Fran O'Sullivan: Why the US is key to Asia-Pacific trade

Foreign Minister Winston Peters chats to US vice-president Mike Pence on a trip to Washington in December. Photo / File

COMMENT:

US vice-president Mike Pence indulged in some nifty verbal semaphore when he said he had agreed with Winston Peters to the importance of the United States and New Zealand working closely together to "achieve a breakthrough" on improving bilateral trade.

The breakthrough Pence was referring to in a statement, following his meeting with Peters at the White House in December, was a bilateral free trade agreement between the US and New Zealand.

While negotiations on a bilateral FTA are not about to begin anytime soon — the negotiating books of both the US Trade Representative and the Ministry of Foreign Affairs and Trade (MFAT) are both full — NZ's leading trade negotiators have been requested to look into what is at stake and make some preparatory work.

Peters also made few direct comments on the trade front on his return from Washington. Newshub reported he had ruled out "speculation" as to where discussions at the Pence meeting could lead to.

But he told reporters the US had made it "very clear" that it's "interested in bilateral relationships in trade when people respect the common rules of law and free trade".

Prospects for a bilateral free trade deal between New Zealand and the US were put to one side more than a decade ago, when talks opened on a proposal for a Trans-Pacific Partnership (TPP) between the P4 partners — Brunei, Chile, New Zealand and Singapore — to include the US and seven other players.

The TPP was ultimately agreed and signed by all 12. But while the Trump administration pulled out a year later, the other 11 TPP countries agreed to revive it.

In March 2018, the 11 countries signed the revised version of the agreement, called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Since then, the Trump administration has been bogged in a trade war with China which has impacted heavily — not just for the US and China — but also on global supply chains.

The US has gone on to successfully renegotiate the Nafta agreement with Canada and Mexico and has an FTA with post-Brexit UK in scope.

New Zealand is occupied with FTA negotiations with the EU, is endeavouring to secure an upgrade of the China-NZ deal and, like the US, is also scoping a post-Brexit UK agreement.

Getting an agreement from vice-president Pence to look favourably into deepening bilateral trade ties has to be a feather in Peters' cap.

For now, both parties have also agreed to support WTO reform and work together to eliminate unfair trade practices.

This picks up on the work undertaken by Trade Minister David Parker on his own trip to Washington.

The Peters visit was highly successful on multiple fronts. Apart from Pence, he also met with Secretary of State Mike Pompeo, Director of National Intelligence Dan Coats, and National Security Adviser John Bolton.

While both the Pence and Pompeo statements were fulsome, it would be helpful if the NZ Foreign Minister could follow suit (notwithstanding the Christmas timing).

In his Georgetown University address on the Government's Pacific reset, Peters said the co-operation and like-mindedness between the US and NZ is now coming into sharper relief in the Asia Pacific where the region is becoming more contested and its security ever more fragile.

"It is New Zealand's view that the Asia-Pacific region has reached an inflexion point, one that requires the urgent attention of both Wellington and Washington. And that is why we are here.

"New Zealand is acutely mindful of, and archly concerned by, the asymmetries at play in the region at a time when larger players are renewing their interest in the Pacific, with an attendant element of strategic competition. The speed and intensity of those interests at play are of great concern to us. Our eyes are wide open to this trajectory and we know that yours are too."

Peters' messaging was well-placed.

There is a lot of water to flow under the trade bridge before bilateral FTA negotiations get up.

The TPP made sense. Getting the US into the CPTPP should remain a priority.