Aust, approves C.E.R. agreement

Press, 2 June 1982, Page 1

Aust, approves C.E.R. agreement

NZPA staff correspondent . Sydney The Australian Government yesterday gave the goahead for a' new trading agreement with New Zealand that will lead eventually to a free-trade area. The Deputy Prime Minister (Mr Anthony) said yesterday in Canberra that the Cabinet had agreed to the release of a report on the' closer economic relationship as a basis for discussion and consultation. “Meanwhile, both sides will continue to work on the basis that a final affirmative decision in August would enable the proposed new arrangements to be implemented on January 1, 1983,” said Mr Anthony. The report and detailed

proposals of the. agreement, which will replace the 17yearold New Zealand Australia Free Trade Agreement (N.A.F.T.A.), will be. revealed on Friday. “This is a most pleasing outcome to a series of detailed studies and negotiations which was set in train by the Australian and New Zealand Prime Ministers after their meeting in Wellington in March, 1980,” said Mr Anthony. The two-month public consultation period is required on the Australian side to fulfil an undertaking given by the Prime Minister (Mr Fraser) in 1980 that the package would be made public before a final decision was taken? '' 4 5 It is now thought that Mr

Fraser and the New Zealand Prime Minister (Mr Muldoon) could sign the head of agreement documents during the South Pacific Forum meeting at Rotorua in early August. Mr Fraser and Mr Muldoon are expected to sort out final details when they meet during the course of the Australian Chamber of Commerce conference in Sydney late next week. Although the Australian Cabinet gave its approval to the basics of the agreement yesterday there is expected to be opposition to certain elements from both Australian and New Zealand industry groups. In particular both the New Zealand Manufacturer's Federation and the Confedera-

tion of Australian Industry have been upset at the agreement on termination dates for New Zealand’s import licensing and export incentives, 1995 for the former and 1987 for the latter. The N.Z.M.F. wanted a review after C.E.R. had been in operation for five years, arguing that the system of preferences maintained by the different Australian States and standards for various commodities were themselves extremely effective barriers to trade. The C.A.I. wanted import licensing on all products terminated within 10 years of the start of the agreement and export incentives by the end of the present New Zealand scheme on March 31, 1985.

The C.A.I. has argued that from the experience of N.A.F.T.A. there could be no “open-ended” commitments if the agreement was to work effectively and achieve its ultimate objective of equality of trading opportunity between the two countries. However, although objections are expected to aspects of the provisional agreement, officials said they expect the objections would have to be “strong and unqualified” if they were to justify significant changes to the agreement which is an integrated package. Under the C.E.R. agreement, tariffs will begin to phase down from the start of January next year. Then goods with tariffs of

5 per cent or less become duty free. On import licensing and tariff quotas, as well as the commitment to a-final date for their termination, access opportunities will be. increased by 10 per cent in a doubling of access every seven years. But special arrangements have been made in some areas, for example, dairy products which' means that exports of New Zealand cheese to Australia will be linked to the percentage growth in the market while New Zealand butter will not be sold in Australia except with the unlikely agreement of the local producers.

Also, a number of products will not immediately be subject to the tariff reduction formula and other trade liberalisation measures. Two sections of deferred categories appear in the draft agreement, the first where agreement has been reached for a modified timetable for the freeing of trade. This includes such items as wine, processed and frozen vegetables, plastics, rubber goods, kitchen and. laundry appliances, and furniture. For example, with wine, to allow time for the New Zealand industry to adjust in accordance with the 1981 industry plan, the normal access formula will apply from the start of C.E.R. for wine costing more than $2 a litre, and from July 1, 1986 for other wine. The tariff phasing will start from the beginning of January, 1986.

Another area concerns iron and steel products and problems brought about by the expansion of the Glenbrook steel plant in New Zealand. The agreement reached is that normal C.E.R. tariff and access formulae will apply from the start of C.E.R. to some products.

But for others, if the Australian and New Zealand industries cannot reach agreement by January 1, 1984, on arrangements acceptable to both Governments, the Governments will consult and decide on the terms and conditions for their inclusion in C.E.R.

The second category of deferred items involves tobacco products, clothing, motor-vehicles, canned fruit, tyres, electronic goods, and ball-point pens. ' Here a timing for a decision on C.E.R. has been agreed, but the timetable for liberalisation deferred beyond the start of C.E.R., mainly because of current industry studies. for example, with clothing, under the Australian industry plan for 1982-88 and the New Zealand industry plan for 1982-86, both countries, according to the draft agreement, are undertaking a significant liberalisation of import restrictions. Accordingly consultations are to be held between the two governments after New

Zealand’s 1982 review., of its industry plan and before the current N.A.F.T.A. arrangement ends in 1988. The consultations will aim to agree on conditions under which clothing would be made subject to • C.E.R. liberalisation. The Prime Minister. (Mr Muldoon) welcomed the “substantive” Closer Economic Relations arrangement agreed by the Australian Federal Cabinet. ;. Mr Muldoon said the next step was to release the C.E.R. exposure draft, and he confirmed this would be done on Friday. “I am pleased that after more than two years/ pt negotiations we have agreed on a comprehensive proposal,” Mr Muldoon said.. “The negotiations have been prolonged and often tough, but I am confident that New Zealand now has a great apportunity before it" Mr Muldoon declined to meet reporters .who wished to put questions to him on the agreement. < The Social Credit Political League has sought an assurance of meaningful consultation of the Closer Economic Relations agreement. C.E.R.’s most persistent critic, the Social Credit leader (Mr Beetham) said' yesterday that without genuine consultation the publication of the exposure draft would be “a hollow and meaningless exercise." The Government should guarantee that interested 'groups would be given the chance to make submissions and that the draft would be altered to take account of valid objections, he said. Too many vitally 'interested, groups had been left in the dark during the negotiations, including the unions. And manufacturers, said Mr Beetham.

“The secretive way in which the negotiations have proceeded so far leaves me with little confidence that either our Government or its Australian counterpart will be prepared to amend the agreement in any significant way,” Mr Beetham said.

“If that is the case, and the Government has its mind irrevocably made up, the airing of the draft will be nothing more than a cynical sham," he said.