WTO: NEW ZEALAND GOVERNMENT PLAYS DOWN CRISIS OVER

C O N F I D E N T I A L SECTION 01 OF 02 WELLINGTON 000418

SIPDIS

NOFORN

STATE FOR E, EB/FO, EB/TPP/MTA, EAP/FO, EAP/ANZ
STATE PASS USTR FOR WEISEL AND KATZ
NSC FOR VICTOR CHA
GENEVA FOR USTR

E.O. 12958: DECL: 05/27/2015
TAGS: ETRD PGOV PREL NZ USTR
SUBJECT: WTO: NEW ZEALAND GOVERNMENT PLAYS DOWN CRISIS OVER
WTO AMBASSADOR RESIGNATION

REF: WELLINGTON 409

Classified By: DEPUTY CHIEF OF MISSION DAVID R. BURNETT,
FOR REASONS 1.4 (B) AND (D).


1. (C) SUMMARY: Although New Zealand's WTO Ambassador Tim
Groser has resigned to run as an opposition party candidate
in general elections later this year, the Government will
finance his stay in Geneva as WTO Agriculture Committee Chair
until the summer break. This will allow Groser to
participate in the July modalities meeting. Despite early
press reports that the Prime Minister wanted Groser to leave
Geneva immediately, Government officials insist their
intention was always to manage as long a transition as
possible for Groser in a way that would be best for the WTO.
But it appears the Prime Minister and others were largely
motivated by National Party claims that the Government was
putting Labour Party interests ahead of New Zealand's
economic well being. The country stands to gain mightily
from a successful WTO agriculture agreement, and Groser's
constructive role as Agriculture Chair has been a point of
pride for New Zealand. END SUMMARY.


2. (C/NOFORN) The announcement earlier this week that New
Zealand's WTO Ambassador, Tim Groser, would resign to run as
an opposition party candidate in general elections (reftel)
threw the Government into a frenzy, at least behind closed
doors. A number of contacts have confirmed to us that
neither Trade Minister Sutton nor Foreign Minister Goff had
any idea either that Groser would resign or that he would
become a National Party candidate. Sutton in particular
reportedly feels betrayed by the move. (In a May 22 press
release, Sutton called National's move to "lure" Groser a
"kick in the teeth for all New Zealanders.")


3. (C/NOFORN) Ministry of Foreign Affairs and Trade (MFAT)
senior officials, led by Chief Executive Simon Murdoch, have
held daily confidential meetings about the crisis with the
Prime Minister's advisors. Our contacts tell us that Murdoch
has had to walk a fine line between handling bruised egos or
high level officials and maintaining a supportive role for
New Zealand at the WTO. Meanwhile, the Beehive is engaged in
major damage control: the Prime Minister is now insisting
that she never said New Zealand would oppose Groser's
continued role as WTO Agriculture Chairman. Groser has
offered to stay on as Chair at his own expense until the
December Hong Kong Ministerial, but press reports had
indicated that PM Clark and Minister Sutton were adamant that
he should leave immediately.


4. (C/NOFORN) On May 24, it was reported that MFAT had
written to the WTO General Council with an offer to
financially support Groser as Agriculture Chair through the
July modalities meeting. The press cited this as a backing
down, but Clark insists that her position has always been
that the Government would not support Groser's stay beyond a
transition period. We believe, however, that Clark's and
Sutton's initial position was modified -- certainly in tone
and probably in substance -- by National Party claims that
the Government was putting partisan concerns above New
Zealand's national and economic interests. As evidenced by
Sutton's press release, the Labour Government apparently
thought that New Zealander's would put the blame on National
for poaching a prized bureaucrat at a key time in WTO talks.
But in a country where agricultural goods still comprise some
53% of exports by value, National's argument that it was
Labour that was at fault seemed to resonate with the public.
Accusations of self-serving indifference are the last thing
the Government needs after weeks of dealing with assorted
scandals (most recently accusations that Associate Education
Minister David Benson-Pope physically bullied pupils as a
teacher).


5. (C/NOFORN) At an unrelated meeting with Ambassador
Swindells on May 27, MFAT Executive Director Murdoch took the
initiative to explain the Government's current plans vis a
vis Groser, who had resigned his position as Ambassador the
previous day. As of now, Groser still resides in the
Ambassador's residence, and the New Zealand Government will
support his stay in Geneva until the summer break if the WTO
Council wants this. Murdoch said that since Groser's
announcement the Government's goal has been to fashion as
long a transition path as required, while at the same time
taking care not to damage the WTO. He added that the
Government would soon recommend an extremely experienced
international trade diplomat who was now heavily involved in
New Zealand's FTA negotiations with China as New Zealand's
new WTO Ambassador. As a further signal of New Zealand's
commitment to the Doha process, said Murdoch, the Government
will send the new Ambassador to Geneva as soon as possible,
to be available to chair WTO meetings as needed. Murdoch
stressed that especially since the resignation of another
senior trade negotiator who was to have worked on China
(Charles Finny) the choice of the new Ambassador will have
costs for the Government.


6. (C/NOFORN) When asked whether Groser would be allowed to
stay on as Chair until December at his own expense if he
insists on doing so, Murdoch said that the WTO works by
consensus, but that the Government could not support his stay
in Geneva beyond the summer break. Hinting that general
elections will be called in late August or September, Murdoch
said that New Zealand will be moving to an election campaign
at around the time of the break, and Groser's status in
domestic politics would then change. It would be up to the
WTO to decide whether they wanted Groser to stay on beyond
the summer; New Zealand will not state its view if this
discussion takes place. There is no Government plan for
dealing with the situation beyond the WTO summer break, said
Murdoch. He added that the Prime Minister and the Government
were fully supportive of the steps that he had taken to
extend Groser's stay in Geneva, and that he hoped the United
States and other WTO members would appreciate the effort.


6. (C/NOFORN) Comment: Murdoch would not indicate who New
Zealand's next WTO Ambassador would be, but the most likely
candidate is MFAT Deputy Secretary Derek Leask, an
experienced trade negotiator who most recently was head of
the Ministry's economic division. Another possibility is WTO
negotiator Crawford Falconer. A dark horse candidate is
Rachel Fry, who led New Zealand's Thailand FTA negotiations.
Fry has not been active on China FTA talks, however.


Swindells