New Zealand does not want Canada joining negotiations for the Trans Pacific Partnership agreement because Canada wants dairy products exempted from any deal, Prime Minister John Key said in Ottawa last night.
"The sticking point is Canada wants to exclude dairy, and that would be unacceptable to us," Mr Key told the Herald.
"Our focus is on getting an agreement that is comprehensive and flexible.
"We certainly would be resistant to anything that halted the process up."
The TPP issue was discussed at talks yesterday between Mr Key and Canadian Prime Minister Stephen Harper, but Mr Harper gave nothing away in his comments at a press conference.
"We're a supporter of the broader objective of a number of Apec countries to try and establish a free-trade area of the Asia-Pacific, and obviously Canada works closely with New Zealand and others to try and further that ultimate objective," Mr Harper said.
But Mr Key said later he believed that the dairying lobby in Canada was even stronger than in the United States, which is one of four new countries (with Australia, Peru and Vietnam) talking to the current four countries in the TTP for a broader deal.
That would make membership of the group very "challenging" for Canada.
Mr Key said that if he were to return to the United States this year for a visit he would not rule out meeting some of the 30 US senators who warned againsta deal involving New Zealand's dairy products.
The first set of talks on the TPP was held in Melbourne last month, and the second set is to take place in Los Angeles in June.
Canada is understood to have been approached in 2006 to join the TPP when only New Zealand, Singapore, Chile and Brunei were members. But it was not interested until the United States made its interest known, first through President George W. Bush in 2008 then last November by President Barack Obama.
Afterwards Mr Key told the Herald that the ball was in Canada's court.
He agreed that a condition of New Zealand's support for Canada joining TPP talks was for it to accept the inclusion of dairy in the deal.
New Zealand's dairy industry is not subsidised.
Canada, which has about 13,000 dairy farmers, runs what is called a supply management framework to control supply and demand and it even runs a quota system for cows. Farmers cannot just increase their herds if they want.
But protections are inconsistent: dairy and poultry are highly protected but the beef, pork and grains industries are not and believe strongly in free trade.
Mr Key rejected a suggestion reported in Canada that the United States had vetoed Canada getting on board at this early stage.
At the same press conference, Mr Key said New Zealand would give $685,000 to a Canadian-led project under the G8 Global Partnership Against the Spread of Weapons of Mass Destruction.
The money would pay for radiation detection equipment for a Russian nuclear facility to help prevent the trafficking of nuclear and radiological materials.
New Zealand has already given $6 million towards other projects.By Audrey Young Email Audrey