NZ joins rival trade deal as US ups ante

Tuesday Nov 20, 2012

United States President Barack Obama will convene a meeting in Cambodia today on the Trans-Pacific Partnership which threatens to overshadow the launch of a rival trade deal involving China at the East Asia Summit (EAS).

Prime Minister John Key is expected to play a significant role in President Obama’s meeting, which is designed to rev up the process.

New Zealand is chairing the next round of TPP talks in two weeks’ time in Auckland. It started the TPP.

New Zealand will also join in the other deal at the ground floor, the Regional Comprehensive Economic Partnership (RCEP) talks, to be launched later today.

If successful it would create new free trade arrangements for New Zealand with Japan, South Korea and India. But Mr Key makes no secret of his preference.

“Our basic proposition is we welcome the RCEP talks but TPP is the big game for us at the moment,” Mr Key told the Herald.

New Zealand has no qualms about being in both arrangements and Mr Key said it was important to get into the RCEP at the ground floor.

“You never know how these things are going to play out so it is always possible that TPP falters and then RECP becomes the significant trade agreement. Hopefully it doesn’t happen with TPP but you never know.”

The only countries at the East Asia Summit not included in the new trade talks are the US and Russia, ostensibly because they don’t have a free trade agreement with the Asean (Association of Southeast Asian Nations) bloc.

TPP talks have been under way in earnest since early 2010.

Mr Obama took leadership of the TPP after hosting Apec in November last year and it is the only trade deal the United States is involved in negotiating at present.

His meeting today is expected to give a great deal more horsepower to the process after the inevitable lull during the US presidential elections.

Seven leaders of the 11 countries in the TPP will attend today’s meeting in Phnom Penh: the US, New Zealand, Australia, Malaysia, Singapore, Vietnam and Brunei.

Trade Negotiations Minister Tim Groser, who is also in Cambodia, described the launch of the RCEP as “a wonderful symmetry between the two” for New Zealand.

While there was the chance of tension between the two deals, it had not been set up like that, he said.

“Our policy is we will dance with anybody provided they are prepared to engage in a high-quality FTA.

“It’s not like a cunning ploy but you can see quite clearly the possibility of creative tension.

“If RCEP just goes round in circles and TPP goes forward, it will put pressure on RCEP – equally the other way round.”

In the end, if the agreement did not cover New Zealand’s main exports, the country would not join, he said.

Mr Groser said China was “massively important” to the RCEP. New Zealand is still the only developed country to have an FTA with China.

Mr Groser has previously made it clear that the Government does not see the TPP as an anti-China vehicle and has said New Zealand would not take part if he thought it was.

But some commentators, including one in the official China Daily, view the TPP as part of a United States plan to marginalise China.

Mr Key and Mr Groser were scheduled to arrive in Phnom Penh last night.

EAS power players

Barack Obama
United States President, freshly elected for another four-year term, fresh from visits to Thailand and Burma. Accompanied by outgoing Secretary of State Hilary Clinton and Defence Secretary Leon Panetta.

Wen Jiabao
Premier, China. Retiring in March but no lame duck. Arrived earlier to make the peace with Asean. Will reinforce China’s co-operation arrangements with Cambodia. Planning China’s own trade pact with Japan and South Korea, as well as the RCEP.

Hun Sen
Cambodian Prime Minister. Asia’s longest serving leader, having been in power since 1985. Delighted to be hosting the summit. Not so delighted that his human rights record is under scrutiny.

Vladimir Putin
The Russian President sends his apologies while he recovers from an aggravated sports injury.

Susilo Bambang Yudhyono
President of Indonesia. The perfect intermediary between his fuming associates in Asean and China over territorial disputes. Indonesia is one of the few Asean countries not in dispute with China.

Yoshihiko Noda
Prime Minister of Japan, the world’s largest economy behind China and the US. The dance over whether Japan joins the TPP talks continues but what he says may not matter. Not expected to keep his job after next month’s elections.

Manmohan Singh
Prime Minister of India and very, very good friends with the US. New Zealand has not given up hope of securing a separate FTA with India whether or not the RCEP gets off the ground.