Editorial: There are still big hurdles to US deal

OPINION: The Champagne corks should not be popping just yet.

President Barack Obama's surprise announcement at the weekend that the United States wants to move on talks to join the Trans-Pacific Partnership is a step forward in achieving a free trade agreement that covers New Zealand and the US. It is still a very long march to reach that goal.

The agreement has been described by the Wall Street Journal as little known. It links New Zealand, Singapore, Brunei and Chile, countries that have a combined economic heft, as the WSJ pointed out, less than Belgium's.

That does not make the partnership any less valuable. The prospect of broad-sweep World Trade Organisation agreements has dimmed to the point of invisibility. A spaghetti bowl of regional and bilateral agreements is the best alternative.

The point now is to deliver on the potential of Mr Obama's promise, and there are hurdles in the way of achieving that.

The first is making sure that it delivers something that is worthwhile to New Zealand. That means making sure that agriculture is covered. There is, as Prime Minister John Key pointed out, no point in doing a deal that excludes agriculture "because that doesn't take us anywhere". What New Zealand needs from these deals is to gain the ability for its dairy farmers to compete on fair terms for a share of lucrative foreign markets.

Early indications are that the Obama Administration is willing to do that – though that might change if the dairy farmers in California and Wisconsin make enough noise.

Then there is the need to get Congress to go along. Administration officials have grasped that, with their domestic economy still battling the effects of recession, they need to look to exports, and that that means resuming trade talks that were put on hold as part of a trade policy review. They now seem to appreciate that any realistic export drive is going to have to focus on Asia, that the US, which has only two bilateral trade agreements in Asia, has been losing share in the region's trade, and that it needs to work on trade ties.

That is not a universal US view. Congress has already blocked a US-South Korea deal, because it does not give US car-makers enough access. Congressmen are making negative noises over signing up. Two key Democrats have said the inclusion of Vietnam – which, along with Australia and Peru, has joined the US in seeking to join the agreement – could "present a challenge" because it is a Communist-run state with minimal workers' rights. That is symptomatic of a US prejudice in favour of protectionism.

Clearing those hurdles will take time and require Mr Obama to keep the pressure on.

New Zealand must do everything it can to encourage him. The key to its economic success lies in securing agreements that open the doors for its exporters. That will be a long process, but one which is necessary.

- © Fairfax NZ News