KEY POINTS:
The United States' decision to enter negotiations to join a free-trade group that includes New Zealand comes just weeks before a new administration is elected in the US and much will depend on the stance the new administration takes.
Word seeped out yesterday that the US had decided
to join the so-called P4 trade agreement, which encompasses New Zealand, Singapore, Chile and Brunei.
The US decided in March to hold talks with the P4 focusing on investment and financial services only, but it's now decided to join the whole deal.
Prime Minister Helen Clark last night put the potential deal in the same ballpark as getting a bilateral free trade agreement with the US, something the Government has sought unsuccessfully for several years.
"I think the value to New Zealand of the United States coming into a transpacific agreement as a partner would be of the same value as we would hope to get from a bilateral FTA," Helen Clark said. "It's very, very big news."
The news leaked out of the US before an announcement expected today by Trade Representative Susan Schwab.
Trade Minister Phil Goff has flown to Washington for that announcement but an unnamed United States diplomat provided an interview to the AFP press agency confirming the move.
While politicians in New Zealand are hailing the development - which clearly further indicates a warming of the relationship between the two countries - there is still considerable uncertainty about what the deal might bring.
The US farming lobby is extremely powerful and is unlikely to take kindly to the idea of removing tariffs for New Zealand goods coming into the US.
Negotiating as a group of four instead of alone could also have an impact on how favourable the deal is for New Zealand.
Because the announcement has been made in the final months of the Bush Administration, it will be up to the John McCain or Barack Obama Administration whether it continues the talks and, if so, how much it is prepared to give away.
The Democrats, in with a chance of taking the White House, are less friendly towards free trade than their Republican counterparts.
Despite this, an upbeat Helen Clark last night appeared hopeful the problems could be steered through.
"I believe that to Democrats, New Zealand offers very few problems because we are very keen on environment and labour agreements as part of an overall approach to an FTA," she said.
On the issue of beef, sheep and dairy farmers in the US, she said she didn't think the Administration would have proceeded if it didn't think those issues could be dealt with.
It was "impossible to say" yet how long it would take to phase out tariffs with the US, which accounted for 10 per cent of New Zealand's total trade, the Prime Minister said.
The Employers and Manufacturers Association said last night that it was "hugely supportive" of the announcement that negotiations would begin, and the Government should be "loudly congratulated" for it.
"A comprehensive FTA with the US would rate ahead of the FTA with China and second only in terms of importance to a favourable outcome under the WTO," chief executive Alasdair Thompson said.
Talks for the Chinese agreement signed this year took around three years but Helen Clark thought the talks with the US could be shorter.
"I think once the US trade system gets up a head of steam, one would hope that steam to carry on through to whoever the subsequent Administration is."
THE P4 DEAL
What is the P4 agreement?
A free trade deal between four countries - New Zealand, Singapore, Chile and Brunei.
Will the US join?
It has started talks but the outcome could depend on the result of the US elections in November.
Would this give NZ business much greater access to US markets?
In theory, yes. Originally the US was considering only investment and financial services but now it says it wants to be part of the whole deal.
