Saturday, April 13, 2024

NZ in hot seat on China Pacific trade bid

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Diplomatic challenge as Taiwan, China apply for CPTPP on our watch.
At about the same time as China’s application is decided on, the partnership will have to rule on a similar bid by Taiwan – with the potential to antagonise a major trading partner. Photo: Wikimedia Commons
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New Zealand could face a “delicate diplomatic dance” next year when it takes a key role overseeing China’s application to join a major Pacific Rim trade deal, according to a lobbyist for some of NZ’s biggest exporters.

The 11 countries of the Comprehensive and Progressive TransPacific Partnership (CPTPP) are expected to rubber-stamp the United Kingdom’s application to join the agreement later this year or early next year.

With the UK’s application out of the way, China’s bid for membership is likely to come under scrutiny just as NZ takes over from Singapore as the chair of the CPTPP in 2023.

Trade Minister Damien O’Connor travelled to Singapore last week for the first face-to-face meeting of CPTPP ministers since the start of the pandemic. NZ’s top trade official, Vangelis Vitalis, has also been visiting CPTPP counterparts in recent weeks.

China’s bid for membership poses many more complications than the inaugural application to join by the UK to join the CPTPP

These include doubts about its ability to live up to the trade rules set out in the original agreement signed in 2016, including those relating to digital trade and disciplines around state-owned enterprises, which could cause problems for Chinese companies.

Strategic rivalries with foundation members Australia, Japan and Canada loom as additional potential roadblocks to China’s application succeeding.

Further complicating the picture is an application by Taiwan to join the CPTPP. Any move to accept it as a member in its own right would be sure to antagonise China, which regards Taiwan as part of its own territory and not as an independent state.

Taiwan’s application to join the CPTPP was received just days after China’s in September 2021. Both are likely to be decided at about the same time.

Former trade negotiator Charles Finny said Singapore enjoyed an easy ride as CPTPP chair in 2022, shepherding through the UK’s application and avoiding the potential fallout that could have come with having to oversee the more controversial applications.

“Singapore has been very cautious as chair and has essentially hidden behind the UK CPTPP accession.

“It has been designated [a] precedent-setting process and this has allowed other applications to be delayed.”

Another former trade negotiator, Stephen Jacobi, now the executive director of the International Business Forum, whose members include export heavyweights Fonterra, Silver Fern Farms and Zespri, among others, said there were risks and opportunities arising from NZ playing such a prominent role in shepherding through China’s application.

“You could say that being the CPTPP chair really complicates the relationship with China because you might have to disappoint them, but on the other hand you could say this is a great opportunity because this means NZ is terribly important to China.

“Therefore we have got every opportunity to continue to grow the relationship and avoid trade coercion.”

Jacobi agreed NZ could come under as much pressure from China to frustrate Taiwan’s bid for membership as to accelerate its own bid.

“They may well try to do that and I am sure they will but they will need to get a polite but firm rebuff and they will be careful not to antagonise other members about their own membership.

“This is a delicate diplomatic dance.”

In recent years China has used trade as a sanction against countries it doesn’t see eye to eye with, restrictions on Australian exports of beef, wine and grain being recent examples.

Asked if exporters are nervous about being caught up in a trade war should negotiations not go in China’s favour, Jacobi said they are supportive of the applications by both China and Taiwan.

“Our members generally ascribe a lot of value to CPTPP and its further expansion.

“It is an important opportunity for NZ to show its credentials as a fair and even-handed player.

“We have got skills that are going to be useful to CPTPP but could it create some awkwardness? Maybe.

“But the overall benefit of advancing CPTPP is the bigger prize,” Jacobi said.

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