Key Points:

It's just a small step, they say. But this month's decision by the US to talk about opening trade in financial services with New Zealand, Brunei, Singapore and Chile could be the sign New Zealand business has been waiting 10 years for - a gesture that the Americans are ready to start serious free-trade talks.

And while it's taken a decade to get this far, export and trade lobbyists say there has already been enough groundwork to ensure that things can move swiftly towards a new world of low trade barriers.

US Trade Representative Susan Schwab last week said the US would start trade talks with New Zealand, Singapore, Chile and Brunei, the "P4" group of countries.

The group signed a wide ranging free-trade agreement in 2006, but this did not include financial and investment services - now it will.

"Participation could provide a pathway to broader Asia-Pacific regional economic integration with like-minded countries committed to high-standard agreements," Schwab said.

Trade Minister Phil Goff said Schwab's announcement was significant, as the US joining P4 would contribute to achieving New Zealand's long-standing objective of liberalising trade between the two countries.

The US already has free-trade agreements with Singapore and Chile, and is New Zealand's second-biggest export market after Australia.

National's trade spokesman Tim Groser, a former senior trade negotiator, said the US dairy sector was trying to move towards more exporting, and was likely to become less protectionist than in the past.

The existing P4 deal is described as "a high-quality trade pact", covering market access and non-tariff barriers to the trade in goods and services, intellectual property, Government procurement and competition policy.

The US is to join those negotiations and is considering whether to join the full trade pact.

World trade talks launched seven years ago in Doha, Qatar, designed to free up world trade - and be completed in just three years - are still dragging on, bogged down by disputes over agricultural protection. As the Doha round - which Goff says may be worth $900 million a year to the Kiwi economy - drags on, more countries are exploring trade deals with smaller groups, such as the P4.

David Skilling, chief executive of the New Zealand Institute think tank, says the true impact of smaller, recent trade deals has yet to be seen.

A deal with China, which could come this year, should be more significant than previous ones with the likes of Singapore or Chile - especially if it includes new access for our dairy industry.

"The trouble with New Zealand and free trade agreements [FTAs] - and the reason I guess that we've been primarily signing these with small countries - is that we don't have huge negotiating power because we are a small economy," says Skilling.

"One of the encouraging things about the announcement of the US agreeing to negotiate with the P4 is that it's a sign New Zealand might be able to be on the inside of a slightly larger grouping. A small country like New Zealand is very exposed or reliant on the nature of the international trading regime."

Skilling says you can look at an FTA in two ways - first, the positive benefits coming to New Zealand and second, in what might happen if we are left out of deals signed between the US and others.

"The nightmare scenario is countries begin to sign bilateral agreements and regional agreements begin to emerge, and New Zealand is on the outside of all those," he says.

"There's a sense that we have to be in this game. Even though we're a relatively small country, we cannot sit back and think that nothing's going to happen. You can concentrate on the upside. If we have an FTA with the US, it will make it easier for New Zealand exporters to access the US market and there'll be more money on the table. That's positive and that's true.

"But increasingly important are the negative aspects - if New Zealand doesn't have an agreement with these countries and others do, that's a risk."

Any pain from signing a free trade deal with the US is likely to be small because New Zealand already has low trade barriers. Any negative impact was felt some time ago.

"If you want companies to locate to New Zealand, it's important to make sure they can access foreign markets from here. If a firm headquartered in Australia can do that more efficiently than New Zealand, that's important," says Skilling.

"Yes, there is a downside, but for the most part it's a positive story in making New Zealand a more attractive place to locate production and employment."

Mike Hearn, executive director of American Chamber of Commerce in New Zealand (AmCham) says a solid 10 years of work has gone into setting the stage for free-trade negotiations with the US.

"It's a small step but, on the road to much bigger things, it's hugely important that this has been announced. We have to keep our eye on the ball with the implications of the US elections."

Talk from Congressional leaders has centred around more inclusion of environmental and labour standards into free-trade deals signed by the US, both of which are areas where New Zealand is "in pretty good shape".

The first topic on the P4 agenda will be financial services and investment. US companies, such as GE Money, already have a substantial investment in this area in New Zealand. Research is now under way to see how New Zealand companies operating in this sector may be able to benefit from opening the US market to them.

"Let's just get this ball rolling, because something is better than nothing, and it will be beneficial to both countries," says Hearn.

Should a decision be made to proceed, reaching agreement on an FTA with the US could happen in as little time as a year, says Hearn.

Export New Zealand chief executive Bob Walters says New Zealand companies must be prepared to exploit a free-trade deal if it comes.

"You always have to be conscious of what opportunities come your way," says Walters.

"It's always good to keep watching what's happening in that space - if you can take an advantage from that, you have to be ready to take that opportunity."

Walters says that is because the advantage over other countries offered by a free-trade deal is not permanent. Once signed others start queuing for the same kind of deal.

A joint approach with business and Government officials working in concert is needed, so business can follow up once the trade door is open."

"I think we are starting to look a bit better at that," says Walters.

Hearn points out that when it comes to a free-trade deal with an economy the size of the US, something is better than nothing.

"With any trade deal, any step forward is better than a step backward, even if it's not all-encompassing initially."

Story at a glance

* The US says it's ready to start talking about free trade with the "P4" group.

* This consists of New Zealand, Singapore, Brunei and Chile.

* While initially talking only about financial services, the move is seen as a positive sign.

* The Doha round of world trade talks is dragging on with little sign of quick progress.

* A free-trade deal between New Zealand and China could be signed by the middle of this year.

* Fears that the American dairy lobby could block liberalisation of the dairy sector are waning.

* Free-trade lobbyists say a full free-trade deal with the US could be signed within a year of a decision being made to begin talks.

* Pressure is mounting on US politicians to take more account of environmental and labour standards in free-trade deals - something that shouldn't be hard for New Zealand.