Key said Obama's commitment was good news. Photo / Getty Images
US president Barack Obama has announced his commitment to "engage" with New Zealand and other like-minded countries to forge a mega-sized free trade area spanning the Pacific.
The Prime Minister and other members of New Zealand's delegation at the Apec summit in Singapore had been waiting all week to see
if the President would spell out his trade priorities.
What they heard from Obama, in a speech delivered yesterday in Japan, were the magic words Trans-Pacific Partnership, rather than bland talk about expanding trade in the region.
After much debate within his administration, the President has come down in favour of working with the four-nation TransPac free trade pact - of which New Zealand is a founding member - and using it as a platform on which to build a much larger, multi-country free trade area, taking in the Asia-Pacific Rim.
The President gave no timetable for the completion of this ambitious project, which is expected to take years of complex and difficult negotiation. He indicated he would say more following his arrival in Singapore late last night.
Regardless, the prospect of the US joining TransPac goes a long way towards compensating for New Zealand missing out on a bilateral NZ-US free trade agreement.
Key did not have any estimates of the potential economic benefits from an expanded Transpac, but said it would amount to "billions and billions" of dollars.
Key said Obama's desire to hammer out a "21st-century quality" agreement was good news in indicating all economic sectors would be included, something crucial for an agricultural exporter like New Zealand.
Despite Key's enthusiasm, economics commentator Bernard Hickey warned that free trade deals were not always what they were made out to be.
America's dairy industry has already indicated that in any free trade deal with New Zealand, they wanted to block New Zealand dairy importers such as Fonterra.
Pharmaceutical lobbyists were very strong and could possibly raise the cost of drugs in New Zealand.
