Trump has already thrown a grenade into the world trading system, pledging to place swingeing tariffs of 60% on China and to a lesser extent, 10-20% on goods imported into the US from elsewhere in the world.
It’s inevitable his singular approach will dominate informal discussions at Apec – including perhaps sotto voce, at the leaders’ retreat.
All of this presents an interesting conundrum for Prime Minister Christopher Luxon in his first Apec foray.
Extended coalition negotiations put paid to Luxon’s plan to attend the 2023 Apec in San Francisco.
If he had been present he would have observed first-hand a marked deterioration in President Joe Biden’s demeanour. And he would not only have had a formal meeting with Biden but also with Chinese President Xi Jinping.
There is a perception in New Zealand business – fair or otherwise – that the Prime Minister and his external facing ministers have been so focused on the changes in the Indo-Pacific security and defence environment that they have not paid sufficient attention to New Zealand’s largest market, China.
A successful visit by Chinese Premier Li Qiang mid-year ought to have offset these perceptions. This included a roundtable with 20 New Zealand firms and organisations doing business with China. This was notable for how well Commerce Minister Wang Wentao had prepared Li on the detail of their bilateral businesses.
So too, Trade Minister Todd McClay’s energetic visits to China this year.
But leadership comes from the top.
The Chinese Government has already invited Luxon to visit China.
That is expected to happen in the first half of 2025.
It will be important that Luxon’s bilateral meeting with Xi goes well.
The Prime Minister will also have been well prepared by his senior officials and ministers, such as McClay and Foreign Affairs Minister Winston Peters, who arrived in Peru earlier in the week for a major meeting with their counterparts.
The Asia-Pacific Economic Cooperation (Apec) is a regional economic forum established in 1989 to leverage the growing interdependence of the Asia-Pacific. Importantly, New Zealand – ranked at 125th in the world on a population basis – is a member along with 20 other Asia-Pacific economies.
The Apec region is home to around 40% of the world’s population and represents more than 60% of world GDP. New Zealand exported $74.2 billion in goods and services to Apec economies in the year to June 2024.
At last year’s Apec leaders’ retreat, it was notable that it was Xi who held sway with other leaders before host Biden entered the room. With Biden now in the lame-duck period of his presidency, his presence in Lima will have little impact.
It’s inevitable that it will be Xi who again commands attention.
Particularly, as his Premier is already on record at the recent Chinese Import expo in Shanghai as saying the country is willing to open up its enormous market further. This includes implementing unilateral opening up and offering zero-tariff treatment for all tariff lines from the least developed countries. A pledge to stay committed to the World Trade Organisation was the second leg of Li’s messaging.
A notable realignment with the Bric (Brazil, Russia, India and China) countries also has an impact on perceptions.
Xi also arrived early to inaugurate the massive Chancay deep-water port, one of Beijing’s most ambitious infrastructure investments in Latin America.
Tempting as it may be to view Trump’s re-election as another step in a march towards US isolationism, the reality is that trade between New Zealand and the US (it is now our second largest goods export market) continues to grow. This includes high-tech business partnerships spanning green tech and space to name just two sectors, which means we have a strong stake in the big game that is the US market.
Trump is also viewed as transactional, which suggests there is room to craft the relationship over time.
How the Prime Minister builds his relationship with the Trump Administration is also critical.
Those like New Zealand who have been engaged in Biden Administration initiatives such as the Indo-Pacific Economic Framework (IPEF), which stops well short of offering greater market access, will want to see if that survives the new administration.
If the Trump Administration did pull out, it might simply be that the other members see sufficient value to continue without the US – as they did with the Trans-Pacific Partnership Agreement.
