US embassy cable - 05WELLINGTON861

UNCLAS WELLINGTON 000861 
 
SIPDIS 
 
STATE FOR EAP/ANP/RICCI AND EB/TPP/ABT 
USDA FOR FAS/ITP/CLAUS AND MIRELES, FAS/BIG/WILLIAMS AND 
FAS/FAA/YOUNG 
 
E.O. 12958: N/A 
TAGS: ETRD, EAGR, ECON, NZ 
SUBJECT: NEW ZEALAND TRADE MINISTER TOUTS FTA TO AMERICAN 
FARM BUREAU 
 
 
1. Summary: In a meeting with visiting American Farm Bureau 
Federation representatives, New Zealand Minister of Trade 
Phil Goff pitched his country's case for free-trade 
negotiations with the United States.  Goff asserted that a 
free-trade agreement would benefit both countries and that 
U.S. agriculture should not fear increased competition 
resulting from such an agreement, because of New Zealand 
agriculture's relatively small size.  The Farm Bureau's 
president, Bob Stallman, responded by noting that the bureau 
was not a big fan of bilateral free-trade agreements in 
general and placed top priority on successful agriculture 
negotiations in the Doha Round.  End summary. 
 
2. In the November 2 meeting, Minister Goff twice raised New 
Zealand,s interest in negotiating a free-trade agreement 
(FTA) with the United States.  It would benefit both 
countries and increase the value of U.S. exports to New 
Zealand by 25 percent, he said.  Referring to U.S. 
agriculture's possible reluctance to support FTA 
negotiations, Goff suggested that New Zealand agriculture -- 
because of its relatively small size -- did not pose a threat 
to U.S. farms.  For example, he pointed to New Zealand,s 
dairy industry, which has a lower production level than that 
in California or Wisconsin.  Goff also noted that due to New 
Zealand,s economic integration with Australia under the 
Closer Economic Relations agreement, the U.S.-Australia FTA 
created inequality and trade-diversion issues for New Zealand. 
 
3. Stallman reacted cautiously toward Goff,s push for 
free-trade talks.  He noted that successful agriculture 
negotiations in the WTO Doha Round were the Farm Bureau's top 
priority and that the bureau in general did not support 
bilateral FTAs unless they benefited U.S. agriculture.  He 
added that time was running out for New Zealand to get on the 
U.S. negotiations list before Trade Promotion Authority 
expires in 2007. 
 
4. Goff stated that New Zealand's trade policy was focused on 
achieving liberalization in the WTO, while simultaneously 
negotiating bilateral agreements.  He noted that New Zealand 
welcomed the U.S. proposal on agriculture subsidies for the 
Doha Round, while "disappointment" was "too light" a word to 
express how New Zealand felt about the European Union's 
response. 
 
5. Goff remarked that he had been part of the Labour 
government that implemented New Zealand,s economic reforms 
of the mid-1980s.  He stated that before those market-opening 
reforms, New Zealand's regulatory regime and subsidy programs 
resembled those in a protectionist Eastern European country. 
Although the reforms initially caused hardship, they greatly 
benefited New Zealand agriculture.  He challenged Stallman to 
find a New Zealand farmer who wanted to "return to the good 
old days." 
 
6. The seven-member delegation of the American Farm Bureau 
Federation was visiting New Zealand from November 1 to 4. The 
delegation included Stallman, the bureau's president; five 
state bureau presidents; and, one staff member.  The Farm 
Bureau delegation also met with officials from the Ministry 
of Foreign Affairs and Trade and the Ministry of Agriculture 
and Forestry. 
 
7. In addition, the delegation met with officials from 
Federated Farmers, a body representing New Zealand farmers, 
similar to the Farm Bureau.  The New Zealand officials 
discussed such issues as the growing rural-urban divide in 
New Zealand and the need to emphasize to the country's 
politicians and public the importance of agriculture to the 
economy.  They noted how New Zealand's farmers had benefited 
in the long term from the removal of support mechanisms, 
after approximately five years of painful readjustment.  The 
officials stated that New Zealand farmers are now 
market-oriented, exporting high-quality products. They 
pointed out that, in the case of lamb, higher volumes are 
produced from a much smaller national flock. 
Burnett