Outlook on trade not all gloomy

By KEVIN TAYLOR and REUTERS

New Zealanders should not be too hasty in thinking the country will suffer if Australia succeeds in getting a free-trade agreement with the United States, says an Australian business leader.

Business Council of Australia chief executive Katie Lahey says she doubts Australia will leave New Zealand behind in negotiating a free trade deal with the United States.

"I just don't think it would be in Australia's best interests to see New Zealand miss out on this," she told the Business Herald.

"New Zealand is the size of Victoria in market terms. Why would we want to see one of our closest neighbours miss out?"

Lahey said New Zealand was one of Australia's biggest trading partners but some Australian companies still ignored it.

She said the council needed to do more to make Australian business aware of the size and potential of the New Zealand economy.

An Australian company thinking of expanding would not ignore Victoria.

Her comments came as it was revealed that a bipartisan group of US senators urged the Bush Administration this week to begin talks with New Zealand on a free trade agreement.

Lahey said irrespective of what happened she thought New Zealand could ride on the coat-tails of Australia in any agreement.

Various New Zealand commentators and politicians are warning of the dangers of New Zealand being left out if Australia signs a bilateral trade deal with the US, as looks likely.

Some, like National Party leader Bill English, have linked the prospect of New Zealand missing out with the lack of support the Labour Government has shown the US in the war on Iraq.

Negotiations have already started in Canberra between officials from Australia and the US.

But Lahey emphasised that the trade agreement was not a done deal and negotiations could take time.

It was not yet known, for example, how many compromises Australia would have to make in order to get the deal.

Reuters reported yesterday that a bipartisan group of US senators, including Senate Majority Leader Bill Frist, a Tennessee Republican, called New Zealand a "strong partner" in opening markets around the world and in the US war on terrorism.

"We ask that you begin negotiations with New Zealand as soon as possible," the senators said.

The senators said negotiations with New Zealand would be a "natural complement" to talks under way with Australia and would benefit all three countries if the final agreements "are comprehensive and properly structured".

The letter, which was also signed by Senate Finance Committee chairman Charles Grassley, an Iowa Republican, was the latest sign of congressional interest in a trade pact with New Zealand.