US politicians attack NZ deal

A multibillion-dollar trade agreement involving New Zealand and the United States has hit trouble in its first week of negotiation with 30 US senators – including a former presidential nominee – criticising our "anti-competitive practices".

Trade Minister Tim Groser says a letter signed by the senators, and sent to US trade representative Ron Kirk, is a significant obstacle which will be countered with a major lobbying effort in Washington.

Negotiations for the Trans-Pacific Partnership (TPP) started in Melbourne last week.

The group is aiming to extend an existing free trade agreement between New Zealand, Singapore, Chile and Brunei to include the United States, Vietnam, Peru and Australia.

The eight nations in talks cover 470 million people with a combined gross domestic product of US$16 trillion (NZ$22.6t).

As the talks started, Idaho Senators Mike Crapo and Jim Risch led 28 colleagues, including former Democratic presidential nominee John Kerry, in urging "very careful attention to dairy trade concerns" through a letter to Kirk.

"Because of the anti-competitive practices in New Zealand's dairy industry and the extensive degree of control it wields over world dairy markets to the detriment of the US dairy industry, we are deeply concerned that an expansion of US-New Zealand dairy trade would further open the US to these imports," the senators wrote.

They said losses to US dairy producers could total up to US$20b over the first decade of the agreement if restrictions were fully phased out in the TPP.

Kerry, who lost to former US President George W Bush in the 2004 presidential election, is chairman of the Senate Foreign Relations Committee.

Last night, Groser said the letter would have "considerable influence" in negotiations.

"We should make no mistake about it – this is a very powerful lobby that we're taking on."

Prime Minister John Key would lead a lobbying effort in Washington to fight for New Zealand's cause.

Groser, Foreign Affairs Minister Murray McCully, Agriculture Minister David Carter, plus Fonterra, industry lobbyists and the incoming Ambassador to the US, Mike Moore, would also lobby Washington.

"This will be a major exercise and we will partially succeed because the facts are extremely strong on our side," Groser said.

It was "palpable nonsense" to say that Fonterra had created an unfair market.

While Fonterra dominated the domestic market, they had to compete like any other company on the world stage.

The US used subsidies for its dairy producers, but New Zealand did not.

"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," Groser said.

In a submission to the the US International Trade Commission earlier this month, the current New Zealand Ambassador to the US, Roy Ferguson, said TPP negotiations would "not be easy".

He said the US accounted for 13 per cent of global milk production, while New Zealand accounted for about 2 per cent.

- © Fairfax NZ News