Thank you for your letter of 30 August outlining a proposed course of action for furthering negotiations on closer economic relations with New Zealand.
I strongly endorse your proposal to reopen with Mr Muldoon the issue of terminating dates for import licensing and export incentives. Strong criticism of the currently proposed dates of June 1987 for the removal of export incentives and 1995 for import licensing has been a consistent theme of almost every representation received by me during the CER consultations.
I have noted your view that it will be exceedingly difficult to obtain a specific improvement in the terminal dates. Nonetheless, the currently proposed dates are clearly perceived as representing a fundamental imbalance in the fair trade concept underlying CER. I must say that this has always represented my own view and in all logic their retention will be extremely difficult to defend in accordance with the 'fair go' concept. We must fully test the prospect of obtaining a commitment to earlier dates in the agreement.
With respect to import licensing, you are no doubt aware that at the last meeting of Agricultural Council, State Ministers of agriculture expressed their strong view to me that the terminating date should be no later than 1987 and called on the Federal Government to negotiate further on this issue. I note that your proposed letter to Mr Muldoon raises the prospect of bringing forward the terminal date and I would hope that Agricultural Council's 1987 proposal could be given serious consideration in the forthcoming negotiations.
During the Agricultural Council discussions and in industry representations the related question of the level of initial access into New Zealand for items subject to import licensing was also raised. This is of particular concern to Australian horticultural industries and to some of the forest products industries where the $NZ200,000 c.i.f. minimum access level is far too low, particularly when compared with the unrestricted access available to the Australian market. I would support your proposal to try for a broadly based formula approach to increases in initial access levels although for agricultural industries the limited number of items involved could, if necessary, be handled on a case by case basis. If a formula approach does not prove feasible I would hope that we could establish some ground rules which would permit fast and effective determination of the level of access required for commercial viability on a case by case basis.
With respect to export incentives, I believe that the strength of industry representations on this issue requires us to try to obtain an advance in the terminating date specified in the CER arrangement. The request which you propose making of Mr Muldoon-that he examine Australia's concerns in the coming year-suggests to me that you consider an improvement in the date is not possible in the CER contest. In view of the strong representations received I believe this should be further tested. Should it prove to be the case then in any re-assessment we should urge strongly that Australia's concerns be taken into account in the course of the New Zealand review of its export incentives scheme.
Your letter mentions the need for further discussion with New Zealand in relation to forest products and certain sectors of the horticulture industry.
My prime interest in the horticulture area is to achieve elimination of New Zealand export incentives well before 1987. We have already achieved this for some sectors such as frozen peas and beans and I would like to achieve similar results for the berry fruit and asparagus industries, both of which are likely to face increased competition as a result of vastly increased New Zealand plantings in recent years. I find it most difficult to accept-and to defend to the industries concerned-that where we offer unrestricted duty-free access New Zealand should maintain both tax free export incentives of the order of 10% together with import restraints.
In respect of forest products my views are similar to the above. However, I agree that a combination of industry and official contact is an appropriate way to proceed. Details of the way in which this might be done will no doubt be discussed during our meeting with the industry on 15 September. I would also agree that the other issues aired in your letter-safeguard arrangements, intermediate goods, license allocation--could be pursued by officials over the next few weeks.
Following these discussions and, should they be necessary, your own talks with Mr Muldoon, I assume that Cabinet will again have an opportunity to assess the complete package.
[NAA: Al3131116, 84/2288, i]