Opposition blame Clark for fate of free trade deal

11.45am - By SHARON LUNDY

The United States rejection of a free trade deal with New Zealand is devastating for New Zealand and Prime Minister Helen Clark must take responsibility, opposition parties say.

US Trade Representative Robert Zoellick yesterday dashed hopes of a free trade agreement, citing too many objections from US farmers.

"A lot of their agricultural exports are ones that are very sensitive here," Mr Zoellick told the US House of Representatives Agriculture Committee, referring specifically to lamb and dairy products.

Mr Zoellick said the US was also disappointed with recent actions by New Zealand.

"There's been some things done recently that would make (a free trade agreement) harder to carry" to the US Congress, he said.

Helen Clark had to apologise to US President George W Bush's administration last month for her comments that the US would not have invaded Iraq if Al Gore were president.

However, she has stuck to her stance that New Zealand would support war in Iraq only if it was sanctioned by the United Nations.

National leader Bill English told NZPA today the blame for the rejection of a free trade deal lay squarely with Miss Clark.

"I think the US accepted that New Zealand could differ over the Iraqi war but unlike all their other friends and allies after the war started, Helen Clark went on a campaign of foot in mouth," he said.

"We've heard from American contacts that the picture of Helen Clark buddying up with (French President) Jacques Chirac has had a lot of play in the US and, of course, he's public enemy number one.

"The US farm lobby would certainly use that against us."

Mr English said the news was particularly devastating for rural and provincial New Zealand, which was coming to the end of a recent boom. A free trade agreement was the next step, he said.

He predicted it would take a long time to repair the damage to the US-New Zealand relationship.

"Ten years of hard work has been trashed," he said.

"I don't think there's anything that can be done (to rectify the situation) while this Government is in power."

ACT leader Richard Prebble also said Helen Clark must take responsibility.

"Those statements were contrary to the national interest, they were made for partisan political reasons and Helen Clark, in order to pander to current polling, has significantly damaged the standard of living and prospects of successive generations of New Zealanders," he told NZPA.

"I'm hard-pressed to think of a foreign policy setback more serious than this one."

Miss Clark was warned her comments would have exactly the consequences they had had, Mr Prebble said.

However, she had not heeded those warnings and New Zealand's foreign affairs and trade policies were now in tatters.

"It now appears that a...nightmare is going to occur and that is for Australia to get a free trade agreement with the US, excluding New Zealand," he said.

"The Treasury's own modelling indicates that will be a very significant setback for the New Zealand economy."

The Bush administration has begun free trade talks with Australia, a strong supporter of the US war on terror, despite objections from many farm organisations.

New Zealand had hoped to eventually be linked into the US-Australia free trade pact.

But asked if that was a possibility, Mr Zoellick said: "That's not my present expectation."

More proof was offered by the fact Mr Bush planned to visit Australia, which strongly supported his Iraq action, later this year but not New Zealand.

Bush recently hosted Australian Prime Minister John Howard at his Texas Ranch and planned to reciprocate the visit in October, when he travels to Thailand for the Asia Pacific Economic Co-operation forum. No such trip was planned for New Zealand.

Mr English predicted Helen Clark would refuse to take responsibility for the situation and this morning her office referred inquiries to Trade Minister Jim Sutton's office.

A spokeswoman for Mr Sutton said they were talking to Washington and trying to find out the context of Mr Zoellick's comments.

United Future leader Peter Dunne said the clear message was that New Zealand needed to rebuild its relations with both the United States and Australia.

"It doesn't mean we need to compromise our foreign policy positions but I think it's the old story of when you start out to have a dialogue with friends you don't begin by insulting them," he told NZPA.

"I think that there are some very clear lessons about the need for us to now build a lot of bridges and to build them pretty strongly and pretty quickly."

Fred Benson, president of the US-New Zealand Council, which represents US businesses with interests in New Zealand, said he did not believe the door was closed on a free trade deal.

"I'm disappointed, of course, to hear the words that have been said today," he told National Radio.

"(But) there was at the end of his comment a comment 'at this time', so I read this a description of current events, not one that would necessarily dictate the final outcome."

There was still strong corporate and political support within the US for a free trade negotiations with New Zealand, Mr Benson said.

More than 275 corporations, 50 members of the House and 19 members of the Senate had signed letters to Mr Bush endorsing such negotiations.

"So I believe the message here is perhaps a little more subtle than the first read is, that things haven't been as good with New Zealand in preparing for a free trade agreement as has been the case with other candidates for a free trade agreement."

Federated Farmers said Mr Zoellick's comments dashed New Zealand's hope for a free trade agreement.

"New Zealand, and in particular New Zealand agriculture, cannot afford to be left out in the cold when the United States goes ahead with an FTA with Australia," Federated Farmers president Tom Lambie said in a statement. "Investment in the WTO Round in Cancun has never been more important.

"Agriculture was always going to be difficult to keep on the negotiating table, and this statement reinforces the need for New Zealand to focus its energies on the upcoming WTO round.

"While the increased funding for the trade negotiations team in the budget was very welcome, Mr Zoellick's comments reinforce that it is probably too little and could be too late."

Mr Lambie told NZPA Federated Farmers wanted to see the Government put more money into the WTO process.

"The main thing is just to have the human capital available for a very long and gruelling process," he said.

"Given the absolute necessity of getting a good outcome from the WTO, and the nature of the multilateral trade talks, it is important the Government fully resource that."

He was not surprised by the US announcement, but thought there had been a chance of a true free trade agreement between this country and America.

He acknowledged US farming interests would have made an agreement difficult to negotiate, but said this country had some good business allies who believed an agreement would benefit both countries.

Mr Sutton said New Zealand had always thought achieving a free trade agreement would be a challenge and Mr Zoellick's comments simply confirmed that, rather than signalling any "new difficulties".

"Mr Zoellick's prepared statement does not mention New Zealand. In response to questions about New Zealand, Mr Zoellick confirmed that he doesn't accept New Zealand is linked to an Australian US trade agreement.

"Neither do we -- we think a parallel but separate negotiation following or near completion of an Australian US negotiation is a more realistic prospect."

- NZPA