Foreign Relations of the United States, 1977–1980, Volume XXII, Southeast Asia and the Pacific

249. Memorandum of Conversation¹

Washington, November 9, 1977, 11:20 a.m.–noon

PARTICIPANTS

• U.S.

  • President Carter
  • Vice President Mondale
  • Cyrus Vance, Secretary of State
  • Zbigniew Brzezinski, Assistant to the President for National Security Affairs
  • Armistead Selden, U.S. Ambassador to New Zealand
  • Dick Holbrooke, Assistant Secretary of State for East Asia and Pacific Affairs
  • Mike Armacost, Staff Member, NSC

• New Zealand

  • Prime Minister Robert Muldoon
  • Frank H. Corner, Secretary of Foreign Affairs
  • Bernard V. Galvin, Permanent Head, Prime Minister’s Department
  • W. Neil Plimmer, Head of Australia and Americas Division, Ministry of Foreign Affairs
  • Lloyd White, New Zealand Ambassador to the U.S.

The President opened the meeting by noting that in their private Oval Office session he and Prime Minister Muldoon had discussed the international economic situation, particularly problems of inflation, unemployment, and balance of payments arising out of the sluggish state of the world economy.² The President expressed appreciation for New Zealand’s generosity in opening its doors to over 400 Vietnamese “boat people”. He observed that he had just received a copy of the Prime Minister’s newly published memoirs, Muldoon, and was “retaliating” with a copy of Why Not the Best? He also gave Muldoon a collection of photos from U.S. space satellites, and indicated that these satellite services could perform a wide variety of functions and were available to New Zealand. The President noted that there were no serious differences of view between the United States and New Zealand, paid tribute to Prime Minister Muldoon’s leadership, and invited him to inform him directly of any concerns he might have now or in the future about U.S. policies.

Muldoon said that New Zealanders have always regarded the U.S. as one of their three closest friends, and suggested that this was evident from the fact that following the first visit of an American nuclear powered warship to Wellington in some years a public opinion poll revealed 70 percent popular approval despite earlier hullabaloo in the press.

Prime Minister Muldoon highlighted two issues: (1) New Zealand’s trade relations with the U.S. and broader global trading problems and (2) emerging problems and opportunities in the South Pacific. New Zealand has always looked toward Polynesia, has a substantial Polynesian as well as Maori population, and plays a major role within the South Pacific Forum.³ He noted that many South Pacific islands are moving rapidly towards independence. Those that have already achieved statehood remain weak economically. Many of these islands and/or island groups are moving toward the assertion of 200-mile economic zones; a map of the region with 200-mile rings around each vividly demonstrates the potential problems that will arise. Over the long term the cohesiveness of the South Pacific Forum will be extremely important. The United States, Muldoon said, should recognize the importance of the future of these small, poor states to its own interests.

The development of their fisheries capabilities will be fundamental to economic growth prospects and their ability to provide employment for very young populations. Muldoon noted that both the Soviets and Chinese are demonstrating a growing interest in this region. In that context as well, it is vitally important that these mini-states become economically viable. Muldoon indicated that he had spoken with European leaders about these South Pacific countries, and had found the West Germans particularly responsive. He acknowledged that at the moment there are no acute or pressing problems in the area, but he emphasized that we should take advantage of the current tranquility to build a solid base for future development.

The President expressed strong support for the South Pacific Forum, commenting that the cohesiveness of these island states would help prevent the Soviets or other outside powers from establishing excessive influence in the region.

In response to a question from the Prime Minister, Cy Vance informed him that we would soon send a resident Ambassador to Fiji for the first time.⁴ Ambassador Selden added that Western Samoa is sending a High Commissioner here.

The President asked Muldoon what he could do to help encourage regional cohesion and economic development in the South Pacific. Muldoon avoided a direct answer, suggesting that it would be presumptuous for him to offer such advice; he proposed that Armistead Selden was better equipped to provide specific proposals. He added, however, that direct bilateral aid would be an ideal instrument for assisting the small personalized regimes in the area. West Germany, he said, was assisting the development of South Pacific shipping lines, training seamen, and extending technical assistance in the fisheries field.

The President said that he would have Cy Vance, Ambassador Selden, and Dick Holbrooke look into this and follow up with the New Zealand Government.

Prime Minister Muldoon turned the discussion to problems in the field of agricultural trade with specific emphasis upon the restrictive and protectionist practices of the Europeans. New Zealand’s dairy products, he said, are being squeezed gradually out of the UK’s market, particularly cheese. He added that they sell relatively few dairy products in the U.S. with the exception of casein.

The President suggested that he talk in detail with Secretary Bergland about this subject, and asked why New Zealand was not taking advantage of U.S. market opportunities to sell higher quality cheeses here.

Muldoon replied that New Zealand has for years concentrated on the production of a standard cheddar with the British but was gradually losing the market for this in the UK and in Europe.

The President acknowledged there are problems, but he noted the fact that the United States is a major purchaser of many of New Zealand’s agricultural products.

Muldoon acknowledged this, particularly through imports of beef which amounted to more than 50 percent of New Zealand’s beef production.

The President jocularly asked whether Muldoon thought we were taking too large a percentage of their beef. In a similarly light vein the Prime Minister acknowledged some misgivings about putting so many eggs in one basket from the standpoint of hedging against uncertainties, but clearly foresaw no large alternative markets on the horizon.

The President asserted that he saw no prospect of cutting back on the import of New Zealand beef, and assured Muldoon that if we bring in additional beef we will take New Zealand’s interests into account in apportioning such increases. He added that we are attempting to press the Japanese toward more liberal policies toward agricultural imports. Australian Prime Minister Fraser, the President said, was using exports of uranium to Europe and Japan as a lever to secure more reliable access to those markets for its other exports. The Japanese appear to feel this pressure, and they may in time lower some of the barriers.

Muldoon agreed that there is some evidence of movement by Japan toward somewhat more liberal trading practices, but progress is always made difficult by internal Japanese political considerations. He noted that Wellington intends to keep the pressure on Japan and he urged us to do likewise.

The President noted that Prime Minister Fukuda is anxious that we not overdo the pressures. He then asked Muldoon for his assessment of market opportunities elsewhere in Asia.

Muldoon described a quite relaxed New Zealand-China relationship. He had visited Peking last year; the Deputy Prime Minister traveled in China more recently. Prospects for expanded trade are rather bright with increases in New Zealand exports of newsprint and linaboard particularly promising. He added that the conduct of Chinese diplomats in Wellington was impeccable.

The Soviet Union is a different story. New Zealand’s trade with the USSR is substantial, growing, but quite unbalanced. New Zealand sells nearly $140 million in agricultural products to Russia but takes a negligible amount of Soviet products in return. Currently the Russians are eager to fish in New Zealand’s waters. Muldoon noted that his government intended to provide some opportunities to the Soviets in this field, but to keep them limited. Recently when a New Zealand diplomat was assaulted in Moscow, he (Muldoon) had demanded an immediate apology from the Russians. The fact that they responded expeditiously suggested to him that Moscow attaches some importance to cordial relations at this time. Nonetheless, he intended to proceed with caution.

Secretary Vance asked Muldoon for his reading of Soviet intentions in the South Pacific.

Muldoon asserted that this area represents a large space on the globe in which the Soviets have nothing going. They are attracted to the crill that are abundantly available in the Antarctic. Fishing interests, he thought, were preeminent at the moment. Muldoon added that New Zealand is eager to prevent the Soviet Union from establishing on-shore installations in any of the island states whose fragile political structures might leave them vulnerable to pressure.

The President said it was his understanding that the Soviets are eager to conclude a fishing agreement with New Zealand. He acknowledged that New Zealand can absorb a Soviet presence more effectively than neighboring mini-states. He indicated that our only concern would be with intelligence activities which the Soviets might undertake. He added that we have no intention of interfering on this question. The decision is, of course, up to New Zealand.

The Prime Minister stated that the Russians would get nothing from an agreement which they do not now have. Passenger and merchant vessels already stop regularly in New Zealand ports. They will not be given on-shore facilities.

Prime Minister Muldoon then mentioned the possibilities of expanding wool exports to the U.S. Secretary Bergland had told him,⁵ he said, that given the current concerns about energy, cotton and wool may become important substitutes for oil-based fibers in the manufacture of carpets. He said that New Zealand produces more carpet wool than any other country, and would be looking into opportunities to sell more here.

The President suggested that Prime Minister Muldoon contact industry and trade people in Atlanta before going there later in the week. These people could put him in touch with those knowledgeable with the tufted carpet industry people in Georgia.

At this point the President suggested that the party move to lunch where the conversation could continue.⁶

1. Source: Carter Library, National Security Affairs, Brzezinski Material, VIP Visit File, Box 11, New Zealand, Prime Minister Muldoon, 11/8–10/77 Cables and Memos. Secret. The meetings took place in the Oval Office and the Cabinet Room at the White House. Brzezinski initialed the first page of the memorandum of conversation.
2. Carter met with Muldoon in the Oval Office from 11:20 until 11:25 a.m. (Carter Library, Presidential Materials, President’s Daily Diary)
3. The South Pacific Forum, comprised of the independent nations of the region, was established in 1971 to promote cooperation among the nations.
4. John P. Condon was appointed Ambassador to Fiji in March 1978; he presented his credentials in Suva in April.
5. No memorandum of conversation of this meeting has been found.
6. Lunch was held from 12:10 until 1:23 p.m. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation of the lunch discussion has been found.