Earlier this year, Stuff reported that New Zealand and the United States had been on the cusp of starting talks on a free trade agreement in 2020– a top policy goal for New Zealand since the 1930s.

Newly released documents show just how close those talks came – before coming unstuck at the final hurdle.

In a meeting room, somewhere in New York City in 2019, Donald Trump turned away from Prime Minister Jacinda Ardern to speak to his officials with a look of urgency.

“Why don’t we start right now,” he said.

The president was talking about a free trade agreement (FTA) with New Zealand – a prize sought by New Zealand diplomats and trade officials since it was first floated by Walter Nash in the 1930s.

While Trump is known for talking a big game, he’s also known for his driving desire to ink deals, and New Zealand was keen that one of the FTAs signed by Trump should be with us. It nearly worked. Officials in both New Zealand and the US have said that, in 2020, New Zealand came closer than it has ever done to starting talks on that elusive FTA.

Documents released under the Official Information Act show Ministry of Foreign Affairs and Trade (Mfat) officials got as far as considering the communications strategy for announcing the commencement of formal talks.

The recollection of the Ardern-Trump meeting is from then foreign affairs minister Winston Peters – he wasn’t in the room, but said Ardern’s retelling of it to him was positive.

Ardern's office declined to comment for this story, but didn’t dispute Peters' recollection of events.

“He looked to his officials and said, ‘Why don’t we start right now’,” Peters told Stuff. “We’d done a lot of work to get it onto the agenda for that discussion.”

What Trump might not have realised was that he was the reason a separate FTA was needed in the first place.

Like much of the world, the election of Donald Trump in 2016 was a surprise for New Zealand.

For our trade officials, his victory was tinged with regret. They were close to inking the Trans-Pacific Partnership, or TPP, a landmark trade deal that would have given New Zealand unprecedented access to the US market, as part of a multilateral agreement with other Pacific Rim countries.

New Zealand has been seeking greater access to the US since finance minister Walter Nash met president Franklin Roosevelt, the State Department and the US Treasury in 1939 over a “reciprocal trade treaty”. Those talks came to nought. Their only legacy in the current Beehive is a framed Roosevelt memento hanging in the office of Cabinet minister Stuart Nash – Walter’s great-grandson​.

An Mfat background document, prepared for officials going to the US, summed up the decades-long struggle : “New Zealand has sought opportunities to pursue an FTA with the US since at least the early 2000s, and President Trump’s decision to withdraw the US from the Trans-Pacific Partnership in January 2017 reversed our closest progress yet towards achieving that goal.”

Trump had said he was willing to “make bilateral trade agreements with any Indo-Pacific nation that wants to be our partner and that will abide by the principles of fair and reciprocal trade”. Peters noted that New Zealand fitted the bill perfectly.

One of the first mentions of what would become the FTA was made at the East Asia Summit in Singapore, where Prime Minister Jacinda Ardern and Peters met American representatives and officials, including Vice-President Mike Pence.

Speaking to Stuff, Scott Brown, then US ambassador to New Zealand, said the idea was raised at that summit and talks properly began during Peters’ visit to Washington DC at the end of 2018.

There, he made his “Georgetown Address”, which made the case for greater US engagement in the Pacific. The speech touched on the Pacific Reset – a big-spending diplomatic re-engagement with the Pacific, and New Zealand’s increased military budget. It also touched on the greater involvement of China in the Pacific – a hint that, if the Americans didn’t re-engage with the Pacific, their geopolitical rival would fill the void.

Peters said that the speech was about reminding the Americans of their shared in interest in the Pacific, but also their obligations.

“We have a huge theatre called the ‘Blue Continent’ that we are helping out on, and we need help too. It cannot be done without money, so please step up,” Peters said in the speech.

A source close to the negotiations said New Zealand’s commitment to refreshing its presence in the Pacific, by replacing old aircraft with new P-8s and Hercules, improved the relationship, especially as the two countries were grappling with the role of the Five Eyes alliance, and questions over redeployments to Iraq and Afghanistan.

These weren’t proper trade negotiations, but rather preliminary talks – both sides had to consider whether formal talks were worth it before taking the plunge.

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While the documents reveal that the FTA idea was “initiated” with the Trump administration in December 2018, it was only in 2019 that things really got going.

A briefing for Peters from Mfat in June 2019 noted that a senior Mfat official would be travelling to Washington D.C. that month to meet with the US Trade Representative department ​ for “initial discussions about New Zealand’s proposal for an FTA with the US”.

It said that Peters’ own visit in July that year “will be a further opportunity to advance discussions on the FTA at a political level”. Officials managed expectations: “Even under a best-case scenario, these initial discussions would be just the first of many engagements.

“The process to get to launching an FTA negotiation would be challenging – and any negotiation would inevitably be long and difficult, and would likely require high level political engagement throughout.”

It was a busy time for trade officials, who were keen to secure an exemption from the Trump Administration’s steel and aluminium tariffs. Just getting to the stage where talks would formally begin was difficult.

Brown recalled that, in early meetings, the US was sceptical about even opening negotiations. Brown said an early reaction “was not positive”

“Quite honestly, they said, ‘Why should we?’”

Brown and Peters, who had a warm personal relationship, tried to sell the deal. They emphasised New Zealand and the US’ strong cultural ties and the Five Eyes intelligence. At a political level, the negotiations progressed well.

The FTA idea got itself squeezed on the agenda for the next round of Trade and Investment Framework talks (TIFA), a regular meeting between the US and New Zealand to discuss trade matters.

TIFA talks in the second half of 2019 would have a specific item on the “challenges and benefits” of a bilateral FTA negotiation.

“The minister of foreign affairs raised the question of an FTA again recently with vice-president Pence. The minister regards bilateral FTA progress as a priority to further strengthen our economic relationship,” said Mfat notes circulated ahead of the meeting.

Peters’ July trip to Washington included a round of lobbying for the agreement with officials including national security adviser John Bolton, secretary of state Mike Pompeo and, once again, with Pence.

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The FTA pitch to Pence, recorded in briefing notes to Peters, went something like this.

“The US currently has a trade surplus with New Zealand”, and “New Zealand’s economy is bigger than 13 of the US’ 20 bilateral FTA partners”.

In other words, the US couldn’t really lose. There were benefits for us too: the US is a major market for “meat and dairy, tourism, and business/information and communication technology services”, as well as wine.

But most of these things didn’t make it into the proposed agreement. As 2019 wore on, talks with US trade representative Robert Lighthizer​ floated the idea of “looking initially at a more focused area of trade with the long-term aim being a comprehensive bilateral FTA”.

A source close to the negotiations described this as getting a foot in the door with the Americans, with a view to prising it open at a later stage.

An Mfat paper from February 10, 2020, reveals talks zeroed in on trade in digital services.

This paper also shows how close officials were getting to formally starting talks. Mfat was already planning a public engagement and communications strategy to manage “high levels of public interest in anything related to bilateral trade negotiations with the United States and on digital trade issues more broadly”.

A separate paper notes that many of these concerns harked back to the tortured TPP negotiations, which sparked massive protests in New Zealand – the bilateral talks would need to be handled more gently.

On February 12, Peters and Trade Minister David Parker were given another paper, which would give the go-ahead for “technical talks” with the US “ahead of potential formal negotiations of a digital trade agreement” – now given the name DiTA.

his came at the suggestion of the US, which proposed “informal technical discussions on the potential parameters of a bilateral digital trade deal”, followed by further talks in mid to late March.

Digital trade threw up a number of issues.

The power of big US tech companies is a hot button political issue in both New Zealand and the US. Some of these issues were raised in meetings on February 20 and 21, where “consumer protection, privacy, and some regulatory issues” were discussed. New Zealand officials said they saw eye-to-eye with the Americans on those potential fault lines.

Later meetings noted that the agreement could be quite broad, going so far as to look at the regulation of data, source code and platforms – and potentially liability.

This would no doubt be tricky, as the US would be keen to protect the freedoms and dominance of its tech sector, while New Zealand would want to leave open the door for the right to regulate tech domestically.

A briefing from March 12 said the “technical scoping discussions” were “constructive and positive, and revealed alignment on a number of issues”. The Americans promised another phone discussion later that month.

The growing pandemic did not seem to blunt Peters’ appetite for a deal. A phone call with national security adviser Robert O’Brien was intended to “highlight the value of bilateral trade as part of a push to re-energise the trade and economic agenda, once the immediate Covid-19 crisis is over”, noting that “now more than ever” digital trade was crucial to the global economy.

A phone call between Parker and Lighthizer in late April was meant to re-energise things and “progress our interest in moving forward with a bilateral digital trade negotiation with the US”.

At that point, the papers go silent. A briefing from June 29, 2020, is almost entirely redacted, focusing only on “next steps” and working on “what to do in the meantime”.

Brown told Stuff that the April call with Lighthizer was what sank the deal. “He called, and it stalled.”

This gazumped officials on the US side who, in Brown’s recollection, thought “it was a done deal”.

A source close to the negotiations said the Parker call came unstuck on the “legal form” of the agreement.

Parker wouldn’t budge on New Zealand’s longstanding approach to international trade, which is that parts of the deal negotiated with the US would be available to other trading partners, so as not to discriminate between nations.

The US, however, wanted the terms to be more or less exclusive – a “significant and potentially intractable” hurdle, as this would compromise New Zealand’s longstanding approach to international trade.

The dispute was essentially between Peters’ office, which wanted talks to start, and Parker’s, which thought the costs were too high.

Parker would not be interviewed for this article.

The agreement isn’t off the agenda. Subsequent to Stuff revealing that the talks had taken place, current Trade Minister Damien O’Connor unredacted lines from the briefing he received when he took office, which noted “engagement with the US over a possible digital free trade agreement” was a “potential vehicle” to “shore up and sustain support for the rules-based global trading system” – its original intent.

Of course, the idea itself was hatched as a way to draw the US closer to New Zealand during the Trump years. With Trump gone, and replaced by a man who was vice-president during the Obama administration’s negotiation of TPP, New Zealand might hope the US would re-enter the deal.

In remarks to the United States-based Council on Foreign Relations recently, Ardern hinted New Zealand was keen for the US to return to what is now the CPTPP – although in the same breath she suggested that a bilateral deal was also on the table if the CPTPP was a bridge too far.

"We would encourage the United State to enter into multilateral trade agreements or even bilateral trade agreements but particularly with an eye to our region," Ardern said.