AUSTRALIA-NEW ZEALAND RELATIONS

The Minister has indicated on a number of occasions that he
believes a more effective tie-up between Australia and New Zealand
might place us in a better position from a point of view of
political and economic discussions with the United Kingdom and the
United States.

The suggested United Kingdom-United States arrangement, as
outlined by Mr. Churchill, including the giving of full citizen
rights in both countries to nationals of each country, stimulates
the suggestion that we might approach New Zealand in the same way.

It is suggested therefore that the following short submission be
made to the Minister, the object of which would be not so much to
put forward a proposal, but to seek his direction as to whether he
wanted a proposal worked out in some detail.

DRAFT SUBMISSION FOR MINISTER

1. Australia and New Zealand have common interests in-
(a) Obtaining security and protecting national independence.

(b) Building up secondary industries.

(c) Maintaining employment in respect of overseas conditions.

(d) Having a measure of control over sources of supply, and of
important raw materials in the Pacific.

(e) Finding export markets for their major export commodities-
butter, wool, meat, etc.

2. Before this war, while the two countries had these common
interests and very largely a similar outlook, there was little
common action on security and political matters. Moreover, they
were competitors on the world markets and made no attempt to
increase their bargaining power by common action.

3. Quite obviously they could, by adopting a common policy, have a
greater influence in international political discussions; they
would avoid overlapping in the development of secondary
industries, thus providing each other with increased markets; and
their economic bargaining power in relation to the world would be
greatly strengthened.

4. A brief note on the Australian-New Zealand trading position is
attached. [1] This indicates that our exports are such that any
changes in trading relations between the two countries, provided
these changes were not extended to the Empire as a whole, or made
subject to most-favoured-nation treatment, could not in any way
affect Australian industries. In fact, the very favourable balance
of trade which we have with New Zealand, due mainly to the export
of manufactured goods, indicates that we have much to gain as a
result of increased trading relations with New Zealand.

5. Consideration might be given therefore to a proposal covering-
(a) The adoption of a common trading policy and a common foreign
policy covering defence, colonies, air bases, etc., brought about
by a combined Cabinet composed of Prime Ministers, Foreign
Ministers and Treasurers.

(b) Full citizen rights in both countries for nationals of each
country.

(c) Freedom of movement between countries.

(d) Currency and customs union brought about over a period of time
provided this would require no great changes in industrial
structure.

6. Your comments on this suggestion are sought together with a
direction as to whether you consider it worth while having a more
detailed outline of such a proposal prepared for submission to the
Government. [2]