AUSTRALIA-NEW ZEALAND: Suffering a Turbulence in Relations (1) An Inter Press Service Feature

SYDNEY, Nov 24 (IPS) - The Australian government of Prime Minister Paul Keating has fashioned itself into a champion of free trade in the Asia-Pacific, but its neighbour across the Tasman Sea is beginning to wonder if that enthusiasm is directed only at Asia.

Australia has a Closer Economic Relations (CER) Agreement with New Zealand just next door, but now the two countries are locked in a bitter air services dispute.

Last month, Canberra suddenly revoked a two-year-old memorandum of understanding with Wellington that would have given Air New Zealand the right to operate domestic services in Australia. Qantas, Australia's national carrier, would have enjoyed reciprocal rights in New Zealand.

Five days before the agreement was to have taken effect, however, Canberra told Wellington that it would not be able to honour the so-called One Sky policy.

The move has deeply upset Australia's trans-Tasman cousins, who were doubly hurt because of the way they were informed of Canberra's decision: via a one-page, five-paragraph fax sent by Australian Transport Minister Laurie Bereton to his New Zealand counterpart Maurice Williamson.

"I don't believe that it's in the spirit of the relationship between Australia and New Zealand for a bilateral arrangement to be cancelled by fax," complained Williamson after flying into Canberra earlier this month for talks on the issue.

Last week, the New Zealand government decided not to push through with its threat to take the issue to international arbitration. But political analysts here say Wellington still sees the matter as a "calculated issue" and are studying its wider implications on the CER Agreement between both countries.

Experts like Christopher Findlay of Adelaide University's Economics Department also say the dispute also brings to question Canberra's pledges on free trade.

"The federal government is sending an astonishing signal to the rest of the region by shutting the gate on the integration of the air transport market between Australia and New Zealand," says Findlay.

"The prime minister has spoken recently about integration with Asia," he adds. "A shut-the-gate air transport decision says we cannot even face up to competition from the New Zealanders."

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