John Armstrong: Obama's gamble on free trade pact

Engagement is one thing; marriage is another step altogether. No doubt that distinction was in the back of the minds of Barack Obama's speechwriters when the American President spoke on Saturday of "engaging" with New Zealand and the three other Trans Pacific Partnership countries with the goal of shaping a regional free trade area which spans the Pacific.

"Engaging" with something does not amount to "endorsing" it. Has the President allowed himself a bit of wriggle room in case pressure builds back home which makes it too difficult politically for him to push the free trade barrow?

Likewise, was his ambitious talk of a mega-trade pact reaching across the Pacific designed to stifle criticism coming from the other direction - that from American business leaders worried that the United States' free trade agenda had stalled and who fear being shut out of Asian markets as a result?

Obama had to say something about free trade before he got to Singapore for the weekend Apec summit - just as he had to say something about a host of other regional issues, be it North Korean nuclear testing or human rights in Myanmar.

Not to have done so would have increased what was the growing frustration of Asian countries looking for a lead from the world's superpower. And it would have left Apec - whose main aim is trade liberalisation - in limbo.

Obama used the old trick of under-promising and over-delivering, silencing the critics by saying more than was expected from him in his Saturday speech in Tokyo and delivering the firm message that "America's back" as a player in the region, especially on the trade front.

He has taken a calculated gamble in selecting what the Wall Street Journal dismissively, but accurately described as the "little known" Trans Pacific Partnership as an initial platform on which to build his far more ambitious proposal to have all Pacific Rim countries inside a free trade area.

The partnership - TPP for short - comprises New Zealand, Singapore, Chile and Brunei. As the Wall Street Journal also noted, their combined GDPs do not amount to that of Belgium.

The upshot is that Obama is seen as doing something for free trade but not at a pace or level which disturbs tariff- or subsidy-protected American producers of goods and service too much. Thus does the President hope to steer a middle course between the free trade camp and those opposed to any further lifting of trade barriers.

Making the understatement of the year, John Key described all this as "very good news". Initially, the objective is to have an expanded TPP which would include the United States, Australia, Vietnam and Peru.

It is unlikely - other countries also want to sign up - but should the expanded TPP remain stuck at eight and the push for a more all-embracing pact lose momentum, New Zealand will still have secured the closest it will get to the stand-alone free trade agreement with Washington that it has missed out on so far. Thus the smiles on the faces of New Zealand's Apec delegation.

The priority now is to nail the expanded TPP as soon as possible, with talk of a target date for completing negotiations in 2011.

As Key put it succinctly after Obama's announcement: the bus is leaving the station. The Americans are on board.

And so are the Kiwis.

THE GOOD

1. Security guards who could actually smile and who did not look at you as if you were Osama bin Laden in disguise.

2. Mad Dogs and Englishmen ... Singapore's rainy season meant slightly cooler temperatures, at least outside if not inside around the negotiating table.

3. Free internet and free food all day in the conference's media centre - and free beer for the hacks after 7pm.

4. Taxi drivers not increasing their fares just because there were a lot of well-heeled visitors in town.

5. The All Whites-Bahrain World Cup qualifier was screened live on local TV.

6. America is back as a player in the region - good news all round.

THE BAD

1. Suntech City - the conference venue - was a rabbit warren of shops and offices, some still open to the public ... a security nightmare.

2. The kitsch, sugar-sweet Saturday night extravaganza featuring local singers and dancers. Elvis Presley has a lot to answer for.

3. It was Apec's 20th birthday, but Singapore struggled to make much of a party of it.

4. The glossy brochures, shopping guides, promotional DVDs and other publicity bumph in the free backpack given to all 10,000 delegates - 99 per cent of which will have gone straight into the bin.

5. Obama's late arrival. The leaders' photo shoot was moved back to yesterday to accommodate his Saturday flight.

6. The way the Gurkha soldiers guarding conference venues held their rifles. Just a little unnerving.