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Fran O’Sullivan: NZ oddly mute on China’s trade overture

OPINION:

There was once a time when New Zealand Prime Ministers and Trade ministers would have shouted cock-a-hoop the news that China had finally applied (via NZ) to join the massive CPTPP trade bloc.

Certainly not be the ultimate and quite timorous fence-sitters when it comes to big moves on trade.

But the Chinese move — coming just hours after Australia committed to build eight nuclear-powered submarines under a new Indo-Pacific security partnership with the United States — sparked a more subtle response.

Understandable perhaps, when the Prime Minister, her senior officials and top diplomats are still coming to terms with the new trilateral defence alliance said to have been stitched up by Australian Prime Minister Scott Morrison and read by China as an offensive military move against it.

So subtle (in fact) that New Zealand, which is the depositary for the CPTPP, did not even issue an official statement acknowledging that it would share China’s accession request with other trade pact members: Japan, Canada, Mexico, Australia, Brunei, Chile, Malaysia, Peru, Singapore, and Vietnam.

It’s not as if New Zealand will remain a mere post-box for the CPTPP pact for too long. It will take over the chairmanship from Japan in 2023. So, ultimately New Zealand will have to engage and take some leadership.

It may come sooner than that.

Chinese President Xi Jinping originally floated the prospect of China joining the CPTPP at last year’s Asia-Pacific Economic Cooperation (Apec) meeting. It’s now just weeks out from the 2021 Apec meeting where Jacinda Ardern will host 20 other Asia-Pacific leaders including Xi and US President Joe Biden.

This could have been an opportune moment to welcome China’s move (with the usual caveats about that country having to reach CPTPP standards).

It would seem likely that Xi will use his own address to this year’s Apec to re-promote this “bold move to reassure the world of the country’s continuing commitment to reform and opening-up”.

And if the Chinese move could just nudge the United States to get back into the game, after President Donald Trump pulled it out of the prior TPP, then so much the better.

Biden’s press secretary Jen Psaki left open a very slim avenue for the US to re-engage.

Chinese officials had delivered the written request to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement to NZ’s Beijing embassy late on Thursday. This was followed up by a phone call between China’s Commerce Minister Wang Wentao and Trade and Export Growth Minister Damien O’Connor.

The Chinese Ministry of Commerce posted the news on the Mofcom website late on Thursday night Beijing time. Yesterday morning it appeared that Trade and Export Growth Minister Damien O’Connor would issue a statement.

Realpolitik intervened.

Instead, journalists were referred to the Ministry of Foreign Affairs and Trade for comment.

Still nothing formally from New Zealand. Finally, an acknowledgement by Deputy Prime Minister Grant Robertson at the 1pm Covid press conference that New Zealand welcomes any countries wanting to join “a high-functioning trade agreement”.

“It is not just China who has expressed interest in this, other countries have in the past.
“This is a very solid regional agreement that New Zealand exporters benefit from and anything we can do to enhance a rules-based trade system around the world, we are always happy to look at.”

There are two elements to this.

The Chinese move was hardly a surprise.

Beijing had been consulting with CPTPP members — including New Zealand — about its interest in the pact. In turn, US lawmakers had been urging the Biden Administration to join the pact before China.

Former Chinese trade negotiator Long Yongtu — who negotiated China’s accession to the World Trade Organisation and the original bilateral deal between China and New Zealand, has urged both major powers to join the Asia Pacific pact.”Of course, this is difficult, but we hope the US and China will make the effort,” he told the Boao Forum.

Former US TPP negotiator Wendy Cutler has observed, “If Beijing managed to successfully join this effort, it would serve as a major public relations coup and hamper Washington’s ability to regain economic sway in this part of the world.”

In an interview with influential Chinese financial magazine Caixin Global in July, Ambassador Clare Fearnley acknowledged New Zealand had supported the expansion of the CPTPP from the beginning.

“We have an approach that we term open plurilateralism — plurilateralism means regional or other groupings of countries — and we see these as open to others to join as long as they can meet the standards of the agreement.”

She went on to affirm that New Zealand and China upgraded their existing FTA in January to ensure the rules underpinning the bilateral trade are up to date and fit for purpose, and also incorporated environmental policy, competition policy and government procurement chapters into the FTA.

“It means that we’re updating and making it relevant to our current economic relationship,” Fearnley told Caixin. “Bilateral goods and services trade have grown remarkably in recent years, reflecting the complementarity of our trade.”

The second fundamental issue is timing.

China’s tabling of the accession request the same day as the US/UK/Australia alliance was announced cements unfortunate parallels.

That is that China is focused outwards on economic expansion while the US is again focused on security first.

It’s not as simplistic as that. Particularly, given China’s own expansion of its military might.

Two decades ago, China hosted Apec in Shanghai.

It was to signal further moves in its economic opening up reforms and its accession to the WTO.

Just weeks after September 11, US President George Bush’s agenda was simply security.
Twenty years on China is still focusing on economic expansion. The US is back on the security focus.

It needs to do both.

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