Obama's new schedule sets back hopes of trade deal

A forced change in schedule has slashed hopes that US President Barack Obama might use this weekend's Apec summit to put the weight of his office behind a potentially lucrative transpacific free trade deal which would include New Zealand.

However, the Government here remains cautiously optimistic that the President will still soon announce his backing for the development of some kind of free trade agreement spanning the Pacific.

Mr Obama and his advisers are understood to have been debating the merits of the United States resuming negotiations with the Trans-Pacific Partnership - a four-year-old free trade bloc linking New Zealand, Singapore, Chile and Brunei - as a platform on which to build a wider free trade area spanning the Pacific.

Vietnam, Australia and Peru have expressed interest in joining "TransPac".

However, negotiations with the United States begun by the Bush Administration were put on hold by Mr Obama in March pending a review of US trade policy.

Anticipation had been building that he would spell out his trade priorities, particularly any role for TransPac, in a major Saturday morning speech at Apec.

However, he has had to revise the schedule for his four-country Asian trip so he can attend the memorial service for those who died in the Fort Hood shootings in Texas.

Mr Obama will now not arrive in Singapore, which is hosting Apec this year, until Saturday evening. He will join other leaders the following morning for the remainder of their summit, which winds up at Sunday lunchtime, before flying out of Singapore that evening. The schedule leaves little room for a major announcement on trade.

It also means Prime Minister John Key will no longer have Mr Obama sitting alongside him when the leaders break into small groups to "dialogue" with business figures from the region.

The truncated visit is a blow for Apec, which was looking to Mr Obama to give a lead and inject a degree of urgency into its long-running trade liberalisation agenda.

Sources say New Zealand has been getting positive signals that Mr Obama would back an Asia-Pacific free trade grouping.

Reports from Washington point to domestic pressures slowing decisions on trade policy.

With China pushing for an East Asian free trade pact, American businesses are fearful of being locked out of Asia by a plethora of such agreements.

However, US unemployment levels have increased opposition to cutting trade barriers.