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RUEHPB RUEHRN RUEHROV
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ZNR UUUUU ZZH
R 090318Z SEP 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5416
INFO RUEHNZ/AMCONSUL AUCKLAND 1734
RUEHBY/AMEMBASSY CANBERRA 5247
RUEHJA/AMEMBASSY JAKARTA 0104
RUEHKL/AMEMBASSY KUALA LUMPUR 0197
RUEHML/AMEMBASSY MANILA 0575
RUEHGP/AMEMBASSY SINGAPORE 0533
RUEHBK/AMEMBASSY BANGKOK 1794
RUEHBD/AMEMBASSY BANDAR SERI BEGAWAN 0053
RUEHHI/AMEMBASSY HANOI 0064
RUEHVN/AMEMBASSY VIENTIANE 0024
RUEHPF/AMEMBASSY PHNOM PENH 0059
RUEHGO/AMEMBASSY RANGOON 0044
RUEHDN/AMCONSUL SYDNEY 0714
RHHMUNA/CDR USPACOM HONOLULU HI
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHSS/OECD POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC 0246
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE
UNCLAS SECTION 01 OF 02 WELLINGTON 000290
SENSITIVE
SIPDIS
STATE FOR EAP/ANP, EEB, INR, STATE PASS TO USTR, PACOM FOR
J01E/J2/J233/J5/SJFHQ
E.O. 12958: N/A
TAGS: ECON ETRD PGOV PREL NZ
SUBJECT: NEW ZEALAND ANNOUNCES CONCLUSION REACHED ON
ASEAN-AUSTRALIA-NZ FREE TRADE AGREEMENT
Ref A) WELLINGTON 121
Ref B) WELLINGTON 180
Ref C) WELLINGTON 285
WELLINGTON 00000290 001.2 OF 002
1. (SBU) Summary. New Zealand's Trade Minister Phil Goff recently
announced that a "substantive conclusion" was reached at the
negotiations between ASEAN, New Zealand and Australia for a Free
Trade Agreement (AANZFTA) held during the 13th annual meeting of the
ASEAN Economic Ministers-Closer Economic Relations (AEM-CER) in
Singapore on 28 August 2008. Leaders from New Zealand, the 10 ASEAN
nations, and Australia initially agreed in Laos in 2004 to launch
negotiations on an FTA with the first round of negotiations held in
March 2005. The accord is expected to be signed at the ASEAN
leaders' summit in Bangkok in December 2008 and is expected to be
"comprehensive" (i.e., dealing with all market sectors). Whether a
full and "comprehensive" trade agreement can be signed by year's end
remains ambitious but New Zealand's immediate concern remains its
trade goal of securing greater market access for agriculture, meat
and dairy exports into the ASEAN economies. End Summary.
Expanded Trade Between ASEAN, New Zealand
-----------------------------------------
2. (U) After concluding last month's AEM-CER meetings in
Singapore, Trade Minister Phil Goff stated, "this was the first time
New Zealand and Australia have been involved jointly in negotiating
an FTA with third countries (multilaterally) and it was the first
time ASEAN has embarked on "comprehensive" FTA negotiations covering
goods, investment, trade in services, financial services,
telecommunications, electronic commerce, and movement of natural
persons, intellectual property, competition policy and economic
cooperation." According to Goff, the agreement represents a huge
milestone in New Zealand's engagement with "the world's most
economically dynamic region."
3. (U) The ASEAN economies represent a market of more than 575
million people and are seen as an increasingly important destination
for New Zealand goods, services and investments. Currently, New
Zealand exporters pay up to $NZ50 million in tariffs annually to
ASEAN countries which the anticipated agreement should eliminate.
The bloc represents a portion of global trade worth approximately
$1.5 trillion and was New Zealand's third largest export market for
merchandise goods in the year to June 2008 - worth $4.6 billion.
According to Goff, the agreement is seen as critical to New
Zealand's longer term strategic engagement and interactions with the
Asia-Pacific region.
4. (U) The AANZFTA marks the latest in a series of trade agreements
that are part of the Labour government's strategy to expand trading
networks between New Zealand and the pan-Asian economies. In April
2008, New Zealand became the first OECD country to sign an FTA with
China (see Ref. A). In May, Prime Minister Helen Clark also led a
trade delegation to Japan and South Korea to begin preliminary
discussions on the start of free trade talks with both countries
while Trade Minister Goff announced simultaneously that progress is
being made on securing a trade agreement with India (see Ref B).
5. (U) In addition to AANZFTA and the China-NZ FTA, New Zealand
has the following FTAs in force: the Closer Economic Relations
Agreement with Australia (1983), an agreement with Thailand (2005)
and the "P4" Agreement with Singapore, Chile and Brunei (2005) (see
Ref C). New Zealand is currently negotiating free trade agreements
with Malaysia and the Gulf Cooperation Council.
Progress on ASEAN FTA Over Past Year
------------------------------------
WELLINGTON 00000290 002.2 OF 002
6. (SBU) Last year, MFAT officials told us that the ASEAN FTA had
undergone over a dozen rounds since 2005, but that a number of
issues remained. Both New Zealand and Australia were prepared to
lift 100% of their tariffs over time; ASEAN countries were prepared
to commit to roughly 90%. Another issue centered on an ASEAN desire
to exclude a portion of current trade products from the agreement.
Indonesia reportedly wanted to exclude all meat trade; Vietnam and
the Philippines also wanted to protect some of their products. On
investment and services, GNZ officials noted that the ASEAN
Framework Agreement on services was as much as ASEAN was willing to
go at the time. New Zealand had tried to inject as much standard
language from its existing high quality agreements as possible, but
was uncertain how much ASEAN would accept.
Agricultural Sensitivities
--------------------------
7. (SBU) Embassy Ag Officer queried contacts at MFAT and Ministry
of Agriculture and Fisheries (MAF) for greater details regarding the
market access requirements for dairy and beef exports, which have
proven problematic with some of the ASEAN members in past
negotiations. GNZ officials remain reluctant to share details at
this point in negotiations about nature and scope of market access
issues/compromises. As was the practice during the China-NZ FTA
discussions, NZ officials will be keeping the particulars a close
hold until the official signing.
8. (SBU) Greater market access for NZ agriculture, meat and dairy
exports ("ag sector") remain the paramount immediate goal of MFAT
with the ASEAN countries accounting for 10% of New Zealand's current
ag sector exports and which are continuing to grow rapidly. New
Zealand's agricultural exports to Indonesia, its seventh largest
agricultural market, were up 37% in 2007. Agricultural exports to
the Philippines, New Zealand's eight largest market, were up 39% in
2007 and agricultural exports to Malaysia, New Zealand's twelfth
largest market jumped 43% in 2007. New Zealand's agricultural
exports to Thailand and Vietnam increased 16% and 49%, respectively,
in 2007. Dairy products, beef and sheep meat products and food
preparations are the leading exports to the region.
Comment
-------
9. (SBU) The AANZFTA provides NZ and Australia with the opportunity
to achieve greater economic integration in the Asia-Pacific region.
This asserted effort is driven in part by frustration resulting from
the inconclusive Doha Round. NZ's attentions will most likely shift
to advancing the cause of the P4 which would need to be of a higher
trade liberalization standard than AANZFTA. With the signing of the
AANZFTA scheduled for December 2008, New Zealand's political
calendar includes getting past a general election expected in
November and the political interests/priorities that will shape the
new government.
MCCORMICK