An FTA with America?

At a speech in Wellington last week former assistant secretary of state Kurt Campbell commented that he was hearing increasing chatter about New Zealand being a potential bilateral FTA partner for the US. President Trump and his team have turned their backs on multilateral or regional agreements and instead want to negotiate bilateral deals. Japan seems to be the principal target but has so far been resistant. Other countries have been talked about but have not yet agreed to negotiate.

Only Taiwan and the United Kingdom seem obviously interested but even the Trump team sense the risks they would be taking talking about a Taiwan bilateral without China signalling comfort. There has been no such signal. And the UK still can’t negotiate as it is still part of a customs union.

The failure to attract interest in a bilateral agreement is becoming an embarrassment for the US administration, which indicated to its voting base that the rest of the world would come flocking.

According to Campbell, people are thinking of New Zealand because we stand out. We are good friends of the US – Five Eyes etc – we run a trade deficit with the US (unusual), we are interested in the outdoors, and we play golf.

All of this is a big positive in the president’s mind. Because we missed out on improved access to the US market when the US pulled out of the TPP, might we be interested in negotiating a bilateral with the US?

I am not a great fan of Trump’s policy platform – particularly the current US trade policy. My natural instinct was to be negative on the idea of a bilateral FTA with the US at this point in time.

But I believe we should, at least, do a risk/ reward analysis.

On the positive side, there is nothing we need worry about on the tariff side domestically. We can give the US tariff-free access to New Zealand without any damage being done to New Zealand industry. And Trump doesn’t seem to like Investor State Dispute Settlement (ISDS) any more than Professor Jane Kelsey. But there are potentially major problems if the US were to demand major changes to Pharmac, to our patents’ regime and to our copyright laws.

All of these were on the table for TPP and it would be hard to imagine that the US team would not be dusting off their TPP positions.

The difference this time is that the pressure for more radical change would be even more intense as New Zealand would not have larger allies in the room also resisting US industry demands.

Finally, I can’t see the Trump administration being hugely enamoured with some of the Government’s ‘‘trade for all’’ agenda. The SME elements might resonate, but will they really want provisions on gender and indigenous issues?

There are also questions about how willing the US under Trump would be to liberalise trade for New Zealand exporters of meat and dairy products. America First might mean a TPP-minus outcome in these product areas.

So, adding it all up, I remain largely pessimistic that an FTA negotiation with the US will be happening any time soon.

But I am also of the view, as a negotiator, that you don’t start an FTA negotiation without preagreement on some of the parameters. So, what if we said to the US something like this?

‘‘We are interested in having you as part of our FTA family but we will only do so on a clear understanding of parameters that need to be agreed in advance. We need at least the TPP outcome on agriculture. We cannot move on patents and copyright for the US any further than we will go in the negotiation now under way with the EU.

‘‘We don’t have any provisions on ISDS. But we do have to have a robust state-to-state disputesettlement system.’’

If the US were to agree to these parameters, I would not have any concerns about New Zealand agreeing to launch a negotiation with the US. Would anyone?

They have just two jobs, property managers: To make sure a house is liveable, and to make sure rent is paid.