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Cablegate: Senator Baucus and Ambassador Give Straight Talk

This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 WELLINGTON 001053

SIPDIS

STATE FOR EAP/ANP-TRAMSEY
STATE PASS USTR-BWEISEL AND DKATZ
COMMERCE FOR 4530/ITA/MAC/AP/OSAO/GPAINE

E.O. 12958: DECL: 10/16/2014
TAGS: PREL ECON OVIP NZ ETRC CODEL
SUBJECT: SENATOR BAUCUS AND AMBASSADOR GIVE STRAIGHT TALK
ON FTA TO NEW ZEALAND TRADE MINISTER

REF: WELLINGTON 36

Classified by: DCM David R. Burnett. Reasons: 1.4 (b) and
(d).

1. (C) Summary: In a meeting December 2 at the Auckland
airport, Senator Max Baucus (D-Montana) and the Ambassador
warned New Zealand Minister for Trade Negotiations Jim Sutton
that his government faces a tough time trying to persuade the
U.S. government to start free-trade talks. While emphasizing
their personal support for such talks, they identified the
New Zealand government's anti-nuclear policy as a major
obstacle to deepening the bilateral relationship, including
negotiation of a free-trade agreement. The discussion
underscored the message of Codel Nickles (reftel) in January
2004 on New Zealand's chances for a free-trade deal and the
nuclear issue's impact on the bilateral relationship. End
summary.

2. (U) Minister Sutton, who raised the free-trade issue,
noted the importance to New Zealand of a deal with the United
States, especially because of the expected diversion of
investment from New Zealand to Australia due to the
Australia-U.S. trade agreement. Sutton had just returned
from the Association of South East Asian Nations summit
meeting in Laos and was accompanied by Simon Murdoch, the
chief executive of the Ministry of Foreign Affairs and Trade.


3. (C) Senator Baucus said that the U.S. administration was
assessing entire bilateral relationships -- including
economic and security issues -- in deciding which countries
to put in queue for free-trade negotiations. He expected
that approach to harden in the administration's second term
as views within the White House become more consolidated.
Thus, the Senator predicted that New Zealand's 1986
legislation barring the entry of nuclear weapons and
nuclear-powered ships into its territory would make it tough
to get free-trade negotiations going. In providing this
direct assessment, the Senator implied that he nonetheless
supported starting talks now with New Zealand based on the
economic benefits to the United States.

4. (C) The Senator, who was accompanied by selected members
of his trade delegation, said that there should be give and
take on both sides, and that there should be some way that
New Zealand could meet the United States half way on the
nuclear issue.

5. (C) Sutton said he had often heard from Washington of the
fear of "New Zealand fever" -- its anti-nuclear policy --
spreading, but that he was not certain that such fear was an
issue or obstacle to trade negotiations.

6. (C) The Ambassador responded that, because of regional
security conditions, New Zealand's policy is more important
to the United States today than it was in 1986. He
acknowledged the need to articulate publicly the reasons why
the United States remains concerned by the policy. He noted
that other countries that are as sensitive to the nuclear
issue as New Zealand -- such as Japan and South Korea -- have
found a way around the issue because of the importance of
national security and of their relationships to the United
States.

7. (C) Murdoch said he hoped a "report card" on the New
Zealand-U.S. relationship would reflect New Zealand's efforts
and give the United States reason to bolster it. He pointed
out New Zealand's support for the reconstruction efforts in
Afghanistan and Iraq and the sharing of intelligence. The
Ambassador confirmed the U.S. government's appreciation for
New Zealand's cooperation in many areas, including customs
and intelligence gathering. However, the U.S. government did
not consider New Zealand to be pulling its weight in defense
and security matters. He thought Australia shared that view.

8. (C) Murdoch asserted that the anti-nuclear policy would be
difficult, if not impossible, to change. The policy had
become ingrained politically in New Zealand, its citizens
even more than the government supported it, and even the
opposition was reluctant to deal with the issue. The
Ambassador, who stressed that he and the Embassy supported
free-trade negotiations between New Zealand and the United
States, said that when two countries want something,
everything should be on the table.

9. (C) The Senator agreed. Unless the nuclear issue were
addressed, it would be tough to get the U.S. administration
to start free-trade negotiations. Somehow, the two parties
needed to quietly work together to resolve the matter.

10. (C) The Ambassador recalled that he had attempted to
address the issue two years ago by arranging for a visit to
New Zealand by a U.S. Coast Guard ship. However, he ran into
strong opposition from certain members of the White House,
Pentagon and State Department. It was their feeling that the
United States had been the more flexible of the two countries
and that New Zealand had made no effort to find a way around
the issue.

11. (C) The Senator and Ambassador pointed out that both
countries cooperated well on a number of issues but that,
while the bilateral relationship was good, it needed to go to
another level. The meeting ended on a cordial and friendly
note, with Sutton and Murdoch appearing to appreciate the
forthrightness of their discussion with the Senator and
Ambassador.

12. (C) Comment: Senator Baucus has been identified by the
New Zealand government as a strong advocate for its effort to
achieve free-trade negotiations with the United States.
Therefore, we expect that his candid assessment of the
challenges faced by New Zealand -- and the importance of
dealing with the nuclear issue -- in its pursuit of a
free-trade deal carried credibility. Post also notes that in
the meeting there was no discussion of how the United States
might benefit economically from a trade agreement.

13. (U) Senator Baucus did not have an opportunity to clear
this cable.
Swindells

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