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Cablegate: New Zealand's Expectations On Eve of P-4 Talks in San

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R 080059Z SEP 08
FM AMEMBASSY WELLINGTON
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UNCLAS SECTION 01 OF 02 WELLINGTON 000285

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SIPDIS

STATE FOR EAP/ANP AND EEB, STATE PASS TO USTR, PACOM FOR
J01E/J2/J233/J5/SJFHQ

E.O. 12958: N/A
TAGS: ECON ETRD PGOV PREL NZ
SUBJECT: NEW ZEALAND'S EXPECTATIONS ON EVE OF P-4 TALKS IN SAN
FRANCISCO

Ref A) WELLINGTON 121

WELLINGTON 00000285 001.2 OF 002


1. (SBU) Summary: A member of the New Zealand delegation to the
P-4 talks says that GNZ expectations remain positive, and that all
sides will make progress in San Francisco. He noted that this
second round will not be the last, but that discussions should
result in consolidated text for both chapters on Investment and
Financial Services. New Zealand has been in contact with the other
countries' negotiators, and he predicted that there would be more
detailed interventions during this round than had been the case for
some delegations in Queenstown in June. End Summary.

P-4 Talks: No Final Results But Progress Expected
--------------------------------------------- -----

2. (SBU) Emboffs met on September 4 with Ben King, senior policy
officer in the Trade Division of New Zealand's Ministry of Foreign
Affairs and Trade (MFAT) to ascertain New Zealand's
expectation/concerns prior to the upcoming "P-4 talks" to be held in
San Francisco from September 10 to 14. King said the NZ delegation
was fully prepared to work through the section on Investor-State
Dispute Settlement (CISDS) and that he expected there to be four
sets of developed CISDS proposals submitted by the respective
parties with the expectation that a consolidated text would result
by end of the session. He did caution that there may still be some
unresolved policy differences among the participants but he did not
see these as insurmountable. He also did not see upcoming New
Zealand national elections (likely to occur in November) as slowing
down any momentum for New Zealand commitment to moving ahead with
further P-4 discussions or negotiating rounds.

3. (SBU) While Mr. King is not directly negotiating the Financial
Services section (responsibility of MFAT's Brian Wilson), he did
proffer that he felt there were still some "technical issues" that
needed to be addressed by the GNZ. These relate to proposed
legislation granting the Reserve Bank of New Zealand (RBNZ) expanded
powers to regulate investment institutions, i.e. non-traditional
banking/investment entities. He did not see this as a deal breaker
but merely a developmental step still to be taken by NZ. Mr. King
further relayed that his sense was that all participants have had
extensive consultation since the Queenstown meeting and he expected
all parties to be fully briefed and prepared.

Background
----------

4. (SBU) In 2005, New Zealand, Singapore, Chile, and Brunei
concluded the first multilateral Free Trade Agreement (FTA) in the
Asia-Pacific region, the so-called Trans-Pacific Economic
Partnership (nicknamed the "P-4"). At the time of signing, the P-4
members were not able to reach agreement on the Financial Services
and Investment provisions, but agreed to revisit those chapters in
2008. In February this year, USTR Ambassador Susan Schwab announced
that the United States would begin Investment and Financial Services
section negotiations with the P-4 countries, and would also begin a
detailed exploratory process to determine whether it should
participate in the full Trans-Pacific Strategic Economic
Partnership.

5. (SBU) The parties held a round of exploratory talks in Santiago
in early March. The first negotiating round was held in Queenstown,
New Zealand from June 16-19. At the start of the Queenstown talks,
New Zealand announced that it could consider inclusion of CISDS in
the Investment chapter, subject to the inclusion of appropriate
safeguards, along the lines of that provided for in the New
Zealand/China FTA (Reftel A). NZ's previous opposition to CISDS had
apparently been a major obstacle to reaching an agreement on
Investment among the P-4 in the initial FTA negotiations.

6. (SBU) In Queenstown, the United States presented proposed texts
on Investment and Financial Services, and most of the negotiations
were spent comparing provisions in the US text with the draft P-4
chapters. At the end of the discussions, side-by-side texts were
agreed upon that now form the basis of the San Francisco round of
negotiations.

WELLINGTON 00000285 002.2 OF 002

MCCORMICK

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