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ZNR UUUUU ZZH
R 090318Z SEP 08
FM AMEMBASSY WELLINGTON
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INFO RUEHNZ/AMCONSUL AUCKLAND 1734
RUEHBY/AMEMBASSY CANBERRA 5247
RUEHJA/AMEMBASSY JAKARTA 0104
RUEHKL/AMEMBASSY KUALA LUMPUR 0197
RUEHML/AMEMBASSY MANILA 0575
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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