Hon Phil Goff
Minister of Trade

15 October 2008
Media statement

Submissions called for on FTA with US

The Government is inviting submissions on New Zealand’s upcoming Free Trade Agreement negotiations with the United States as part of the Trans-Pacific Partnership (currently called the P4), Trade Minister Phil Goff said today.

The negotiations were announced in New York on 22 September, following a meeting between Mr Goff, United States Trade Representative Susan Schwab and trade ministers from Singapore, Chile and Brunei (the other P4 countries).

“The US is the world’s largest economy, with more than 270 million consumers with a very high average income, notwithstanding recent economic difficulties,” Phil Goff said.

“It is New Zealand’s second largest export market. Total trade with the US in the year to June 2008 was worth $8.14 billion, accounting for 9.6 per cent of New Zealand’s overall total trade. That means this deal is of huge significance to New Zealand.

“An American study on the impact of an FTA with the US, the Bergsten Report, published in 2002, estimates that New Zealand exports to the US would rise by $1 billion.

“That figure is indicative only. With its membership likely to expand further, the Trans-Pacific Partnership will likely bring much greater benefit for New Zealand and the US. The strategic benefits to the US should win bipartisan support for the agreement and ensure that it is both high quality and comprehensive in nature.

“In the current world economic climate, improving market access for Kiwi exporters, and the boost to growth, jobs and confidence that this provides, makes this negotiation and proposed agreement critically important.

“The more favourable New Zealand exchange rate will also boost exporter confidence. New Zealand’s export future however, relies not on cheapness but on quality and innovation.

“Essential to this is the encouragement of research and development promoted by both Labour’s 15 per cent tax credit for R and D and the $700 million Fast Forward Fund for the primary sector.

“National’s promise to eliminate these policies is incomprehensible,” Phil Goff said.

“Our major exports to the US, dairy and meat, will benefit significantly through the removal of export quotas.

“Horticultural exports to the US worth $370 million last year currently face tariffs of up to 23 per cent. They will also be significant beneficiaries.

“Fish and seafood, industrial products, metal products, wood, pulp and paper account for more than $1.5 billion in New Zealand exports to the US. These too will be able to trade into the US at lower cost.

“New Zealand companies will also be able to bid for US Government procurement contracts, worth an estimated $200 billion a year.

“One example of facilitating new opportunities for New Zealand exporters is in the US Territory of Guam, where US Marines are transferring to from Okinawa over the next five years. This involves contracts of around $14 billion for work such as building and support services around the new base. An FTA with the US could allow New Zealand companies to bid directly for Defense Department projects.

“Our high tech companies will also benefit. Christchurch-based Tait Electronics last week welcomed the advantages an FTA with the US would bring, allowing them to bid for US Government contracts, currently blocked under the Buy American Act.

“Tait said this would greatly reduce the time and effort taken to meet US regulations to export its radio equipment into the US. It would also allow it to bring its manufacturing base back from Texas to New Zealand,” Phil Goff said.

“Public submissions are an essential part of a consultation process that will take place as the negotiations proceed. The negotiations are due to begin in March 2009, and are expected to be completed within 12 to 24 months,” Phil Goff said.

Background to the negotiations and an online submission form are available on the Ministry of Foreign Affairs and Trade Website, mfat.govt.nz. Submissions close on December 8.

ENDS

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