NZ's nuclear stance factor in trade deal

By VERNON SMALL deputy political editor

Deputy Prime Minister Michael Cullen has raised eyebrows among senior colleagues by admitting New Zealand's anti-nuclear stance is a factor in Australia's head start in free-trade talks with the United States.

Background briefings by officials in the US and in New Zealand have always acknowledged that the "ally" status of Australia has given it the inside running on a coveted free-trade deal.

But Dr Cullen's comment breaks with the Government's public line - that although the ban on US nuclear ship visits is a sticking point in the relationship, trade and security issues are kept separate.

Senior sources said there was surprise at "how frank" Dr Cullen had been about discussions he had held in the US last week.

Prime Minister Helen Clark, in Sydney for the Warriors' rugby league grand final game, declined to be interviewed about Dr Cullen's comments.

Speaking through a spokesman, she repeated that New Zealand would not change the anti-nuclear law passed in 1987.

She said the issues of defence and trade had traditionally not been linked.

"New Zealand will argue the case for a free-trade agreement on its merits."

Dr Cullen also reaffirmed New Zealand's commitment to the anti-nuclear law and rejected a call from National MP Lockwood Smith for an independent inquiry into the policy.

Last year, foreign affairs officials warned Helen Clark that Australia was using its Anzus relationship with the US to steal a march on New Zealand. Australia has since decided to "go it alone" in trade negotiations.

During talks with President George Bush in April Helen Clark pressed New Zealand's case. She received a polite hearing after New Zealand's contribution of special forces to Afghanistan, but she was seen to make little progress on trade.

New Zealand is pushing more resources into its embassy in Washington to support its bid.

During his visit last week, Dr Cullen said he had argued "with some success ... that New Zealand should be next in line after Australia" because of the strong transtasman links through the closer economic relations pact.

A US-New Zealand free-trade pact is estimated to be worth $1 billion a year to New Zealand through access to the world's largest market.

In a newspaper interview, Dr Cullen said the subject of New Zealand's anti-nuclear law was raised during discussions in Washington, and he was told the door was certainly not shut.

The anti-nuclear policy did not rule out a free-trade pact forever, but it was a reason the Bush Administration would deal with Australia first.

However, reports from Australia suggested that even alone, John Howard's Government is struggling to make progress.

US Trade Representative Robert Zoellick announced last week that Washington's priorities were to open free-trade talks with Morocco and five Central American countries.

That prompted Mr Howard to admit that a deal with the US might founder over agricultural trade.