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The negotiations are expected to lay the foundation for a larger transpacific agreement

WASHINGTON, DC – 09/29/08 – The US has said it will join Singapore, New Zealand, Chile and Brunei – the so-called P4 Group – in talks to establish a free trade agreement that, officials say, “could set the pace for a broader Asia-Pacific free trade area.”

"We need to ensure our trade will continue to expand so that it can contribute to U.S. economic growth in the future," said US Trade Representative (USTR)  Susan Schwab.

"Strengthening our economic ties to the transpacific region,” she added, “is vital to achieving this goal."
The US currently has free trade agreements with Chile and Singapore, but not with Brunei and New Zealand. A new trade pact with Peru has been approved, but similar proposals with Colombia, Panama, and South Korea are stalled in Congress.

While the proposed transpacific talks would begin with the Bush Administration still in office in Washington, observers say the deal would likely have to be concluded by the next president’s administration.

The decision by Washington is expected to give impetus to a long-term initiative within the 21-member Asia-Pacific Economic Cooperation (APEC) to forge a long-sought after free trade agreement encompassing the entire Pacific Rim.

APEC, which brings together several of the world leading trading nations including the US, China, Russia, Chile, Japan, Canada, Australia and key Southeast Asian economies, currently accounts for nearly half of the world’s total trade.

Interest in the agreement has reportedly been voiced by Peru, Vietnam and Australia.

New Zealand officials have hailed the proposed trade agreement with Trade Minister Phil Goff saying that, “Securing an FTA negotiation with the US, the world's largest economy, has been a key trade objective for more than a decade.”

The US decision to enter into free trade negotiations with the P4 – also known as the Trans-Pacific Partnership – is of "huge significance and benefit for New Zealand,” he said.

New Zealand Prime Minister Helen Clark put the potential deal in the same ballpark as getting a bilateral free trade agreement with the US, something the government has sought unsuccessfully for several years.

"I think the value to New Zealand of the United States coming into a transpacific agreement as a partner would be of the same value as we would hope to get from a bilateral FTA," she said, adding that the development “is very, very big news."

The US is New Zealand's second largest trading partner and export market. Total trade with the US during the 12 months ending last June amounted to $5.7 billion or 9.6% of New Zealand's total trade.

In the US, the National Association of Manufacturers (NAM), one of the country’s largest trade organizations, applauded the announcement of the proposed agreement saying that it plays a major role as “part of an overall effort to bolster US competitiveness in the entire Asian region.

The NAM, the group said in a statement, “has watched with concern the increasing integration of the Asian market through a labyrinth of FTAs of different quality while the US has recently been stuck on the sidelines.”

Alluding to what it called the “explosive growth of trade agreements in the Asia-Pacific region,” the NAM said that “a successful result in these negotiations could give US manufacturers greater access to growing Asian markets. We look forward to working closely with USTR and the Commerce Department on this P-4 initiative to attain an agreement that, indeed, benefits US manufacturers.”

The first round of negotiations on the new pact are expected to start early next year.The US exported a record $1.6 trillion dollars in goods and services to countries around the world last year.

In the past four quarters, trade has accounted for more than half of the growth in the US economy, according to the USTR.

The first six months of this year, it said, the US exported $926 billion worth of goods and services, 18% higher than the same period in 2007.

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