New Zealand is on the cusp of signing a significant free trade deal with Latin American and South American countries.

The Pacific Alliance, which is made up of Chile, Mexico, Colombia and Peru is expected to announce tomorrow morning whether it will enter formal negotiations on a new deal with New Zealand.

New Zealand would be the first country to secure a free trade agreement with the trading bloc, which is currently worth $1.1 billion in two-way trade.

Trade Minister Todd McClay is in Cali, Colombia, speaking to his counterparts from the four countries in a bid to get the negotiations underway.


He said earlier this week he was optimistic of a result, because the countries saw New Zealand as a stepping stone to Asia.

The Labour Party said today it would support a Pacific Alliance agreement, which means any deal is likely to survive if the Government changes in September.

Foreign affairs spokesman David Parker said that like New Zealand, these four countries were looking towards Asia for trade.

"They are doing good things through that alliance to reduce trade barriers, which also affect New Zealand. So we are supportive of that."

His party's main concern was about any provisions which allowed investors from the alliance countries to buy land and houses in New Zealand.

"Whether it's the billionaire from Mexico or from other countries, the principle remains the same. New Zealand governments should be able to act in the interest of our people to stop one percenters from overseas who can outbid New Zealanders."

Labour was also concerned about any investor-state dispute settlement provisions, which McClay confirmed would be a part of an FTA with the alliance.

Parker said Labour's main focus if in power would be to advance a trade deal with the EU.


New Zealand First leader Winston Peters was more sceptical about an FTA with the Latin American and South American countries, saying that growth in those regions had been stagnant for 30 years and that New Zealand should be dealing with bigger economies in the Americas like Brazil.

He did not necessarily oppose a deal with the Pacific Alliance grouping, but said he would first want to be certain that the deal was not simply "hype and presentation" and that it was in New Zealand's interests.

If in government, his main priority for trade deals would be Russia. Negotiations were suspended in 2014 after Russia's annexation of Crimea, and the NZ Government has said it will not pursue a deal while US and EU sanctions on Russia remain in place.

Peters said a deal with Russia would be "clean" because there were no other countries to complicate negotiations, and because it was the world's second biggest importer of beef and milk products.

Instead, New Zealand had "doffed its hat" to the former Barack Obama administration by agreeing not to deal with Russia, he said.