NZ Herald | 28 March 2017
Jane Kelsey: Governments in denial of a world changing around them
by Jane Kelsey, professor of law at Auckland University
The visit of China’s Premier Le Keqiang to New Zealand should be the catalyst for a mature and nuanced discussion of our future relationship with the world’s rising hegemon, not simply, whether we can renegotiate the China New Zealand free trade agreement to gain more dairy market access, and will we give China more investment rights and protections in return.
An important backdrop for this reflection is the crisis meeting Chile convened last week to plan the rescue of the Trans-Pacific Partnership (TPP) agreement and the broader, troubled free-trade and investment model.
Those invited to this ’’High-Level dialogue on the Integration Initiatives in the Asia-Pacific Region’’ were the (now 11) TPP signatories, the US (no longer a signatory), the Latin American Pacific Alliance countries (which allowed Colombia to come), plus South Korea and China.
They all attended, but with mixed levels of commitment.
The US was represented by its ambassador to Chile, for only some parts of the meeting. Singapore was the only Asian country to send an actual minister.
China’s invitation confirmed its status as a major player in the rule-making arena.
An article by Chile’s ambassador to China called the country "a crucial piece in the jigsaw puzzle of designing an architecture that will give new impetus to trade across the Pacific".
China agreed to attend to exchange broad ideas, but sent a low-level delegation.
It reportedly insisted the meeting was not about TPP, which was "too complex and politicised", a coded reference to the TPP as part of the US "pivot" to Asia, and Obama’s warning that without the agreement China would make the new rules for the global economy, not the US.
China’s invitation was doubtless discussed with the others.
Some commentators simplistically treated its presence as a provocation to make US President Donald Trump want to rejoin the club.
Public reports said Japan was unhappy, saying the meeting would become unproductive with China there, probably because China would oppose a future platform based on the TPP, especially parts on e-commerce, intellectual property and state-owned enterprises that the US demanded and Japan is now championing in other negotiations.
If "the meeting was the message", it said very little.
The TPP parties, minus the US, had a breakfast session. Their three-paragraph statement was devoid of content, with plans to meet again on the side of the APEC trade ministers meeting in Hanoi in late May.
There was no statement from the meeting as a whole, which suggests a lack of agreement on even the banal.
Some were desperate to hold onto the gains from the TPP.
New Zealand’s trade minister Todd McClay and his Australian counterpart refused to declare the TPP dead, holding out the prospect for some Lazarus options at APEC in May.
Others said the TPP should live on in other free trade agreements, a strategy that is well-advanced with the tabling of similar texts in numerous negotiations, as if the TPP is the new norm.
Ironically, US corporations get the benefits for free.
The Pacific Alliance (Chile, Colombia, Peru and Mexico) said it would create associate membership and negotiate new TPP-style deals. Predictably, Minister McClay put his hand up for New Zealand to be first.
These were Pavlovian responses to the crisis in the neo-liberal agenda at the international level by governments in a state of denial that the world is changing around them.
China is now taking a more active role in the negotiating arena. Its international economic strategy focuses on investing in natural resources and infrastructure, and building supply and value chains from production to consumer.
Underpinning that is a political imperative to create a prosperous middle class that can provide social and political stability and the survival of the one-party state.
The last thing China wants is a trade war with the US, and it will expect countries within its economic orbit to distance themselves from a belligerent Trump.
China’s approach to international trade and investment agreements will not follow the TPP-model; nor will it be benign.
In the Asean/China-led Regional Comprehensive Economic Partnership, for example, leaked texts show China strongly supports foreign investor rights and investor-state enforcement, including for investment contracts on infrastructure projects and natural resources, but is also defensive of its regulatory sovereignty.
As the Government seeks to renegotiate the China Free Trade Agreement, we need to reflect on the broader priorities and risks in that relationship for the future.