Howard's progress helps NZ chances

By JIM EAGLES business editor

Australian Prime Minister John Howard appears to be edging closer to his dream of a free trade agreement with the United States - an agreement with which New Zealand would hope to link up.

Howard is in Washington for a meeting with President George W. Bush, and the White House has taken the opportunity to signal that a trade deal with Australia is certainly on the agenda.

Such a deal still has several hurdles to cross - not least the fact that the President still lacks the Trade Promotion Authority to negotiate with Australia - but the prospects are improving.

As Stephen Jacobi, executive director of the New Zealand Trade Liberalisation Network put it: "It is now very clear that if there is a list Australia is on it."

On the whole, Jacobi said, that was good news for New Zealand. "If we're going to get there it will have to be on Australia's coat tails, so the sooner Australia gets to the front door the better it is for us."

Howard's push for a free trade deal gained much momentum on his previous visit to Washington last year, and since then several senior US officials have referred favourably to the possibility.

Even the obstacle of Trade Promotion Authority is starting to move the right way: the House and the Senate are due to meet shortly to start negotiations on their differing versions of an empowering bill.

Jacobi said that although agreement on Trade Promotion Authority remained problematic, the signs from Washington were looking more positive and some reports suggested it could happen as soon as July 4.

The White House chose Howard's arrival in Washington to give one of its strongest signals yet that Australia's status as an ally has boosted its chances of winning a deal.

The President's economic adviser, Larry Lindsey, gave an interview to the Australian Financial Review in which he emphasised that once Congress granted negotiating authority, Bush would use it to negotiate with Australia.

"They will certainly do the negotiating, I'm sure we'll get it," Lindsey said. "Australia and America have very good relations and I think it's a natural country with which to have free trade."

Those comments drew an enthusiastic response from Anne Wexler of the Wexler Group in Washington and head of the US lobby group pressing for a free trade deal with Australia. She said they were "very good news - it's great to have an affirmation from the White House that it's going to go ahead".

Jacobi, similarly, said Australia's progress was positive for New Zealand.

Given that Australia had decided it would be preferable to negotiate unilaterally rather than joining forces with New Zealand, the next best option was to hook up with whatever the US and Australia agreed on.

"We've no hope of negotiating with the US on our own," he said, "but we could hope to join an Australia-US deal later on, in much the same way as Mexico joined up to the Canada-US free trade agreement to form Nafta, so there is a good precedent."

Prime Minister Helen Clark and Trade Minister Jim Sutton had both registered New Zealand's interest and this had been acknowledged.

In addition, said Jacobi, the New Zealand-US Council was doing a good job of lobbying to keep the New Zealand position to the forefront.

He said there was a risk that if Australia and the US did reach a deal "the longer it takes for us to join the more damage it will do to our economy".

"But I think we have to be positive and take the view that the only way we're going to get anywhere is by hooking up with an Australian deal - so any progress they make has got to be good for us."