possible movement of goods between the two countries;
2. An outward-looking approach to trade;
3. The most favourable treatment possible for each other's citizens;
4. The freest possible movement of their peoples between the two countries, subject at any time, to their respective laws and policies;
5. The fullest consideration for each other's interests in all aspects of the economic relationship; in particular, prior consultation on international trade and economic discussions;
6. Frequent discussion and consultation on matters of common concern.

The Prime Ministers agreed that a sound foundation already existed for the development and expansion of bilateral economic relations. There was strong support on both sides of the Tasman for building on this foundation and making further progress.

Much good work had already been done in the development of closer co-operation by national bodies representing industry and agriculture in each country, and by organisations such as the Australia - New Zealand Foundations and Businessmen's Councils. This, combined with the increasing number of exchanges between scientists and academics as well as various cultural and sporting contacts between the two countries served to promote the concept of a broader and stronger trans-Tasman relationship.

In conclusion, the two Prime Ministers reiterated their expectation that closer economic co-operation conducted in conformity with the principles agreed between them would result in economic and social benefits to both countries, and a strengthened ability, on the part of Australia and New Zealand working in partnership, to contribute to the development of the region. They were especially concerned to ensure that a closer relationship between Australia and New Zealand should provide a stronger base for the expansion of their economic and trading links with other countries, particularly those of the Pacific and South East Asia.

ANNEX: STATEMENT BY PRIME MINISTERS OF AUSTRALIA AND NEW ZEALAND ON FURTHER STUDY AND FUTURE CONSULTATIONS (UNDERLINE ALL)

The Prime Ministers agreed upon a framework for further detailed exploration and examination of possible arrangements for a closer economic relationship. An outline of the basic approach and scope of these studies is set out below.

The central trade objective would be a gradual and progressive liberalisation of trade across the Tasman on all goods produced in either country on a basis that would bring benefits to both countries. However, no commitment to any specific proposal had been entered into at this stage, nor was it possible to determine if a satisfactory mutual balance of advantage would be attained until all the elements of a package had been defined and agreed.

In respect of tariffs applying to trans-Tasman trade, an initial examination would be based on a grouping of all products into three categories:

1. Those which would move immediately to duty free treatment, for example, those with tariffs which were at 10 percent (or equivalent) or less;
2. Those for which duties would phase out over five years in equal annual steps after a one year grace period;
3. Those on which a decision would be deferred because of special reasons. These could include but would not necessarily be limited to cases where an official industry enquiry was planned or in progress.

The objective would be to include all industrial and agricultural products in these categories while keeping the deferred list as short as possible. This work would result in the establishment of three lists common to both countries.

In respect of import restrictions, the possible techniques for achieving the objective of a gradual and progressive elimination of import licensing and tariff quotas between Australia and New Zealand, in reasonable time, would be studied.

Initially the study would apply to the two categories of goods committed to eventual duty free treatment and would be based on the following approach:

1. Where trade was already flowing, an annual increase in access of 10 percent in real terms;
2. Where no trade existed a base to be established and the above formula applied;
3. The resulting figures from (a) and (b) above to be of a sufficient size to give commercial viability.

A principle to be taken into account in the progressive liberalisation of import restrictions was that it should not foster the expansion of inefficient industries in either country.

A study would be made of agricultural support/stabilisation measures to identify whether there were aspects of these measures which might have undue impact on trading opportunities between the two countries. An assessment would then be made to determine the extent of any significant impact and to examine the scope and need for neutralising the impact on trans-Tasman trade in these cases.

Australia had a much broader industrial base and produced a wider range of industry inputs than was the case in New Zealand and assistance in Australia was provided across a broader range of industries producing such inputs. The difference in treatment of these intermediate goods industries in the two countries was recognised as requiring special study to quantify the problems and canvass possible solutions.

Both countries had export incentive schemes, although they varied in nature, extent and duration of commitment. It was agreed that an assessment should be made of their applicability to trans-Tasman trade within any future closer economic relationship, with the purpose of a review when this was practicable.

In any future closer relationship, industry rationalisation would be encouraged. Where industries which existed in both countries developed different product specialisation, consultations would take place with the objective of ensuring reasonable protection against third country suppliers of these specialised products in the interest of the economic development of both countries. Where practicable this would be encouraged by the adoption of a common external tariff and appropriate by-law or tariff concessions.

It was agreed that there were other and significant areas of possible co-operation which would need to be examined in the context of a closer economic relationship: customs valuation, customs by-laws or concessions and rules . of origin, standards, continued consultation between industries assistance advisory bodies, government purchasing procedures, joint marketing activities in third countries and the development of tourism.

Transport, which was of fundamental importance to the development of trans-Tasman trade, would be kept under special review.

Ends.

[NAA: A1838, 370/1/19/18, xvi]

• 1 Conveyed to Canberra in cablegram O.WL5043, dated 21 March 1980.