Q+A: Prime Minister Bill English on Trump, TPP, Japan and China

Prime Minister Bill English told Q+A’s Corin Dann that New Zealanders shouldn’t be too concerned about what’s happening politically in the United States.

Bill English: Well, we just, I think, need to understand there’s a lot of domestic politics in the US that’s pretty robust – certainly at the moment – a different way of the president operating. But hour by hour following it would distract, I think, the government from our critical focus, which is on growing the economy, investing in the infrastructure to support it, getting these trade agreements done. So while the US politics is creating some uncertainty. We want to get on with the job of working with like-minded countries to achieve our trade objectives and making sure we don’t get distracted from the real–

Corin Dann: But isn’t the Trump presidency–? Hasn’t that now become the number-one urgent foreign policy focus for you and your government because it is creating uncertainty?

Well, it does have some effects. I mean, an example is around the TPP, where the US has pulled out. That has created a situation where China has now become a standard-bearer for open trade. Japan has taken a leadership role which just five or six years ago, you couldn’t have imagined with respect to open trade and investment flows. So we’re taking our opportunity that goes with that rather than following hour by hour the sometimes exciting commentary in Washington.

Yeah, but that exciting commentary in Washington, surely we should be following it hour by hour, because it’s very difficult to interpret what America is doing hour by hour, yet it could have an enormous impact on the Asian region and is.

Look, it could—If it has an impact on confidence in the US economy, that’s something that we can’t influence but would certainly be concerned about, because the US has been growing; it’s been pulling along the global economy. That has helped us. It does appear that despite the domestic politics, the US is staying focused on the most urgent security issue in the Asia-Pacific, and that’s the threat from North Korea, where they are continuing to work with China, with Japan on bringing pressure to bear on resolving the North Korean situation without conflict. So if they can stay focused on that, then we certainly support them.

When did the TPP become a strategic agreement?

Look, I—

In terms of the Asian region, in terms of defence, because that was talked up very strongly in your meetings in Japan.

It always had a strategic element to it, particularly with the US showing leadership on trade in the Asia-Pacific – if you remember President Obama’s pivot to the Asia-Pacific – but I think it’s taken on a bit more relevance as a strategic agreement at a time when the US has pulled back, where China and Japan are taking leadership and where they’re all feeling a bit threatened and destabilised by what’s going on with North Korea. And we’re finding other countries reacting to all that instability by tightening up their focus and probably being a bit more interested and determined about TPP.

Because that was probably one of the most surprising elements to come out of your meeting with Shinzo Abe was the talk about defence, strategic relationships, closer defence ties – these types of things with Japan. Doesn’t that create problems for New Zealand’s foreign policy? Japan is a rival to China and seems to now be coming into that vacuum to take more of a leadership role, and we seem to be supporting them, yet that would be in conflict perhaps not on North Korea but on other issues, like the South China Sea, with China.

You’ve seen this term around for a few years – ‘the multipolar world’. As a small open economy, we have to adjust to a world where different countries are demonstrating direction, leadership on different issues that are relevant to us. So in this case, with the US pulling back from trade, it’s China, Japan taking an interest. They have their own tensions between them. There’s no doubt about that. We have the opportunity as a small country to keep those in balance, as we do between China and the US.

But I come back to the issue about Trump and say we shouldn’t get too caught up in domestic politics with Trump, but the removal of the US from the TP, the withdrawal from the Pacific pivot has created an imbalance, and that imbalance is that there is now no counterbalance to China’s rising power. So for you, as prime minister and potentially prime minister again for another three years, how are you going to ensure that we can navigate this multipolar world? I mean, it’s fraught. We have to follow Trump, don’t we? We have to try and work out what’s going on.

Well, look, we have a very strong interest in the stability of the US domestic politics and predictability about their direction, particularly on foreign and security policy.

We’re not getting any predictability.

Well, they’re going through a process of working out how this new presidency is going to work. We can’t influence that. They’ve got their own checks and balances, and I think you’re seeing all those working. In the meantime, we can get on with the tasks where we do have direct relevance, like the TPP.

Do you think that Donald Trump is being unfairly targeted by the media there?

I wouldn’t want to speculate about all that. That’s US domestic politics, and, as we can see, it’s all pretty energised at the moment and some pretty significant issues for them. Our hope is that they will be able to stay focused, particularly on the North Korean issues, because that’s an immediate security problem, particularly from the point of view of friends of ours like Japan.

Do you accept, though, that having Donald Trump in the White House has created the potential for an increased likelihood of a misstep, a miscalculation? Because that’s the real risk, isn’t it, with North Korea? I mean, both sides—The prospect, as you’ve mentioned, of conflict is so terrible that it’s unlikely, but there is the possibility of a misstep, and with Trump there, surely there is a greater risk now.

Well, all the participants face risks of those missteps, including–

But has it risen now that Donald Trump is there?

Well, on the North Korean issue, the US administration has been quite direct and reasonably predictable, and they’ve been getting around the region, explaining their position. That part of the administration seems to be working reasonably well. Others face risks of missteps. I mean, China has influence over North Korea. They’re concerned about how they might judge that. The real problem here, of course, is whether North Korea makes some missteps.

Did Japan ask for any support in terms of their ability to be able to conduct pre-emptive strikes against North Korea – a change that’s necessary to their constitution? Was that discussed?

Not specifically in those terms. We’re aware of Prime Minister Abe’s intention to try—Well, he’s floated the idea of changing the constitution–

Did they ask for New Zealand support in terms of Japan taking more of a defence role in the region? Obviously it’s got the alliance with the US, but the US is pulling back, so do they want our support?

Well, I think we have some interaction with their self-defence forces. We will continue that on terms that are suitable to Japan, but it’s an issue for them as to how far they go changing their self-defence constitution.

And… Because, obviously – coming back to China – South China Sea and that issue with Japan is a major bone of contention. I’m just curious, because if you’re going to be the prime minister for the next three years, you’re going to have to lead New Zealand through this tightrope, and by cosying up closer with Japan, surely that creates some tensions.

Well, they have… Look, Japan does look for support over its territorial disputes in the South China Sea and the East China Sea. Those are disputes among neighbours in that part of the region. We don’t want to be—We don’t get involved in taking sides on those disputes. Each side contends there isn’t actually a dispute, because each side believes they’ve got the rights of ownership. So our focus is a traditional New Zealand one in that respect, and that is that these are best resolved by international law – in this case, Law of the Sea and various conventions – and we encourage them to stick to that. And I think it’s important that countries like ourselves keep making that point.

Is it frustrating that we’re essentially going to potentially sign up to the TPP and yet offer America up those same deals that caused so much controversy around Pharmac copyright – that they’ll get access to that even though they haven’t signed up?

Well, we have a choice of unravelling the whole thing because there’s bits that each country doesn’t like, including New Zealand. If we go down that track, it’ll never actually happen. This needs to move at speed, and that means being a bit pragmatic about arrangements that were negotiated in there with the US. If those arrangements stay in place, it increases the likelihood that the US would be incentivised to join it later.

And have you had advice on what the economic gain would be from a deal if you can get the TPP 11?

Well, it’s still quite considerable, but we’ve yet to formalise all the numbers. And in Japan we were presented with examples which show, for instance, that the Australian beef imports have a much lower tariff than New Zealand beef imports. That’s now starting to erode our market in Japan. So in the absence of the TPP, we could end up losing what is a pretty high-value market.

So is the argument for the TPP still the one that we just can’t afford not to be in it?

Yes, essentially. It’s in our interests positively for jobs and incomes at home, and I think it’s now got a growing strategic relevance given these uncertainties around the US administration, North Korea and various tensions around South East Asia.

Just finally, on the issue of the Belt and Road, 18 months now, I understand, the government— for 18 months, New Zealand and China will now work on ways in which there could be infrastructure investments. Is it likely that there will be from Belt and Road infrastructure investment in New Zealand from Chinese firms – joint ventures or whatever it might be – under this deal?

Look, I don’t see it connecting too specifically to the Chinese Belt and Road strategy. It’s got, I think, a lot more relevance in their own region. We have our own rules about investment coming into New Zealand. That doesn‘t change.

One other thing – the Asian Investment Bank – the Infrastructure Investment Bank – which you actually went up and signed New Zealand up to, would New Zealand ever consider taking investments from that bank in terms of our infrastructure deficit?

If we fitted the criteria, we would. I mean, we are keen to invest in the infrastructure for a growing economy. We’re not going down the line of the opposition parties of saying, ‘Well, let’s stop the economy growing because it’s too hard to keep up.’ We want to keep up, and different sources of finance, different models of financing are all going to be part of how we make those investments over the next five years.

So we would be open to the Chinese-based infrastructure bank investing in New Zealand in the right projects?

In the right projects. We’ve got a range of—You know, there’s Chinese banks in New Zealand now. There’s Japanese construction companies. They’ve had a long history of doing some projects in New Zealand, and if it’s going to help us deal with the issues that are relevant to our households, to our businesses, to our jobs and incomes, then we’ll use them.

 

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