Prime Minister Christopher Luxon may come face-to-face with US President Donald Trump (inset) at two summits this week. Photo / Ben Dickens + Kevin Dietsch / Getty
Two major international events await Christopher Luxon in Asia this week – but an always unpredictable US President Donald Trump is also on his way, including for what could be a consequential meeting with China’s leader. The Herald will be in Malaysia and South Korea following developments.
Prime Minister Christopher Luxon will make a fresh push for rules-based global trade at two major Asian summits this week, as US President Donald Trump continues to erode economic stability with his tariff agenda.
Luxon is keen to continue generating momentum for a new trading partnership consisting of Asian, Pacific, American and European nations that “reinforces the rules-based system” and protects against “tit-for-tat tariffs between other countries”.
It would distinguish the Kiwi leader from Trump, who has upended the global economy this year with his tariffs as well as his social media threats and negotiation tactics against other world powers.
Luxon could soon come face-to-face with the US President, with Trump expected to be present in Malaysia and South Korea. Schedules are still up in the air, meaning there’s a chance the two leaders could miss each other or only have a brief exchange.
Speaking to the Herald, Luxon seemed relaxed about the idea of his first in-person meeting with the world’s most powerful man.
Asked what his approach would be to Trump, the Prime Minister said he believed the pair had developed a “good connection” in a phone conversation after the US President’s election last year.
“It is about building the relationship. We are good partners to the US,” Luxon said, before quickly adding that New Zealand has “our independent foreign policy”.
“We will have different views on trade, as we’ve articulated pretty well into their system. We’ll see how it goes, but if it happens, great, and if it doesn’t, you know, so be it as well.”
Luxon flies out today, first to Kuala Lumpur, Malaysia, for the East Asia Summit (EAS). Members include many Asian nations as well as top global players such as Australia, China, Russia and the United States.
It’s hosted by the Association of Southeast Asian Nations (Asean), New Zealand’s fourth-largest trading partner when taken as a bloc of countries. Two-way trade was worth just under $30 billion for the year to June, with dairy being our top export. Singapore, Indonesia, Malaysia and Thailand are key economic partners for New Zealand in this grouping.
New Zealand has been investing heavily in Southeast Asia recently, with about 40 visits by the Prime Minister and ministers during this term of Government, the creation of 22 new diplomatic and trade roles focused on the region, and the establishment of a $12 million fund to support cross-government work.
Milestones of this leg of the trip would be the celebration of 50 years of dialogue with Asean and the possible signing of a Comprehensive Strategic Partnership, which would be an upgrade to our trading relationship.
From Malaysia, the Prime Minister will head to Busan and Gyeongju, South Korea, where the annual Asia-Pacific Economic Co-operation summit (Apec) meeting is being held. With 21 member economies, it’s worth $161b in two-way trade.
Two figures of interest here will be South Korean President and Apec host Lee Jae Myung and Japanese Prime Minister Sanae Takaichi, both of whom came to power this year – Takaichi just this week.
She’s Japan’s first female Prime Minister and is considered to have conservative political positions, promoting hawkish views on China and downplaying Japan’s role in World War II.
Trump will visit Malaysia and South Korea (with a pitstop to Japan along the way), but whether he devotes any substantial time to either summit is unclear. It’s more likely that he focuses on a small number of bilateral engagements.
US Presidents don’t always attend EAS meetings. Trump seems to have been lured to Kuala Lumpur by the offer to oversee a peace deal between Cambodia and Thailand. He’s been credited with contributing to the countries reaching a ceasefire after threatening not to do a trade deal with either nation unless they stopped fighting.
His main event, however, will be on the sidelines of Apec. Trump and China’s Xi Jinping are scheduled to have their first meeting since the US President returned to office. Considering current trade tensions between the two economic superpowers, it will be closely monitored.
After Beijing this month tightened rules around rare earth mineral exports, Trump responded by threatening an additional 100% tariff on imports from China and suggested he may pull out of the meeting with Xi. While that was later walked back, Trump’s comments put financial centres into a tailspin.
Finance Minister Nicola Willis, who has been in the US, Japan and Korea this past week to meet with counterparts, told the Herald leaders remain worried.
“If you’re a South Korean minister, the thought of jeopardised access to rare earth minerals is a threat to your entire manufacturing industry. These challenges continue to be in high relief for many global leaders.”
So how does the leader of a small nation like New Zealand, with an economy reliant on a stable international trading order, navigate all this volatility?
Luxon repeats it’s all about relationships and building a group of friendly nations that can resolve “any future trading or economic issues rather than have the whole system break down”.
“That’s not what we want to see. I will be reaffirming that very strongly in my Apec interventions. I am talking to a lot of these leaders quite regularly... we’ve built very good rapport and good relationships with these leaders.”
He will be among those watching the Trump-Xi meeting.
“That’s a very important meeting, the two big powers and economies in the world. They’ve obviously got their own bilateral, tariff and trading relationships, and conversations that are ongoing.
“For them, to be de-escalating and then to find a way and a pathway through together is actually very important for the rest of the world.”
Luxon doesn’t believe tariffs are “the way to go forward as a free trading, rules-based country”. But the “shift from rules to power” is “the reality of the dynamic we’re navigating out there in the world”.
He acknowledged Trump was “pretty crystal clear” during his election campaign that he wanted to introduce tariffs, and despite New Zealand being hit with a base rate of 15%, exporters have been able to pass increases on to the American consumer.
“Our trade with America is still very positive, but we will continue to make that case.”
The real challenge, Luxon said, comes with the “disruption” to the global trading environment, “which is what we first encountered in quarter two this year”, referring to New Zealand’s gross domestic product going backwards.
“There was just massive amounts of uncertainty and as a result, that literally puts the brakes on investment and spending.”
To create a buffer against that type of tumult in the future, the Prime Minister has been championing a new international trading platform built alongside other partners that respect rules.
Following Trump’s so-called Liberation Day, Luxon hit the phone with other world leaders to explore the idea of members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) working together with the European Union (EU).
That received the backing of EU President Ursula von der Leyen in June, and Luxon confirmed to the Herald that CPTPP trade ministers and their EU counterparts will meet before the end of the year.
A similar partnership is in the works between Asean and the EU, with Luxon saying the three groups amounted to 40% of global trade.
“We need a trading platform and a dialogue, which we will have in place before the end of the year in both cases, in order to have good discussions about trade and economics and, more importantly, to reaffirm that rules-based system,” Luxon said.
The genesis of CPTPP lies in an agreement New Zealand formed with Singapore, Brunei and Chile years ago, and Luxon wants New Zealand’s influence in the global trading arena to be felt.
“We can continue to make the case very strongly for the rules-based system. We do feel we have agency to be able to do that,” he said.
“Part of that is working with like-minded friends and deepening and broadening those relationships so that you can be bolder, advocate together and turn your volume up.”
Former Trade Minister Tim Groser told the Herald he hopes Apec will provide an opportunity for a discussion between the CPTPP nations about a partnership with the EU.
He agrees with Canadian Prime Minister Mark Carney that Trump has caused a “rupture” to international trade but finds it noteworthy that most other major economies haven’t “wanted to follow the United States down this line”.
“The US is leaving the globalisation fleet to go on indefinite shore leave, but we’re still steaming ahead because we like a rules-based system,” Groser said.
“We don’t like this system whereby things change on a daily basis, undermining business confidence. How can you run an international economy where every day the rules change?”
While the absence of European nations provides some limit to any progress at Apec, Groser said it would be appropriate for the idea to be raised between the Canadian, Australian, Japanese and New Zealand leaders.
“The rest of the world is not going down this whirlpool with the United States, and it’s a very important reassuring point.”
He’s been to numerous Apec meetings and said while it may be a cliche, the leaders’ meetings are really all about “speed dating”, arguing you can’t “divorce personal relationships from foreign policy”.
But Groser would be “astonished” if Luxon secured a meeting with the US President.
“The usual diplomatic reality for a country of 5 million is a pull-aside, a quick five-to-10-minute handshake and exchange, which will serve the purpose of personal relationships.”
Geoffrey Miller, a geopolitical analyst, said having Trump present in Malaysia and South Korea added a lot of weight to the summits, particularly given the tariff situation.
“New Zealand thinks it’s been hard done by at 15%. A lot of other Asian countries are suffering far worse fates than that,” he said.
“This is the chance to influence Donald Trump and we’ve seen that he is influenceable. We’ve seen that Donald Trump is open to deals. He loves the deal-making.”
Miller said New Zealand, like all other nations, will be thinking of ways to appease Trump. He pointed to the Government’s increased defence expenditure, which would have been crowed about by Defence Minister Judith Collins in Washington this week.
But Miller said this coming Asia tour shouldn’t be all about Trump.
“[Apec is] New Zealand’s window on Latin America, for example, we don’t have a lot of engagement otherwise with Latin America.
“We have that new flight that’s going to be starting shortly between Shanghai, Auckland and Buenos Aires in Argentina... so there’s a chance to talk with countries like Peru, like Chile.”
“There’s just a huge amount of opportunity there to build relationships and in the end, that’s what these leader-level events are all about.”
Economist John Ballingall said it’s critical for countries such as New Zealand to have a diverse range of trade options.
“The global trading environment at the moment is a pretty tough place, and it absolutely makes sense to use summits like this to build political relationships, and to use those political relationships to try to derive commercial benefits.
“Getting close to some of these countries is really important at a time when we need as many friends on trade policy and economic policy as possible.”
He said the Asean market was helpful to New Zealand exporters because of population and development growth in the region.
“It’s proving itself to be quite a robust region when it comes to dealing with the effects of things like the Trump tariffs.”
Jamie Ensor is a senior political reporter in the NZ Herald press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. He was a finalist this year for Political Journalist of the Year at the Voyager Media Awards.