Dialogue among ourselves on TPP is timely – Terence O’Brien

With another round of TPP negotiations beginning  in Auckland a dialogue amongst ourselves about TPP is helpful. This is important in these times of austerity when transparency is at a premium, because it was after all a conspicuous absence of transparency in  financial oversight that  created much of the  present economic turmoil.

Inside NZ itself  TPP has been presented throughout in an essentially  trade policy context.  But there is a  broader foreign policy dimension  which relates to NZ’s world view, its  relationships and interests globally and regionally. There are four aspects . First, the  TPP negotiation  intentionally  extends beyond a FTA as such and provides  a vehicle for economic policy  integration. Much public attention in this country has already  focussed on potential impacts for NZ sovereign decision making across  several sectors. Others will focus today on those dimensions. But the broader foreign policy fact is that if  TPP is consummated, it will be a notable first economic integration agreement  for NZ with a major economy, the US.  CER with Australia, which is critically important to NZ, is an economic integration agreement but  of significantly lesser magnitude potentially than a formal agreement with the world’s largest economy, at a point in time where  the US itself moreover  coincidentally confronts severe  insolvency and  uncertain economic governance. That is a consideration which obviously cannot be discounted when NZ contemplates  direct economic policy convergence. Moreover taken, as it should be, in conjunction  with NZ’s  revitalised de facto American  military alliance,   an important part of NZ’s emerging  response to  the  regional strategic transformation now under way,  amounts   to purposeful deepening of earlier external  dependencies fashioned for a different era. NZ foreign policy here  is  concentrating less upon the exhilarating challenge of new  opportunities that the so-called Asian century offers, but upon actively  retrenching the country in  an old comfort zone embellished by  traditional allegiance.

Second, while  it is manifestly important that NZ enjoys a balanced, constructive and rewarding US relationship, inside East Asia  intergovernmental political/economic   cooperation  has been led by regional governments.  NZ foreign policy has fully subscribed to those  processes  which  underpin  East Asia’s collective accomplishment, upon which the entire global economy now depends for recovery. Some outsiders continue wrongly to brand  East Asian regionalism  as incoherent and ineffectual because it fails to conform to models devised in the Western world. The TPP signifies Washington’s ambition to assert US leadership of the Asia Pacific  regional economic process as a means to restore US economic fortunes.  America’s renewed  engagement with the region is genuinely welcomed.  That  does not amount however  to bestowal by East Asia of economic leadership upon Washington.  American  credentials have been harmed by implication with the causes of the 2008 global financial crisis and studied indifference at the time of the earlier 1998 Asian economic crisis, which itself proved a particular  spur to deepening economic and financial  interaction amongst East Asian governments. It is conspicuous therefore  that none of the five  East Asian G20 economies are committed to TPP. They are however  all involved with the ASEAN led Regional Comprehensive Economic Partnership (RCEP) where fashioning a pathway to greater economic and financial  integration will be a progressive collective enterprise, in contrast to TPP where  parameters are meticuously set by  policies, preferences and immediate economic recuperation needs of the US.

The clear lesson that the  prevailing  shifts to the centre of global economic gravity reinforce, is that agenda setting for, and negotiation of, new  trade/economic rules must  from the outset, henceforward involve important newly emergent economies (NEC). Failure to follow that precept helps explain present paralysis inside WTO, and TPP itself does not meet the crucial test.  On the other hand RCEP, which does, is still in the early stages of evolution. It is still possible to have, as NZ does, a foot in both the TPP and RCEP camps but this will become increasingly problematic  if  it emerges that  TPP contains provisions which inhibit NZ freedom of policy action in the RCEP context; or if  key East Asian governments negotiating inside RCEP  disavow TPP as  incompatible with their aims. The two respective  negotiations may presently act as a spur, one upon the other but  NZ’s best tactical  course in relation to with TPP based on all  the evidence, is surely  now  “to hasten slowly”.

Third, and reinforcing the above, ASEAN’s leadership of regional efforts  and its ongoing construction  of the ASEAN Community is effectively challenged by  (the distraction of) TPP – where four ASEAN members are involved as an Asian minority in the US led negotiation. This is of course an issue first and foremost for ASEAN governments themselves together with Washington, and the US is offering inducements to persuade ASEAN to get on board with TPP. But for NZ, ASEAN has proved  the indispensable doorstep for us  into East Asia. When shaping our respective  policies  towards TPP and RCEP  NZ must remain acutely aware of  pressures that could diminish ASEAN centrality in regional affairs. The basic issue may boil down to how far, or how wise, is it for NZ to consciously assist the   regional  leadership ambitions of a powerful friend, while risking its Asian accomplishments

Fourth, while NZ must resist the temptation to view  the transformation of the regional strategic environment and the place of TPP, through just one set of optics, the fact is that US-China relations  will frame the picture of regional, and global, change.  Their relationship will inevitably contain elements of partnership and of rivalry and whilst military conflict between them  is virtually inconceivable each government confronts immense practical and psychological adjustment to the realities of the strategic change now under way.  China fears containment led by the US including through the TPP and further strengthening of US regional military supremacy; the US fears regional exclusion orchestrated by China. Both sides exaggerate. Their respective  perceptions  cannot however simply be discounted by NZ foreign policy. At the bottom line it is not moreover a zero sum game – a prosperous resilient China and East Asian region is not somehow a defeat for the US.  The role of smaller state foreign policy is to strive to conciliate even-handedly, the differences between the two.

The foundations for further NZ economic integration with East Asia lie with  established arrangements that connect NZ to the hub of East Asian dynamism viz. the bilateral FTA with China and the FTA alongside  Australia with ASEAN, as well as other bilateral ties. These are fruit of sustained twenty five year foreign policy  and must  remain the guiding stars for NZ as it  navigates through  the riddle of the  TPP/RCEP. President Obama’s remarks  to the effect that TPP is intended to pressure China “to meet international standards” begs the earlier  question about how and by whom such standards are now to be  devised, and  implies a  confrontational instinct behind TPP that NZ would be best advised to emphatically avoid.

  • Terence O’Brien is a former diplomat and senior fellow at the Centre for Strategic Studies at Victoria University of Wellington. He made these comments at a Symposium on the Trans-Pacific Partnership (TPP) at the VUW Centre of International Economic Law.

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