New Zealand and Australia freeing up trade

By , Special to The Christian Science Monitor

Australia and New Zealand - sometimes testy neighbors - have agreed to begin a new era of trade relations next year.

Their ''Closer Economic Relations'' plan, hammered out after two years of negotiations, proposes to phase out tariffs over five years, remove New Zealand's import licensing and tariff quotas, and eliminate export subsidies and incentives in trans-Tasman Sea trade.

The knitting of closer ties stops there, however. Politicians on both sides of the Tasman see little or no prospect of an integrated political or economic system; they opt only for improved trade.

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''A common market of 18 million people (15 million Australians, 3 million New Zealanders) is far better than separate markets of 15 million and 3 million,'' noted Chris Hurford, Australia's opposition Labor Party spokesman on trade, as he endorsed the plan in principle.

Then he added: ''It would have been better for New Zealand if they had come into some form of union with us in 1900. Foolishly they did not do so. Relatively, their standard of living has declined - until it is well below that of ours now. That is why we have the enormous problems across the Tasman.''

The comment speaks volumes about the delicate relationship between the two Commonwealth members, separated by more than 1,000 miles of ocean. Australians tend to take New Zealand for granted, an attitude that helps to persuade New Zealanders to resist fiercely any suggestions that there should be closer political ties between the two countries.

Public response to the new plan sheds more light on this relationship. A recent public opinion poll showed 62 percent of New Zealanders favored the proposal, while 18 percent opposed it. No one has taken a poll in Australia; in fact, there seems to be little awareness of the plan. The press has barely mentioned it, and even the deputy prime minister's announcement of government approval was brief.

The proposals will replace the 17-year-old New Zealand-Australia Free Trade Agreement. NAFTA, as it was known, involved an item-by-item approach and had reached the end of its useful life.

New Zealand Prime Minister Robert Muldoon says the point had been reached where the agreement covered ''pretty well everything that was likely to be accepted. We were finally getting down to considering seriously things like harness brass - at about that size. And we thought, 'This is nonsense, we are not going to go any further with NAFTA.' (Australian deputy Prime Minister) Doug Anthony and I had a meeting three years ago and decided to try a much more comprehensive approach.''

Mr. Anthony, who is also Australia's minister of trade, says the main aim of the proposals is ''quite simply the gradual and progressive liberalization of trade across the Tasman for all goods produced in either country.''

The new agreement has not been received with total acclaim by Australian manufacturers. The Australian Metal Trades Industry Association tried to have the agreement changed to get an early winding down of New Zealand export incentives and import licensing, but it wound up with only minor changes.

The Confederation of Australian Industry, however, heartily welcomes the plan , saying it will bring considerable benefits to Australian industry.

Despite the similarities of Australia and New Zealand, nothing has ever come of suggestions that New Zealand might become Australia's seventh state. Ninety years ago, when the original negotiations between the Australian colonies began (which led eventually to the formation of Australia as a federation), representatives of New Zealand took an active part in helping to develop the terms of the proposed new constitution. But after the first meetings, New Zealand withdrew from the constitutional convention.

In the last decade, tens of thousands of New Zealanders have migrated to Australia, assisted by the fact that until last year there was no need for the nationals of either country to have passports to enter the other country.

New Zealand has probably been affected by this loss of population, although Prime Minister Muldoon strongly denies there has been a real ''brain drain.'' Instead, Mr. Muldoon says, ''There's quite a lot of New Zealanders in Australian industry and vice versa. There is a body drain which hasn't much brain.''

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