Powerful US lobby group supports free trade deal with NZ

New Zealand has won a powerful ally in its quest to secure a free trade agreement with the United States.

The influential National Association of Manufacturers in the US has released a report recommending America pursue a free trade deal with New Zealand and four other countries.

The association favours New Zealand because it imports more than US$1.7 billion ($2.4 billion) of US manufactured goods annually, has few non-tariff barriers and a quality judicial system.

Others recommended include India, Egypt, Malaysia and South Korea.

Trade Negotiations Minister Jim Sutton said he welcomed the endorsement but was not surprised.

He said the Government had been working on an intensive campaign at many levels, particularly in the US business community.

The move of US Trade Representative Bob Zoellick to the State Department would slow progress on any deal as no replacement had yet even been nominated but Sutton remained optimistic.

The association's report said New Zealand was the second smallest importer of US goods on the list but had the most open and least regulated markets.

"These factors imply a relative easy free trade negotiation, as New Zealand already has in place most of the factors that would be sought in an agreement," the report says.

An important factor was that New Zealand had a tariff regime that was four times lower than it legally could apply.

The association projects New Zealand imports of manufactured goods to rise to US$2.5 billion by 2010 and estimates that figure would rise by 12.5 per cent if an agreement eliminated all tariffs on US goods.

The association's international director of trade policy, Christopher Wenk, said a free trade agreement with New Zealand was a natural follow-on to its Australian deal given close Australia-New Zealand trade ties.

He admitted New Zealand's anti-nuclear policy was an issue but noted the Bush Administration had said it should not preclude a deal.

Wenk said the protectionist US dairy lobby could be another obstacle.

"I can envisage the dairy lobby in the US will be anxious if there were talks of a US-New Zealand free trade agreement.

"But, overall, there could be some opportunities for US agriculture," he said. US drug manufacturers strongly opposed Australia's central drug purchasing system and New Zealand's body, Pharmac, may be similarly objectionable.

But Wenk said he had not heard from Pharma, the drug manufacturers' lobby within the association.

He noted it was the oldest and largest trade association in the US, with "a lot of clout" in Washington. "We feel we are force to be reckoned with."

Asked about the timing of a deal, Wenk said: "There are certainly some ducks that have to get in a row here."

- NZPA