NZ has fight on its hands for US trade deal

US senators against a free trade agreement with New Zealand have described our dairy industry as having "anti-competitive practices".

The Dominion Post reported that a letter signed by 30 senators was sent to US Trade Representative Ron Kirk.

Talks started last week in Melbourne on a Trans-Pacific Partnership (TPP) which would build on the previously negotiated P4 trade agreement between New Zealand, Brunei, Chile and Singapore to include the US, Australia, Peru and Vietnam.

Idaho senators Mike Crapo and Jim Risch led 28 other US senators, including former Democratic presidential nominee John Kerry, in urging "very careful attention to dairy trade concerns" in the letter.

"Because of the anti-competitive practices in New Zealand's dairy industry and the extensive degree of control it wields over world dairy markets to the detriment of the US dairy industry, we are deeply concerned that an expansion of US-New Zealand dairy trade would further open the US to these imports," the senators wrote.

Losses to US dairy producers may total up to US$20 billion during the first decade of the agreement if restrictions were fully phased out in the partnership, they said.

Trade Minister Tim Groser said the senators were influential.

"It's a real concern. We should make no mistake about it - this is a very powerful lobby we're taking on."

Prime Minister John Key would lead lobbying in Washington.

Groser said it was "palpable nonsense" to say that Fonterra had created an unfair market. Though it dominated the domestic market, it had to compete like every other company internationally, he said.

The US subsidised dairy producers but New Zealand did not.

"It's a very, very politicised argument, trying to suggest that somehow New Zealand doesn't play it fair, when any person who looked at it objectively would reach exactly the opposite conclusion. New Zealand has enemies on dairy trade around the world and always has had."

The next round of TPP talks is in Los Angeles in June.

NZPA