O'Sullivan: PM aims for place in history

By FRAN O'SULLIVAN

Prime Minister Helen Clark is trophy hunting: a free-trade agreement with the United States has been elevated to "high priority" status for her Government.

If she can bag that prize during her term as Prime Minister, Clark will go down in history as one of this country's greatest premiers.

But it will take great political determination on Clark's part and a concerted campaign by New Zealand business to get a commitment from the United States to negotiate a deal.

The September 11 atrocities have played to New Zealand's advantage as the United States openly adjusts to the new international order.

But Clark must still execute a deft internal strategy to ensure that the coalition does not fracture over the Government's unconditional support for the US.

If the war against terrorism fails to make swift headway, expect discord to erupt - not just within the Alliance, but also within Labour's own ranks, where anti-Americanism is not yet dormant. Combine that with the Green Party's opposition to free trade and Clark may well feel inclined to seek a fresh mandate by calling an early election.

The Prime Minister's not-so-subtle threat to her dissident Maori MPs to call off their opposition to the genetic modification solution or face an early election was not made in jest.

Clark's confidants in the business community had already suggested the early election option should be explored if the Government was not able to make headway.

The war against terrorism provided a ready issue to seek a fresh mandate.

But while many in business are alarmed at the general policy stasis, the Prime Minister has run out of time - and issues - to call an election before Christmas.

More generally, concern is rising in business circles at Government paralysis across other policy fronts.

A stocktake on the August Knowledge Wave Conference recommendations is under way. But no big-ticket policies have yet emerged to galvanise New Zealand.

The Air New Zealand debacle and the September 11 terrorist attacks deflected attention and monopolised senior ministers' time.

But now Clark must quickly show she is prepared to move the agenda forward.

The focus on a free trade agreement with the US - or, in PC-speak, closer economic partnership - has demonstration effect. But it must be turned into actions.

On Friday, Clark twice promoted the prospect - at an Apec Business Coalition lunch and at a dinner to celebrate the inauguration of Fonterra, New Zealand's mega-coop dairy company.

As a daughter of Waikato farmers who were National Party supporters, Clark is fully aware of the hurdles NZ will face to ensure agriculture is included in a US free trade deal.

Trade Negotiations Minister Jim Sutton and his business advisory team will test the waters at the World Trade Organisation talks in Doha, Qatar, this week.

The launch of a new WTO Round will be their prime focus, but the team - which also includes Stephen Jacobi, executive director of the recently launched Trade Liberalisation Network - will also use the meeting to lobby US business contacts on the issue.

NZ's Ambassador to Washington, Jim Bolger, will also push the issue at the conference of the Australian-NZ-American Chamber of Commerce in Washington this month.

As Clark noted on Friday, New Zealand cannot ignore the prospect that other countries - in particular Australia - are aiming for the same thing as New Zealand.

Some key pointers are worth repeating from Clark's speech:

* If New Zealand does not press ahead its competitive position in the United States could be undermined by other third countries (read Australia) having better access in that market.

* The US has "unambiguously" recognised and appreciated New Zealand's support for the war against terrorism.

* The US Administration is now focused on getting its Trade Promotion Authority through the Congress.

Clark stresses that New Zealand will play up several points as it strives to open negotiations. She has signalled New Zealand wants to be one the first cabs off the rank (Chile and Singapore are already in discussions with the US and New Zealand should be in there as well).

US business has consistently suggested it makes no sense for Australia and New Zealand to work separately on trade agreements with the US. (New Zealand already has an excellent CER deal with Australia and an agreement with the US would have a major impact on the CER market, not least the investment market. Thus, if Australia is in, then so New Zealand will have to be).

While agriculture is a likely area of difficulty, New Zealand's approach will be to ask how much time is needed for domestic industry to adjust and to establish a clear timetable for open access.

US dairy protectionism is one of the major hurdles New Zealand's negotiators will have to deal with.

But only weeks into his role as chief executive of Fonterra, Craig Norgate has also made getting a free trade agreement with the US a priority for his company. Norgate took the opportunity at last week's international dairy federation congress in Auckland to discuss the issue with his US counterparts. Key executives have been asked to focus on the lobbying.

But the pressure also needs to be whipped up in the United States.

Fred Benson, president of the Washington-based United States-New Zealand Council, began a soft-focus lobbying exercise early this year.

Benson will come to New Zealand early next month to galvanise local support from within the business and bureaucratic communities to get behind the Washington campaign.

But it will be US Ambassador-designate John Wood who leads the charge when he takes up the Washington post on Jim Bolger's retirement.

If Clark is to land her trophy, he will be a prime player in the hunt.

* The prospect of a closer economic partnership with the United States will be debated at an Auckland conference on December 6. Conference bookings are available from Ros Warren at the Auckland Regional Chamber of Commerce and Industry (09) 309-6100.