US manufacturers association supports US-NZ free trade deal

The influential US National Association of Manufacturers (NAM) this week released a report recommending New Zealand and four other countries as the most promising new countries the United States could conduct a free trade agreement (FTA) with.

NAM selected countries which import more than US$1 billion ($1.41 billion) of US manufactured goods annually and applied other criteria such as the extent of non tariff barriers and the quality of judicial systems.

Others singled out include India, Egypt, Malaysia and South Korea.

NAM's report said New Zealand was the second smallest importer of US goods on the list but had the most open and least regulated markets.

"These factors imply a relative easy FTA negotiation, as New Zealand already has in place most of the factors that would be sought in an FTA," the report states.

A unique and very important factor was that New Zealand had a tariff regime that was four times lower than it legally could apply.

New Zealand imported US$1.7 billion of US manufactured goods in 2003 and NAM projects that to rise to US$2.5 billion by 2010. It estimates that figure would rise by one eighth if an FTA eliminated all tariffs on US goods.

NAM's international director of trade policy, Christopher Wenk, told NZPA that with the US-Australia FTA coming into force this year and the Australia and New Zealand's economies being so closely tied, "it would just be a natural progression for the United States to have an FTA with New Zealand".

He admitted New Zealand's anti-nuclear policy was an issue but noted the Bush Administration had said it should not preclude an FTA.

The protectionist US dairy lobby could be another obstacle, Mr Wenk said.

"I can envisage that the dairy lobby in the United States will be very anxious if there were talks of a US-New Zealand Free Trade Agreement, but overall, there could be some opportunities for US agriculture."

US drug manufacturers strongly opposed Australia's central drug purchasing system and New Zealand's body, Pharmac, may be similarly objectionable. But Mr Wenk said NAM had not heard from Pharma, the drug manufacturers' lobby within NAM.

He noted NAM was the oldest and largest trade association in the US with "a lot of clout" in Washington.

"We feel we are force to be reckoned with."

This week's report on Recommended Candidates for additional Free Trade Negotiations has been distributed to Congress and the Administration.

The United States-New Zealand Council is promoting an FTA and a Friends of New Zealand caucus was being formed, led by Republican Congressman Jim Kolbe, from Arizona and Californian Democrat Ellen Tauscher.

The friends body plans a reception to launch the caucus on Capitol Hill in two weeks.

Asked about the timing of an FTA, Mr Wenk said there were a number of difficulties. The US was already in bilateral talks with Thailand, Panama, Oman and United Arab Emirates as well as being heavily involved in the World Trade Organisation Doha round.

As well, President George W. Bush had to renew his Trade Promotion Authority in a couple of months giving the Administration the right to negotiate trade agreements. Finally, a replacement for US Trade Representative Bob Zoellick, who is leaving to go to the State Department, had to be decided on.

"There are certainly some ducks that have to get in a row here," Mr Wenk said.

- NZPA