I'm not a fan of letting foreign policy influence trade policy (which is one of the reasons I prefer multilateral trade liberalization to bilateral or regional trade deals, which are particularly susceptible), but there is no question that it sometimes does. In this regard, I often come across statements suggesting that the U.S. negotiated a trade agreement with Australia but not New Zealand because Australia supported the Iraq war while New Zealand did not. Here's an example:
As the invasion of Iraq began in March, U.S. and Australian officials met in Australia's capital Canberra for the first official talks on a bilateral [trade] agreement. More talks are scheduled this week in Honolulu, according to Australian trade spokesman Matt Francis.
New Zealand had hoped to join those talks, according to New Zealand's Ministry of Foreign Affairs and Trade. But Prime Minister Helen Clark blasted Washington over the Iraq war, so New Zealand has not been invited to the talks.
I don't know all of the circumstances of the U.S. decision here, and perhaps it is more complicated than the article suggests, but I've seen this claim enough that I suspect it is true to some extent.
Is it possible we may see a repeat of sorts? We keep hearing things from the Trump administration about how they will pursue bilateral trade deals, and perhaps focus them on "anglo" countries. If this happens, perhaps a New Zealand - U.S. FTA would be a possibility. On the other hand, I couldn't help noticing this in relation to the recent UN Security Council resolution on Israeli settlements:
The Israeli Government has recalled its ambassador from New Zealand after the UN Security Council passed a resolution condemning Israel's continued settlements.
New Zealand co-sponsored the resolution, which said the settlements violate international law and undermine a two-state solution in Israel's conflict with Palestine.
The Trump teams has been clear about its opposition to this resolution (which the Obama administration decided not to veto) and its support for Israel. Will New Zealand's actions here translate into bad feelings by the Trump administration towards New Zealand, and serve as an impediment to a NZ-U.S. FTA?
This all makes for bad economic policy, in my view, although it must be really interesting for political scientists who study these things.
