KEY POINTS:
The Trans-Pacific Partnership (P4) is a free-trade deal between New Zealand, Chile, Singapore and Brunei.
US Trade Representative Susan Schwab yesterday confirmed the US would begin negotiations on joining the P4 early next year.
Possible sticking points are the state pharmaceutical buying agency Pharmac, which is anathema to US drug companies, and the Overseas Investment Office, which is seen as a source of delays even if it rarely refuses anything.
New Zealand is seeking a better trade deal with the United States than Australia secured four years ago, Trade Minister Phil Goff says.
One reason he believes that is possible is the United States' strategic interest in ensuring the Trans-Pacific Partnership (P4) becomes the principal mechanism of trade liberalisation in the Asia-Pacific region.
The US is worried it is excluded from other major regional trade initiatives, notably Asean Plus Three, which would link China, Japan and Korea with Southeast Asia, and the East Asia Summit initiative.
"The US gives P4 the critical mass and momentum that we need and P4 gives the US the strategic positioning in the region that they badly need. It is a marriage made in heaven," Goff said.
These strategic considerations would hold good whatever the political landscape in Washington after the November election.
The P4 agreement links New Zealand, Chile, Singapore and Brunei.
The US likes the P4 agreement because it is a high-quality trade agreement which fits the US "template" of being comprehensive, with no sectors excluded, and the grouping does not present problems over labour or environmental standards which might cause the Democrat-controlled Congress to baulk.
The Farm Bill Congress passed this year was widely seen as a step backwards in terms of agricultural trade liberalisation, reinforcing the impression that Washington gives more weight to the interests of American farmers than consumers and taxpayers.
And the 2004 Australian-US free trade agreement excluded the sensitive sector of sugar altogether, and took 18 years to eliminate US tariffs on Australian beef imports.
The US dairy lobby has already come out against the P4 plan.
Goff said such opposition was predictable. "The question is how much their heart will be in it. Fonterra works closely with major dairy producers like the Dairy Farmers of America co-operative. The US industry is much larger than ours, of course, and in recent years the US has become a net exporter of dairy products."
As for what the US would want from New Zealand, given that our markets are already wide open to US goods and investment, Pharmac, overseas investment approvals and intellectual property are expected to dominate discussions. Negotiations were expected to take at least a year, maybe two.
Business lobby groups yesterday universally applauded the breakthrough agreement to start negotiations.
Stephen Jacobi, executive director of the NZ US Council, dismissed concerns that this initiative was being undertaken by a lame duck Administration whose fast-track negotiating authority from Congress has expired and which has struggled to get other trade deals ratified.
"If we waited for this to start under a new Administration a new trade promotion authority we could be waiting for a very long time indeed."
Senator John McCain is on record as favouring a trade agreement with New Zealand.
"But if he gets in he would have to deal with a Democratic Congress. That relationship might be more difficult than it would be if it was an Obama Administration dealing with a Congress controlled by its own party," Jacobi said.
Wellington Regional Chamber of Commerce chief executive Charles Finny, a former senior MFAT official, believes the Trans-Pacific Partnership will become the centrepiece of US trade policy in the region, whoever wins the election. He said the Australians, Peruvians and Vietnamese had already expressed a desire to join.
