Cablegram from Department of Foreign Affairs to Australian High Commission in Wellington

Canberra, 9 October 1981

0.CH991149 CONFIDENTIAL

Closer Economic Relations discussions during CHOGM

Prime Minister met with Mr Muldoon on 29 September and discussed progress of the closer economic relations exercise. The Minister for Trade and Resources was present for the latter part of the discussion.

1. As foreshadowed Mr Muldoon raised the question of timing and steel. Two other outstanding matters, dairy and wine, were canvassed in very general terms but there was no detailed discussion on any issues.
2. On timing Mr Muldoon did not question Australia’s need for the details of the package to be madpublic before final decision. He was, however, anxious to be able to comment on CER in the election period and to predict a 1.1.83 starting date. The Prime Minister suggested that the objective should be to start at the beginning of 1983 but wished to confirm this timing with Mr Anthony.
3. It was recognised that this timetable would require rapid progress on the package and it was agreed that the Prime Minister and Mr Muldoon should meet next March or April at the latest to ‘wrap up’ the negotiations. It was acknowledged that this would mean considerable prior work by officials which Mr Muldoon suggested could be stepped up after 28 November.
4. On steel the Australian position put to New Zealand officials at the September working party meeting had apparently made an impact in Wellington.1 Mr Muldoon explained his need to make a statement on expansion of the New Zealand industry before the end of the month but was receptive to elements of harmonisation in this industry across the Tasman. It was agreed that officials and industry should meet on this.
5. On dairy Mr Muldoon indicated he was now more relaxed as the idea was getting through in New Zealand that any further access to the Australian market must be gradual and without disruption to Australian industry.
6. On wine Mr Muldoon thought that the continuing industry discussions were resolving the problem.
7. The Prime Minister suggested that Mr Anthony and Mr Muldoon should take the opportunity to discuss any points of detail at a separate meeting.
8. The further meeting took place on 5 October. As neither side had been prepared for substantive detailed talks it was thought that the focus would be on confirmation of the points made at the discussion with the Prime Minister and a generalised checking off of the issues where progress was still to be made. Accordingly the Minister was not given any written briefing and was accompanied only by Mr F. Anderson. In the event the mood of the meeting encouraged frank discussion which provided some useful indications of movement by Mr Muldoon towards Australian positions on some of the important issues.
9. On terminal dates for import licensing Mr Muldoon confirmed he could make no movement at present. However he was more receptive to the thought of some commitment to a terminal date at the time of the Prime Minister’s meeting in March.
10. Mr Muldoon also conceded that it seemed reasonably clear that New Zealand’s present system of export incentives would have to go by 1985 to meet the expectations of the USA.
11. In respect of dairy products, Mr Muldoon confirmed his comment to the Prime Minister. He thought he would be able to accept the Australian approach and that we should proceed to get the industries talking.
12. It was brought to Mr Muldoon’s attention that, in response to a Wine and Brandy Corporation invitation to a second meeting, the New Zealand industry had questioned the point of a further meeting at this time. He accepted that the industries had not yet addressed the question of CER and agreed that this needed to be done quickly. He would seek to encourage the New Zealand industry to co­ operate if Australia saw a meeting as necessary and commented that if the industries could find a solution it would make his task much easier.
13. There was some further discussion on steel where Mr Muldoon reiterated his need for an announcement this month which the Minister countered by pointing to the difficulty we had had on the Australian side in obtaining information of New Zealand’s intentions. It was pointed out that the foreshadowed meeting between the top executives of BHP and New Zealand Steel in Toronto would not seem to be sufficient to cover this issue. Mr Muldoon agreed that the industries should be got together ‘right away’ with officials.
14. The Minister pointed out that Mr Muldoon’s earlier undertaking to look at the possibility of action on selected horticultural products would not solve Australia’s political problem in this sector. The action taken should apply to the industry as a whole.

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

• (1) The New Zealand Government had earlier given official support to a proposed expansion of the New Zealand steel industry. Australia was concerned about the implications for the Australian industry and for a CER and had emphasised that any expansion plans must be consistent with the trade liberalisation principles of a CER.