Prime Minister John Key has joined a launch of Asian free trade talks - but made it clear he favours a US-backed deal.
The East Asian Summit wrapped up in Phnom Penh yesterday with Asian leaders formally announcing a start to negotiations towards a Regional Comprehensive Economic Partnership (RCEP), a 16-nation trade pact.
However, earlier in the day Key met with five other Trans Pacific Partnership (TPP) member states. US President Barack Obama requested the sideline talks as he seeks momentum for the deal.
RCEP is an alternative to TPP - and commentators say it has come about as the US and China tussle for dominance in the Pacific. China is not a TPP member - and RCEP includes economic powerhouses Korea and India.
"[RCEP is] in its infancy... it has some very, very big players," Key said. "You've got countries that are large and represent a big market from our point of view.
"In a sense it's exciting, in another sense it's challenging because some of those countries - Japan, Korea and India - have all been quite slow to embrace regional FTAs."
'Cracking it' would be a great opportunity because Asia is the growth engine of the world. But over the next 12 months a huge amount of New Zealand's "effort and energy" is going into TPP, he said.
Key also brushed off speculation Thailand could join TPP talks - saying it is better to get the deal sewn up without the complication of new members. Officials will go into the 15th round of negotiations in Auckland next month with a push to get it concluded by next year.
RCEP talks will begin next year, with an end goal of 2015.
Key said RCEP would give Kiwi business improved access to important Asian markets and would complement regional FTAs. It would also offer a chance to negotiate a free trade relationship with Japan, New Zealand's fourth largest trading partner. But, as with the TPP, agricultural is bound to be a sticking point.
Key also chatted with Russian Foreign minister Sergey Lavrov about ongoing negotiations towards a free trade deal. Moscow are keen for Key to visit next year. "I said I'd love to go, but I really don't want to go unless we are signing a deal."
The summit was "useful...people can see the growth opportunities in Asia."
The Middle East crisis was discussed. And, as expected, tensions over the strategically important South China Seas were also raised during the closed-door talks.
Key said it wasn't "a row" and that ‘‘all parties could see that it’s critical there is a peaceful and negotiated way through that issue."
RCEP: New Zealand, Australia, China, India, Japan, Korea and the ten ASEAN countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam.
Covers 57 per cent of New Zealand exports
TPP: New Zealand, the US, Mexico, Canada, Chile, Vietnam, Brunei, Malaysia
Worth about $2 billion a year to the New Zealand economy