Free trade with US hinges on WTO talks

WASHINGTON, DC - New Zealand and the United States have agreed to strike out for a high ambition result in global trade talks despite the huge difficulties facing a deal.

But New Zealand might have to ape former National Foreign Minister Brian Talboys' assiduous trade lobbying efforts if it wanted to bag a prized bilateral US free trade deal, suggested Trade Minister Phil Goff after a round of high-powered talks.

Goff, who met US Trade Representative Rob Portman and his nominated successor, Susan Schwab, yesterday, said he was reasonably positive at some point that negotiations would get under way on a bilateral free trade agreement.

But the stalemate at the World Trade Organisation's Geneva talks inevitably dominated discussions.

Goff expects leading trade ministers to convene again in Geneva in one to two weeks' time. But only if significant progress can be made by officials on farm subsidies and tariffs on manufactured goods.

Critical breakthroughs were needed in three areas:

* The European Union had to give greater market access for agricultural products.

* Developing nations such as Brazil and India had to liberalise their industrial goods markets.

* The US needed to further reduce farm support.

Goff said Portman was upfront about it.

"If we get some movement elsewhere, he can deliver on domestic support. But if not, the web of support that has been developed around the WTO would be undermined."

Goff said Portman's views were underlined in a subsequent meeting with US Agriculture Secretary Mike Johanns and at a lunch with trade lobbyists. There was a strong perception that US farmers would be prepared to see their domestic supports further reduced in return for greater market access to Europe and a reduction on industrial tariffs in the bigger G20 countries.

But Goff said the WTO might have to pass the baton to director-general Pascal Lamy to write a draft legal text if negotiators could not agree.

He said a heads-of-government meeting, which was promoted by British Prime Minister Tony Blair while in New Zealand, was being given serious consideration by the US. But there was some skepticism about what leaders could do that the trade ministers could not.

Goff arrived in Washington just one day before President George W. Bush's shock announcement that he was moving Portman to be budget director.

His decision to move Portman after less than one year as trade representative has stunned other leading trade czars such as European Union Trade Commissioner Peter Mandelson.

"At this stage in the round it would have been easier to manage with Portman still in place," Mandelson said.

But Goff, who was the first trade minister to have met Schwab since she was announced as Portman's replacement, was sanguine. Schwab had impressive trade credentials, being one of Portman's deputies and a former trade negotiator together with strong links to Bush's chief of staff Josh Bolten. But critics say she lacks the insider cachet with Congress that Portman enjoys.

Goff said Portman and Schwab were reasonably sympathetic to New Zealand's push for a bilateral free trade agreement with the US.

But he reiterated the US' attention was focused on negotiations with South Korea, its number seven trading partner, and tenth-ranked Malaysia.

Goff made a subtle shift in New Zealand's lobbying stance, promoting a New Zealand free trade agreement as having a demonstration effect if the US struck difficulties negotiating with South Korea.