KEY POINTS:
Trade Minister Phil Goff hopes to hear from the United States this year that it is prepared to enter into comprehensive free-trade negotiations with New Zealand.
Rather than a direct bilateral negotiation like the Australia-US agreement, the context would be expanding the Trans-Pacific Strategic Economic Partnership, commonly known
as P4, a free-trade agreement linking New Zealand, Singapore, Chile and Brunei.
The US already has free-trade agreements with Singapore and Chile.
US Trade Representative Susan Schwab announced yesterday the United States is to join P4 negotiations already due to begin next month on investment and financial services.
More importantly, Goff said, she also announced the US Government would begin a "detailed exploratory process" to determine where the US should participate in the full-trade agreement.
"They have done some initial sounding out on that. They got, I think, quite positive feedback from stakeholders but what they now need to do is have a more formal process of consultation with Congress and across the business sector," he said.
"If that goes as they anticipate then I hope we will see later this year a commitment from the Bush Administration to move into a comprehensive free-trade discussion."
The announcement was warmly welcomed by the business lobby groups - Business New Zealand, the New Zealand and American Chambers of Commerce, the Business Roundtable and the NZ US Council.
The council's chairman, former Prime Minister and Ambassador to the US Jim Bolger, said it would be good to have a process under way before the change of administration early next year.
"If you have a decision made to move forward that is better than having to wait in line to get the access you need to a new administration and try to get them to agree."
P4 provides a possible answer to a question that has always overhung the possibility of the free-trade agreement with the United States: What is in it for Washington, given that New Zealand is small and already wide open to US goods and investment?
Schwab said it could "Provide a pathway to broader Asia-Pacific regional economic integration with like-minded countries committed to high-standard agreements".
Goff said that having the US join P4 would give it mass and momentum and encourage other countries in the region to join. An expanded P4 could act as a spur to the World Trade Organisation's Doha negotiations, much as the formation of Apec had during the previous Uruguay round.
National's trade spokesman Tim Groser, a former senior trade negotiator, said that the only bilateral trade problem of any magnitude was dairy and it was diminishing over time.
As more and more US dairy products were exported he expected its lobby - a powerful one - to evolve as the US beef industry had before it from a protectionist to an open trade view.
The US Government's trade promotion authority (TPA) from Congress has expired. It gave the administration the ability to negotiate a trade deal without the risk that Congress would then take it apart. Instead legislators could only vote it up or down.
"The absence of a TPA does not prevent the administration from launching a new free trade negotiation but it makes it all the more important that it has consulted beforehand, to be confident that the negotiation would command domestic support," Goff said.
"A TPA would hopefully be available by the time you had got to the end of the negotiation"
How long such a negotiation might take was impossible to say.
* THE P4 AGREEMENT
The Trans Pacific Strategic Economic Partnership (P4) is a free-trade agreement linking New Zealand, Singapore, Chile and Brunei.
Generally regarded as a high-quality trade pact, it covers market access and non-tariff barriers to the trade in goods, trade in services, intellectual property, Government procurement and competition policy.
It does not yet cover investment or financial services. Negotiations on them are due to begin next month.
The US is to join those negotiations and is considering whether to join the full trade pact.
P4 is intended to be expandable.
It has its origins in a strategy in place since the late 1990s to have a high-quality trade agreement that could act as the nucleus for wider circles of agreement within the Asia-Pacific region.
