US Suspend Joining P4 - Brunei, NZ, Singapore, Chile

Mark Peart on March 10 2009 reported on the National Business Review:

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Suspension of Transpac talks will damage trade agenda

The Obama administration’s decision to suspend its participation in the Transpac regional trade agreement negotiations, in which New Zealand is a key participant, is a major setback for this country’s trade liberalisation agenda, despite the reassuring noises to the contrary issuing forth from government ministers.

Transpac is the Trans-Pacific economic co-operation agreement which was known in a former life as P4. It was founded by New Zealand, Singapore and Chile, and was later joined by Brunei.

The US is a relative newcomer to the negotiations, having initially restricted its interest to financial services and investment. However, its decision last year to seek full membership of the pact was a lightning rod for Australia, Peru and, more recently, Vietnam to join the negotiations as well.

A spokeswoman for the US embassy in Wellington, Janine Burns, confirms that the next round of Transpac negotiations, which was to have started in Singapore on March 30, has been postponed. No date for a likely resumption has been given. However, such a comprehensive review of US trade policy will not be completed overnight.

Ms Burns says key US cabinet officials-including Trade Representative Ron Kirk (whose congressional confirmation hearing is being held this week) are not yet in place.

“These senior policy makers need to assume their positions and have adequate time to review US. trade policies, including the TPP, before we can agree on next steps on this and other major trade policies,” she says.

While it can be argued that it is sensible to do such a stocktake now, there is a danger that US officials will use it as an opportunity to embark on a protectionist path.

New Zealand has a great deal at stake in the ultimate outcome of the review, as the expansion of TransPac has been seen up until now as a more direct mechanism for improved market access and reduced tariffs for NZ goods services than the more politically fraught bilateral FTA proposal, which has long languished despite a strong improvement in US-NZ relations during the past two to three years.

The US push for full membership in TransPac, indicated while President George W Bush’s administration was in power, enlivened separate but related efforts for a more economically integrated Asia-Pacific region.

The pace of Asia-Pacific trade growth must surely pull back while the US sits on the sidelines engrossed in its review. The US decision makes assessing President Barack Obama’s free trade proclivities even more difficult.

As a presidential candidate last year his free trade rhetoric was hawkish in the extreme, especially as far as the future of the North America Free Trade Agreement (Nafta), which includes the US, Canada and Mexico, is concerned.

Mr Obama’s newly-released trade policy agenda for 2009 says the administration will work with Canada and Mexico to identify ways in which Nafta could be improved without having an adverse effect on trade.

“We will do this in a collaborative spirit and emphasize ways in which this process can benefit the citizens of all three countries,” he says.

As far as proposals for new bilateral and regional agreements are concerned they will be considered when they promise to deliver “significant benefits consistent with our national economic policies,” President Mr Obama says.

New Zealand and its fellow Transpac partners can only hope the administration sees a resumed participation as delivering just those benefits.

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