KEY POINTS:
The news that the long-sought prize of a free trade agreement with the United States might now be within our grasp makes a heartening change from dreary recession at home and a downright scary credit crisis overseas.
But that "might" covers a multitude of factors which could yet lead to disappointment.
The US decision to begin negotiations to join the Trans-Pacific Partnership (P4), a trade pact most people have never heard of, means very different things to us and them.
For New Zealand it holds the prospect, eventually, of tariff-free access to the world's largest economy.
For the United States it is not, of course, about access to the New Zealand market which is by its standards tiny and already pretty much wide open to American goods and investment.
Rather it is a strategic response to the risk that regional trade liberalisation will be an exclusively Asian, rather than an Asia-Pacific affair, shutting the US out.
That regional trade initiatives are gaining traction at all is the result of the continued abject failure of the world's leading powers to muster the political will to complete the World Trade Organisation's Doha round. Even after seven years of wrangling and even amid a global food crisis, the first, best option for trade liberalisation is, if not dead, comatose.
In this bleak environment a seed which was planted in the late 1990s and which has been germinating quietly ever since has now burst through.
The idea was to take a bottom-up, coalition-of-the-willing approach to the Apec goal of free trade in the region by 2020. Originally linking New Zealand, Singapore and Chile, and more recently Brunei, it is a high-quality, comprehensive free trade agreement which criss-crosses the Pacific and which is designed to be expandable.
In July last year, Trade Minister Phil Goff gave his American counterpart Susan Schwab a copy of the P4 agreement, suggesting she have her officials take a look at it.
"The next time we met she said, 'This is really great. It's better than Nafta [the North American Free Trade Agreement]. Is there any possibility the US could join?'," Goff recalls.
"I paused for about a nanosecond and said, 'Oh I think we would be interested'."
Whether this comes off, however, depends on whether the new US Administration next year sees the logic of the situation the same way.
We should not discount the degree of continuity in US trade policy, but it is not apolitical.
It is always a problem, in trying to predict what the US will do, that in a country so big and so pluralistic you can find ample evidence of support for just about any point of view.
Figuring out where the centre of gravity of opinion lies, or who would have the brawnier bicep in any arm wrestle over policy, is much harder.
The P4 breakthrough is a move by a lame duck Administration. Its fast-track negotiating mandate, trade promotion authority (TPA), has expired. Without it Congress can take apart any trade deal the administration does instead of just be able to vote it up or down. The Bush Administration also has a backlog of trade agreements which it has concluded but which it cannot get through Congress.
"You don't need TPA to start a negotiation, just to finish it," says Stephen Jacobi of the NZ US Council, which with its sister organisation the US NZ Council has pressed the case for a trade deal for years.
"It won't come before Congress for at least a year. We don't know what the combination of forces will be then."
John McCain is on record as supporting a free trade agreement with this country. But if he wins he could face a hostile Congress.
From Barack Obama we hear things like this: "Trade deals like Nafta ship jobs overseas and force parents to compete with their teenagers to work for minimum wage at Wal-Mart."
Mere electioneering or a deep-seated conviction? Who can say?
But it points to more structural problem with the P4 strategy.
There is a fundamental philosophical divergence between those who see trade liberalisation and globalisation as powerful forces for good which have lifted huge numbers of people out of poverty, and those who see them as a race to the bottom threatening wages in developed countries and despoiling the environment everywhere else.
From the latter standpoint the existing P4 partners are pretty innocuous. The US already has bilateral free trade agreements with Singapore and Chile. New Zealand is hardly likely to arouse concerns about labour and environmental standards.
The problem is that the attractiveness of P4 to the US as a trade policy avenue is its expandability, its ability to serve as a nucleus for a larger Asia-Pacific bloc.
Not only the Australians but also the Peruvians and Vietnamese have, apparently, expressed some level of interest in joining. For Congressional Democrats with concerns about labour and environmental standards that might raise concerns. In short the very thing that makes this attractive to the US Trade Representative's office (USTR) might kill it on Capitol Hill.
But let's assume it does not.
Just as there's no free lunch, there is no such thing as a free free trade agreement. The Farm Bill enacted this year was widely seen as illiberal from a trade standpoint.
The free trade agreement with Australia, that most adhesive of US allies, negotiated four years ago was not a good deal for Australian farmers. Is it, as some observers contend, that John Howard was so desperate for an agreement that the Australians did not try very hard? Or is it, like the Farm Bill, evidence that agricultural protectionism remains alive and well in the US? As for the concessions we might be asked to make, the USTR's annual report on trade barriers gives some clues.
ERMA's role in vetting the products of biotechnological inventiveness is apparently a concern.
As is the Overseas Investment Office's powers to approve inbound investments (above a $100 million threshold). Those powers might be dismissed as a dead letter, so rarely are they used, had the Government not used it for an ad hoc poll-driven intervention over Auckland airport.
Pharmac's dominant (73 per cent) role as a buyer of pharmaceuticals has long caused eyes to narrow and lips to curl among US drug companies.
Goff says the US side can expect "some reasonably strong resistance" to anything that would push up the cost of pharmaceuticals to New Zealand consumers or taxpayers.
This is just the beginning of the negotiating process, he points out.
He is entitled to take a bow for having got things this far.
But the $1 billion a year being bandied about is a long way from being money in the bank.
