Canberra, 22 October 19791
CONFIDENTIAL
Permanent Heads Meeting in Wellington 1-2 November 1979 Australia’s Objectives and the Framework of the Meeting DRAFT-22 October, 19791
Australian objectives at the meeting in Wellington on 1 and 2 November 1979 are to:
- Identify the areas of common ground in the economic strategies and objectives of Australia and New Zealand.
- Identify the areas of conflict of interests and the broad ways in which it may be possible to reconcile them.
- Review the broad parameters of the type of arrangements which would maximise the economic benefits for both countries from 1 and 2 above.
- Agree upon the issues which need to be submitted to the Ministers of both countries before the meeting of the two Prime Ministers in February 1980.
- Agree upon the issues requiring further examination by officials and future meetings or exchanges of papers that may be necessary.
[matter omitted]2
6. Since Mr Garland’s visit the annual joint meeting of the New Zealand Manufacturers’ Federation and the Confederation of Australian Industry (CAl) has taken place followed by the annual quadrilateral meeting of the two governments and the industry associations. At their meeting the two industry associations adopted the following statement which includes an agreed section and separate sections by the respective federations:
‘TOWARDS A MORE POSITIVE NAFTA
Objective
The creation of a larger and more effective economic unit through an extension of the principles of NAFTA.
Benefits
- — complementary development and utilisation of resources
- — increased investment from overseas
- — increased employment opportunities
- — a fuller utilisation of a well educated, highly skilled work force
- — the provision of greater leverage when negotiating with third countries
- — joint marketing schemes in third countries
- — improvement in quality and maturity of manufacturing and technology within industries
Such an economic unit should enable the progressive elimination of all barriers, including non-tariff barriers such as technical standards, to total trade between New Zealand and Australia provided that a higher area content provision is established for those industries where such a provision appears necessary.
The New Zealand delegation believes that the move towards free trade in the economic unit could eventually lead to the adoption of one of the following options:
- — full free trade area
- — customs union
- — economic union.
As an initiative towards the achievement of the objective of a larger and more effective economic unit it is recommended that consideration be given to placing all products which are not currently on Schedule A on to Schedule B. Where duties are applicable to these products such duties should be progressively reduced to nil within the next eight years with equitable access to each market.
As regards Schedule A, it is recommended that all items which could be placed on Schedule A should be placed thereon immediately without the limitation of quantitative controls, both ways.
Meanwhile the working party should continue its efforts to eliminate quantitative controls in respect of items already in Schedule A.
It is also recommended that the joint working party establish, within the next twelve months, mechanisms for this initiative taking full account of industry discussions. Such mechanisms should take into consideration that:
- Duty reductions for some industries may not be possible or as rapid as those for the majority.
- There will be a continuing need to protect some New Zealand and Australian industries by restricting access by each country and third countries.
Finally it is recommended that at the end of the eight year period, those industries for which duties have not been eliminated should be reviewed and a new time scale established over which duties could be eliminated.
The Australian delegation believes that it would be in the interests of both New Zealand and Australia to join together in creating a larger economic unit and agrees the benefits of such a unit would be those stated by the New Zealand delegation.
In considering how these benefits might best be attained the Australian delegation unanimously resolved that:
A Customs Union between New Zealand and Australia be established within the next eight years to coincide with the expiration of the present NAFTA.
That in the interim negotiations aimed at developing a more equitable two way trade situation under the auspices of NAFTA should be continued.
That the joint working party be given firm guidelines which will enable it to frame mechanisms aimed at achieving both these objectives.’
Current Trans–Tasman Trade Situation
7. Analysis of the latest estimates shows that there was a significant increase in total trans–Tasman trade in 1978–79 compared with 1977–78. A summary table comparing trans–Tasman trade in 1978–79 and 1977–78 is attached.
- Australian exports to New Zealand increased by 28.2% to $750.3m.
- Imports from New Zealand increased by 18.0% to $424.9m
— the ratio of exports to imports in Australia’s favour increased from 1.6:1 to 1.8:1.
8. Summarising trends in trade in total manufactures:
- Exports to New Zealand were valued at $621.8m, and increase of 31.9%.
- Imports from New Zealand were valued at $288.3m, an increase of 18.4%
– the ratio of exports to imports in total manufactures increased in Australia’s favour from 1.9:1 to 2.2:1.
9. There was an increase in the exchange of non–resource based manufactures:
- Australia’s exports to New Zealand increased by 34.7% to a value of $362.4m.
- Australia’s imports from New Zealand increased by 17.2% to a value of $281.3m
– the ratio of exports to imports in this category increased in Australia’s favour from 1.1:1 to 1.3:1.
10. There was an increase in trade in resource based semi–manufactures across the Tasman:
- Exports to New Zealand increased by an estimated 28.2% to a figure of $259.4m.
- Imports from New Zealand (although insignificant in terms of total trade) increased from an estimated $3.5m to $7.0m.
[NAA: A1838, 37011/19118, ix]
- 1 The document was prepared by the Special Trade Representative for discussion at an interdepartmental meeting on 24 October 1979. Prior to that, on 22 October, Flood sent the draft to Departments along with (i) a discussion paper on conclusions and questions arising from the Australian studies and (ii) a draft agenda for the Permanent Heads meeting in Wellington.
- 2 The omitted material reviewed developments from March 1978 to September 1979 when Garland visited New Zealand.