Thank you for your letter of 8 July 19801 to the Secretary with your comments on reactions to Mr Muldoon's statement in his budget speech about the possibility of the closer economic co-operation exercise being 'abandoned'. The Secretary indicated in his reply (telegram No. O.CH904928) that I would also be writing.
I have also seen your cable O.WL5849 reporting the trans-Tasman article of 10 June 1980, and a press item by Ian Templeton, on the same subject, with more hard-hitting allegations, notably that Australian Ministers are reported to have instructed Australian officials to make negotiations as difficult as possible.
Mr Muldoon's comment and the press reports have been the subject of concern to us here, given the imminence of the NAFTA Ministerial level talks on 12-13 August which will give Ministers the first opportunity to consider progress on the studies to date. You will be aware that officials' talks had been scheduled from 6-8 August in preparation for Ministerial consideration of the studies on 12-13 August.
On checking with the Department of the Special Trade Representative, which is co-ordinating the studies on economic co-operation, I was gratified to hear confirmation that progress on the Australian studies is on schedule, in respect of almost all the papers required. I am told, too, that officials here have had the impression that New Zealand officials have to date been optimistic about the studies. Sir Frank Holmes' remarks which you cited, and Mr Muldoon's indication to the press that his words were not to alert any new situation together support this inference.
However, Frank Anderson of the Department of the Special Trade Representative, has let me know that he has been informed that the New Zealanders were now proposing that there would not be a need for pre-NAFTA officials talks, due to the 'lack of progress on the Australian side'. We are somewhat surprised by this suggestion and wonder about the basis for it. The New Zealand High Commission here has been advised of our readiness to conduct the officials' talks, and of the need for them. We were informed on 23 July by the High Commission (on a please protect basis) that the real reason why the New Zealanders now want only a short meeting on 7 August is that they are not yet ready to hand over any papers.
It may be that their own studies are simply not far enough advanced. But considering the timing of Mr Muldoon's public indication of his reservations about the idea of closer economic co-operation, subsequent press reaction, and the seeming about-face of New Zealand officials, the following are possible explanations:
- the New Zealanders have assessed that their negotiating coin is limited, and are seeking to postpone negotiations of substance for as long as possible;
- on the basis of their studies of the question to date, they have decided they would prefer to settle for a continuation of the benefits which they derive from NAFTA and thus want to back away from carrying examination of any other sort of arrangement further; or
- the New Zealanders are seeking by their reference to negotiations taking 'too long' (cf Hugh Templeton's comments to you) to exert pressure on the Australian side to establish a specific timetable at the NAFTA Ministerial meeting.
As you know, considerations of timing and decision-making were only vaguely referred to in the Muldoon/Fraser communique in March, primarily because of election considerations on both sides. (You will no doubt recall the rather amusing exchange between the two Prime Ministers on this point.) The imminence of the Australian elections (as opposed to the later New Zealand elections)2 could well be another element of the 'pressure' tactic. Your comment on New Zealand primary and manufacturing industry interests may also be relevant here.
In any of the foregoing explanations, either separately or in combination, it would seem that the press has had some inspire briefing. Our O.CH904929 was prepared with this in mind, in the hope that the press might be fully briefed on our side of the question)3
[NAA: Al838, 37011/19/18, xviii]