US says dairy sector could be ready for NZ trade deal

NZPA | Tuesday September 23 2008

US says dairy sector could be ready for NZ trade deal

The United States’ dairy industry is more open to a free trade deal with New Zealand than in the past, US trade representative Susan Schwab says.

New Zealand has pressed for years for a free-trade agreement with the United States, but has faced strong opposition from US dairy and other farmers worried about opening the US market to a strong competitor.

But Ms Schwab today announced the US will begin negotiations on joining the "P4" trans-Pacific trade pact early next year with New Zealand, Chile, Singapore and Brunei.

The pact — initially signed in 2005 — aims to tear down tariff barriers among member companies within a decade. US accession to the pact could be worth up to $1 billion a year for New Zealand’s economy.

Ms Schwab today said the US dairy industry’s attitude had changed over the years.

"There are clearly sensitivities that need to be negotiated," She said.

But "our dairy industry really has been remarkable in its development over the last 10 to 20 years ... This is a sector that is increasingly sophisticated about its stake in more open trade".

Trade Minister Phil Goff, who was in New York, for today’s formal announcement said fears of New Zealand flooding the US with cheap imports were unjustified because New Zealand’s farmers were unsubsidised.

"The American dairy industry is alive and well and thriving, quite able to compete with New Zealand."

Their comments followed news seeping out yesterday of the deal.

That news has been largely welcomed, but some groups have raised concerns over whether a new Democratic administration would stall or overturn the decision.

The US will hold its presidential elections in November.

But Prime Minister Helen Clark said she was confident trade negotiations would continue even if Democratic candidate Barack Obama won the presidency.

She said several pending trade deals had been carried over from the end of former President Bill Clinton’s administration.

"In my view if the US administration sees a good case for this it is likely it can carry on from one administration to the next," she told reporters.

"We also know from extensive lobbying over many years with Democrats that they find New Zealand a much more congenial FTA partner than they would find many other countries."

Miss Clark moved to assuage fears raised by the Green Party and the Council of Trade Unions (CTU) that a deal with the US could lead to the axing of New Zealand’s drug subsidy agency Pharmac, which has significantly lowered the cost to taxpayers of medical drugs.

She said she expected the US to raise New Zealand’s pharmaceutical subsidy regime, but New Zealand would be careful about what it gave away.

"We also have to be very mindful of what’s fair to the Kiwi taxpayer."

Miss Clark rebuffed suggestions the US agreement to enter negotiations was a pay off to New Zealand for moderating its stance at the United Nations over US sales of nuclear technology to India.

Business groups today cheered the prospect of the trade deal, but unions greeted the news more cautiously.

CTU economist Peter Conway said any negotiation with the US had considerable risks including the possible axing of Pharmac and demands on New Zealand to relax its overseas investment criteria.

But Mr Conway also said tariff-free entry of exports into the US market had major potential benefits for this country, and it was likely government procurement by the US would be more favourable towards New Zealand.

Business NZ chief executive Phil O’Reilly said the prospect of a free-trade deal with the US, under P4, was some of the best news exporters could hope for.

The Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson said a comprehensive FTA with the US would deliver better trade outcomes than the FTA Australia had with the US, Mr Thompson said.

source: NBR