Fran O'Sullivan: NZ feels US trade deal pressure

If negotiations are not sorted by June there is a risk the US political timetable might overtake the entire process

New Zealand's agricultural lobbyists will be feeling the knock that the US Senate has delivered to the chances of getting the Trans Pacific Partnership (TPP) in place before the Obama Administration leaves office.

The major driving forces behind New Zealand's leadership role in expanding an Asia-Pacific deal between Singapore, New Zealand and Chile and Brunei known as the P4 (Pacific 4) agreement came from out of the NZ agribusiness sector in the first place.

Players like Anzco Foods chairman Sir Graeme Harrison - who also chairs the NZ International Business Forum (IBF) - have been to the forefront along with other members of the peak business body. The IBF's forerunner was the Trade Liberalisation Network.

Under P4, which came into effect in 2006, most tariffs on goods traded between the four countries were immediately removed. The agreement also included a range of other measures covering rules of origin, quarantine rules and technical barriers to trade. As well as measures to open up trade in services and opportunities to compete for government procurement contracts, cooperate on customs procedures, intellectual property, competition policy and binding agreements on environment cooperation and labour cooperation.

The agribusiness leaders saw the opportunity to maximise New Zealand's competitive position and set about building high-level relationships with target markets, notably Japan, Korea and the European Union - all markets where agribusiness exporters have faced market access hurdles and high tariffs for agricultural exports.

Australia has notched a separate trade deal with Japan. But NZ is unlikely to get behind Japan's tariff barriers outside of market access occurring within a regional deal like the proposed 12-nation strong TPP. The same applies when it comes to the United States and Canada.

New Zealand's Special Agricultural Trade Envoy Mike Petersen has been making the case for liberalisation within key markets included in TPP. There has been some success within the US where the dairy sector - which is now developing strong partnerships with Chinese counter-parties - sees stronger export opportunities within the fast-expanding Asian middle class. Although China is not part of the current trade gavotte it is widely expected to apply to join TPP if it does finally get done.

The White House will now embark on another round of arm-twisting to see if it can build sufficient support for legislation that will give Obama the powers to finalise negotiations on a TPP agreement that Congress can either accept or reject, but not amend.

Petersen - a realist - has said if it is not done by the end of June there is a risk that the political timetable in the US might overtake it.

Obama might be facing political hurdles and will inevitably have to make some deals to get the legislation to give him Trade Promotion Authority over the line.

While dairy is still a stumbling block as far as Canada is concerned, the US is putting the pressure on its northern neighbour to dismantle its highly protective regime of tariffs and quotas. NZ lobbyists have also played a role with the Five Nations Beef Alliance of NZ Beef and Lamb, and cattle organisations from Australia, the United States, Canada and Mexico.