Fran O’Sullivan: Tasman mates united on the ‘China issue’

OPINION:

Jacinda Ardern’s fence-mending efforts with Australian Prime Minister Scott Morrison will step up again when she invites him to fill two more slots on her dance card this year.

Ardern expects to meet Morrison again in early October when she headsto Sydney for the Australia New Zealand Leadership Forum. This time she will be accompanied by Foreign Affairs Minister Nanaia Mahuta in recognition of the growing importance of cementing the political relationship.

She has also issued Morrison an invitation to cometo Auckland in the second week of November to join her as she hosts the Asia Pacific Economic Co-operation (Apec) Leaders Meeting which is otherwise being held virtually.

Ardern went into her formal meeting with the visiting Australian Prime Minister in Queenstown last Sunday with her “eyes wide opened”.

Eyes widened, that is, followingrecent “deep intelligence” briefings, which concerned senior ministers, over the rapid emergence of an authoritarian and expansionist Chinese superpower which plays by different norms to us.

It’s not as if Ardern was not already alert to the increased risk profile for New Zealand businesses trading with China if her Government stood up publicly on human rights issues in the way successive prime ministers have in private.

She made that clear earlier in May, when she told the China Business Summit that “managing the relationship is not always going to be easy and there can be no guarantees”. There have been urgings to NZ exporters to China to diversify. Not to pull out of China, but to think “China and” and not “China or”.

In separate private meetings with two major New Zealand companiesthis year, it has been confirmed to me that she warned that her Government would not sacrifice its principles. And to be wary if there was any trade retaliation in the event thatthe two countries sparred over a human rights issue.

In fact, neither company is going to pull out. It would be laughable if they did, given that foreign companies — including from the US, which is driving much of the current containment approach to China — are betting large on the rival superpower’s booming economy and superior management of the Covid-19 pandemic.

The upshot is that both New Zealand companies will stay well invested in China but neither is expected to increase its footprint significantly in the current geo-strategic environment.

Ardern’s warnings have been to some degree conditioned by China’s coercive response to Australia by imposing trade tariffs on some secondary exports.

But the proper place to argue that is in the World Trade Organisation, and New Zealand has registered a third-party interest in Australia’s current case opposing China’s tariffs on their barley exports.

It’s been a difficult time for the Ardern Government.

Australian “influencers” have been putting the boot into New Zealand for months over the Government’s “failure” to slavishly adopt every Five Eyes statement on China.

Behind the scenes, New Zealand’s Ambassador to Australia Dame Annette King has worked to build an understanding among Canberra think-tankers and leading Australian political journalists that New Zealand is not China’s running dog. The success of King’s briefings could be read by a marked change in tone ahead of the visit.

An understanding had been forged by leading diplomats on both sides of the Tasman that there should not be a sliver of difference — at least publicly — on the “China issue” when they faced news media at their joint press conference.

It was a remarkably polished performance by both leaders.

China was not the only issue on the agenda.

More important in the near term are their proposals for joint action on opening the New Zealand and Australian borders beyond each other’s country to a regional environment where the Covid-19 virus is becoming endemic.

The leaders tasked officials withexploring technological solutions to verify vaccination status to enable Australians and New Zealanders to reconnect with the wider world, alongside othersolutions that support a safe reopening, while maintaining the transtasman travel arrangements.

As they put it,as much as possible, they want to write the reopening rulebook together.
It will not all be plain sailing.

A number of chief executives who metFinance Minister Grant Robertson just beforethe Morrison visit stayed on for the welcoming reception for Morrison at the Skyline last Saturday.

While the economy is surpassing expectations, they have two over-riding concerns: labour supply and the impact of the Covid pandemic on international supply chains.

These issues also worry Australian businesses.

The two prime ministers later instructed officials to establish a Supply Chain Dialogue, to share best practice for identifying and managing supply chain disruption risks and use this to drive information sharing and tangible joint action.

They agreed that addressing non-tariff barriers would support supply chain resilience and committed to improving transtasman regulatory coherence and resilience in the freight, transport and health sectors. They also asked officials to explore opportunities to harness innovations from the pandemic response, and advance digital trade.

This is not the sexy stuff of headlines but it is important to both countries’ economic health.

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