Our snuggling up to the US again is another example of politics' twisted silver linings

Trade Minister Phil Goff must have been the only politician in Washington with a smile on his face this week as he turned up to signal the beginning of negotiations on a trade deal with the United States. He did so on the very day that the American Government began considering a $US 700 billion dollar bailout of its prized capitalist economy. That’s the blank cheque former Chairman of Goldman Sachs Henry Paulson wants to rescue Goldman Sachs and others who have through greed and mismanagement brought the economy to the brink. It represents a debt which, at roughly seven times New Zealand’s GDP, may not yet have bottomed out. This is not a good sign.

While trade deals may have given way to make-up and porcine qualities, bridges to nowhere and other crucial issues in the US election, they were central to the debate during the Primary season. The severe downturn in the US economic stakes may well herald their return. As they sought to outbid each other, Barack Obama and Hillary Clinton launched several attacks on the North American Free Trade Agreement (NAFTA), which came as a rude surprise to the Government of Canada. Clinton called for what she termed a rethink and a redesign of trade policies with other countries, despite the fact NAFTA had been a key policy of her hubby’s presidential term. Do not be lulled because she failed to win the ticket. Obama pledged to sign only free trade agreements that expand the economy and protect workers. Going back to one of his speeches, he declared that if trade agreements were only good for the Dow Jones, but no good for Jim or Fred or Sally Jones, they won’t happen. These pledges were given to woo unions in states that were suffering huge lay-offs in the manufacturing and automobile sectors of Michigan and Iowa. The Joneses will not be disappearing anytime soon, and now Dow is in the proverbial as much as his kitchen table and assembly line cousins.

Way back in 2006, when all was well in the Kingdom of Capital, McCain went on record as backing talks on a free trade deal with New Zealand, going as far as saying that the nuclear free policy shouldn’t interfere, and offering other such post-Cold War sentiments.  His current position summary has him defending free trade as a continuing principle “that guides the nation’s economy”…but this is the guy who only days ago announced the fundamentals of the American economy are “sound”.  His less than convincing backtrack attempted to morph the workers of America into the economic fundamentals – much to the confusion of said workers and the amusement of the economists.  It was the last laugh Wall St. will have for a while.

Given what he has already said, New Zealand should be wary of Obama’s potential concerns with labour practices in Chile – one of the signatories to the P4 deal – which has been criticized by union, human rights and labour watch groups for child labour and lack of trade union freedom. When it comes to actually signing up, Obama is even less likely than McCain to hold against New Zealand the nuclear issue or the refusal to send troops to Iraq. In theory there should be little difference for New Zealand’s negotiators whichever colour the White House turns early next year.

There are other issues that can’t be easily dismissed, however. The United States is not exactly pure when it comes to abiding by World Trade Organisation rules, and New Zealand knows this first hand having taken the country to task over subsidies in a number of areas. The farm lobby in the US is extremely powerful and has had much success in securing subsidies for its client base. The deal Goff is hoping to have signed will concentrate on areas dear to the heart of that lobby – beef and dairy, and despite it being fertile political fodder at the moment, ridding Washington of its lobbyists will be as successful as selling the Alaskan Governor’s plane on E-Bay. Can’t be done.

All is not doom and gloom in the pursuit of this holy grail of a trade deal. Helen Clark must be mighty pleased with herself for having had the foresight to split the job description when nutting out the governing agreement with Winston Peters following the last election. At the time she had trouble portraying it as a reasonable or credible policy to give Peters the much sought after glamour position of Foreign Minister, and leave Goff with the tough slog and little limelight. So while Peters has charmed the likes of Condi, Goff has been toiling away to produce trade agreements with China and ASEAN and now the US – albeit in tandem with others.

This step back into the US orbit is, if nothing else, proof of the twisted silver linings that politics can sometimes produce. Sure, it's not a resumption of ANZUS, but does anyone really care about that anymore? It is hugely uncertain territory given the economic predicament the US is now in, with the ‘trickle down theory’ now flooding from the taxpayers to the major banks. It may well be a high priority for the next Beehive Administration, but won’t be for the next US administration. Still, for Helen Clark it was a day when Goff’s smiling face was beamed back to her from Washington as he carried out the ‘Trade’ end of the business. On the other screen was the ‘Foreign Affairs’ half of what used to be a combined portfolio. Peters scowled away as the Privileges Committee did to him what it always does with that load of soggy bus tickets it must have secreted away somewhere in the bowels of Parliament. While unlikely to be (yet another) death knell for Peters, his censure can but add to John Key's resolve, should he ever be in such a position, to do anything he can to avoid inheriting that part of Clark’s watch.