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Transcripts from the Prime Ministers of Australia

Transcript 5961

AUSTRALIA - NEW ZEALAND CLOSER ECONOMIC RELATIONS

Photo of Fraser, Malcolm

Fraser, Malcolm

Period of Service: 11/11/1975 to 11/03/1983

More information about Fraser, Malcolm on The National Archive website.

Release Date: 10/11/1982

Release Type: Media Release

Transcript ID: 5961

f
AUSTRALTA 7ZWE AL. AND CLOSER RC: OIO:. MAJfCC ' S
dt, t by the Act ting Prime Mini ster ai ' i r,; istC f or T;.
a:; d Resources, the Rt. 1ion. J. D. Anthony, M. P.)
I wish to advise the House that the Government has approved
a comprehensive package of new arrangements to govern trans-
Tasman trade under a closer economic relationship between
Australia and New Zealand. These arrangements cover the most
far-reaching economic undertakings that Australia has yet made in
a bilateral agreement.
The Government's decision was taken following Cabinet
consideration of a report on my meeting with the New Zealand
Prime Minister, Mr. Muldoon, in Wellington on 28 October. At
that meeting, Mr. Muldoon and I reached agreement on a number of
variations to earlier proposals and agreed to put these to our
respective Cabinets for endorsement.
New Zealand's acceptance of the new arrangements was
announced by Mr. Muldoon on 1 November.
It is proposed that the formal signature of the Heads of
Agreement for a new trade treaty will take place within the next
few weeks, and the new arrangements will apply from 1 January
1983. The decision by both governments to implement new trading
arrangements completes a process of detailed study, consultation
and negotiation which was formally launched after a meeting
between the Prime Minister and Mr. Muldoon in Wellington in March
1980. A joint communique, issued by the two Prime Ministers was
tabled in this House by the Prime Minister on 25 March 1980. That
communique referred to the close relationship which had developed
between Australia and New Zealand across a wide front, and said
that an appropriately structured closer economic relationship
would bring benefits to both countries and improve living
standards. The new arrangements give practical meaning to that view in
respect of trade. They are a logical step forward in the series
of trade agreements between our two countries which started with
the preferential Trade Agreement of 1922, and led through to the
New Zealand-Australia Free Trade Agreement of 1965 and the 1977
Agreement on Tariffs and Tariff Preferences.
The previous framework of agreements supported the
development of a vigorous trade across the Tasman and recognised
the fact that each country is the other's major export market for
manufactures. By removing the remaining'trade barriers, the new
arrangements are expected to further expand this trade, with
positive effects on production and employment. v

Mr. S. peaer ; hcn he t;: ed Lje 15O0 joint co ;, uniq ue, the
Prime Minister gave an assurance tihat tht-e would be full
consultation with interested parties, and that the details of any
proposed new arrangemen-ts would be made public before substantive
decisions were taken. In keeping with that commitment, on 4 June
this year the Australian and New Zealand Governments released a
report containing draft Heads of Agreement for proposed new
arrangements to govern trans-Tasman trade under a closer economic
relationships. The main aim of these proposals was quite simply the gradual
and progressive liberalisation of trade across the Tasman for all
goods produced in either country. With this in view, there was
provision for the phasing out of tariffs within five years of the
commencement of an agreement. There was also provision for the
progressive removal by New Zealand of import licensing and tariff
quotas, by increasing access by 10 per cent a year in real terms,
and completely eliminating these restrictions by 1995 at the
latest. It was agreed that in the long term, there should not be
export subsidies and incentives in trans-Tasman trade, and all
performance-based export incentives were to be removed no later
than 1987. The draft Heads of Agreement released in June gave full
details of proposed arrangements, but it is important to note
that the proposals envisaged modified arrangements for a small
range of goods. Some of these arrangements, such as those for
dairy products and wine, were based on agreements reached between
the respective Australian and New Zealand industries.
It is also important to note that the draft Heads of
Agreement included provisions for consultations and safeguards to
offset any unfair advantages which might arise from dumping,
subsidisation or intermediate goods problems. There were also
general safeguard provisions to cover any cases of severe
material injury arising from the trade liberalisation process
during the transition period of the agreement.
In addition, the draft Heads of Agreement covered such
matters as rationalisation, Government purchasing, agricultural
stabilisation and standards, all of which are significant in a
free trading relationship.
After those draft proposals were released, Commonwealth
Ministers and officials held extensive consultations with State
Governments, national industry organisations and other interested
parties throughout Australia.
These consultations showed that there was widespread support
in principle in Australia for the objectives of the proposed new
arrangements, that is, bringing about equality in trading
opportunities and fair competition in trans-Tasman trade. There
was a wide recognition also that the proposed arrangement will
result in an improvement, c-. er time, in the inequalities facing

Australian industry under NAr'A. At the same timr. e, h ver,
here w'as criticism of certain spcts of tje draft pr-. Cols .
' The st: rojg-e st criticism wa-s d i r~ t t? t t proposed lt s for
the ultI imate eli inati on in t r ns-' T: is; an trade of perfrci: inccdbased
export incentives and ir: port restrictions, by 1987 and 1995
respectively. Taking account of reactions to the draft package, Mr.
. uIildoon and I tried, in the final phase of negotiations, to
explore the scope for mutually acceptable modifications and
improvements in the arrangements, consistent with the guiding
principles and objectives of the closer economic'relationship.
While it did not prove possible to provide for earlier
termination of export incentives and import restrictions, we
reached agreement on the means by which certain measures would be
modified to take account of Australian concerns.
It has been agreed that performance-based incentives
available to exporters in trans-Tasman trade will be halved in
1985, with further reductions of 25 per cent in 1986 and 1987.
This agreement does not preclude faster phase-down arrangements
being established by the New Zealand Government as a result of
its current review of future export assistance policy. Furthermore,
I have been assured that Australia's concerns will be a
major consideration of the New Zealand Government in their
review. On import restrictions, it has been agreed to double the
fninimium access levels applying under the liberalisation formula,
from $ NZ200,000 to SNZ400,000 in each item code/ quota category.
Further, it has been agreed that the 10 per cent a year real
growth in access opportunities, generated under the standard
liberalisation formula, will be increased to 15 per cent a year
for all item codes/ quota categories where access opportunities
are below $ NZ1 million. This higher rate will apply until such
time as access opportunities reach or exceed $ NZl million; after
that, a 10 per cent growth factor will apply.
These modifications will result in a significant increase in
access opportunities available to Australian exporters in the
first year and will, of course, be compounded as New Zealand's
import licensing regime is progressively liberalised under the
new agreement. It is important to recognise that both countries do not
enter the exercise from equal positions, in terms of the nature
and extent of protective and assistance mechanisms available to
their respective industries. The industrial bases in each
country also differ in their breadth and composition. For these
and other reasons, it was necessary in the negotiations to strike
a balance between achieving equality of dpportunity and fair
competition between the two countries as soon as possible and the
need for gradualism in the trade liberalisation process to allow
time for industries on both sides to adjust.

The Gov\ rn;; ent is 3Varie of su.; 1 sti. ons ; hat ' detailde st' ies
:. re re; ii ir .: d to : ens're that te pnrc-': po d new arra . ngenciltcsa rry
no adverse implications for particular States, regions or
industries. There have also been suggestions that special
adjustment assistance may be needed. The Government does
recognise the concerns underlying such proposals. It does not,
however, consider that such Teasures are necessary. It is also
satisfied that the new arrangements do not carry any significant
adverse implications, either short or long term, for employment
or regional activity. On the contrary, the overall impact is
expected to be positive.
This is because the provisions of the new agreement, which
will be the most comprehensive bilateral trade agreement ever
negotiated by Australia, are designed to apply gradually, to
minimise disruption and to provide for adequate safeguards. In
addition special arrangements for modified programs have already
been established, as I have stated, for industries which are
regarded as particularly sensitive to increased trans-Tasman
competition. It rust be recognised, however, that there are still
sections of industry that feel concern over the possible impact
of the proposed agree--ent on Closer Economic Relations. I
believe thie great imajority of these fears can be clearly shown to
be misplaced indeed, it can be shown that without Closer
Economic Relations, it would not be possible to find solutions
for several existing inequities in trans-Tasman trade.
In the timber industry, for example, there are fears that
the proposed agreement will lead to unfair competition from
increased imports. The fact is under the proposed arrangements,
there will be no change in duty and access provisions for trans-
Tasman trade in sawn timber and plywood. Trade across the Tasman
in these products has been duty-free and unrestricted since
1966. Without the proposed new agreement, moreover, there would
be no redress of inequities such as New Zealand's exports
incentives and lack of free access for other forest products.
This applies to other sensitive areas, such as horticultural
products. Performance-based export incentives are probably the issue
of greatest concern to the industry, and some people will
probably be disappointed that it has not been possible to remove
these even earlier. However, Australian industry will retain its
existing right to take action against New Zealand imports where
it can be shown that dumped or subsidised imports are causing or
threatening material injury to an Australian industry. Some
Australian industries, indeed, have already sought-anti-dumping
or countervailing action.
I do regret that such action has become necessary,
particularly when it occurs in industry sectors where it had been
hoped that industry-to-industry understandings could be

S reached. Unfortunately efforts to come to understandings on sawn
timber and plywood have not yet produced positive results. It is
to be hoped that in the very near future, satisfactory joint
industry undertakings can be reached.
I would hope that generally, any problems that might arise
would be resolved through consultation, avoiding the need for
resort to anti-dumping or countervailing action.
A number of other improvements and modifications have been
agreed, in respect of aspects of export incentives and import
restrictions, allocation of exclusive access, transitional
safeguards, intermediate goods, government purchasing and a
number of specific product issues. Overall, I believe that this
agreement represents an outcome with which both sides should be
well pleased. The decision to proceed puts both countries on the
threshold of a new and most comprehensive trading arrangement.
Both Australia and New Zealand can look forward to growing trans-
Tasman trade, to the benefit of both their peoples, and they can
look forward also through this agreement to the security that
will come from a strengthened ability to contribute to the
development of the region.
Around the world today, we see increasing trade restrictions
threatening international economic growth, and inward-looking
policies in many countries becoming the order of the day. It is
timely, in these circumstances, to remind ourselves that the
commitment we are making to trade and commercial expansion
between Australia and New Zealand has the ability to add to
wealth and employment for both our countries. If similar faith
and vision can be displayed in forthcoming international forums
where trading problems are to be dealt with, then we will be well
on the way, I believe, to achieving the international economic
recovery that we all seek so deeply.

Transcript 5961