US lawmakers urge free-trade pact with New Zealand

US lawmakers have urged the Bush administration to begin free-trade talks with New Zealand, despite the country's small economy, its anti-nuclear policies and opposition to the Iraq war.

Wellington has long been interested in such a pact with Washington, but was forced to sit on the sidelines while the United States negotiated a free-trade agreement with New Zealand's neighbour and close economic partner, Australia.

A group of 54 lawmakers, split nearly evenly between Republicans and Democrats, launched a campaign to persuade the Bush administration to begin negotiations.

The United States is one of the largest investors in the New Zealand economy, covering sectors ranging from agriculture to finance, chemicals and telecommunications.

Business groups estimate a free-trade pact would boost US exports to New Zealand by 25 per cent. The National Association of Manufacturers has put New Zealand on its list of top five potential free-trade partners for the United States.

Trade between the United States and New Zealand totalled about US$5 billion ($7.07 billion) in 2004, with Wellington enjoying close to a US$892 million surplus.

In contrast to Australia, New Zealand opposed the US invasion of Iraq. A 1980s-era disagreement over Wellington's anti-nuclear policies and the expected strong opposition of many US farmers to an agreement also contributed to the Bush administration's reluctance to begin free-trade talks.

Representative Jim Kolbe, an Arizona Republican, said New Zealand had proved itself a dependable ally in the US fight against terrorism in Afghanistan and South-East Asia despite its decision not to participate in the invasion of Iraq.

John Wood, New Zealand's ambassador to the United States, said the country sent military engineers to help in Iraqi reconstruction and was prepared to consider requests from the United Nations to provide more assistance.

One obstacle to beginning talks with the United States was the country's small economy compared with other potential free-trade partners, Wood said.

There also could be some "push back" from US dairy farmers worried about New Zealand's prowess as a world-class dairy exporter, Wood said.

- REUTERS