Fran O'Sullivan: Key showing restraint on TPP despite lingering glow

John Key, pictured here with Barack Obama in Seoul in March, was thanked by the US President for "overseeing" the TPP trade talk in Bali.
John Key, pictured here with Barack Obama in Seoul in March, was thanked by the US President for "overseeing" the TPP trade talk in Bali.

An AP headline out of Washington yesterday - "Obama thanks New Zealand official for trade talks" - won't have punctured John Key's lingering pink glow even if the American news agency omitted to mention he was the Prime Minister.

Key has been put on a local media pedestal since he emerged from a meeting of Trans Pacific Partnership (TPP) leaders and announced they would try to wrap up negotiations on the regional deal by the year's end.

But what was noticeable at this year's Apec leaders' sojourn is that Key has been much more sparing in the use of his (diminishing) political capital and was exceptionally careful not to overstate progress by claiming that the TPP will be finished by the end of the year.

Irrespective of colourful rhetoric such as Japanese Prime Minister Shinzo Abe's, who said he would serve as the "drill bit that will break through the bedrock" to ensure major reforms in his country, there are still powerful interests to assuage. Not just in Japan but also right through the other 11 negotiating countries.

Despite New Zealand's reputation as a free-trading nation, Key still has to get parliamentary approval for a deal.

He knows he only has 59 votes in Parliament.

And irrespective of the shift back on to the stage by former Trade Minister Phil Goff (now Labour's shadow trade minister) Key will have to work very hard indeed to secure the level of bipartisan support for the ultimate deal that will ensure it has long-term domestic legitimacy.

What was also noticeable this time was Key's obvious decision to duck-shove potential opportunities to try to use his political capital to push other bilateral trade negotiations forward with Russia and South Korea.

In the case of Russia he publicly made it clear that talks were not sufficiently elevated by the respective trade ministers to the point where any progress could be unveiled.

This was a major departure from the operating mode Key deployed at last year's Apec meeting in Vladivostok where he and his officials had clearly been wrong-footed by Russian President Vladimir Putin.

It's too early to say whether the TPP meeting in Bali will turn out to be a triumph of form over substance (as the free trade opponents jibe).

The get-together on the outskirts of the Apec leaders' meeting in Bali was originally spruiked as the place where high-level horse-trading by 12 Asia-Pacific Presidents and Prime Ministers would take place as the talks entered the end game.

With Barack Obama marooned in Washington that was never going to happen. But the United States President hat-tipped Key by phoning him to say thanks for "over-seeing "the talks and issued a media statement to underscore the Prime Minister's role.

Such is the billing and cooing that occurs when egos have to be pumped by a United States President deprived of the leadership role he would rightfully feel is his - not that of the leader of a South Pacific nation of a mere 4.4 million people.

In a perverse way, Obama's "no show" at Apec may have in fact strengthened the American President's will for the congressional fight that lies ahead to get political approval within the United States for the proposed TPP.

Not that Key affirmed that when I put the question to him at a media stand-up. But in truth Obama needs a high-profile card to play to offset the reputational damage his presidency is suffering.

Diplomats I spoke with at Apec believed the United States needs to show the rest of the Asia-Pacific (read China) that it intends to remain a force in the major trade liberalisation moves now under way in the region. Obama also needs to offset concerns that the United States Government's current financial shutdown has robbed it of its international economic legitimacy.

The Republicans have signalled they will consider a short-term increase in the United States debt ceiling of US$16.7 trillion ($20.1 trillion) to avert the risk of major default by the declining super power next week.

New Zealand has a lot of negotiating coin invested in a successful conclusion of the TPP.

Trade Minister Tim Groser has reiterated it will create area "gold standards" for the 21st century economy taking into account e-commerce, cross boarder data flows and intellectual property. And combine that with traditional 20th century market access.

The TPP leaders' statement merely noted this comprehensive and high-standard agreement is a model for future trade agreements and a "promising pathway to our Apec goal of building a Free Trade Area of the Asia Pacific (FTAAP).

Both the United States and China now see the FTAAP as the end-game.

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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