Trade balancing act ahead for NZ
The Brexit decision by Britain is a game changer that ranks alongside the end of the Cold War, 9/11 and the global financial crisis (GFC).
It alters an important piece of the international landscape.The task of disentangling the complex and intricate connections that have bound Britain to Europe will consume governments involved over the years immediately ahead. It will provide a distraction from other wider global concerns where a united Europe has shouldered responsibility in particular at a time when international rulesbased order is challenged from different directions.
New Zealand interests and emotional ties are obviously affected by this large and unforeseen change. However, the traditional 20th century self view of New Zealand as a small, distant, dependable outpost of an unrivalled Atlantic world has been, and continues to be, materially reshaped by the influence of successful Asia. Coincidental tensions in the South China Sea over competing sovereignty claims and the implications for New Zealand of the recent international tribunal’s detailed rulings, remind New Zealand that strategic issues closer to home command first priority.
China’s emergence into a world of established United States primacy provides New Zealand with the supreme challenge of fashioning and sustaining effective 21st century relationships with both at the same time.
Having said that, Europe and Britain remain significant for New Zealand as sources of ideas, investment and trade opportunity. Too many eggs in the Asian basket after all need to be avoided and balanced by access in Europe (and elsewhere). Shared values remain relevant too even when diversity is the hallmark of the modern globalising world, and interests can therefore differ.
In the period ahead as Britain and Europe negotiate mutual separation there will likely be disagreements, with Britain seeking to prolong the adjustment negotiations, while Europe (notably Germany) prefers to settle in due time to ensure further European disintegration does not spread from prolonged bargaining and/or from terms that are perceived to indulge Britain. The separation will be occurring moreover against a disquieting background of rising influence inside several European countries of Right-wing populism driven by migration and other pressures.
Britain is obviously readying for a post-Brexit future. Moves to recultivate the so-called anglosphere and Commonwealth ties more broadly are likely. New Zealand will be viewed as biddable. Much water has passed beneath the bridge in the 40 years since Britain opted for Europe, obliging New Zealand to fight strenuously and persistently to preserve prosperity and markets as an efficient farmland economy.
It was a stern and unsentimental lesson for New Zealand in international power politics. It substantially changed the country’s external horizons and witnessed change within New Zealand itself
The clock cannot now be simply re-wound.Sentimentality cannot wistfully recreate connections of yesteryear, although the need to formalise trade opportunities separately with Britain and with Europe is important. But just where New Zealand will rank in the queue of those outsiders wanting to regularise their trade dealings with the separating parties is impossible to predict as things stand.
Brexit puts a spanner as well into the works of American trade policy. Washington’s grand design for a trans-Atlantic trade and economic partnership with the united EU will have to be revised.
The proposal is controversial anyway in certain quarters on both sides of the Atlantic. In that respect it is not all that different from the other leg of of the US trade policy double – the Trans Pacific Partnership (TPP) – although with its signature completed that agreement now awaits ratification by each of the 12 participating governments.
American presidential politics complicate matters. Without American ratification or if a new US administration tries to renegotiate provisions, TPP will stall. New Zealand will pursue ratification nonetheless.
Official enthusiasm for TPP confirms that New Zealand sets particular store by improved relationships with Washington, even as coincidental tendencies inside the US contrast notably with New Zealand values and ideals – racism, militarisation of law and order, deluded gun laws and politics dominated by lavish open ended campaign funding.
The world owes the US a considerable debt for so much that it has bequeathed; and America has in the past demonstrated capacity for reinvention and renewal. But claims to be an ‘exceptional’ nation, endowed by providence to change the world in its own image, are undoubtedly deflated through the exposure of such fragility in this era of instant worldwide awareness and 24/7 news streaming.
The Atlantic world is on both sides in a state of some turmoil. Gallons of ink have been spilt in Europe and elsewhere to explain Brexit and its implications. Resistance in the street to decision-taking by distant elites and the deepening realisation that the effects of modern trade and financial liberalisation produce adverse distributional consequences that create or intensify inequality, provide explanations.
Inequality both within newly emergent economies, like China, and in established economies of the Atlantic world, and in New Zealand itself, now increasingly impacts modern international relations.
Terence OBrien is a former diplomat and senior fellow at the Centre for Strategic Studies.