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Friday, 5 December 1986
Page: 3510

Senator BUTTON (Minister for Industry, Technology and Commerce) —Mr President, I seek leave to make the Government's response to the report of the Senate Standing Committee on Industry and Trade on `closer economic relations between Australia and New Zealand' and to incorporate the statement in Hansard.

Leave granted.

The statement read as follows-


The Senate Standing Committee on Industry and Trade commenced its inquiry into Closer Economic Relations between Australia and New Zealand on 24 August 1984, and subsequently issued four reports: the final report was tabled on 20 August 1986.

Closer Economic Relations between Australia and New Zealand has bi-partisan support in this Parliament and in New Zealand. The Trade Agreement represents the most comprehensive bilateral trading arrangement entered into by either country. It was negotiated in the two years preceding the change of Government in 1983 and was signed into effect as from 1 January of that year by the Deputy Prime Minister and then Minister for Trade, Lionel Bowen on 28 March 1983.

The Trade Agreement provides the framework for the development of trans-Tasman trade under conditions of fair competition through the elimination of specific trade barriers in a gradual and progressive manner. It incorporates safeguard measures which are designed to deal with unfair competition and certain prejudicial situations.

The Government considers that the automatic provisions of the Trade Agreement have been implemented smoothly and that industry on both sides of the Tasman is taking advantage of the increased trading opportunities being opened up by this process.

Since the commencement of the Agreement Aust- ralia's export earnings to New Zealand increased by $282 million to $1,496 million in 1985. It is apparent that Australia's export performance has recently been influenced by reduced demand in certain sectors in New Zealand which possibly obscure the benefits associated with increased liberalisation for Australia's exports under the Agreement.

The Government has considered the recommendations of the Committee and finds many similarities with the broad objectives of Government policies. The Committee's concern that exporters are not taking full advantage of the increased opportunities provided under the trade liberalisation provisions of the Agreement parallels the Government's efforts as exemplified by the National Export Drive to encourage the business community to look at export markets. The Government also has actively encouraged the Australia/New Zealand Business Councils to provide views on the longer term closer economic relationship.

The Government has also moved to improve the anti-dumping/countervailing procedures within the framework of international rules which apply to trans-Tasman imports under the Agreement. As regards those matters touched on by the Committee which are not presently covered under the Agreement, such as industry assistance measures, the Government will be looking to see if further understandings should be reached in the context of the 1988 review of CER. A joint working party of officials has been recently set up to examine the impact of bounties on trans-Tasman trade.

Overall the Government is encouraged by the Committee's support for the development of wider arrangements and co-operation under CER aimed at achieving more fully the objectives of free trans-Tasman trade by the elimination of remaining potential trade distorting factors.

In this regard the Committee's recommendations and findings represent a valuable contribution to the further consideration of ways to strengthen and develop the closer economic relationship and provide a useful element in the development of Australia's approach to the 1988 review.

In the main the Committee's recommendations and findings directed at the Government can be categorised under the following groups

Public awareness/monitoring

Industry policies and non-tariff barriers

Effectiveness of safeguard measures

Agricultural co-operation

This statement provides comments in each of these areas.

Public Awareness and Monitoring

The Government agrees with the importance attached by the Committee to CER publicity and that the business community's response to CER could be improved.

The Government has stressed the urgent need for the development of increased exports and that it looks to individual Australian firms to capitalise on opportunities. Campaigns have been mounted to publicise the opportunities for trade under CER and Monitoring Reports have been published regularly with the view to keeping interested bodies abreast of developments and progress under the Trade Agreement.

As part of the National Export Drive recently launched by the Minister for Trade further seminars were held in Brisbane, Sydney and Melbourne in October and a series of workshops are to be conducted by the Australian Trade Commission next year to encourage exporters and manufacturers to export to New Zealand.

Trade flows between the two countries have been monitored on an ongoing basis since the Agreement entered into force. There are however difficulties in taking up the Committee's recommendations on a more useful series of statistics because of the lack of reliable statistics in measuring the operation of the Agreement in areas other than direct trade, such as employment and industry performance information. Indeed given the wide variety of general economic and other factors which influence commercial judgments in both countries it is questionable whether the effects of the Agreement can be isolated in any meaningful form.

The Government supports the Committee's view on the need for continuing close consultation between government, industry and unions on the impact and development of the Agreement and for adequate preparation for the 1988 review and believes there is a need to encourage the widest possible community interest in the closer economic relationship. In this regard consultations are being held with the private sector to identify matters which might contribute to the further development of the relationship and submissions or comments have been invited from interested organisations and the public at large.

Industry Policies and Non-Tariff Barriers

A central objective of the Trade Agreement concerns the elimination of quantitative restrictions. The Government has acted on Australian exports concerns at the continuing restrictive effect of New Zealand's import licensing system which under the Agreement is to be removed by 1995 at the latest by seeking improvements to the licensing system. New Zealand recently announced that import licensing for goods not covered by its industry development plans will end on 1 July 1988 and as a result of a significant reduction from 1 July 1986 in the number of Australian goods requiring import licensing into New Zealand, some 70% of the available 1986/87 access has been issued compared with 54% for the same 150 categories in 1985/86.

Progress has been made in the consideration of liberalisation measures to apply to the few outstanding modified arrangements. Governments are to hold further talks on apparel and steel products later this year and following further discussions between the tobacco industries will address possible arrangements in this area.

Progress has been made also towards harmonisation of standards and other regulations which can affect conditions of trade. In particular mechanisms have been established to achieve greater harmonisation of food standards and food labelling.

There have been developments relevant to the areas of government purchasing, standards, and transport costs, which the Committee highlights as acting in varying ways as non-tariff barriers to trade. As a consequence of the arrangements recently introduced by the Government in conjunction with the States on purchasing policies the New Zealand Government is considering the basis of New Zealand's possible involvement in the National Preference Agreement. In addition a joint study between the Governments has been initiated into trans-Tasman transport costs.

The Government is aware that trade problems may arise as a result of different approaches to industry policy in Australia and New Zealand.

However, while recognising the benefits available from CER, the Government is also concerned to ensure that industry policies in Australia are designed to improve the performance of our industries and exporters in terms of the wider international market.

Nonetheless, with both the Australian and New Zealand Governments committed to lowering protection levels and developing a more outward-looking and competitive industry environment, differences between the industry policies of the two countries are expected to reduce progressively. While in some areas change is likely to be slow the effect will be to reduce the magnitude of the problems cited by the Committee.

In pointing to a lack of a plan in CER for future development of industries and regions in both countries the Committee seems to be envisaging an Agreement which sets the pattern of industry development in Australia and New Zealand. This of course goes well beyond the stated objectives of the Agreement which was intended to set a stable and predictable free trade framework within which industry in both countries could plan its activity in respect of the trans-Tasman market.

The Government also recognises that with the removal of tariffs the scope for non-tariff barriers to influence the development of bilateral trade increases. These non-tariff barriers are among the issues that will be addressed in the lead-up to and during the 1988 review. In this context consultations are currently being held with private sector organisations and interested groups, and individuals to identify by the end of 1986 ways in which trade is or is likely to be affected by differences in each Government's policies or any other matters which might contribute further to the development of the closer economic relationship.

Effectiveness of Safeguard Mechanisms

The Government notes that the safeguard provisions of the Trade Agreement were directed at providing the necessary framework to address particular problems while not frustrating the movement to free trade.

The procedures and methodology employed for anti-dumping and countervailing inquiries are set out in the GATT Codes and the Australian Customs Tariff (Anti-Dumping) Act and have broad applicability to all countries, not just New Zealand.

It is noted that the issue of application of GATT material injury provisions to agricultural industry and the related problems of access to the anti-dumping system for farmers, the capital goods industry, small businessmen and unions was commented on by Professor Gruen in his Report on the Review of the Customs Tariff (Anti-Dumping) Act. The calculation of normal values in anti-dumping cases was also raised in the Review. The Government recently completed its consideration of the Report of the Review of the Customs Tariff (Anti-Dumping) Act and on 30 October I announced decisions on the Report including the decision to establish an anti-dumping tribunal to make recommendations to the Minister on anti-dumping or countervailing action.

Agricultural Co-operation

Agriculture is an important export oriented sector in both countries. CER provides the opportunity for more extensive mutual links between industries aimed at co-operating in third country marketing. Sheepmeat and dairy products are prime examples where such co-operation already exists.

The Government notes that the concerns and sensitivities of Australian agricultural industries, particularly those of the horticultural industries were discussed at the August 1985 Ministerial meeting. In respect to horticultural products, which the Committee highlighted as a potential area for co-operation, industry representatives met in Auckland in June 1986 to discuss issues of mutual interest, with emphasis on the potential to increase co-operation between the two countries. The industries plan to meet again in July 1987 in Adelaide. In the meantime, an informal secretariat for the group has been established to ensure an ongoing level of communication and regular exchange of information.

In conclusion, the Government is concerned to develop closer economic relations between Australia and New Zealand in a way which serves the interests of both countries. Both Governments are now beginning to address the question of possible additional arrangements in preparation for the comprehensive review of the Agreement in 1988. Wide ranging consultations with interested groups have already commenced and a meeting between Governments is expected to take place early next year to determine a plan for the review.

Senator BUTTON —I move:

That the Senate take note of the statement.

Debate (on motion by Senator Durack) adjourned.