NZ US Council says the Trans Pacific Partnership free trade agreement is a "very large prize" which will likely benefit our agricultural industry - something disputed by opponents.
The agricultural industry - especially dairying - could benefit most from an estimated $2.1 billion economic boost generated under an Asian-Pacific free trade agreement, the NZ US Council says.
Nine countries, including New Zealand, Australia, Singapore and the United States, are negotiating the so-called Trans Pacific Partnership FTA.
The Ministry of Foreign Affairs & Trade says the agreement will open up trade and boost investments.
Research undertaken by Honolulu's East-West Centre, to be presented at today's NZ US Council's 10th anniversary conference in Auckland, suggests the TPP could add another $2.1b to New Zealand's economy by 2025.
Reviewed by local economists NZIER, it indicates the gains could be bigger if a broader FTA, taking in more countries, was developed.
Existing two-way trade with the US is valued at more than $8 billion.
The East-West Centre uses a general equilibrium model to estimate how the existing trade relationship would change if barriers were removed.
NZIER extrapolated the New Zealand data.
Council executive director Stephen Jacobi says the gains are likely to come in the areas where New Zealand has a comparative advantage.
"It's going to be in a better environment in which we're selling dairy and agricultural products, beef and lamb and the range of other areas we do best in.
"This is because in agriculture the tariffs are the highest and, because of the volumes of exports in those areas, are the biggest."
Mr Jacobi says gains from the TPP are predicated on an agreement with "comprehensive coverage" which has yet to be signed off.
"There's always danger in quoting expected gains ... but what we're saying here is that there is potentially a very large prize if we can get this right."
He says one of potential benefits of a FTA is more offshore investment, because of greater commercial attention focused on the countries' relationship.
Deal by year's end a big ask
TPP negotiations started in 2005 with four countries and have been expanded to nine. Japan, Canada and Mexico are pushing to be included.
The 12th TPP negotiating round begins next Tuesday in Dallas, Texas, and trade ministers will discuss progress at an Apec meeting in Russia next month.
Mr Jacobi says the aim is to complete negotiations this year, but that is a big ask - especially because there is a US presidential election in November.
The TPP will most likely include controversial provisions for "investor state dispute" settlements, under which foreign companies can sue governments when a change in policy hurts their investments.
Mr Jacobi says the provisions are restrictive, but they are an important part of negotiations.
"I think there are risks, of course, but the negotiators are well aware of them.
"The reality is that our companies need that sort of protection when they operate overseas.
"Presumably, we have due process in New Zealand that means that such egregious actions wouldn't occur here.
"Remember, companies can sue companies at any time using the domestic process."
University of Auckland Professor Jane Kelsey, a TPP critic, says sound government policies, such as plain packaging for cigarettes, will be attacked under the investor-state dispute process.
"While we have that in some of our existing agreements, we do not have one that allows the US companies directly to go us, and they are litigious and aggressive."
Ms Kelsey points to a 2010 report from the Australian Productivity Commission which says there is little evidence bilateral and regional trade agreements generate commercial benefits and that pre-negotiating modelling oversold the benefits.
She says the US is steadfastly negotiating agriculture bilaterally and it is not prepared to put dairy on the table in the TPP negotiations.
"If this [East-West Centre] report projects a radically different outcome from that then to call it misleading would be polite."
She wants negotiators to publicly release the texts.
Speakers at today's NZ US Council conference include former prime minister Jim Bolger, the NZ US Council chairman, US ambassador to New Zealand David Huebner and Foreign Minister Murray McCully.
In March, Trade Minister Tim Groser gave a speech at a Beijing University about the Trans Pacific Partnership and international trade.
Last year, the New Zealand government announced a new TPP lead negotiator.
