US embassy cable - 04WELLINGTON1053

C O N F I D E N T I A L SECTION 01 OF 02 WELLINGTON 001053 
 
SIPDIS 
 
STATE FOR EAP/ANP-TRAMSEY 
STATE PASS USTR-BWEISEL AND DKATZ 
COMMERCE FOR 4530/ITA/MAC/AP/OSAO/GPAINE 
 
E.O. 12958: DECL: 10/16/2014 
TAGS: PREL, ECON, OVIP, NZ, ETRC, CODEL 
SUBJECT: SENATOR BAUCUS AND AMBASSADOR GIVE STRAIGHT TALK 
ON FTA TO NEW ZEALAND TRADE MINISTER 
 
REF: WELLINGTON 36 
 
Classified by: DCM David R. Burnett.  Reasons: 1.4 (b) and 
(d). 
 
1. (C) Summary: In a meeting December 2 at the Auckland 
airport, Senator Max Baucus (D-Montana) and the Ambassador 
warned New Zealand Minister for Trade Negotiations Jim Sutton 
that his government faces a tough time trying to persuade the 
U.S. government to start free-trade talks.  While emphasizing 
their personal support for such talks, they identified the 
New Zealand government's anti-nuclear policy as a major 
obstacle to deepening the bilateral relationship, including 
negotiation of a free-trade agreement.  The discussion 
underscored the message of Codel Nickles (reftel) in January 
2004 on New Zealand's chances for a free-trade deal and the 
nuclear issue's impact on the bilateral relationship.  End 
summary. 
 
2. (U) Minister Sutton, who raised the free-trade issue, 
noted the importance to New Zealand of a deal with the United 
States, especially because of the expected diversion of 
investment from New Zealand to Australia due to the 
Australia-U.S. trade agreement.  Sutton had just returned 
from the Association of South East Asian Nations summit 
meeting in Laos and was accompanied by Simon Murdoch, the 
chief executive of the Ministry of Foreign Affairs and Trade. 
 
 
3. (C) Senator Baucus said that the U.S. administration was 
assessing entire bilateral relationships -- including 
economic and security issues -- in deciding which countries 
to put in queue for free-trade negotiations.  He expected 
that approach to harden in the administration's second term 
as views within the White House become more consolidated. 
Thus, the Senator predicted that New Zealand's 1986 
legislation barring the entry of nuclear weapons and 
nuclear-powered ships into its territory would make it tough 
to get free-trade negotiations going.  In providing this 
direct assessment, the Senator implied that he nonetheless 
supported starting talks now with New Zealand based on the 
economic benefits to the United States. 
 
4. (C) The Senator, who was accompanied by selected members 
of his trade delegation, said that there should be give and 
take on both sides, and that there should be some way that 
New Zealand could meet the United States half way on the 
nuclear issue. 
 
5. (C) Sutton said he had often heard from Washington of the 
fear of "New Zealand fever" -- its anti-nuclear policy -- 
spreading, but that he was not certain that such fear was an 
issue or obstacle to trade negotiations. 
 
6. (C) The Ambassador responded that, because of regional 
security conditions, New Zealand's policy is more important 
to the United States today than it was in 1986.  He 
acknowledged the need to articulate publicly the reasons why 
the United States remains concerned by the policy.  He noted 
that other countries that are as sensitive to the nuclear 
issue as New Zealand -- such as Japan and South Korea -- have 
found a way around the issue because of the importance of 
national security and of their relationships to the United 
States. 
 
7. (C) Murdoch said he hoped a "report card" on the New 
Zealand-U.S. relationship would reflect New Zealand's efforts 
and give the United States reason to bolster it.  He pointed 
out New Zealand's support for the reconstruction efforts in 
Afghanistan and Iraq and the sharing of intelligence.  The 
Ambassador confirmed the U.S. government's appreciation for 
New Zealand's cooperation in many areas, including customs 
and intelligence gathering.  However, the U.S. government did 
not consider New Zealand to be pulling its weight in defense 
and security matters.  He thought Australia shared that view. 
 
8. (C) Murdoch asserted that the anti-nuclear policy would be 
difficult, if not impossible, to change.  The policy had 
become ingrained politically in New Zealand, its citizens 
even more than the government supported it, and even the 
opposition was reluctant to deal with the issue.  The 
Ambassador, who stressed that he and the Embassy supported 
free-trade negotiations between New Zealand and the United 
States, said that when two countries want something, 
everything should be on the table. 
 
9. (C) The Senator agreed.  Unless the nuclear issue were 
addressed, it would be tough to get the U.S. administration 
to start free-trade negotiations.  Somehow, the two parties 
needed to quietly work together to resolve the matter. 
 
10. (C) The Ambassador recalled that he had attempted to 
address the issue two years ago by arranging for a visit to 
New Zealand by a U.S. Coast Guard ship.  However, he ran into 
strong opposition from certain members of the White House, 
Pentagon and State Department.  It was their feeling that the 
United States had been the more flexible of the two countries 
and that New Zealand had made no effort to find a way around 
the issue. 
 
11. (C) The Senator and Ambassador pointed out that both 
countries cooperated well on a number of issues but that, 
while the bilateral relationship was good, it needed to go to 
another level.  The meeting ended on a cordial and friendly 
note, with Sutton and Murdoch appearing to appreciate the 
forthrightness of their discussion with the Senator and 
Ambassador. 
 
12. (C) Comment: Senator Baucus has been identified by the 
New Zealand government as a strong advocate for its effort to 
achieve free-trade negotiations with the United States. 
Therefore, we expect that his candid assessment of the 
challenges faced by New Zealand -- and the importance of 
dealing with the nuclear issue -- in its pursuit of a 
free-trade deal carried credibility.  Post also notes that in 
the meeting there was no discussion of how the United States 
might benefit economically from a trade agreement. 
 
13. (U) Senator Baucus did not have an opportunity to clear 
this cable. 
Swindells