logo logo

Fran O’Sullivan : United States owes NZ a free trade deal

New Zealand Herald, Auckland

Fran O’Sullivan : United States owes NZ a free trade deal

By Fran O’Sullivan

18 March 2007

Helen Clark needs to muscle up to George Bush this week and directly push the case for a bilateral free trade deal with the United States.

Bush has just returned from Latin America where he offered a freer trade deal to Uruguay which, like New Zealand did not send troops to Iraq but, unlike New Zealand, did not help the US in Afghanistan in the long-running war on terror.

Uruguay, like New Zealand, has political utility for the US as a counter-weight to the anti-Americanism that is booming in nations like Venezuela.

For some New Zealand companies and farmers - who are still waiting to enjoy the more favoured access other nations enjoy to the US Government procurement market or the vast US consumer market - this really sticks in the craw.

Even though many of our more innovative companies - like Fisher & Paykel or Orion - have no difficulty ponying up their operations in the more competitive US market, prohibitive measures do impact on our meat and dairy sectors.

In 2003 when the US was in free trade talks with Australia, Bush said : "The people of New Zealand shouldn’t read anything into it other than, we just haven’t gotten started."

That statement is looking rather hackneyed now, given the deals the US has since offered to other friends - like South Korea - and the contribution this country has made to the war on terror and Pacific stability.

Just whether Clark’s stocks have risen high enough for Bush to decide to talk about an FTA between our two nations any time soon, has not been given much attention by New Zealand’s foreign affairs mandarins.

If anything, they have deliberately played that prospect down when briefing journalists on Clark’s second visit to the White House.

The basic message is not to expect an announcement that the US will open free trade talks with New Zealand. It is not even an agenda item for the one-hour official discussion that Clark will have with President Bush.

They say this week’s trip is all about consolidating the relationship - joint efforts in counter-terrorism (but not Iraq) ; trade (WTO but not a bilateral FTA) and political instability in the Pacific.

That’s the somewhat disingenuous drum being beaten on the Prime Minister’s behalf.

But realpolitik suggests otherwise.

Iraq may not be at the centrestage of Clark’s face-to-face meeting with Bush. But it’s difficult to imagine how the US President could avoid talking about this particular elephant in the room during his consultations with her on common efforts in the war on terror which appear to be the central focus of the meeting, according to the White House press statement.

Whatever our mandarins say, Iraq is the key foreign policy issue confronting the US and it would be an absurdity for Bush not to seek Clark’s views on how stability might ultimately be brought to that region simply because New Zealand does not have troops on the ground there.

The Prime Minister will not say so outright, for fear of offending the left, but New Zealand is playing an integral role in the US military supply chain.

The mere fact that Clark has extended the tour of our military mission in Afghanistan along with other Nato aligned nations helps the US by enabling it to continue to free up its own military for deployment in Iraq.

New Zealand will inevitably be involved in the discussions over the post-US occupation phase and Clark would do well to reaffirm that point with Bush. She has a tactical advantage. Bush, increasingly a lame duck as he enters the final stretch of his presidency, should not be written off in the expectation that New Zealand might forge a closer relationship with a Democrat successor.

Clark could well make the argument to Bush that a stronger and more economically vibrant New Zealand will be better able to fund future contributions to the war on terror.

It is high time the US offered New Zealand a quid pro quo on the economic front to offset the contributions we are making on the foreign affairs and security front.

The White House press statement says the two leaders will review efforts to advance and strengthen bilateral relations.

If ever the time was ripe to advance relations by pushing for a bilateral free trade deal, it is now.

Glyn Davies, US Deputy Assistant Secretary for East Asian and Pacific Affairs, paid tribute to New Zealand’s role in the South Pacific last week and noted the bilateral relationship was excellent. He said the US was seeking greater cooperation with New Zealand in a number of areas in which it can make significant contributions, including non-proliferation, counter terrorism, humanitarian and disaster relief, and peacekeeping.

Clark’s White House visit was expected to further those goals. "While we may consider an FTA with New Zealand in the future, we are currently working through our Trade and Investment Framework Agreement (TIFA) to further deepen our economic relationship,"said Davies.

Frankly, that’s not good enough but unless the Presidential trade promotion authority is extended, any deepening of the relationship may have to come (in the short-term) by adding new chapters to the TIFA.

This could be done in particular sectors but it will require the US administration to tell its protectionist farming camps to back off.

Clark will meet a number of big US investors in New Zealand during her trip, including Boeing which has long pushed New Zealand’s case for an FTA. The US Chamber of Commerce, which also wants free trader New Zealand to be in the tent, will also feature.

But the main game is a political one. Clark and Bush have formed a good working relationship, particularly at Apec where they were photographed - by the White House photographer in Hanoi last year - in a solemn conflab outside the meeting.

Clark played an integral role in getting climate change on to the official APEC agenda along with proposals to investigate a Free Trade Area in the Asia-Pacific region to which Bush has attached his own imprimatur.

New Zealand also works with the US to advance the World Trade Organisation goals.

But that’s not where the action is for this bilateral.

The travelling New Zealand press corps has been told it will be limited to just two questions when reporters are ushered into the Oval Office after the meeting concludes.

There are just two issues that really matter : Iraq and the FTA.

Anything else is just diplomatic window-dressing.