As Jacinda Ardern heads to Asia for her first major trip as Prime Minister, the fate of the TPP is shaping up as a big test for her Government. Yet it’s far from the only challenge Ardern and her team will face, as Sam Sachdeva reports.
With apologies to Malcolm Turnbull and his Sydney brunch, Jacinda Ardern’s trip to Vietnam and the Philippines represents the first real international test during her brief time as Prime Minister.
Ardern departs Wellington on Thursday, heading to first the Apec summit in Da Nang, and then the East Asia Summit (EAS) in Manila.
Robert Ayson, a professor of strategic studies at Victoria University, says the forums are a chance for the Prime Minister to articulate her own approach to foreign affairs.
“They're generally important for New Zealand, with or without a new government, because New Zealand tends to put an emphasis on multilateral connections in the Asia-Pacific," Ayson said.
“But for the Ardern government, this is the Prime Minister’s first real chance on the international stage...it’s the first chance to show her view on how New Zealand should engage with the region.”
TPP: no way, or A-OK?
The headlines leading into Ardern’s trip have been about the Trans Pacific Partnership trade deal, better known as the TPP.
Negotiators and ministers from the 11 remaining TPP countries have already been sweating the final amendments to the deal.
Some of the most controversial clauses, primarily relating to intellectual property, have reportedly been suspended until and if the United States re-enters the TPP, but individual countries - including New Zealand - are still pursuing their own priorities.
Stephen Jacobi, who has been in Da Nang as a member of the Apec Business Advisory Council (ABAC), says there is uncertainty among those on the ground about the fate of negotiations.
“There are all sorts of thoughts about, is it 50/50, is it 60/40, I don’t quite know what the outlook is on all of that.”
There have also been questions about the positions of New Zealand’s new government, Jacobi says.
“[People are] curious, a little surprised to hear a different sort of language coming out of New Zealand - obviously we have been doing what we can to reassure people that we don't think it means we’re turning away from our championing of freer trade.”
The previous National government was a staunch advocate of the deal, but Labour while in opposition appeared far more equivocal, highlighting a range of concerns related to New Zealand’s sovereignty.
The foremost of those, its desire to implement a ban on foreign buyers, has been solved by what appears to be an artful workaround in the form of an amendment to the Overseas Investment Act which will function as a ban in all but name.
ISDS a challenge
However, Labour’s concerns about the Investor State Dispute Settlement (ISDS) clauses - shared by its coalition partners the Greens and New Zealand First - are proving harder to resolve.
With Japan believed to be an enthusiastic backer of ISDS protections for its investors, wholesale change is off the table; instead, Trade and Export Growth Minister David Parker has been pursuing side-letters with individual TPP members agreeing to mutually suspend the ISDS clauses.
While Ardern says she is preparing “for all scenarios”, that approach seems likely to give her Government enough ground to sign off on the TPP while claiming a moral victory.
Some of its supporters will be less convinced: in an NZ Herald editorial, TPP critic Jane Kelsey said signing off on the deal would break Labour’s position against it while in opposition.
On top of a potential public outcry, the legislation required to amend the TPP’s enactment will also test the stability of the governing coalition.
While New Zealand First is presumably bound by its full coalition deal to back Labour’s position, the Greens’ confidence and supply arrangement gives it no such restrictions - and leader James Shaw did not shy away from signalling his discomfort with a deal.
“We don’t support trade agreements that include Investor State Dispute Settlement mechanisms...
“I can’t give you a definitive answer [on support] until we see what would be in that piece of legislation.”
The Greens’ opposition would be a discomfort rather than a fatal flaw, with National trade spokesman Todd McClay saying his party will back any new TPP legislation through the House.
“It’s very important the deal is done for New Zealand exporters, particularly our agricultural exporters into Japan...it is really important our negotiators go away and know they’ve got the support of Parliament, otherwise they might have to compromise in areas they would choose not to otherwise.”
US-China unease looms
The TPP is not the only issue on Ardern’s plate. As Ayson says, if Kiwis think the trade deal will be the main topic of discussion at Apec and EAS “then they’ve got another thing coming”.
He argues the deal will be quickly overshadowed by the complexities of the US-China relationship, with a solution to North Korea and China’s activity in the South China Sea set to be the main topics of discussion at EAS.
“What the region thinks about the US role and what it thinks about China’s role and how it thinks about how those two are going to get on or not, and how engaged [Donald] Trump’s going to be really in the region and what Xi [Jinping]’s approach to the region’s going to be now that he’s consolidated his power - those are the big questions, so the TPP is not the big be-all and the end-all.”
The previous government was careful to pursue an independent foreign policy, building ties with both the US and China, and Ayson expects that to continue under Labour.
“The big question is not whether Labour would be comfortable with what the National-led government did, it’s whether that approach actually works for the period we’re in, and I haven’t really got a very sound answer to that.”
Finding an answer hinges on whether Trump can provide the region with the comfort it needs as China translates its economic power into military and diplomatic influence, he says.
“I see a situation where China will have more clout and therefore the region will want to have more American reassurance, but where the region is unclear at the moment is whether it’s actually getting reassurance from Mr Trump or it should be slightly disconcerted.”
What may be most important for Ardern, says Ayson, is finding “ballast” through stronger relationships with New Zealand’s partners in Asia, such as Japan and Singapore.
Unease over US looking inwards
The Trump administration’s insularity is already making its mark at Apec, with the US creating issues over the drafting of wording around trade according to Jacobi.
“We understand they’re making things very difficult in the official Apec drafting committees around references to trade and ‘free trade’ and ‘fair trade’ and ‘balanced trade’ - we’ve even heard the term ‘truly free trade’, which is not what we used to mean by truly free trade - and that’s hanging over us...
“I do think it might do, because the risk is a lot of the meatier stuff in the agreement gets taken out, and we get just a renewal of the annual Apec work programme which is not terribly compelling for leaders to come to.”
“There’s on the one hand a new narrative needed about trade, it has to be explained better...but also there has to be more accompanying policies to make sure that people don’t fall between the cracks.”
Trump’s influence is being felt less directly through a focus at Apec on the social impacts of globalisation, with some linking discontent over inequality to the rise of protectionist leaders like him.
Jacobi says businesses in the Asia-Pacific aren’t pulling back from investing overseas, but they are thinking more about “doing more back home” - in part a reflection of the uncertain political climate.
“There’s on the one hand a new narrative needed about trade. It has to be explained better...but also there has to be more accompanying policies to make sure that people don’t fall between the cracks.”
What success looks like at Apec and EAS may be open to interpretation: Jacobi is keen for the TPP to progress, while Ayson says a US-China agreement on an approach to North Korea would be a victory.
For Ardern, an uneventful trip and some happy snaps with world leaders may be enough as she prepares for more tests at home and abroad.