The deal was announced by Jacinda Ardern and Japan’s PM Fumio Kishida in Tokyo.
ANALYSIS: Amid the great struggle for power in the Indo-Pacific, Prime Minister Jacinda Ardern has reaffirmed what New Zealand thinks the United States needs to be. Not a greater security partner in a region that’s experiencing “assertiveness and aggression”, but a better economic one.
It’s a message Ardern has issued to the Biden administration before. But, in a speech to the US Business Summit in Auckland on Monday, and weeks before she travels to the US, it was entirely unambiguious: Get on board with free trade because, China has.
And the US offer has so far fallen short of expectations.
Ardern, in the speech, committed New Zealand to the recently announced and sparsely detailed US “Indo-Pacific Economic Framework” – which amounts to something of a US-led free trade deal, just without the free trade, for a region that already has such a deal.
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“The manifestation of that may be slightly different than where our ultimate aspiration would be. But we have an opportunity here on the table that we are keen to work with,” Ardern said.
The ultimate goal remained having the US again committing to joining the region-wide free trade agreement, dubbed the CPTPP. As geopolitical tension has risen, countries including China and the United Kingdom have applied to join this agreement.
“We have our own commercial reasons for wanting that,” Ardern conceded, of US involvement. “But the stakes are much higher.”
Victoria University professor David Capie, the director of the Centre for Strategic Studies, said the “higher” stakes referenced by Ardern was a want from countries across the region to see the US economically engaged.
“What she’s saying is essentially, that a stable and peaceful region requires an engaged and present US, including one that’s putting an economic vision forward that’s attractive to the region.
“The Government wants to see that, and I’m sure that that would be a message that the Prime Minister heard when she was in Singapore, and Japan as well, and obviously the ideal form of that in the Government’s mind is CPTPP.”
Ardern’s speech included a brief recount of post-World War II history, and references to the General Agreement on Tariffs and Trade and Bretton Woods agreement, which both rebuilt the global economies after the war and established US-dollar dominance.
These being part of the post-War system of “rules and norms” that the Government, among Western governments, talks of being existentially challenged by the rise of China and by other stresses on the international system – stressed that included a more economically protectionist US.
Van Jackson, a senior lecturer in international relations at Victoria University, said New Zealand’s preference would be to retain the existing economic order.
“You don’t want an America economic superpower to be going rogue … You don’t want to be on the receiving end of tariffs, for some reason, at some point. You want them playing by the same rules you’re playing by.
“A small power needs predictability and stability above all else, and the problem with the current moment for a country like New Zealand is that we’re just full of unpredictability.
“There’s a sense of structural instability in the world right now … So it’s hard for a small nation to place its bets. And so the safest bet is the devil you know, which is basically the liberal international order.”
The US’ Indo-Pacific Economic Framework, which the Biden administration promised to launch “early in 2022”, was promoted as a “partnership” that countries in the region could sign on to.
It would be aimed at “high-standards trade”, facilitating the digital economy, and supply chain resilience – outcomes that are often part of free trade agreements.
Capie said the significance of the framework would be in the yet-to-be-revealed details, and the “big question” was whether there would be any agreement to be had on market access – meaning trade tariffs and quotas.
“All of the signs so far is that there won’t be. While countries will welcome any opportunity to engage with the US on trade and economic issues, and on things like digital services, for a bunch of countries in the region if there isn’t market access, then they’re going to say, ‘Where’s the beef?’”
Jackson, who served in the Department of Defence during the Obama administration, said the framework was “not part of a grand plan”, but instead a bureaucratic response to a lack of a plan.
The concept of free trade had become politically unpopular in the US, he said, a result of “oligarchic” levels of inequality which came with globalisation
“The Biden administration didn’t know what to do with its economic statecraft, even though America is still sort of the global economic hegemonic,” Jackson said.
“This comes to a head in Asia, because Asia is the world’s wealthiest and most populous region. American foreign policy elites decided 10 years ago that Asia was America’s future … And so they need to show that they’re doing something strategic in Asia.”
On the security front, Ardern spoke positively about the AUKUS military pact, which will have Australia acquire nuclear-powered submarines from the United Kingdom and the United States, and of the Quad, a military “security dialogue” between Australia, India, Japan, and the United States.
She said such security arrangements benefited New Zealand as long as they “continue to put at their heart the interests of our region”.
The US knows it needs to do “more” in the Pacific, according to Biden’s “Asia-czar”, national security advisor Kurt Campbell, who said as much more than once during a speech to the summit. But, while a diplomatic and development push was promised, trade was not mentioned.
In a Q+A afterward, Campbell said he would “disaggregate trade from everything else”. He said everyone in the US understood an “affirmative” economic agenda in Asia was needed to compete with China.
“The problem is the domestic politics … the politics of this tend to go up and down, and we’re at a down moment now. Hopefully it’ll come back up in a way that makes things possible soon, that are not possible today,” he said.
Whether Ardern will get to deliver her message directly to Biden is not yet clear, as a White House visit has not been ruled in, or out. Ardern said arrangements were still being made for the trip, due to take place in late-May, and it was a time of “intense” geopolitical issues. So, Biden might be busy.
But there’s little chance the message will differ greatly.
“The United States first and foremost is well aware of our position on CPTPP,” she said, after the speech.