Aust. 'get tough’ allegation denied

Press, 26 July 1980, Page 14

Aust. 'get tough’ allegation denied

By

STUART McMILLAN

Suggestions that Australian Ministers have instructed officials 'to be tough on New Zealand over negotiations have been denied by sources in Canberra. Officials say .they are totally unaware of such ; an instruction or anything like it. ? This denial is one of a series which ‘ Canberra sources ,made late this week. The instructions were alleged to have been given over New Zealand-Australia Free Trade Agreement talks. A. further allegation has been that Australian officials have been slow, to get on with their .. studies on a wider, economic ; relationship with New Zealand. Canberra sources say that ' all . the studies “are ohschedule. -■Another allegation is :tnat : different' / conclusions. aboutmoving towards econ-:

omic relations have been drawn from those reached when the Prime Ministers of the. two countries last met. Nothing is known in Canberra about such different conclusions. The. last allegation — also denied — is that in consultations. between Australian departmental officers and industries, insurmountable obstacles have been found to closer economic relations. The allegations have been made in a number of articles published in ; Australia and New Zealand; They appear to have been prompted by the comment made by the Prime Minister (Mr Muldoon) in his Budget speech on July 3r “The Australian and New Zealand Governments are seeking ways of making better use of our combined industrial . and

agricultural resources. Certain problems have been identified. I. make it clear that if these cannot be surmounted, this exercise . will have to be abandoned, a result which I would regret.” , The question has been: what was Mr Muldoon concerned about? Three main problems are well known. The first concerns the dairy, industries of the two countries. Mr Muldoon in particular is known to be keen on gaining access to Australia for New Zealand dairy products, an access that would threaten Australia’s dairy industry. Another problem lies in so-called intermediate goods. New Zealand manufacturers like to be able to buy their raw materials at the cheapest source of supply. Australia is keen that New Zealand manufacturers “source” more of .their ■ raw

: materials : in Australia. This would benefit Australia in increased sales of„'raw materials, and, the higher-priced Australian raw materials ’would reduce New Zealand's price advantages. . Another aspect of the intermediate goods problem is■ that of “point of origin.” Some - New Zealand garment manufacturers argue that Australian manufacturers have been importing clothing from Asia, putting their own labels on it and exporting'it to New Zealand. The Australian, or New Zealand, content of such re-exports is supposed to be 50 per cent. However, there seems little evidence that New Zealand is deliberately stalling on. talks, either. As far' as can’ be' ascertained the advice still being given to Ministers is that the studies do .not indicate any problems that cannot be over-

come.. Sources close to the working party have identified no new problems. Which leaves the question of Mr Muldoon’s Budget statement.' From the way, it was . phrased it seems likely that he was himself the author of it.. It seems that he was not saying anything new, more that he was saying that the negotiations are indeed difficult. He, was adopting a tough negotiating position and dismissing any view that the talks are not to be taken seriously, or that they . are a series of kindly debating points. A basic approach of New Zealand officials to the talks is to consider whether New Zealand would be better off in having - closer economic relations with Australia or whether it would fare better still as a free trader in a world context.