Global trade talks on agenda when Key meets Clinton

John Key. Photo / Mark Mitchell

Prime Minister John Key will stress United States leadership is crucial to getting a successful conclusion to the Doha trade round when he meets US Secretary of State Hillary Clinton in Auckland on Friday.

"We see that as a fundamentally important building block in terms of restoring economic growth," says Key. "It's one thing I want to talk to her about, not withstanding that trade doesn't fall within her broader remit ... but she's Secretary of State."

Key's determination to get some renewed US focus on the importance of global trade talks is well-timed. On Friday, World Trade Organisation Director-General Pascal Lamy warned the prospects for a recovery of the global economy this year could not be guaranteed because the massive public investment injected into financial sectors had "generated lots of bubbles".

According to French radio reports, Lamy said the recession had reached the bottom "but a quick resilience was not evident. Dynamic emerging countries such as China, Brazil, India and South Africa, which were more active, better managed and less debt-burdened, had suffered less impact from the economic crisis and in some degree represented better management than the West during the recession."

Speaking to the Business Herald from Hawaii, Key stressed that the US decision to enter negotiations to join the expanded Trans Pacific Strategic Economic Partnership (TPP) would obviously feature strongly given New Zealand's involvement as one of the TPP's four bedrock partners.

"The President has essentially put trade back on the agenda with TPP," says Key. "But on a broader basis the Americans have been talking about Doha."

Trade Minister Tim Groser emphasises the WTO round is still at the top of New Zealand's trade priorities.

"We are not going to back off ... there will have to be continual pressure until such time the parties realise the deal has to be done."

While Groser will not be present at Key's formal talks with Clinton (the pair will be accompanied by Foreign Minister Murray McCully and US Assistant Secretary of State Kurt Campbell), he will have briefed the Prime Minister on the potential for the United States and New Zealand to collaborate in an effort to conclude negotiations within the new 2010 deadline.

Groser will join other key trade ministers in Switzerland later this month for an informal meeting alongside the World Economic Forum's Davos Summit.

In fact, the brutal reality is that the Obama Administration has been slow to take up the cudgels on international trade.

Trade was well down the incoming President's list of priorities as he dealt with the effects of the global financial crisis on America and ushered in his health legislation.

Says former US Trade Representative Susan Schwab, "There needs to be a way of validating trade with the domestic concerns that have been hit by the economic downturn ... When those issues have been addressed we will start to see movement on the trade agenda."

Writing on his blog, US Trade Representative Ron Kirk stressed trade policy that expands export opportunities could create jobs in American communities and put dollars in the pockets of American families.

The US wants to create a 21st century trade agreement that reflects American priorities, enhances American competitiveness, and generates job-creating opportunities for American businesses and workers. A "fact sheet" points out that six million American jobs are sustained by exports.

The US has clearly been spurred to join TPP because it fears exclusion from the major new trading alliances being built in Asia. The same USTR fact sheet notes a 2001 study by the University of Auckland's Robert Scollay forecast that America could lose as much as US$25 billion ($34 billion) in exports annually solely from static effects of an East Asia Free Trade Area excluding the US.

"This is the United States' chosen vehicle for being part of the architecture that is evolving for trade and investment liberalisation - they are well aware they are not part of the Asean Plus Six.group (East Asia group)," says Groser

The Trade Minister says the first priority for TPP is to nail the conceptual groundwork, in the context of the strategic realities facing the Asia Pacific and the United States. "But let's be clear for this to succeed we have to respond to the rhetoric of an agreement for the 21st century."

Auckland Regional Chamber of Commerce CEO Michael Barnett emphasises when New Zealand businesses first established a platform to accelerate a US trade deal, Asia was not the powerhouse it is today.

"We believed that we needed a trade agreement with the US," says Barnett. "But time has provided some trade partners for NZ who are easy to do business with and see the value of having NZ as a trade partner."

"The US on the other hand has continued to play hard to get over the last 10 years and has not figured in the bilateral pursuit like NZ has nor has it participated with Asia the way we have.

It has little option but to participate but we just need to be realistic and accept that via TPP we may end up with a free-trade deal with the US, but it's a backdoor deal and done for them not for us."