Q + A
Panel Discussion 1
Hosted By Susan Wood
In Response To John Key Interview

SUSAN Joining me on the panel this week – political scientist Jon Johansson from Victoria University; we’ve got New Zealand Herald columnist Fran O’Sullivan, who’s literally just back from China; and Professor Jane Kelsey, who’s an international trade expert. Good morning to you all. So, Fran, the trip – I read some of the stuff you were writing in China, and there was an interesting line about turning this bilateral trade into an economic partnership. What do you mean, and how do we do it?

FRAN O’SULLIVAN – NZ Herald Columnist
Well, I think what was coming through on this trip very definitely was – particularly you saw it in dairy – overtures by some of the major Chinese companies in Beijing, COFCO in particular, which is a major food manufacturer, and it has shares in Modern Dairy Ltd and also in Mengniu, the very big Mongolian— Inner Mongolian dairy company. And essentially it’s about forging relationships at various stages of the value chain in China, where there will be work that Fonterra will do with that company. There’ll also be overtures about perhaps the two companies combining together in third nations, and I had the privilege of chairing a session on the FTA at the first Partnership Forum. And what was very interesting was the chairman of COFCO basically relating from the podium how he’d had a conversation with Tim Groser on that very option. So this is a theme that’s starting to develop, where you put together major distribution networks with China, with expertise out of New Zealand and capital out of China and perhaps going into third markets, accessing arable land elsewhere and building major platforms to bring all that feedback into China. So that’s a demonstration of the partnership model.

SUSAN Jane Kelsey, five years of FTA, which was a big part of this trip, obviously, and a lot of talk about business needing to do more to capitalise on this massive— well, we’re trying to get them to be our biggest trading partner – another $5 billion worth of trade in the next few years. That’s what they’re hoping for.

PROF JANE KELSEY – International Trade Expert
Yes, I think we need to look carefully at what kind of model we’re trying to develop here. If we look at the claims that are made for the China-New Zealand FTA, undoubtedly there were some economic gains. I think people are a little surprised that it wasn’t simply about extending our exports into China of some slabs of butter or baby milk, but, in fact, there was a quid pro quo, which was that there are expectations that China have of New Zealand. And that’s the dimension, I think, of the relationship that’s so poorly understood, that we’re not just talking about trade in the old-fashioned sense. We’re not just talking about economic partnerships, but we’re actually talking about how New Zealand is positioned in a very rapidly shifting dynamic where Asia is becoming the big game, and our previous points of best friendship is not simply declining in its significance, but where we’re having a competition emerging. And that’s where I think we live in too much of a happy place, including the Prime Minister. We think we can play in all of these sandpits at the same time when there are growing tensions—

FRAN Oh, come on. He said quite definitely that you can’t play in all these sandpits, and he’s feeling it’s quite fortunate New Zealand does have the opportunity to be in Asia when we were shut out of Europe, frankly, as Britain’s farm 25 years or more ago. And he’s also talked about diversifying so we don’t have all the eggs in one particular bucket, so—

JANE But, Fran, you know that if you’re looking now at what’s happening in the field of negotiations especially, you’ve got the Trans-Pacific Partnership on one hand, which is the US-led initiative into the region, where Hillary Clinton describes it as a two-pronged approach: one, remilitarising in the region, and two, America shifting its model in to become dominant, specifically to neutralise China. And on the other hand, we’ve got these negotiations, this regional comprehensive economic partnership, which is a China-led one. We seem to think that we can play in both of those—

FRAN Well, why can’t we? At the moment, we can.

SUSAN Jon Johansson, can we play in both of them?

DR JON JOHANSSON – Political Scientist
Well, this is where I am laudatory about the diplomatic efforts of not solely the Key Government but of governments that stretch right back to the Kirk Government, frankly, in terms of establishing key relationships at that leadership level in China. Now, I agree with Jane that this is a very very fragile and difficult diplomatic space, right, but the depth of our relationship that we’ve developed as a Western nation with China as well as the, you know, more long-standing relationship with the Americans does allow us to be seen, because we are so small and non-threatening, as a bit of an honest broker for others, and we should exploit that if we have expertise in that and can do that with integrity.

SUSAN And that is the question, Fran. Can we exploit it and do it with integrity?

FRAN Well, I don’t think New Zealand’s integrity has been in any way compromised, and I think it’s quite laughable to blow up, you know, what was a mission about cementing ties and getting to that phase of being able to create extra economic benefit for our nation into some major sort of global geopower ex-fight, because we’re not actually at that phase of the game. And if you really wanted to look at it in those terms, even Australia, which is on an ally status with the United States, during Julia Gillard’s visit, she said that they want to form military relationships also with China. So, I mean, let’s look at it in the big context, and the big context is our biggest trading partner, which is still Australia, is forming military alliances with China. I mean, it is a shifting thing. There could be elements of fragility later on, but let’s capture the moment while it’s there.

JANE But that’s not the big context, Fran. The big context is how is the US going to deal with the fact that its presence in the world is being threatened? Its ascendancy in the region—

FRAN Well, it’s a multipolar world now, and that’s just the reality. The United States knows that. They know that China is emerging also as a global superpower. It won’t be the only one. In another 30 years, India will be there, Brazil will be there. This is the reality of our age. Our age has changed.

JON And that is also why the Americans are actually quite pleased that New Zealand performs the role that it does.

FRAN Yeah.

JON Because it, through us, can also deliver some messages.

SUSAN Let’s talk about, though— Let’s talk about just the demeanour of John Key in that interview, because we know in the past couple of weeks he has really been under the gun. Somebody said to me they thought perhaps it was, you know, nice, honest John back who would appeal to people – someone who had looked at this interview. What do you think?

FRAN Well, I think it’s interesting. I mean, I don’t actually think, despite the journalistic patter out of this visit, that, in fact, he was— the whole thing was totally sidetracked by the GCSB. It may have been to New Zealand journalists, but to be perfectly frank about it, the only part of his visit that was really disrupted was one morning, other ministers went off and covered that. The mission went on. There was a domestic issue back home, but in China, nothing was really terribly affected by it. All the major events took place. Journalists were sidetracked by this and to a certain degree by North Korea, but I think he handled it actually reasonably well.

JON And, actually, one of the ironies is, in fact, that even though we are focusing very heavily on Key in China, the Chinese were focused more heavily on Gillard and Australia, so we shouldn’t fool ourselves either that we were the centre of attention.

FRAN Oh, and not only just Gillard. I mean, let’s face it, when he went up to the forum on Boao Island, there were 13 leaders. There were a bunch of official state visits, and Key didn’t have one of those, because he has already had one of those in 2009. So he had an official visit, and also Zambia and Prime Minister Gillard were there at that same— in fact, over the two, so—

JANE The Australian Financial Review made a really interesting slag-off at Gillard by saying, ‘You look at the invitation of the states which were in the order of importance, and there you’ve got Myanmar and you’ve got Brunei—‘

FRAN Oh, no, no, no. What it was— What it was, Jane, it’s not so much the order of importance. It really comes down to the presidents were listed first. Presidents are seen as being equivalent to the president of China. They, you know—

JON Look—

FRAN …our Governor General, so prime ministers are much lower, so it was all the presidents – six or seven presidents – then it was the prime ministers, then it was people like Christine Lagarde. That was the order of precedence.

JON All right, reason one thousand for ditching the monarchy – you know, become a republic and get a president.

LAUGHTER

ENDS

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