New Zealand envoy sees U.S. willing to deal in Asia-Pacific trade talks

WASHINGTON Fri Aug 16, 2013 5:56pm EDT

WASHINGTON (Reuters) - A senior New Zealand official on Friday said he was optimistic the United States would agree to phase out tariffs in politically sensitive sectors like sugar and dairy as part of a regional free trade deal with Asia-Pacific countries.

"It's our belief the administration is focused on TPP (Trans-Pacific Partnership), wants to do it and wants to do it this year," New Zealand's Ambassador to the United States Mike Moore told reporters. "We can see movement (from U.S. negotiators) happening at an accelerating pace."

New Zealand and the United States are two of 12 countries trying to finish negotiations on the proposed Trans-Pacific Partnership agreement by the end of the year.

The others are Australia, Canada, Mexico, Chile, Peru, Vietnam, Singapore, Malaysia, Brunei and Japan, which just joined the more than three-year-old talks.

The countries will hold their 19th round of negotiations on the TPP pact next week in Brunei.

In addition, U.S. Trade Representative Michael Froman and his counterparts from the 11 other TPP countries will meet at the start of the Brunei round to discuss the difficult work that must be done to reach a deal by December 31.

Washington has a long list of "21st century issues" in areas like intellectual property protection, labor, the environment, supply chain management and state-owned enterprises that it is pressing on its trading partners.

But its ability to gain concessions in those areas could depend on how willing it is to dismantle 20th century protections for some U.S. farmers and textile producers.

Moore said it was "fundamentally important" to New Zealand's neighbor Australia that the United States agree to open its market to more sugar imports.

The former World Trade Organization director general acknowledged that was a sensitive issue for the United States, just as phasing out rice tariffs is for Japan.

But "you take one product of this and create an exemption, I fear the thing will unravel," Moore said, emphasizing his country's commitment to a pact that phases out all tariffs.

For its part, New Zealand wants more access to the protected U.S. dairy market. That should be manageable since U.S. dairy farmers stand to gain new export opportunities in Canada and Japan from the agreement, Moore said.

Asked if he had a concrete basis for believing the United States was prepared to make serious offers to open its sensitive sectors, Moore said: "Yes, I do but I can't share it."

A final deal would also require the United States to open its market to more imports of clothing, footwear and catfish in exchange for tough reforms that Hanoi is being asked to make in the proposed pact, he said.

In remarks last month to the U.S. Chamber of Commerce, Froman gave little indication how much the United States could cut protections for dairy, sugar and textiles to reach a deal.

"Every country has its sensitivities and part of the negotiations is to work through how to deal with those sensitivities," Froman said.

"When it comes to particular products, we'll look product by product ... to try to strike the right balance," he said.

(Reporting by Doug Palmer; Editing by Carol Bishopric)

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