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Thursday, 11 October 1984
Page: 1666

Senator COLEMAN —On behalf of the Standing Committee on Industry and Trade I present the first report on the Development of Closer Economic Relations Between Australia and New Zealand.

Ordered that the report be printed.

Senator COLEMAN —by leave-I move:

That the Senate take note of the report.

I have the honour to present to the Senate the first report of the Senate Standing Committee on Industry and Trade's inquiry into the development of closer economic relations between Australia and New Zealand. The Committee proposes in the course of this inquiry to table a series of reports rather than present a final report after the completion of public hearings and a thorough examination of the evidence. This approach will enable matters of concern or matters requiring urgent action to be brought to the notice of the Senate and the Government at the earliest possible opportunity.

Australia and New Zealand entered into the closer economic relations trade agreement, commonly known as CER on 1 January 1983. The CER agreement is by far the most significant and detailed trade document ever signed by either country. Therefore it is the Committee's firm belief that the success or otherwise of CER will greatly influence the development of relations between both countries over the next 10 to 20 years. Because it is such an important agreement, I believe the continual re-examination and close monitoring of developments is both logical and necessary. The on-going success of CER will depend very much on the ability of parties on both sides of the Tasman to identify, discuss and resolve any problems that are likely to impact on the development of trade between both countries.

Much has happened since the agreement came into force on 1 January 1983. Not only have we seen a change of government in both countries, but also we have witnessed the ending of a severe drought in Australia, there has been a general world-wide recovery in economic growth, both countries have undertaken major reviews of a number of key industries, and in more recent times the New Zealand Government has devalued its currency by 20 per cent and has announced a major restructuring of its global trade protection policies. Unlike the New Zealand- Australia Free Trade Agreement, CER is outward-looking and it is aimed to encourage the gradual opening up of both economies to international competition. Instead of building incrementally upon NAFTA, CER seeks to break boldly from it by being comprehensive in coverage and open-ended in duration. Whereas NAFTA excluded all items unless specified, CER included all items unless specified. CER calls for a progressive and automatic elimination of bilateral tariffs, quantitative import restrictions and export subsidies and incentives. Whilst CER in the strictest sense endeavours to achieve free trade between Australia and New Zealand by 1995, it is difficult to envisage the achievement of a free trade area without the development of other common policies. My Committee believes that compared to NAFTA, CER does offer greater scope for resource efficiency and industry rationalisation. However, the possibilities appear somewhat limited if no further harmonisation is achieved. The Committee referred to this factor in its first report on CER and no doubt the Committee will wish to explore in greater detail during its inquiry the scope for further harmonisation in areas such as external trade policies, trade practices, industry assistance, standards , et cetera. The development of other joint agreements between both countries will no doubt enhance CER and help improve economic welfare and resource efficiency in both countries.

In our first report the Committee has listed several issues which it believes will greatly influence the course of CER over the coming years. I do not want to discuss these issues in any detail today, but let me say that the Committee has found at this early stage of its inquiry a number of matters that it believes require immediate attention. Briefly, these include the following matters: Australia's lack of preparedness to pursue the possibilities under CER; the very poor utilisation of the exclusive Australian licences in the first 18 months of operation of CER; the time taken to finalise agreement on how goods such as motor vehicles, iron and steel, rubber goods, apparel, tobacco, and taps, cocks and valves should be phased into the agreement; the likely disruptive effects resulting from the New Zealand 20 per cent devaluation; the need to reach agreement on foreign investment guidelines to be applied to each country; the existence of widely differing standards and labelling requirements in both countries; the need to commence formal discussion of second generation issues; the real prospects for allowing free trade between both countries in such goods as wool, lamb, sheep meat, dairy products, horticultural products, et cetera; the need to get together to establish common practices towards the development of third country trade; the high cost of sea transport between Australia and New Zealand; and the need to ensure that manufacturers of like products in both countries can compete on equal terms without the need to resort to hidden forms of assistance.

Finally, the Committee has made a number of first round recommendations which it believes should be addressed by the Government in Australia and hopefully in consultation with the Government of New Zealand over the coming months. The Committee will be watching with great interest during this time and will no doubt be reporting back to the Senate in due course on the actions taken by both governments. Because of the forthcoming Federal election, the Committee will not commence its round of public hearings until early 1985. Therefore, it is the hope of the Committee that the tabling of this report will enable intending witnesses to be in a better position to provide a full and frank exchange of views concerning matters pertinent to the Committee's CER inquiry.

I take this opportunity of thanking the members of the Committee and particularly the members of the Secretariat. Given that it is only six weeks since I introduced the reference to the Committee in this chamber I believe we have done a sterling job in presenting a report to the Senate at this time. I commend the report to the Senate.

Question resolved in the affirmative.