date:2009-06-04T23:54:00
source:Embassy Wellington
origin:09WELLINGTON128
destination:VZCZCXRO1019 PP RUEHAG RUEHCHI RUEHFK RUEHHM RUEHKSO
RUEHPB RUEHRN RUEHROV RUEHSR DE RUEHWL #0128/01 1552354 ZNY CCCCC ZZH
P 042354Z JUN 09 FM AMEMBASSY WELLINGTON TO RUEHC/SECSTATE WASHDC
PRIORITY 5886 INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY RUEHSS/OECD POSTS
COLLECTIVE PRIORITY RUEHBY/AMEMBASSY CANBERRA PRIORITY 5525
RUEHDN/AMCONSUL SYDNEY PRIORITY 0856 RHHMUNA/CDR USPACOM HONOLULU HI
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C O N F I D E N T I A L SECTION 01 OF 02 WELLINGTON 000128

SENSITIVE
SIPDIS

STATE   FOR EAP/ANP, EEB/TPP
STATE   PASS TO USTR B. WEISEL
STATE   PASS USDA/FAS E.MANGINO
STATE   PASS TO DEPT OF AGRICULTURE

E.O. 12958: DECL: 06/04/2019
TAGS: EAGR, ECON, ETRD, PREL, NZ
SUBJECT: NEW ZEALAND'S MINISTER OF TRADE ASSESSES
HIGHLIGHTS OF WASHINGTON VISIT

Classified By: CDA David J. Keegan; Reason: 1.4 (b) and (d)

1. (SBU) Summary: New Zealand's Trade Minister Tim Groser
categorized all his meetings in Washington as extremely
successful; he also expressed decidedly negative reactions to
recent dairy export subsidy measures by the U.S. and EU.
Groser outlined his plans to revamp NZ development assistance
to focus more on developing the trade and economic capacities
of Pacific Island nations. He was particularly encouraged by
his discussions with U.S. officials in advance of the Cairns
Group meeting regarding marrying efforts to address climate
change concerns with agricultural initiatives. End Summary.

Background
----------
2. (SBU) On June 2, Charge', Ag Attache' and Econoff met
with New Zealand's Trade Minister Tim Groser to get his
assessment of his series of meeting and speaking events in
Washington between May 12-15, 2009. Also acting in his
capacity as NZ's Associate Minister for Climate Changes along
with Adrian Macey, NZ's Climate Change Ambassador at the
Ministry of Foreign Affairs and Trade (MFAT), they covered
issues of concern to NZ in both the trade and environment
arenas. Graeme Harrison, Chairman of the International
Business Forum in NZ accompanied the delegation and was
present at events with NZ business interests and the U.S.
Chamber of Commerce. Minister Groser also met with the
President of the World Bank, Robert Zoellick, USTR Ron Kirk,
Mike Froman, Deputy NSC Advisor for International Economics
Affairs and Todd Stern, the State Dept.'s Special Envoy for
Climate Change. Groser also gave a speech to the U.S. Chamber
of Commerce entitled, "Trade and the Road to (Economic)
Recovery - An Asia Pacific Perspective."

New Direction in New Zealand's Development Assistance
--------------------------------------------- --------

3. (SBU) The first half of the Minister's readout was
devoted to his plans/vision for changing New Zealand's
economic aid and development assistance programs. He spoke
about merging NZAID (NZ aid agency) back into MFAT and using
economic assistance to focus more on building trade and
economic development in and with Pacific Island countries.
Groser said he liked some of the studies and policy advice
that was being produced by the Lowy Institute in Sydney.
Groser stressed that GNZ's vision was not so narrow as to
shift focus in assistance merely as an attempt to increase
export opportunities to Pacific nations but a genuine desire
to build more sustainable economies. He said that one measure
of New Zealand's success could be a negative trade balance
with the islands as they improve their ability to export to
New Zealand and Australia.

Trans-Pacific Partnership
-------------------------

4. (C) Turning his attention to the issue of closer trade
relations with the U.S., Groser said he was "absolutely
thrilled" at the positive signals from Secretary of State
Clinton, USTR Ron Kirk and others regarding the improved
relationship between the United States and New Zealand. He
noted that the recent visit of Foreign Minister Murray
McCully to Washington had been very successful from New
Zealand's perspective, and they were intently focused on
finding ways to continue improving the relationship. Turning
specifically to prospects for a Trans-Pacific Partnership
Agreement (TPP). Groser said he expected the announcement
soon to restart negotiations, but the shape and tone of the
announcement could/would be worded differently from what was
originally announced (e.g., perhaps a different configuration
of countries and/or issues). He said he was realistic and
recognizes that it has to be a U.S. decision and that NZ
cannot influence that decision but would be very surprised if
the U.S. were to say no to restarting TPP negotiations. If
U.S. were to say no (to TPP), he sees negative consequences
for the United States as well as its friends in the region,
with China taking on a more dominant role among the Asia

WELLINGTON 00000128 002 OF 002


Pacific economies. "The question would be, who is going to
lead the trade and investment integration in Asia in the
future in the absence of a leadership role played by the
United States and the answer is clearly China." With China
extending its influence in the Asia-Pacific region, Groser
"would rather see more U.S. involvement in the region and the
sooner the better."

Dairy Export Incentive Program (DEIP)
-------------------------------------

5. (C) Groser stressed that he was "deeply disappointed"
with the U.S. announcement of its support for dairy export
subsidies (DEIP). "At the end of the day, it is impossible
to reconcile the U.S. action with the recent G-20
communique'." Groser went so far as to say that if the
upcoming OECD Ministerial drafted a similar communique', "I
could not let New Zealand be associated with such hypocrisy
and I would not sign it." Groser expressed his concern that
the U.S. decision to implement DEIP will lead us down the
slippery slope of a larger future trade war as evidenced by
the recent French initiative to get pig meat subsidies in
place. In the strongest of terms he said, "the U.S. can't
expect the rest of the world to take trade liberalization
seriously if the U.S. says one thing and does another."

6. (C) Comparing the EU and U.S. approach to dairy export
subsidies, Groser indicated he was "informed" that the EU's
Dairy Management Committee (DMC) made its decision to
introduce export subsidies in a vacuum without an
understanding of the bigger picture while the U.S. made the
decision in spite of a recent Congressional Research Service
(CRS) paper predicting minimal benefits accruing to U.S.
dairy sector as a result of DEIP. He said it was his desire
to eventually see the U.S. and EU issue a joint statement
saying the EU will abolish export refunds and US won't
reintroduce DEIP. In the near-term, Groser believes it would
be good for the advancement of trade liberalization if the
U.S. and EU could jointly agree on at least 4 or 5 basic
principles that would restart momentum to resist further
protectionism. Groser added that he expected a degree of
"head bashing" on DEIP at the upcoming Cairns Group meeting
in Bali, but he said for his part he intends to remain even
handed.


Climate Change and Trade Policy
-------------------------------

7. (SBU) Mark Sinclair, lead trade negotiator for TPP at
MFAT, noted that there was a "meeting of the minds" in the
session between NZ Ambassador Macey and Mike Froman, Deputy
NSC Advisor regarding the intersection between the WTO trade
policies and Climate Change policies. According to Sinclair,
Groser was pleased with the level of engagement and feedback
he got from his U.S. counterparts on calling for greater
attention to be paid to the effects of climate change
produced by agriculture and cooperative efforts to mitigate.
Groser also said his expectations for the upcoming Cairns
Group were measured.
KEEGAN

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