A United States decision to enter multilateral free trade negotiations with New Zealand is a "major step forward" that could be worth up to a billions dollars a year for the local economy, Prime Minister Helen Clark says.
US officials today said the US had agreed to join Singapore, New Zealand, Chile and Brunei in the "Comprehensive Trans-Pacific Strategic Economic Partnership Agreement".
The agreement, the first trade pact involving a group of Pacific Rim countries, was signed between Singapore, Chile and New Zealand in 2005 before Brunei joined it a year later.
It was commonly known as the "P4" group with a broad objective to tear down trade barriers among participants within a decade, officials said.
The US decision to join the agreement will give impetus to a long term initiative within the 21-member Asia-Pacific Economic Co-operation (Apec) forum to forge a Free Trade Agreement of the Asia Pacific, officials said.
Apec, comprising such nations as the United States, China, Russia, Chile, Japan, Canada, Australia and key Southeast Asian economies, account for nearly half of world trade.
US trade representative Susan Schwab and Trade Minister Phil Goff will announce the "launch of negotiations" tomorrow.
Washington in March decided to hold talks with the P4 on freeing up just investment and financial services.
"The terms of the US accession to the broad agreement is to be discussed later among the five parties," a diplomat told AFP. "The investment and financial services talks will be folded into the larger agreement."
The P4 group has a "benchmark matched by few preferential trade agreements," Mr Goff said during a recent Washington visit.
With many Apec members seeing the prospect of a Asia Pacific free trade area as a long term goal, "the alternative is to create a bottom-up process where like-minded countries agree to come together to liberalise trade between them at a much faster rate," Mr Goff said.
The US has bilateral free trade agreements with Singapore and Chile but not with New Zealand or Brunei.
But its free trade pacts with South Korea, Columbia and Panama have not been ratified by the Democratic-led Congress as President George W Bush's administration nears the end of its term.
Mr Bush on the sidelines of the UN meeting will on Wednesday hold talks on free trade with leaders of several nations in the Western hemisphere.
Last year, the United States exported a record US$1.6 trillion ($2.34 trillion) in goods and services to countries around the world, and in the past four quarters, trade has accounted for more than half of the growth in the US economy, the White House said at the weekend.
For the first half of 2008, the United States exported US$926 billion worth of goods and services, 18 per cent higher than the same period in 2007, it said. "The growth in exports has helped to strengthen the American economy."