Caught in the middle

: Trade Minister David Parker and the Prime Minister being briefed by officials during the talks with the Chilean President and his delegation yesterday.
 

The Prime Minister and her Foreign and Trade Ministers were yesterday putting a brave face on the outcome of the APEC summit in Port Moresby.

But its failure, for the first time since the first meeting in Canberra in 1989, to not agree on a communique has underlined how New Zealand is caught awkwardly in the middle of the increasingly cold war between the United States and China.

Papua New Guinea (PNG), Prime Minister Peter O'Neill, said at a closing news conference that the sticking point was over whether mention of the World Trade Organization and its possible reform should be in the Leaders’ Declaration. 

Meanwhile, China continued its high profile wooing of Pacific Island states with the announcement of a Comprehensive Strategic Partnership with eight Pacific countries and a China-Pacific Island Countries Economic Development and Cooperation Forum in China in the second half of 2019. 

Chile President Sebastian Pinera and the Prime Minister

Chile President Sebastian Pinera and the Prime Minister

Speaking at a press conference with the President of Chile, Sebastian Pinera, in Auckland yesterday, Prime Minister Jacinda Ardern said it was disappointing that there was no communique. 

“But I think it is also important to acknowledge that while the communique collectively was not issued, because we work on a consensus basis, there was still consensus around a substantial number of areas and agreement across APEC around some significant issues. 

“Whilst it is fair to say that we saw at APEC some of the differences in the international trade environment reflected with what happened with the communique they shouldn't diminish from the areas of substantive agreement.” 

The visit of the Chilean President underlined the positions taken by New Zealand at APEC in support of free trade and a rules-based multilateral trading system; in contrast to the positions currently being advanced by the United States. 

Chile has been an important partner of New Zealand in trade negotiations. It was, with New Zealand, one of the original four founders of what is now the Comprehensive and Progressive Trans Pacific Partnership and is currently supporting New Zealand's bid to become a member of the Pacific Alliance Trade Agreement with Chile, Colombia, Mexico and Peru. 

"We are like-minded countries," said President Pinera. 

“A commitment to free trade, to open trade and to fair trade is something that comes naturally to New Zealand, and therefore we are looking forward to strengthening our relationship with New Zealand." 

A communique issued after talks between Pinera and a party of Chilean officials with Ardern and Foreign Minister Winston Peters and Trade Minister David Parker said the Leaders shared their concerns on the rising level of protectionist tendencies, the enforcement of unilateral measures, and the current impasse regarding appointments to the WTO’s Appellate Body. 

“They noted their countries’ actions in pursuing constructive solutions that seek to defend, strengthen and modernise the WTO and its rules,” it said. 

“Chile commended New Zealand's proposal which reaffirms the preference for multilateral approaches to carry out trade negotiations and puts forward principles for more flexible mechanisms such as open plurilateral arrangements.” 

Trade Minister David Parker and Foreign Minister Winston Peters waiting for the Prime Minister's press conference.

Trade Minister David Parker and Foreign Minister Winston Peters waiting for the Prime Minister's press conference.

Trade Minister David Parker said New Zealand the failure to produce a communique at APEC was a symptom of a disagreement between the superpowers about where the WorLd Trade Organisation (WTO) sat and should go. 

“The United States have some complaints that have not yet been addressed to their satisfaction,” he told POLITIK. 

“Where we sit in all of this is that we try and work with others to find solutions.” 

Parker listed the specific areas that needed resolution as:

  • The enforcement of WTO appellate court judgements
  • The appointment of new judges to the Court (currently held up by the US)
  • Updating WTO rulemaking to incorporate issues of the day
  • Improvements to the WTO notification system --- which is how countries advise each other of tariffs etc.

Parker said New Zealand was working with the original TPP group --- Chile, Brunei, Singapore ---  on these issues and also China and the US. 

This seems to be a key part of New Zealand’s current foreign policy strategy; to position the country as an “honest broker” between China and the US.

Peters told POLITIK New Zealand was in a "sweet spot" between the two superpowers. 

But it is a spot that is going to come under increasing pressure. 

The Chinese effort to woo the Pacific was big at APEC --- for example, Tonga --- has got some relief from its huge debt to China in return for support the Belt and Road initiative.

That President Xi met individually with each of the eight Pacific leaders is an indication of how serious China is about its Pacific strategy. 

The state-run news agency, Xinhua, said President Xi told the Pacific leaders that  China was  ready to maintain the momentum in exchanges at high and various levels with the island countries and “continue to support one another on issues of their core interests and major concern.” 

Xinhua said The Pacific island countries were ready to actively participate in the joint construction of the Belt and Road and strengthen cooperation with China in such areas as trade, investment, fishery, tourism and infrastructure construction which would boost their own economic and social development. 

In effect, China has responded to the Australian and New Zealand Pacific “reset” intended to counter its influence in the region by simply upping its own involvement in the Pacific. 

Increasingly it would seem that this region is going to be caught between the growing superpower rivalry between the US and China. 

That could leave New Zealand with some difficult decisions to make.

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