KEY POINTS:
The United States' decision to join negotiations on a regional financial services and foreign investment accord with P4 is a huge fillip for this country.
Fast forward five years.
New Zealand may well be able to use the forthcoming free trade deal with China to encourage global companies
to site more operations here to target the world's fastest growing consumer market.
That's the big picture. But there's a lot of hard graft to be done by the New Zealand Government, diplomats and business to take full advantage of the burgeoning opportunities.
NZ Inc was justifiably cock-a-hoop at yesterday's announcement by US Trade Representative Susan Schwab that a financial services and investment accord with the Trans-Pacific Strategic Economic Partnership (as P4 is formally known) might be followed by negotiations to enter a comprehensive free trade deal.
Such a deal would link Singapore, Chile, New Zealand and Brunei with the US in an arrangement criss-crossing the Pacific.
What's being talked about right now is not a typical free trade deal with P4 (the US already has separate bilateral deals with Singapore and Chile) which would liberalise trading in goods and services to New Zealand's ultimate advantage.
But that may well occur later if the soundings Schwab takes with power players in the Senate and Congress results in broad agreement that it is in the US' interest to do a deal that would turn P4 into P5. In reality, such a step will not be finalised this year. It's just too close to the presidential elections for either side to put political capital at risk here.
The only trade deal that stands any chance of getting over the line within the months remaining in President George W. Bush's second term would be a conclusion to the World Trade Organisation Doha Round.
The US would have to be incredibly brave - or stupid - not to come to the party if the WTO negotiators can work through the remaining sticking points. But that is dependent on agreement being reached on agriculture and industrial goods.
Irrespective, there is an element of realpolitik behind yesterday's announcement.
US companies - concerned about their ability to unlock investment opportunities in Asia because of changes wrought by a plethora of Asian bilateral and regional trade deals - have been urging the USTR's office to shore up their interests. The US will initially try to negotiate rules covering foreign investment in sectors such as express delivery, telecommunications and insurance based on the terms of the FTAs it has previously worked out with Chile and Singapore.
New Zealand also wants to shore up foreign direct investment by US companies here to help underpin the economy and jobs.
The Government has been concerned that US companies have been diverting investment to Australia, after it signed a bilateral free trade deal with the US in 2004, by basing their Asia-Pacific headquarters there.
Trade Negotiations Minister Phil Goff - who deserves credit for managing to turn the goodwill generated at last year's United States New Zealand Partnership Forum into something more than rhetoric - admits that's a driving factor from his perspective.
Goff notes that while he has no direct figures on which to base his gut feeling, the number of US corporates who have located their Asia Pacific HQs in Sydney or Melbourne underpins the concerns.
At the 2007 partnership forum, US Assistant Secretary of State Chris Hill indicated the stage was set to expand the relationship after years of concerted work by New Zealand Government ministers, bureaucrats and business people had built closer relations.
Reaction in Singapore and Chile has also been upbeat. Neither country views the existing P4 agreement as purely a trade deal. It's been promoted as a policy to help small countries co-operate on future challenges.
Other countries can seek to join P4 and it is hoped this will provide a basis for an Asia Pacific Free Trade Area in the event of a WTO failure.
Given that the US already has bilateral free trade deals with Singapore and Chile, New Zealand stands to be the main winner if Schwab gets approval from Washington's political kingpins to seek participation in a comprehensive free trade agreement with the P4 partners.
Some sensitivities will have to be addressed:
* Australia. It's notable that Schwab delayed her announcement until after Australian Trade Minister Simon Crean completed his visit to Washington last week.
Crean has been watching for an announcement since it was signalled two months ago.
Australia (unofficially) will not express huge public interest in the announcement at this stage of the game.
In Apec circles the Howard Government was dismissive of proposals to use P4 as the nucleus of a wider free trade agreement of the Asia Pacific region.
Australia and the US also pulled out of the original plans for a P5 (including New Zealand, Chile and Singapore).
Australia wanted to concentrate on the multilateral negotiations at the WTO whereas the US was shifting into bilateral deal mode.
Australia also wants to negotiate an investment chapter for CER and New Zealand can hardly tarry on that while pursuing an investment accord with the US.
* The Greens. Greens co-leader Russel Norman was quick to rain on Goff's parade, calling on Labour to halt discussions on an investment treaty because of "sovereignty risks and issues dealing with environmental standards".
Labour will be tempted to tread carefully around Norman because of electoral considerations. But frankly, this is one area where the Cabinet should show some courage and tell the Greens to take a jump.
Goff has yet to take the proposal to Cabinet.
At the end of the day Labour will be able to rely on strong support from National to secure this investment accord. The issue is simply too important to allow the tail to wag the dog here.
