NZ trade push goes on despite seeds of doubt

By KEVIN TAYLOR

The Government will continue seeking a free-trade deal with the United States despite Australia's failure to get major agricultural concessions in its deal with Washington.

Foreign Minister Phil Goff congratulated both countries on the deal, which came after months of negotiations.

It includes free access for almost all manufactured goods and services but was criticised by Australian farmers for not giving full access to the US for agriculture.

The deal, yet to be approved by Congress and the Australian Senate, sparked questions about how many concessions New Zealand would get on agriculture should it get to negotiate a free-trade agreement with the US.

New Zealand business groups warned yesterday that investment and jobs may now be diverted towards Australia, and National and Act slammed the Government's failure to get on the negotiating list.

National leader Don Brash said the deal was a "tragedy".

"Once upon a time it would have been unthinkable for New Zealand to be excluded from such a deal. It is a sad reflection on how far the relationship with our most important friends and allies has slipped."

But US Embassy deputy chief of mission David Burnett said New Zealand could yet get on the list. He denied the deal was payoff for Australian support for the US invasion of Iraq.

Mr Goff admitted there was potential for investment and trade diversion towards Australia. But the US was conscious of that and had stated there was no intention of damaging New Zealand's economy.

Act deputy leader Ken Shirley predicted closer economic relations (CER) would "wither on the vine" and New Zealand firms and investment would increasingly shift to Australia.

He said New Zealand should change its foreign policies - particularly the nuclear ships ban - to get back into US favour.

An Employers and Manufacturers Association Northern official, Bruce Goldsworthy, said that Australia's focus would swing away from CER and onto the US.

"We might have been cousins with Australians yesterday but now we've just been consigned to second cousin status."

Trade Liberalisation Network executive director Suse Reynolds said it was apparent the US gave almost nothing to Australia on agriculture.

That meant the prospect of New Zealand getting any better access in a deal with the US was slim.

"We needed the Australians to be much tougher than they have been."

Federated Farmers chief executive Tony St Clair said outstanding foreign policy issues, such as the nuclear ships ban, needed sorting out.

Greens co-leader Rod Donald said Labour should abandon hopes of a deal with the US after Australia was sold a "lemon".

"John Howard appears to have sold-out his own farmers, workers, manufacturers and his country's sovereignty."

Value of two-way trade

* NZ-US $8.4 billion

* NZ-Aust $13.3 billion

* US-Aust $41 billion