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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.