What is really driving China in trade negotiations and why Key is failing

By   /   April 8, 2013  /   13 Comments

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In reality, so-called ‘trade’ negotiations have become proxies through which a new competitive imperialism is being pursued. In the 1990s competitive imperialism described the race between the US and European Union to extend their hegemony. Today, it involves a new cold war between the US and China.

EnjoyCommunism2Last month it was Latin America that John Key, global diplomat was taking by storm. The embedded media entourage showed him kicking a soccer ball in Brazil – swapping whisky and wine with Chile’s billionaire President Pinera – waving his sombrero at the prospect of a free trade deal with that bastion of freedom, Colombia, some time in the (hopefully indefinite) future.

Few of the accompanying journos provided an in-depth analysis of Key’s ‘own goal’. His official meetings with Latin America’s leaders had been rescheduled so they could attend the funeral of Venezuelan President Hugo Chavez. Key could have gone too, but chose to stay away – presumably to avoid offending the more important ally in Washington DC. For all the hype back here about the PM’s triumphant tour, the lasting message to Latin American leaders was that New Zealand’s priorities lay elsewhere.

Our great leader is now wooing this month’s new best friend, China. Expect more photo ops and bland blogging from journalists traveling with the PM. That’s why he has taken them with him. The blah has already started. We heard how Key, fresh off the plane, was embraced warmly by his Australian counterpart Julie Gillard. Such warmth is hardly surprising. The beleaguered Gillard can use any friends she can find at present.

This is early days for the China trip, so let’s hope we have some deeper engagement with the foreign policy issues on this visit than we did for Latin America, because they are crucial. One focus, at least, should be the brewing conflict between the US-led Trans-Pacific Partnership Agreement (TPPA) and the China and Asean-led Regional Comprehensive Economic Partnership (RCEP). New Zealand is a party to both.

Our government has a Janus-faced approach to this tension. On one hand, Trade Minister Tim Groser said ‘if we in New Zealand smell or sense that this is an anti-China thing we would leave TPP’. During the 2012 US election Republican candidate Mitt Romney said Obama hadn’t been tough enough with China, and endorsed the TPPA as a ‘dramatic geopolitical and economic bulwark against China’. Obama responded in one of the presidential debates that ‘we’re organizing trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards. That’s the kind of leadership we’ve shown in the region. That’s the kind of leadership that we’ll continue to show.’

Both Obama and Romney reinforced the strategy set out by Secretary of State Clinton in November 2011: a two-pronged move to secure America’s Pacific Century through first, realigning US military presence from Iraq and Afghanistan into Asia, and second, the economic pivot of the Trans-Pacific Partnership Agreement. The explicit goal was to neutralise China.

Of course, New Zealand hasn’t walked away from the TPPA.

The current goal is to close off the 11-country TPPA at the APEC leaders’ meeting in October. That won’t happen, although intense political pressure could get them quite near. By then Japan will have come on board and the talks will become more complicated.

There are rumours the US might be prepared to sacrifice the time line to bring more Asian countries into the TPPA, presumably to intensify the pressure on China. But despite public urging from US, South Korea has said it won’t seek to join the TPPA talks at this stage because its focus is on a bilateral negotiation with China and a three-way deal with China and Japan.

Assuming the TPPA doesn’t conclude at APEC in Bali in October more meetings will be required, especially at the level of trade ministers and even political leaders. In recent years these have occurred at the margins of APEC, when the minister and leaders are all in one place. But in 2013 China is chairing APEC. Are the APEC members involved in the TPPA planning to have side meetings in China, rubbing the hosts’ nose in a US-led deal that is so overtly hostile?

Which brings us to the parallel world of the RCEP. New Zealand along with Australia, the Asean countries, Japan, India and South Korea are about to start negotiating a mega-agreement that pivots around China. Six of them (Singapore, Malaysia, Vietnam, Japan, Australia and New Zealand) will also be negotiating the TPPA.

With different strategic and foreign policy drivers, and very different economic models, how can the TPPA and RCEP be reconciled? Tim Groser’s happy image has them all ultimately docking together into one grand regional APEC free trade agreement. I don’t think so.

Where does that leave countries like New Zealand that are straddling the two? According to Key in November 2012: ‘Our basic proposition is we welcome the RCEP talks but TPP is the big game for us at the moment’. Will he be telling that to China’s President Xi and Premier Li when he meets them this week?

Which brings me back to the China tour. Coverage to date suggests the Bo’ao conference is the first stop by the PM, several Chinese-New Zealand MPs and a corporate entourage in a trade mission to China.

This line rests on three assumptions: first, that our export interests should, and do, drive our relations with China; second, that trade is politically neutral, so we can play with everyone in the world; and third, that we can sign politically motivated deals with major powers who are in conflict with each other, without having to take sides.

In reality, so-called ‘trade’ negotiations have become proxies through which a new competitive imperialism is being pursued. In the 1990s competitive imperialism described the race between the US and European Union to extend their hegemony. Today, it involves a new cold war between the US and China.

Given the ascendancy of Asia, and China in particular, what position New Zealand takes and how we maintain our independence, is crucially important. These are matters of foreign policy, not isolated commercial issues.

We should not assume that China is sitting passively and contented as the US strategy plays out through the TPPA. China’s own priorities are clear from the order in which it has listed the dignitaries attending the Bo’ao conference. According to the Australian Financial Times, Brunei, Kazakhstan, Myanmar, Zambia, Mexico and Cambodia are higher up the list than Gillard at number 11 – she is even outranked by John Key.

The media would serve us well by interrogating Key about these deeper foreign policy issues. Hopefully he can perform better than at his post-Cabinet press conference last week. According to the Scoop transcript, when asked if was he was concerned about Japan joining the TPPA, Key replied that ‘China did not actually get a voice on the TPPA’.

As with Latin America, these questions that deserve more attention than Key’s smiles and waves, or even than the fallout from the recent calamities in China involving Fonterra and Zespri.

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13 Comments

  1. Another David says:

    For anyone who is interested, here are trade figures for the United States and China, according to MFAT

    United States

    In the year to December 2011, New Zealand exported over NZ$3.8 billion worth of merchandise to the United States. New Zealand’s top exports were beef, dairy, sheepmeat and wine. Over the same period New Zealand imported over NZ$5.1billion worth of merchandise from the United States. In that period, aircraft and airport parts were our top imports from the United States, followed by turbo jets, medical or veterinary instruments and motor vehicles.

    China
    New Zealand exports (FOB) – NZ$5.887 billion (2011, up 22% yoy).
    (New Zealand’s second-largest market, constituting 12% of total exports)
    New Zealand main exports (2011)
    • Dairy products – NZ$2,172 million (up 19% yoy)
    • Wood – NZ$1,179 million (up 19% yoy)
    • Wool NZ$396 million (up 36% yoy)
    • Fish and seafood – NZ$281 million (up 75% yoy)
    • Meat – NZ$215 million (up 59% yoy)
    • Wood pulp – NZ$202 million (up 9% yoy)
    New Zealand imports (CIF) – NZ$7.4 billion (2011, up 10% yoy)
    (New Zealand’s second-largest source of imports, constituting 16% of total imports).

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  2. onsos says:

    Mr Key looks particularly out of his depth on the international stage. The flippancy of his responses seems to stem from a lack of preparation. He doesn’t seem to know what he is doing. Combined with an intellectual and personal hankering for America, he already looks to be floundering in China.

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  3. A McGregor says:

    Often when there’s some heat from government bungling, Key’s nowhere to be seen but can be found globetrotting in supposedly some official capacity. At the end of his “South American Tour” returning to NZ, Key and his entourage spent one night on Easter Island. Enough time to discuss trade with the Island’s big stone heads? Maybe I’m unfair, his trips just coincide with the frequent controversies his government are expert at producing.

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  4. Afewknowthetruth says:

    I don’t think the jazzed up logo is particularly appropriate, given that China is not actually a communist country any more.

    Anyway, China is not where the real action is at the moment. Japan peaked economically around 1990 and has been in terminal decline ever since. Now the BOJ has set the money-printing machine to full speed -to ‘stimulate the economy’!!

    With the touch paper having been lit, it’s just a matter of time before we hear a very loud bang. (Maybe two loud bangs if another nuclear reactor explodes.)

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  5. Blueice says:

    “China is not really a communist country anymore” ??? You’re joking !! No -one actually owns land there – its ALL leased from the State, and while individuals are now encouraged to accumulate wealth, make NO mistake the whole situation is under the COMPLETE control of the Communist Party. If that control starts to slip there will be trouble. My uncle was an old China hand ( made his first trading trip of 68 or so to China in 1958, and was the initial instigator of the NZ- China Free Trade agreement, as well as escorting / advising many NZ ministers on trips over there, as well as spending some time in a Chinese jail during the Cultural Revolution), and amongst the family openly stated that the welfare of CHINA (read the Communist Party) is ALWAYS uppermost in the minds of the Chinese government. The cult of Mao is alive and VERY well in China, and many of her young people feel that the current government is not tough enough. That’s scarey. There are armies of young hackers working from cyber cafes all over China (not officially sanctioned), hacking websites all over the world, who look on themselves as at war for CHINA. This is not about individual Chinese people, they’re absolutely fine, as immigrants to NZ, or as business people in their own right. Yes, trade with China by all means, but NEVER make the mistake of treating the country of China lightly. For hundreds of years, regardless of whether they have been ruled by emperors or the Communists, China has been the superior in their minds, and all other people should bow down. Go to the website http://www.farmlandgrab.org to see how the Chinese are getting control of land around the world, not for their individual benefit, but for the benefit of China. Shades of Hitler and the Nazi policy of Lebensraum. Check it out.

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    • Afewknowthetruth says:

      The people who run the communist party are not communists.

      You can call them oligarchs, opportunists, psychotic sociopaths….. a whole load of descriptions fit. But not communist.

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      • Blueice says:

        Yes, you’re right – I was thinking more about the control by The Party, rather than the actual “communism”. I still think that the over riding focus of The Party is that everything is for the benefit of The Party and China, rather than individual welfare, and when it comes to the crunch and there is a clash between individual welfare / human rights and the State / Party welfare, then the State will win everytime.

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    • Draco T Bastard says:

      its ALL leased from the State…

      Which is as it should be.

      …and while individuals are now encouraged to accumulate wealth, make NO mistake the whole situation is under the COMPLETE control of the Communist Party.

      Which makes it capitalist.

      Actually, you’re entire rant except the bit about land ownership tells me that China is no longer communist but capitalist.

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      • Ion A. Dowman says:

        Afewknow and Mr Bastard are correct: China is ‘Communist’ in name only. It is not ‘Communist’ in fact, nor even in fiction. Nor is it a ‘dictatorship of the proletariat’, the stage itermediate between the fall of capitalism and the emergence of true communism.

        By the way, for anyone with eyes to read and ears to listen, Communism has absolutely nothing to do with totalitarianism, nor with central planning, nor with curbs upon personal freedoms. Nor is it a denial of individualism, however much its emphasis is upon cooperative rather than individual enterprise.

        What you are looking in China here is State Capitalism modelled upon lines similar to that of the old Soviet Union, but with certain features that seem more closely akin to western capitalism. Well, after all, the more liberal a regime, the more easily it is hijacked. What runs China is a kleptocracy more overt than in the west. The old Communist Party officials were much better placed than anyone else to seize control of the whole kit and caboodle and e treat it as their own fiefdom.

        John Key has one political talent in spades: he has the common touch. I’ve not seen the like: not even Norm Kirk had it to that level. But that, worse luck, is his only talent: he is no Statesman, he doesn’t come across as particularly astute, and although he might be a top gun wheeler dealer, I don’t see him as much of a negotiator.

        The impression I am forming is that in the International arena, the poor schmuck is simply way out of his depth. It is clear that he does not understand complex issues. Mind you, I don’t believe the 5th Labour Administration was any better advised. I’m not expecting any result but disaster for this country’s sovereignty, its commerce and its economy if ever John Key signs off on TPP.

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  6. Tim says:

    “……The media would serve us well by interrogating Key about these deeper foreign policy issues…… ”

    If we get the same sort of coverage we did during the Sth American jaunt, don’t hold your breath!
    Key was able to proclaim what an outstanding success it all was unchallenged.
    If you were to ask Sth Americans, some of whom accompanied him, the impression is that they think he’s a bit of a joke.

    A master of the universe with a band of publicity agents in tow!

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  7. [...] What is really driving China in trade negotiations and why Key is failing – Prof Jane Kelsey looks into the TPPA and what it really means for the US and other nations. Prof Kelsey is up with the play on this issue and her writings are always informative. Her analysis of the Bo’ao Conference is illumination – and also instructive is the way the MSM have skirted the issues involved. [...]

  8. [...] Jane Kelsey: What is really driving China in trade negotiations and why Key is failing http://thedailyblog.co.nz/2013/04/08/what-is-really-driving-china-in-trade-negotiations-and-why-key-… [...]

  9. [...] Jane Kelsey: What is really driving China in trade negotiations and why Key is failing http://thedailyblog.co.nz/2013/04/08/what-is-really-driving-china-in-trade-negotiations-and-why-key-… [...]


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