Opposition won't derail US trade agreement - Key

Prime Minister John Key doesn't think opposition from a group of United States senators to a free trade agreement with New Zealand will derail negotiations.

The group of 30 senators has sent a letter to US Trade Representative Ron Kirk saying New Zealand's dairy industry has "anti-competitive practices".

Talks started last week in Melbourne on a Trans-Pacific Partnership (TPP) which would expand the previously negotiated P4 trade agreement between New Zealand, Brunei, Chile and Singapore to include the US, Australia, Peru and Vietnam.

Idaho senators Mike Crapo and Jim Risch led 28 others in urging "very careful attention to dairy trade concerns" and said New Zealand's dairy industry wielded extensive control over world prices.

Mr Key, speaking at his post-cabinet press conference today, said negotiations had only just started.

"This is very early days, you would expect those who come along to significant negotiations to start at the most extreme, or hardest, position," he said.

"Over time, I believe that there is a big prize on the table there for all the participants and whether we can achieve the goal of picking up that prize is in the hands of those eight negotiating teams."

Mr Key said Fonterra held a largely monopoly position in New Zealand but it competed in the international market.

"The fact that we are a very large exporter is a factor but we have unsubsidised markets and we are a fraction of the world's overall production."

Trade Minister Tim Groser said the senators were influential.

"We should make no mistake about it - this is a very powerful lobby we're taking on," he said.

It was "palpable nonsense" to say Fonterra created an unfair market because it competed internationally like every other company.

"It's a very, very politicised argument, trying to suggest that somehow New Zealand doesn't play it fair when any person who looked at it objectively would reach exactly the opposite conclusion," he said.

- NZPA