Report by Permanent Heads

Canberra, 26 February 1980

CONFIDENTIAL

Report of Australia - New Zealand Permanent Heads Meeting Canberra, 25/26 February 1980

The meeting agreed that:

1. on the basis of its discussions and the report of the Joint Working Parties1 it should be recommended to Ministers that an appropriately structured closer economic relationship would provide economic benefits for both countries;
2. on the basis of studies to date this would appear to be technically capable of achievement;
3. if this was accepted the need was to establish a commitment to move ahead in a politically acceptable way.

DECLARATION

1. It was agreed that there could be value in a Declaration by the Prime Ministers which would provide a framework for developing the relationship. This could enshrine principles which are set out in a separate draft of the Declaration.2
2. In addition to trade matters, co-operation on other economic issues should be maintained and developed. Such matters would include labour, transport, tourism, raw materials, energy, finance and investment.

TRADE ISSUES

1. The objective would be gradual and progressive liberalisation of trade across the Tasman on all products produced in either country.

Tariffs

1. Products are to be grouped in three categories: 1. those which could move immediately to duty free treatment, e.g. those with tariffs which were at the equivalent of 10% or less 2. those for which duties would phase out over 5 years in annual steps after a 1 year grace period 3. those which required deferred decision because of special considerations such as cases where an official industry enquiry was planned or in progress.
2. It was agreed that all industrial and agricultural products should be included in these categories.
3. It was agreed that there should be an exchange of lists of products for inclusion in category (3) within 3 months. The objective would be to keep this list as small as possible.
4. From these exchanges three common lists would be derived.
5. It was agreed that in agriculture a study should be made of agricultural support/stabilisation measures to identify whether there were problem areas which might have undue impact and to examine the scope and need for neutralising the impact on trade. An assessment should then be made to determine the extent of any significant impact on trade in these cases. This work should be completed in 3 months so that lists of products as above can be exchanged.

Agreement on Tariff and Tariff Preferences

1. The agreement should be extended for 12 months and further extensions would depend on the progress towards broader economic co-operation.

Import Restrictions

1. Both sides will make a study of the possibility of liberalising the treatment of the other country under import licensing and tariff quotas on the following basis: 1. where trade is already flowing a 10% annual increase in access in real terms; 2. where no trade exists a base to be established and the above formula applied; 3. resulting figures would need to be of a sufficient size to give commercial viability; 4. would apply to the two categories of goods committed to duty free treatment; 5. a principle to be taken into account in the progressive liberalisation of import restrictions is that it should not foster the expansion of inefficient industries in either country.
2. Further discussions will take place within 3 months to determine if the foregoing is practicable.

Customs Valuation

1. There appeared to be scope for moving even closer together in this matter, based on possible acceptance of the GATT code provided that both countries adopt the same basis of valuation (i.e. FOB or CIF), with a preference for FOB.

Safeguards

1. It was agreed that safeguard provisions should be kept to a minimum.

Intermediate Goods

1. It was recognised that there may be a problem with intermediate goods. Australia will carry out a study to quantify the problems and canvass possible solutions. This study will be completed within 3 months.

Export Incentives

1. It was noted that both countries have export incentive schemes and there are commitments to maintain these for a time. It was agreed that an assessment should be made of their applicability to trans-Tasman trade with the purpose of a review when this is applicable.

Customs By-Laws/Rules of Origin

1. The operation of these systems requires further study.

Industry Rationalisation

1. Where industries which exist in both countries develop different product specialisation, consultations should 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 should be encouraged by the adoption of a common external tariff and appropriate by-law arrangements.

Developing Country Preferences

1. It was recognised that there is no need to go to a common scheme but that there should be consultation before any changes are made.

GAIT

1. It was agreed that both countries would review at an early date the GATT implications of the closer economic relationship under consideration.

Co-operation between Industries Assistance Advisory Bodies

1. Present consultation between the two bodies should be maintained. There may be need for special consideration to be given in respect of particular industries. It was agreed that at this stage there should not be joint sittings of the two bodies although this was not ruled out for the future on an ad hoc basis. However, it may be appropriate in some instances to have concurrent hearings.

Government Purchasing

1. Consideration will be given to the scope for extending domestic supplier status to each other and that Australia would approach individual State Governments with a view to New Zealand being accorded treatment no less favourable than suppliers from other States.

Standards

1. The importance of the continuing consultations between the two countries was noted and that both were likely to join the GATT code.

FINANCIAL ISSUES

1. Australia’s concern to avoid precedents in treatment of New Zealand which would create difficulties in relations with third countries was noted but it was agreed that the ability to present to third countries a closer economic relationship with New Zealand could enable Australia to provide some preferential treatment for New Zealand.

TOURISM

1. It was agreed that this subject be covered by the declaration and that consideration be given to the scope for expanded co-operation.

ENERGY

1. It was agreed to exchange information on all items on refinery product slates or energy sources coming on stream. It was agreed to examine the scope for further co-operation in R & D projects,- consult on any energy problems having economic impact.

JOINT MARKETING ACTIVITIES

1. It was agreed that there was some scope for increased co-operation in joint marketing activities and that this should be brought out in a communique to be issued when the two Prime Ministers meet. However, it was agreed that there were limitations to what could be achieved.

TRANSPORT

1. It was agreed transport matters would be kept under review in the context of the Declaration.

THIRD COUNTRIES

1. On release of the communique the overseas posts of each Government would talk separately with third countries.
2. However, in relation to Papua New Guinea and the Pacific Islands it was recognised that there would be a need for a joint Australia - New Zealand presentation.

[NAA: A1838, 37011/19/18, xv]

• 1 Document 58.
• 2 Document 67.