Make Trade Great Again?

The American people have chosen their new President and he has been installed with all the solemnities of his office. The President has now taken the steps he promised to withdraw the United States from TPP.

That is deeply disappointing. Regardless of what we as individuals or even as a nation might think of Donald Trump and of his policies, New Zealand now has to find a way to work constructively with the new Administration. The United States remains as important to us today as it was the day before the inauguration.

“America First” has an ominous ring to it but it’s not unusual for countries to seek to advance their own interests. What President Trump seems to repudiate however is the international system for peace and prosperity which the United States and its allies, including New Zealand, have championed for decades. He has spoken as disparagingly about the UN and the WTO as he has about NAFTA and TPP.

From a New Zealand perspective, we can kiss goodbye not just to American involvement in TPP but to President Obama’s pivot to Asia – where engagement seems likely to be replaced by challenge, especially to China. Economic integration in the Asia Pacific region which has advanced relentlessly in recent years with increasing trade, transport and investment also looks under threat.

There is much irony here – TPP’s lengthy negotiation was in part because the other 11 partners were seeking to counter the full extent of American ambition in regard to investment, intellectual property and the regulation of state owned enterprises. This was largely achieved: the final TPP was a carefully structured consensus which represented a balance of interests, preserved participants’ sovereignty and left a door open to others, including China, to join. Much of TPP was a re-negotiation of NAFTA and, given the slow demise of Doha, an attempt to bring trade rules into the 21^st century.

An inward-looking, isolationist America is not in New Zealand’s interest. As the leading super-power American engagement is vital for solving global problems especially security and climate change. In the economic sphere America remains a powerhouse of innovation, entrepreneurship, business ideas and investment. President Trump may be open to bilateral deals but these may prove no easier to negotiate than TPP, especially if all the benefits are not equally shared.

New Zealand must continue to engage with the United States even as we look to advance other options for integration and interdependence – in China, elsewhere in Asia, and in Europe, as the Prime Minister has been doing in recent weeks. These are not alternatives to a strong and mutually beneficial relationship with the United States any more than RCEP, the ASEAN-led model for Asian integration is an alternative to TPP. We need both deep and broad new frameworks of rules to future-proof our economy.

This effort will be assisted though by greater focus in New Zealand on our key economic interests – such as the forthcoming release of the refresh of the Trade Policy Strategy might bring – as well as through continuing engagement of business and other stakeholders and greater bipartisanship in Parliament.

We are entering a new and uncertain period. Making trade great again for New Zealand will require leadership, commitment and wide public support.

This post was written by Stephen Jacobi, Executive Director of the NZ International Business Forum. An interview on this theme with Stephen on Radio New Zealand on 23 January 2017 can be heard here.