NZ fears the fallout from Trump’s trade war
says Jacobi.
But we need to be careful not to upset the other members of the TPP.
Particularly the Japanese who, says Jacobi, “are in a very invidious position”.
“They had this ballistic missile sent from North Korea the other day. They have got real security concerns, for which they have to rely on the US. They are not going to be drawn to take issue with the United States unnecessarily.”
China is already a member of an alternative multilateral trade group — the Regional Comprehensive Economic Partnership (RCEP), which also includes New Zealand.
If completed, that free trade agreement (FTA) would include the 10 ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has free trade agreements (Australia, China, India, Japan, South Korea and New Zealand).
There have been suggestions that China may look to push this deal as a TPP alternative.
But China hasn’t yet shown any signs of taking the lead, says Jacobi.
We’ve heard rhetoric from Chinese President Xi Jinping about
We can’t afford not to push on any open door. Stephen Jacobi
China’s global leadership, but the reality is that they haven’t taken a major role in multilateral negotiations yet, Jacobi says. “Maybe it’s time. They do have an enormous ability now to fill a vacuum.”
It is a different game now, says Hamilton-Hart, who believes the TPP is effectively dead.
“So do we make a much better effort to get on board with RCEP?” she says. “Or are we going to hang in there and hope that we could do a bilateral with the US . . . which I think would be a bad thing to do as we’d be massively disadvantaged in the negotiations.”
Jacobi agrees that the bilateral path is problematic. “We can’t afford not to push on any open door,” he says. “But the reality is that is bloody hard going. Look at the experience we had with Korea, very complicated.” Trump has said he’ll do bilateral deals with TPP partners. But we would want dairy concessions and the US would want a lot of movement on medicines, says Jacobi.
And neither would play well politically for either nation.
“We’ve got to talk, but will we be high up on the list? And will it be better than TPP? Most unlikely.”
“I don’t want to be too pessimistic,” says Auckland University’s Sandaram. “There may be some opportunities as a small country where you could fly under the radar. It’s harder for a big country to be non-aligned.” This could be a unique opportunity, she says. “We could try and stay neutral and expand into both markets.”
Sandaram, who has been based in New Zealand for only a year, feels New Zealand is sometimes overly cautious about Chinese sensitivities.
“It’s not a traditional link like the UK or Australia, so maybe it is because it is new that we are so cautious.”
Jacobi believes the Chinese have a good understanding of our deep political and economic ties with the Western nations, particularly the US.
“In fact, one of the positive aspects they see in our relationship is that we are an interesting interlocutor because of our attachment to the West,” he says. “But they also know our trade and economic ties are towards China. So whether that will amount to cutting slack . . . I’m not sure.”
Both Sandaram and Jacobi believe we have more options than we did a generation ago.
“We need to diversify,” says Sandaram. “China is decelerating. But we have Asian powers that are fast growing economies. India, Malaysia, Indonesia — with the emerging middle class there is going to be demand for goods that New Zealand exports. That’s a great opportunity, I think we’re uniquely placed.”
New Zealand, both government and business, has to be proactive about trade, says Jacobi.
“This is not something that New Zealand can just sit back and observe. We don’t have that luxury. This is about our economic livelihood and we have to have a say in it.”