Nuclear stance roadblock on path to free trade

By NICK PERRY and BRIAN FALLOW

New Zealand's nuclear-free stance has again arisen as a threat to a free-trade agreement with the United States.

Even as the Senate approved legislation on Friday that gives President George W. Bush fast-track authority to negotiate trade deals with foreign nations, power players in Washington said long-simmering tensions over the nuclear issue had resurfaced and could prove a major, perhaps insurmountable, barrier to a deal.

Fred Benson, president of the US-NZ Council in Washington, said US officials who were involved in embarrassing blunders in the 1980s, including sending a ship that was refused entry to a New Zealand port, now held key positions in the Bush Administration.

"They are very senior people now," Benson said.

"They still carry a little grudge about being involved in that."

Benson said he rated the nuclear issue a 10 out of 10 on a scale of hurdles to a trade deal.

Concerns over pharmaceutical sales rated about a five on that scale, he said, and agricultural issues even lower.

Benson said he was surprised how quickly the nuclear issue had resurfaced.

"A year ago it did not seem to be something that would become that significant."

Congresswoman Jennifer Dunn, a Republican from the Seattle area who has long championed a trade deal with New Zealand, said Bush's Trade Representative Robert Zoellick told her recently that the nuclear stance was a problem.

"Right now it does cause some folks in Congress some concern," Dunn said. "It could be used by opponents to a point where it is a real problem. It could be exploited."

Dunn said there was a real buzz around Congress about the prospects of a deal with Australia, which would probably come after mid-term elections in November. But nobody was talking about a deal with New Zealand.

"People haven't focused on a New Zealand agreement," she said. "I tend to be the one who brings it up."

Zoellick and others had referred to concerns about the nuclear issue in public and semi-public statements, said the New Zealand Ambassador in Washington, John Wood, although nothing had been raised formally.

The nuclear issue had been an issue with the US since 1985, he said.

"Representatives of this Administration have always been concerned about the anti-nuclear stance and continue to be concerned."

In the past, both countries had been careful not to let the nuclear issue spill over into trade talks, Wood said. He said he supported an Australia-US trade deal, which he hoped would pave the way for a similar deal with New Zealand.

But should the Australian deal go ahead while New Zealand was left in the cold, it would be a real concern.

On Saturday, Zoellick's spokesman, Richard Mills, declined to comment on whether any progress was being made toward a US-New Zealand free trade agreement.

Zoellick himself said: "With Trade Promotion Authority, we will be able to complete free trade agreements with Chile and Singapore in short order.

"With TPA, we are able to consider free trade agreements with other nations, such as Australia and in Southern Africa."

Asked if New Zealand should re-think its nuclear-free stance, Benson said the issue might be moot, as US naval ships no longer carried nuclear weapons.

Ships propelled by nuclear power had proven safe, he said.

Fonterra chief executive Craig Norgate, who chairs the New Zealand-US council, has called for concerted political support for a US-New Zealand free trade agreement.

"We cannot afford trade to become a political football," Norgate said.

"When I was in Washington last week it became very apparent to me that our cause would not be advanced without strong political backing in New Zealand.

"I call on political parties which are pro-growth and recognise the importance of a closer economic partnership with the US to declare their support for this key national objective."

National's trade spokesman, Lockwood Smith, wants a commission of inquiry into the issues causing the US to remain silent on the prospects of a bilateral deal.

"The very action of doing that could break the impasse," he said.

"As well as the defence relationship, I'm advised there are a range of issues involved, from the labelling of biotech products, through agriculture and phytosanitary matters, parallel importing, as well as the activities of Pharmac and the way it handles the importation of pharmaceuticals."

Trade Minister Jim Sutton said: "We have made sure that New Zealand's interest in a bilateral agreement with the United States is known at the highest levels of the Administration.

"The Prime Minister raised New Zealand's interest in an agreement with President Bush in Washington in March. She also discussed the issue with Secretary of State Colin Powell and Trade Representative Bob Zoellick."

New Zealand officials were continuing to build support, he said.