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NZ: Momentum growing for free-trade deal with US

New Zealand Herald | 17 December 2007

Momentum growing for free-trade deal with US

By Fran O’Sullivan

Trade Minister Phil Goff has good reasons to feel cock-a-hoop as he prepares for a short New Year holiday break in South America with his family.

The world’s powerhouses, China and the United States, are about to get up close and personal with New Zealand in the free trade agreement stakes.

Next year Goff will travel to Beijing with the Prime Minister to sign the free-trade deal that has been under negotiation since Helen Clark and Chinese President Hu Jintao announced talks at the 2004 Apec meeting in Santiago.

The penultimate round of talks was held in Beijing this month.

Negotiators and legal teams are working through the hundreds of pages of text that will underpin the ultimate agreement. One or two issues still need to be ironed out, but the political commitment is there to get the deal done by the April 2008 deadline set by Clark and Wen Jiabao during the Chinese Premier’s visit to New Zealand in 2005.

Clark and Goff will be able to promote the China free-trade deal as a coup for New Zealand: the first free-trade deal that China has signed with a Western developed nation.

China has already ticked off a deal with Chile and is negotiating deals with Singapore, Iceland, Australia and the Gulf Co-Operation Council.

New Zealand is unlikely to get everything it asked for. The deal that China signed with the Association of Southeast Asian Nations was sub-optimal. There will also be winners and losers on both sides. But the deal will be promoted as comprehensive, high-quality and consistent with World Trade Organisation rules.

The question Wellington will have to confront if it also signs a sub-optimal deal, is what template has it set for other agreements China might forge with developed nations.

Such questions will be glossed over in the haste to sign a first that will position the Clark Government well to make great political mileage in election year. Already a publicity campaign to promote the upside of the deal to New Zealand’s exporters is in the pipeline.

Across the Tasman, Prime Minister Kevin Rudd — a fluent Mandarin speaker who served in Beijing as a diplomat — does not see bilateral free-trade deals as Australia’s main game.

Rudd’s economic adviser, Ross Garnaut, labels free-trade deals Trojan horses for protectionism. Garnaut — who is strongly critical of the deal Australia signed with the United States — cites China’s desire to protect its farmers as a critical factor in bilateral talks.

The movements on the US front are the most intriguing.

Goff is not giving too much away.

The United States does not appear ready to announce negotiations on a direct bilateral free trade agreement with New Zealand. The economic spin-off for the United States is frankly too minuscule for Washington to risk upsetting farming lobbies at this stage in its own electoral cycle.

At the United States New Zealand Partnership Forum in Auckland a number of intermediary steps were promoted, among them getting the United States Trade Representatives office to do a preliminary study on costs and benefits.

Goff has also promoted a linkage between Nafta (The North American Free Trade Area which comprises the United States, Canada and Mexico) and CER (New Zealand and Australia).

But it would appear that Washington is most interested in forging a deal with the Pacific Four nations (New Zealand, Singapore, Chile and Brunei) who have forged a Trans-Pacific Strategic Economic Partnership (known as P4).

A Pacific Five deal could be presented as a model free trade agreement.

If the World Trade Organisation talks are ultimately shelved, a Pacific Five agreement could become the nucleus for an Asia-Pacific free-trade area.

The issue is expected to be canvassed during a planned visit by US Under-Secretary of State for Democracy and Global Affairs Paula Dobriansky early next year.

There are plenty of ifs and buts, but New Zealand is finally about close to entering negotiations with the United States — not directly but it’s a step in the right direction.

 source: NZ Herald