O'Sullivan: Tough pitch in hardball town

Washington is the ultimate political hardball town. The bottom line for the Congressmen and Senators whom New Zealand is lobbying to climb up the list of countries wishing to close free-trade agreements with the US, is an unspoken "What's in it for me."

When Congressman Jim Leach brought in a bill midweek urging President George W. Bush to initiate talks with New Zealand, Singapore and Australia over a potential free-trade area with the US cheers resonated in the New Zealand camp.

Just days later, Trade Negotiations Minister Jim Sutton was due to hit town to formally push the New Zealand campaign with US Trade Representative Bob Zoellick, the business community and influential politicians.

Coming on top of Mr Bush's recommitment to the free-trade agenda at last weekend's Summit of the Americas, the Leach initiative was welcome. After Australia's cold-shouldering and the breakdown of the "P5" talks which began after the 1999 Apec leaders' meeting in Auckland, the fact that a key player on Capitol Hill had suggested New Zealand be part of a broader deal instead of a bilateral agreement was a positive sign.

New Zealand is back on the Washington trade chessboard. But the pieces have yet to start moving.

New Zealand's profile has been raised in recent weeks through concerted lobbying by Ambassador Jim Bolger and visits by Foreign Affairs Minister Phil Goff and Speaker of the House Jonathan Hunt.

But while the Washington power elite recognises New Zealand's free-trade credentials are solid, it is also a small player without much clout.

It is a complex situation.

Free trade is one of the major defining economic issues for the Bush Administration, but the President faces a stalemate. Until he can recoup "fast-track authority" - power vested with the White House to negotiate trade deals that will not be amended by Congress - his ability to forge ahead is limited. Mr Bush must introduce his Trade Promotion Authority bill and get it passed this year if he is to beat the legislative deadline imposed by the 2002 congressional elections.

Mr Bush faces some tough political priorities. Time and resources are limited. The President's major education reforms and the $US1.4 trillion tax cuts take precedence politically. He must also build a broad political constituency for free trade - both within Congress and with the public.

Against this background, New Zealand's chances of cutting a US trade agreement are strengthened if it can promote a multilateral rather than bilateral deal.

In Washington, trade officials, lobbyists and business organisations have applauded the timing of Sutton's visit - just after the Bush team had been to the Quebec Summit and refined its position. Ambassador Bolger has ensured the Trade Negotiations Minister will meet all the key players - but a concerted campaign by the US business community will be needed to build political support.

In Washington, the US Chamber of Commerce (AmCham) has already begun surveying its members over a prospective free-trade agreement which brackets New Zealand with Australia. Preliminary indications show there is wide support for New Zealand's cause from US forestry and utility players. But pharmaceutical companies have cut up rough.

Mr Sutton will get a first-hand perspective from some of the key AmCham players when he meets them tomorrow.

The survey asks US companies to distinguish whether they would see more benefits if the US pursued a bilateral approach towards the two countries, or took a trilateral stance. The P-5 approach - a negotiation between the US, Singapore, Chile, Australia and New Zealand - is also being canvassed.

Tellingly, AmCham's survey questions suggest a free-trade agreement with Australia or New Zealand (or both) could be used as leverage by the US on the European Union or Asian countries for a new round of multilateral talks. The US could also solve trade irritants through free trade agreements - then use the resultant deal as an impetus for solving these problems globally, or, act as a vehicle to gain support for broad trade promotion authority in the United States.

Fred Benson - the incoming chairman of the US-New Zealand Business Council - is also liaising with the New Zealand Embassy to create a core business constituency.

But trade promotion authority is essential to progress.

The US business lobby will soon step up its own efforts within Congress to put pressure on representatives to vote in favour of the upcoming legislation. Says AmCham's Wally Workman: "The new Bush Administration has stated that obtaining fast track is one of their priorities.

"From a business point of view, the Administration should be given a chance to do this, either as stand-alone legislation or even an omnibus trade bill. In any case, using trade sanctions to enforce a social or non-trade agenda is a non-starter with the American business community writ large."

Mr Workman notes that with Republican control of the White House and Congress, the political hill business has to climb is not as steep as in years past.

The US Business Roundtable says it is also actively pushing US companies to promote the benefits of a free trading environment. If employees understand the benefits, the political risk congressmen face will be diminished.

Mr Zoellick is now working on a compromise to the main sticking point - the prospect that trade sanctions are used to enforce labour and environmental standards. A number of tools have been canvassed: affirmation of International Labour Organisation conventions within free-trade agreements; the interaction of multilateral environmental agreements with the World Trade Organisation; incentives such as those written into a Cambodia textile agreement; and monetary penalties similar to those within the Canada-Chile free-trade agreement.

Mr Zoellick has postponed final progress on two agreements which has been negotiated under the Clinton Administration. The Jordan agreement - negotiated as part of a security policy tradeoff - contains clauses which the Bush Administration is concerned could be extrapolated to challenge oil drilling in Alaska. The Vietnam agreement is likely to be washed into an omnibus bill.

A set of principles will be published that will form the framework for the intensive negotiations with Congress. Mr Zoellick is expected to run a strategy that will combine trade authority in a single piece of legislation along with a series of concrete trade accords which would probably include Jordan and Vietnam and possibly Singapore.

Trade and the environment are also issues which require New Zealand to mount a balancing act. High environmental standards have been a selling point for this country, but extra standards could affect our competitiveness particularly in the agricultural arena.

Tonight, Ambassador Bolger will host a Washington barbecue as a platform for Mr Sutton's visit. Mr Sutton has big hurdles to overcome - but New Zealand is in with a strong chance of finally getting a fast track agreement with the US after the long hiatus of the Clinton years.