Head of Business for NZME

Fran O'Sullivan: English should get to Washington

US President Donald Trump shows the Executive Order withdrawing the US from the Trans-Pacific Partnership (TPP). Photo / Getty
US President Donald Trump shows the Executive Order withdrawing the US from the Trans-Pacific Partnership (TPP). Photo / Getty

Prime Minister Bill English should put Washington DC on his dance card - sooner rather than later - if he wants to secure a trade deal from Donald Trump.

The US president yesterday said he would invite the Trans Pacific Partnership (TPP) members to open talks on bilateral deals.

English has been openly optimistic about the Trump presidency. But he will have to play strong strategic cards - like New Zealand's membership of the Five Eyes security pact and its first-class trade credentials - to get over the starting line with a bilateral FTA and not be sold a pup.

Trump yesterday collapsed the Trans Pacific Partnership by formerly withdrawing the US from TPP. He has instead offered up negotiations on bilateral deals to the eleven TPP parties combined with an attendant threat to walk away within 30 days if any future party does not hold up its side of the bargain.

On the surface this is promising.

The mere fact that Trump has not completely closed the doors with the TPP parties with which the US does not have an existing agreement - Japan, New Zealand, Vietnam, Malaysia and Brunei - takes some of the sting out of his decision to walk away from the Asia-Pacific regional trade agreement. But as New Zealand knows from past experience, getting the US to sign up to a "highly comprehensive, high quality" bilateral deal will be no mean feat given the strength of American lobbies.

This country does not have a huge amount of "negotiating coin". New Zealand is basically an open book when it comes to international trade. It is likely negotiators would endeavour to transfer some elements from the TPP framework into a bilateral deal and ring-fencing controversial issues like Pharmac might prove more difficult in one-to-one negotiations with a powerful partner than within a multi-lateral framework.

But the trick will be getting to the negotiating table in the first place.

The first step is to create a political climate which will persuade Trump and his US Trade Representative Robert Lighthizer, who still has to get through the Senate Nomination hearings, that despite New Zealand's small economy a deal would make sense.

New Zealand diplomats have already established a ground game in Washington which will be critical to cinching a bilateral US free trade deal.

Ambassador Tim Groser - a consummate trade pro himself - needs little introduction around the DC establishment. The NZ embassy also his good contacts with the key players like House Ways and Means Committee Chairman Kevin Brady who was pro-TPP.

Trade Minister Todd McClay will be in the box seat when it comes to talking with Lighthizer in a few weeks' time (assuming he is appointed and that is not a dead cert).

Christopher Liddell, the NZ businessman appointed to a White House position as the president's point man with the private sector, was among a number of business people who got behind the formation of the NZ US Council in 2001, which supported a lengthy NZ Government campaign in Washington.

Liddell works for the United States. But he is likely to advocate for New Zealand as a first-class trading partner - but not lobby for the substance of a deal.

Former Trump campaign manager Stuart Jolly - who has worked with the NZ embassy to connect the diplomats with Trump insiders and the new Administration - will also be an ally.

Assuming New Zealand does get to the negotiating starting line as Trump has implied - the next challenge with be for any FTS to be comprehensive and high quality.

It's notable that New Zealand already has a free trade deal with China which is broadly seen to have a demonstration effect - for instance tariffs on dairy products reduce to zero in the early 2020s.

At Davos last week Chinese President Xi Jinping said protectionism was akin to "locking oneself in a dark room."

Whatever Trump says now he is not in the longer run going to want to handover regional economic leadership to Xi.

China has talked previously about acceding to TPP. With several of the TPP members - including Japan and Australia - now talking openly about a "TPP minus one" agreement the ability for China to accede will also be under discussion (even if behind closed doors for now).

While this might not worry Trump who backs his own deal-making skills, it will worry the Washington establishment.

- NZ Herald

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