15 Nov 2009

Key hopeful on Trans Pacific partnership

10:18 am on 15 November 2009

Prime Minister John Key says a Pacific free trade deal that included the United States would be worth billions of dollars to New Zealand.

The proposed eight-country free trade agreement, which includes New Zealand, has been stalled since March pending a review of US trade policy.

Mr Key made the comments after US President Barack Obama re-committed his country to the Trans-Pacific Partnership (TPP) in Tokyo on Saturday, where he spoke en route to a meeting of Asia-Pacific Economic Cooperation leaders in Singapore.

Mr Obama said in Tokyo that the US will re-engage in free trade agreements such as the TPP, which began under the previous Bush administration, to help boost US exports and create jobs.

Mr Key, who is at the APEC summit, says Mr Obama's speech sent a clear message.

"I think he was trying to make it clear in the speech actually, in a very direct message to his own unions, that if he is going to grow the US economy and produce the job growth that is required, part of that is exporting their way out.

"So it was very clear that he sees liberalisation of the trade agenda as a pro-economic reform."

Possible deal worth billions - Key

Mr Key says other countries will now want to join the TPP and, once completed, the deal will free up New Zealand's trade with a number of countries - not just the US.

"This is the largest economy in the world ... it's a big destination for our agricultural exports. You've got to imagine it's billions and billions of dollars involved."

Mr Key says Vietnam, which has a population of 85 million, is also part of the agreement.

"If this can be completed in line with what New Zealand would want to see, it's real job growth and it's real economic gain."

Earlier, Mr Key urged the APEC leaders to make a new commitment to free trade.

He says trade benefits everyone and free trade helps create conditions for business success in all economies in the region.

Don't rely on US exports - Obama

Mr Obama gave no date for the Pacific trade negotiations to start and Mr Key says it could be years before the deal is concluded.

In his Tokyo speech, Mr Obama said the United States has a direct stake in the future of the Pacific region because of its importance to the American economy.

However, he repeatedly challenged regional leaders to wean themselves off lucrative US export markets to pursue "balanced" and sustainable economic growth.

Mr Obama has also pledged to work with APEC countries to complete the Doha round of world trade talks in what he described as a timely fashion.

China to boost domestic demand

Earlier, China's president called on world leaders to turn the global financial crisis into an opportunity by dismantling barriers to free trade and investment.

Hu Jintao told APEC leaders the global economy needs rebuilding and there are great opportunities but also potential pitfalls ahead, the BBC reports.

Mr Hu said the financial crisis had given rise to trade and investment protectionism that threatened what he called the fragile momentum of recovery.

He also suggested China would use additional measures to persuade Chinese consumers to spend more. China is an export-led economy.

"China will further boost domestic demand, vigorously expand the domestic market, and promote balanced growth of domestic and external demand," he said.

Mr Hu has pledged to promote regional economic integration.