The APEC summit in Singapore next month will host Barack Obama's debut on the Asia-Pacific stage. And it seems we can expect the president to finally draw the curtain on his trade policy
It's been bugging me all week, so I thought I'd share it with you. You see, we know more than we realise, but no-one's spelling it out.
In a month's time, the 20th annual APEC meeting will have just wound up in Singapore. It's the central event in President Obama's debut tour of Asia and is being prefaced as a chance for leaders in the region to reflect on and take stock of the recession and its collateral damage.
There's a lot of speculation around the meeting, and we in New Zealand got a better insight than most last weekend in Q+A's interview with US Assistant Secretary of State Kurt Campbell. I know, I know, it's my show and of course I'm proud of it. But if you've read past blogs you know how annoyed I get about New Zealand media being blind to important stories in their midst. Well, it's happened again as everyone ignored some revealing comments Campbell made about this year's APEC summit and the Obama administration's position on free trade.
Trade is a huge question mark hanging over this presidency. The Democrats have been divided on the issue for a generation, but most have a protectionist bent thanks to the power of US lobby groups and the hip-pocket reality of local politics in that country. Obama's own position has been opaque. In the primaries he railed against NAFTA, the free-trade deal the US has with Canada and Mexico, or at least against its design, and talked of the importance of strong labour and environmental standards in any deals. One of his early acts as president was to put the all-but signed off FTAs with Colombia and South Korea on hold as his new Trade Representative Ron Kirk completed a 'stock take' of America's trade agreements.
As president, however, he has argued against protectionist policies as they emerged during the recession. So where does he stand? And when might we finally see the US taking a stand on trade? Will Obama stall on trade until after his healthcare and climate change bills are passed, or move with more urgency?
What Campbell revealed this week is that we'll have an answer at APEC. Here's what he said:
I think it'd be fair to say that we've had a very broad agenda on a range of issues and that the Asian Pacific region has been waiting patiently for the United States to articulate a more forward looking trade and economic policy, and my hope is that when President Obama visits APEC in the coming weeks that we will be able to roll out an agenda that articulates what our vision is and that will include some points concerning the TPP [Trans-Pacific Partnership]. What I'm saying is that I think the President will have more to say on this.
A concession that our region has been "patiently waiting" – ie growing impatient – for America to act on trade is unusually blunt. It's a recognition that America risks being left behind in the world's fastest growing economic zone. As recently as August, the ten ASEAN nations and India signed an FTA.
Pressed, Campbell went further, from a "hope" that Obama would announce a position on trade at APEC to an expectation:
...all the Asian leaders are going to ask the same question – what's the American agenda on trade, on economics, and I expect that the President will be very clear on what our American plan is going forward.
That will make this APEC summit an important one, not least for New Zealand and its hopes for the TPP deal as a tarriff-free way into the US market. It's a world exclusive: Obama to announce position on trade at APEC. And everyone ignores it. Typical. So let me say, 'you heard it here first'.
One other point roundly missed from that interview. Campbell said that New Zealand and America could resume joint military training, which was duly reported, but a close look at his words show that he went further. Read this:
I think that you will see in the coming months a desire for the United States and New Zealand to work more closely together in a variety of ways, we are in the midst of a review now, I think Secretary Clinton and others have made clear that we want to work more closely with New Zealand, we recognise that there are areas that we need to do more together.
That to me is a clear hint that resuming military training ties is just the beginning and that more will be announced "in the coming months", perhaps when Hillary Clinton visits New Zealand in January. Campbell continues:
I believe these are issues that we have to review, and it is in American interests, it's in the interests of the Asian Pacific region for New Zealand to play a more active role. The truth is this isolation has not been good for New Zealand overall, it's been in many respects self-imposed, but over the last several years there are a number of areas that New Zealand has taken a very pragmatic very positive role, very active role, and we think that that has to be recognised in our global political stance.
So America wants to draw us into a more "active role" in the region and will recognise our efforts. What role is being conceived for us? And what reward for our efforts? And, in terms of our national interests, how much do we want to be drawn into this American plan for the region?
These are questions worth pondering in the immediate months ahead because the US-NZ relationship seems to in the midst of some major changes and we need to consider whose interests we're serving.
Comments (5)
Tim,
There is a lot here, which as you say, the NZ press does not engage on.
Firstly, FTA's can be overated. Yes, NZ's exports to China are soaring, but so are the exports of every country in the Pacific Rim. In many respects, the advantage of a China-centric world is that countries are free to pursue their comparitive advantage in a way that they never could with a US-centric world (where ag exports were locked out, so Thailand, Malaysia et al become manufacturers when their comparitive advantage was ag and commodities). So to China, Brazil exports iron ore, Thailand fruit and nuts, Indonesia coal and palm oil and NZ milk powder amongst other products. Is this the FTA in NZ's case or just Chinese demand. I suspect the latter, although the FTA is not a disadvantage.
On the US, I am not sure of the benefits versus the costs. Are we going to be expected to play support to the US's Sheriff on Asian issues, rather than define our own interests.
Either way, FTA's are still second best from a NZ perspective versus a Doha. A spagetti of FTA's as Bhagwati would say is not substitute for trade liberalisation.
Secondly, on foreign policy, John Key's approach worries me. For instance, in China when he was there it was all smiles with Hu Jintao and Wen Jiabao. That's great, but is there a risk we are seen as a lightweight? Is the US's sudden interest in NZ because they perceive strength (which involves pursuit of well-defined interests) or weakness? And we are talking about a declining US here (and on that note, I suspect not much will come out of APEC).
I think you nail it in your third par. Are we going to define our own interests? Especially our long-term interests.
And it's interesting to ask how the US and China perceive us. I think there's some respect there, but we'd be fools not to assume that we are a means to their own national interests.
I'm less convinced about the declining US point. Yes, it's declining, but it's still the world's largest economy, even in its current doldrums, it is still hugely admired around the developing world, it's a huge aid giver as well as having far-and-away the strongest military, and it's the dominant cultural power as well. We shouldn't underestimate that.
Of course I overstate the point on the US. But the US is in rapid relative decline, in that from here, China will contribute more to global demand each year than the US. And India is only 10 years behind China. But under this government, all the focus is on improving relations with the US, while Asia takes a back seat. That is not a sustainable position.
I suppose what was irritating about Kurt Campbell comments was his statement that NZ's seperation from the US has "not being good for NZ". In the context of Asia in the last 15 years, I do not see how he can claim that.
Rodney, we're pretty much in agreement, I think. To be devil's advocate, some would say that Australia has stuck close to the US but still trades profitably with Asia and is on the verge of matching us on trade access. If you measure life in FTAs and current accounts, we've paid a price. But I think that our broader relationship with most Asian nations is better than Aus and that will serve us well in the longer term.
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