The Macro Picture

Terence O’Brien

Geopolitics and NZ’s relationships

Terence is a  former New Zealand Diplomat and Founding Director of the Centre for Strategic Studies, Victoria University of Wellington.

We are living in a world at a time where the distribution of global power and influence is fundamentally changing. Some of the themes Jane Kelsey mentioned underline that fact.

The rise of East Asia led by China. The fact of Brexit and Britain striking out on its own in the world, which is going to have consequences not only for Europe but also for Britain itself
obviously. The emergence of the fast growing successful East Asian economies when fundamental things like technology, artificial intelligence, cyberspace and so on are also impacting on the way in which countries relate to each other internationally. This
uncertainty is severely compounding the task we have today to look at an alternative and progressive trade strategy. … We have reached a singularly delicate moment in modern international relations, which is the very time we are trying to work out among ourselves a
new and progressive trade strategy. It is absolutely vital that we do that. But we shouldn’t under-rate the problems out there which all revolve around whether large major powers can accept that there is a fundamental shift occurring in the world order and they need to
adjust to that.

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Laila Harré: what do you see as the key developments, changes and challenges in the geopolitical environment and how do you see the current establishment in Aotearoa understanding, or not, the developments in that area and what some of the implications may be for your thinking today?

Terence O’Brien: We are living in a world at a time where the distribution of global power and influence is fundamentally changing. Some of the themes Jane Kelsey mentioned underline that fact: the rise of East Asia led by China. The fact of Brexit and Britain striking out on its own in the world, which is going to have consequences not only for Europe but also for Britain itself obviously. The emergence of the fast growing successful East Asian economies when fundamental things like technology, artificial intelligence, cyberspace and so on are also impacting on the way in which countries relate to each other internationally. So I think there is a sense that the cup is running over. This uncertainty is severely compounding the task we have today to look at an alternative and progressive trade strategy.

Quite frankly as Jane mentioned, the whole framework for international trade is under considerable stress at the moment. In particular that stress comes from the US where President Trump feels that he must correct the imbalances and the way the rest of the world has “taken advantage of the US” with a series of cascading trade actions. At a time when there is concern about the future of the international rules order in the world, which is particularly sheeted home to China because of its actions in the South China Sea, the fact is that as great a menace to the international order comes from America’s handling of the international trade agenda and its disregard of international institutions, of human rights, you name it. There is a deep antipathy or ambivalence for the multilateral system emanating from Washington.

It’s vitally important that the world system is modified, changed, to recognise the emergence of the newly successful emerging countries, the Chinas and Indias of this world. But the signs are that this is only going to occur with great difficulty and very slowly because the US is resisting quite strongly these changes. Vice-President Pence recently made a speech which was the first really fully dedicated to America’s policies towards China. If you want to understand the dimensions of the problem, I recommend you look that up. It actually states that in every domain of international interaction the Americans intend to contain China and press China back. That’s the American agenda whether in politics, trade, commerce, technology, space – in every dimension of international relations, this is the American policy.

The NZ government as yet has not developed a comprehensive, coordinated response to this change. We have a very interesting speech recently by the Prime Minister in New York to the UN General Assembly. It was the first exposition before the word of the NZ position on these issues. But she didn’t take the opportunity to do that. Rather than to explain that, she branched into describing what NZ is and what it can bring to the international relations table, what kind of country she is trying to encourage us to evolve, in what way. It was quite the contrast to the other speeches made at the General Assembly, which were much more traditional. So she doesn’t give us an indication of how NZ is reacting to the changes that we’ve been talking about. And the only reaction we have officially is the so-called strategic policies review released a couple of months ago by Defence Minister Ron Mark, where the government is justifying the acquisition of some fairly expensive defence equipment by saying that it’s vitally important that NZ deepens its security relationship with ‘traditional allies’. And of course there is one very large partner they have in mind.

So on one hand you have the defence/security community stating that we need to deepen our relationship with our traditional friends, at the very same time as the non-traditional friends are the ones upon whom NZ increasingly relies for its prosperity and its security. And the foreign policy community in NZ – MFAT and so on – have not actually pronounced officially on what their foreign policy view is of the changes. We’ve only got the defence and security perspective. We’ve got a gap and that gap needs to be filled. No one can pretend that it’s easy and that there is a single bullet. One idea and that’s it. It’s a process of slow, steady, but self-confident adjustment, and the courage of convictions.

Laila: When we look at gender or labour in NZ Aotearoa developing our own agenda for how we want to see how things develop, how realistic is that in terms of the global scene that you outlined? What do China and the US expect, given the bipolar scenario you painted? What’s their expectation of NZ’s approach to trade in relation to them? Do we have to take sides? Or don’t we know?

Terence: The non-government inputs to trade occur at two levels: the national level that occurs within the country and the degree to which the government of the day accepts and welcomes inputs; and then at the international level as part of the NGO effort on the margins of large conferences like climate change, trade or human rights. So there are two levels at which non-government input can be made, provided the governments individually and collectively are in the right frame of mind to permit that.

On the broader question of taking sides between China and the US – when we are looking at this progressive and new policy we must be careful not to throw the baby out with the bathwater. The WTO is something with many faults, many warts and all, but it does have one or two capabilities which we should be very careful about destroying. And that mainly is the conflict resolution. When a dispute occurs between two states, there are two ways of resolving it. One is that two states set up a panel and adjudicate the problem. The other is to have an independent arbitration system where you can bring dispute settlement talents from all over – that’s what the WTO provides. In this highly uncertain time we are now in, we should be careful about not losing that international role of the WTO which is precisely what Trump is after. The Americans want to neutralise the whole WTO role in dispute settlement. That’s one part of the WTO that NZ should be striving to retain. There are other policies, philosophies, agendas which are behind WTO that are not necessarily so [indecipherable] but ones that which you have pursued through the processes that it has.

I don’t see us destroying the WTO and replacing something in its place. That would be very dangerous because, as we are watching now out of Washington, the Americans intend to set the agenda in every domain. Pence’s speech shows they intend to prevail in all places. The Europeans to give them their due, do defend the multilateral trading system in terms of dispute resolution. But at the moment they are desperately concerned with their own future, the future cohesion of Europe, the future of Britain, so their attention is focused on their own game rather than a larger perspective. NZ has to play it very nimbly and avoid, to the extent that it can, taking sides. But in the trade arena the negotiating of agreements with another country is actually the way you take sides.

On this question of taking sides, NZ should certainly be on the side of modulating change and refining the international institutions to allow the BRICS (Brazil, Russia, India, China, South Africa) a greater say in the way those institutions are run. The Americans and Europeans are not prepared to see that, at least yet.

And on the Australia-NZ-Pacific relationships, there is a worry or concern. Australia is a country in the Pacific but not of the Pacific, whereas NZ is both. There is a trend that is now quite apparent that Australia tends to see its relationships with the Pacific in ‘security’ terms – the perceived threat to Australia is the main force that drives their policy position towards the South Pacific. NZ has a real challenge in resisting the idea of looking at the Pacific through an exclusively military, security, defence lens which the Australians are doing now. So the NZ-Australian relationships are going to be tested as well in this new search for alternative and progressive trade strategies.

We have reached a singularly delicate moment in modern international relations, which is the very time we are trying to work out among ourselves a new and progressive trade strategy. It is absolutely vital that we do that. But we shouldn’t under-rate the problems out there which all revolve around whether large major powers can accept that there is a fundamental shift occurring in the world order and they need to adjust to that.

Sam Huggard

What International Labour Is Saying

Unions have had a long interest in trade and investment issues. Jobs are not the only part of our lives – there’s kids, recreation – but jobs are a big part of our lives. So we have an interest in issues that have a big impact on jobs. Not only the impact that trade and commercial agreements have on working and conditions for jobs, but also in terms of the wider social wage that workers experience in terms of our need for strong public services.
That’s a pretty key part of our interest in trade. … It’s hard to outline what are the core features for trade unions in trade agreements, because of the architecture of them and the neoliberal framework that underpins them for the last 30 years – you have to address that before we can look at the way it manifests itself in terms of trade and investment agreements. It’s a long term challenge in terms of the economic relations we would want to see.

Sams presentation starts at 24 minutes into the video.

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Laila Harré. Labour activists and trade unions have a long history of association with trade policy and workers issues have been at the heart of the protection versus free trade arguments for time immemorial. What do you see as the trade unions’ interest in the free trade agenda? The unions have been at the table often and have supported agreements, globally though not necessarily locally, on the basis that they are seen as articulating core labour rights or giving some machinery to argue about that. Has that worked? And what have been the gains from being at the table? Because the decisions we have to make as a movement is the extent to which we engage in and challenge the Trade for All agenda of the current government.

Sam Huggard: Unions have had a long interest in trade and investment issues. Jobs are not the only part of our lives – there’s kids, recreation – but jobs are a big part of our lives. So we have an interest in issues that have a big impact on jobs. Not only the impact that trade and commercial agreements have on working and conditions for jobs, but also in terms of the wider social wage that workers experience in terms of our need for strong public services. That’s a pretty key part of our interest in trade.

There’s also the wider interest in some of the massive issues that are facing our globe, which are totally absent from trade and investment agreements. As we often say in the union movement in respect of climate change, which is one of the biggest issues facing us, there’s no jobs in a dead planet. Yet in the international architecture of trade and investment there’s very little there about climate. I read in bits that have come out about the NZ EU negotiating process, not from the most recent round, but the prior one. There was some reference to climate, which is a good start. We have looked to having some firm commitments, such as countries’ nationally determined contributions being part of trade and investment agreements, rather than the voluntary non-binding nature they currently are in the Paris Agreement.

So we have a wide range of interests. There’s a lot to it. It’s hard to outline what are the core features for trade unions in trade agreements, because of the architecture of them and the neoliberal framework that underpins them for the last 30 years – you have to address that before we can look at the way it manifests itself in terms of trade and investment agreements. It’s a long-term challenge in terms of the economic relations we would want to see.

Within that construct, a critical one for us is retaining the right to regulate to protect decent work. That is in part to close some of the gaps in labour law coverage that have been exploited, for example, by gig economy employers. But also we don’t know what the nature of work is going to look like in the coming years. McKinsey’s figures are often quoted on the impact on jobs. One is that 60% of occupations now could have up to 30% of their work automated. Just as we don’t know as much about the future of work and jobs, we also can’t forecast what the future economic relations are between workers, labour and capital. If we are not reserving the right to modernise, protect and defend the governance of those arrangements then that’s a pretty big problem.

We are really keen on mitigation plans in place for any decisions we make in trade agreements, to have a dedicated and focused mitigation strategy. It links to the work we are doing on climate change and the just transition strategy for workers in carbon-exposed jobs. There was no mitigation in place for workers in the clothing and textile industry when the tariffs came off in the 1990s. We would want to see in future trade and investment agreements that propose some change to industries that we have a dedicated plan in place to address that. And the recognition that trade is not just about economic trade between countries, we think it should be driving good social outcomes across the board.

It’s important that there is a proper Tiriti grounding and the recognition that Maori self-determination is pretty poor for our country, including economic self-determination aspects of self-determination and the Crown’s recognition of that.

There’s some other things we would want to see, but those concerns are largely around protecting and supporting domestic policy making.

In terms of our role at the table, I haven’t been at the table in my time. Our predecessors had to some extent, perhaps most in respect of the China FTA. Overseas unions possibly have more. But in reality, the labour movement has mostly been at the table as an advocate or lobbyist alongside other civil society organisations. Direct involvement, seeing and contributing to negotiating texts has been very limited. I guess some examples with the China FTA would be slowing down, and not hastening, the phase out of textile tariffs between the two countries. But in response to the political question of how we engage – my constituents would have an expectation that we are engaged in the government process and we are happy to do that. In a way we rely on work that Dr Bill Rosenberg has done on what we would articulate as a positive agenda in our People-Friendly Approach to Globalisation document. As we do in other areas, we are at the table negotiating for good ACC policy outcomes, but also active members of an ACC Future Coalition that reserves its right to determine what a good ACC policy should look like.

On the situation in the Pacific, one of the challenges we have faced, and we have discussed this with government, is that we want NZ to play a responsible role and use whatever influence they can. We are a relatively tiny nation compared to other players. But that role of leadership in areas where we do have some influence is relevant to us. Picking up on the Australian and NZ interest in the PACER-+ negotiations with the Pacific, NZ and Australia went through that encouraging Pacific Island states to change the way their support their economies, away from tariffs, which are one of the few sources that Pacific states have to raise revenue in order to deliver social services, and instead to adopt what we have as GST in NZ, a value added tax, which is a regressive tax that punishes the low waged and poor. If you have very low national income and very low incomes of workers and communities, why on earth would you remove one of the very few fundamental ways to raise revenues and then push the tax burden onto families and consumers. It seems an utterly nonsensical approach to us, and one of the reasons why we couldn’t support PACER+. So NZ has a role to play in the international institutions, but close to home we could be playing a much better role than we have with PACER+.

Laila: What do people think about the Trade for All Advisory board?

Sam: We don’t know yet. There’s a Cabinet paper from April that’s worth reading. There’s a general strategy which is out there. They are going to be announcing this ministerial advisory group. We don’t know if it’s going to be like Todd McClay’s ministerial advisory group or a wider involvement of civil society. But the agenda they set out focused on issues like SMEs, gender, indigenous populations and so on. It hasn’t from what I’ve read fundamentally addressed some of the concerns you will hear expressed today and tomorrow – the real issues we would want trade and commerce agreements to address in order to gain some confidence in them.

Workers have strong support for greater interactions with other countries and for trade. Members of ours who are working in jobs that are export-oriented in the food manufacturing sector, elaborately manufactured goods, and others, have a strong interest in growing relationships with other countries in terms of export of goods. We just want international commerce agreements that serve the populations’ needs, rather than being subservient to international commerce.

If the Trade for All agenda is to be successful, one of the things it will have to grapple with is to foster an open and honest, frank and evidence-based assessment of the trade-offs that come with trade and investment policies. The public recognise that in any negotiations, be it trade, workplace relations, or with my 7 year-old for his music screen time of an evening, there are winners and losers when you are negotiating. I think people would not expect there would not be winners and losers for trade. But those wins and losses, who benefits and who doesn’t, the inequalities, are never part of the debate. And that needs to be central to our discussions if Trade for All is to be successful.

You can partly do that through greater transparency. The EU is pushing greater transparency to some degree in these negotiations, including with us. So we would want to see more of that – the regular releasing of negotiating texts, the draft mandates, and so on. Wider, pluralist involvement of civil society participation in those discussions, not just corporate interests. Transparency is one way of doing it. But national interest analyses are another really critical, and poorly used, way of doing that, in respect of the economic gains and losses, the impact on inequality, health and access to medicines impact assessments, environmental impact assessments, before the negotiating period and after as it goes through Parliament for ratification. Those are some of the areas that need significant strengthening.

Claire Slatter

A Gender-Informed Trade Strategy

Retired academic, founding member and global chair of Development Alternatives for Women in a New Era (DAWN) and active member of the Pacific Network on Globalisation

The WTO Declaration on Trade and Women’s Economic Empowerment doesn’t talk about gender equality, it talks about women’s economic empowerment. This is really capture of a
concept that feminists originally spoke of. But our concept of ‘empowerment’ wasn’t about economic empowerment in this way, on the fringes of an extremely strong market economy driven by corporate forces. We talked about it as changing power relations in society. Giving women self-determination firstly over our own bodies. This goes much deeper to transforming gender relations and the kind of society and economy we have. It’s not about economic empowerment in this narrowed way of seeing women as potential entrepreneurs.

Claire’s presentation starts at 14.30.

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Laila Harré. We’ve seen with free trade and investment agreements, including the most recent one NZ has signed up to, the CPTPP, that the issues around environment, tobacco, labour etc are increasingly referenced in the language of those agreements, and that is now expanding to include reference to gender. Most recently the 2017 WTO Declaration on Trade and Women’s Economic Empowerment states that – and this is pretty typical of how labour and environment have been addressed in the past too – that international trade and investment are engines of international economic growth in both developed and developing countries, and that improving women’s access to opportunities and removing barriers to their economic participation in national and international economies contributes to sustainable economic development. How do you as a feminist critic of free trade and the current economic regime respond to these developments? Is it going to be enough to give women a cut of the action or is something more fundamental required?

Claire Slatter: I start by reminding us, in relation to this claim that free trade and investment is the engine of growth, that we were initially told that the private sector was the engine of growth. This was part of the selling point of structural adjustment policies, like rolling back the state, privileging private investors. As we have seen, that has led to an era of total corporate control. The worry now is really corporate control of states. We live in an era which DAWN has called a fierce new world, in which corporations are so empowered – and this is one of the major challenges.

The feminist critique of DAWN is really embedded in firstly a feminist critique from the South of structural adjustment programmes, which led us to the trade liberalisation agenda. Gita Sen has a quotation I like to cite where she said ‘structural adjustment programmes were the battering ram for trade liberalisation’. Basically they knocked down the walls and softened the ground for the end game of free trade. So this is essentially what has to be countered. We don’t look at it in ‘what’s in it for women’ terms of seeking equality with men in a free trade strategy. It’s about looking at what free trade has meant – dispossession, impoverishment for the whole of society, for the mass of ordinary people. Who has benefitted? They talk of women as the losers, but frankly the losers are the majority and the winners have been the 1% who have been so enabled to accumulate profits and wealth. This is one of the major crises of our time, the enormous, unprecedented levels of inequality. If it was shown on a graph you would see almost a flat line then rising almost vertically to show what the 1% controls in terms of wealth. The Oxfam statistics (was it in 2016?) revealed the eight richest people in the world owning the same as the bottom half of humanity, and we are talking about 3.6 billion people. That’s absolutely shocking. So that, together with corporate power and control, are the main issues that feminist critics of trade liberalisation have highlighted.

Just to get to the WTO’s declaration – this is all about giving a cut to whom? To a small minority of women entrepreneurs, essentially focused on micro, small and medium enterprises. It’s part of this whole thing that the private sector is the engine of growth. Private entrepreneurs amongst women – really they are going to make it? It’s nonsense, and the very strong critique of the declaration that was made by feminist organisations denounced it as such for that reason.

What has been seen with this language in trade discourse and proposed agreements has been described by Robert Bissio as a Trojan horse for bringing in new issues. For instance, e-commerce, which there’s a lot of controversy about from Southern countries. It is pushed with the argument that this is one of the barriers for women’s participation in business and offers a way of empowering women. Actually, the WTO Declaration doesn’t talk about gender equality, it talks about women’s economic empowerment. This is really capture of a concept that feminists originally spoke of. But our concept of ‘empowerment’ wasn’t about economic empowerment in this way, on the fringes of an extremely strong market economy driven by corporate forces. We talked about it as changing power relations in society. Giving women self-determination firstly over our own bodies. This goes much deeper to transforming gender relations and the kind of society and economy we have. It’s not about economic empowerment in this narrowed way of seeing women as potential entrepreneurs.

Laila: How does it feel to have language appropriated in that way? We’ve become used in the labour movement to appropriation of language as the justification for these agreements. But women are in a period where this is starting to happen. How do we respond?

Claire: In the analysis we’ve done, we’ve sought to address the dominant discourses and making a clear distinction between what we mean when we use these terms and how these terms are being misappropriated and turned to mean something else. The appropriation of language and concepts goes on all the time because it’s an opportunistic instrumental use of our language for their purposes. There’s something very powerful about the language. And it’s a way for them to bring some people on board. And there will be women who will see this as broadening opportunities for women, but they are a minority. When you think of the really damaging, impoverishing effects of free trade against that, it makes no sense for us to embrace this as opening doors to participate in the new economy.

Laila: The large countries of the South – Brazil, India, South Africa – are innovating new ways of being in economic relationships, especially rejecting investor-state dispute settlement (ISDS) for instance in the case of Brazil, or a new model agreement in India. Do countries that are traditionally in relations with large economic powers have to confront the world order in that way? What about Pacific countries for instance? For example, Fiji walked out of PACER-plus …

Claire – Pacific Islands countries are in a very different category. The one size fits all argument that free trade will be good for all economies doesn’t hold when you look at remoteness, disadvantage. Middle-income countries still have the largest numbers of poor people. There’s not much work that’s been done on inequality in the Pacific. Earlier work was done on poverty and poverty was basically denied. Instead we were talking about ‘hardship’ in the Pacific. Even Pacific people don’t like to think of themselves as poor – that’s for Asia and Africa, but not us. The stark reality is that poverty is very present. But what’s not being looked at is the degree of inequality that has developed over the past 20-30 years.

The way in which BRICS countries emerged, in particular China, India, Brazil, is also being talked about in terms of them no longer being developing countries. This is being seen as changing the geography of inequality and even the geography of development. It’s interesting when you see discourses that are suggesting the world has changed, these countries are doing well, the growth and enlargement of the middle class, and in the Northern countries you are seeing the reverse. It’s hard to make sense of the world, but also of what changes may come from how changes between countries are being interpreted.

Laila: We heard this morning of the importance of trade prior to colonisation and the impact of colonisation on trade by indigenous people. The majority of world trade is now within multinationals and their supply chains. I wonder if we are still not talking about the real questions here. The reality is that most of these agreements are about protecting ultimately those corporate supply chains, whether they are Chinese, Americans or Europeans. How much do we really have to fear and how much is there really for us to lose from disruption of that system?

Claire: Even with PACER+, obviously it’s a trade agreement that will primarily benefit Australia more than NZ in terms of opening up markets for Australian suppliers of goods and services, and that’s already happening. The possibilities for suppliers from the Pacific to access the Australian and NZ markets are much more limited and the hurdles they would have to overcome are much more, such as the sanitary and phytosanitary rules or quarantine rules. The risks of those free trade agreements for Pacific economies are enormous, not just in terms of opening access to Australia and NZ through PACER+. Free trade basically opens economies to goods coming in from everywhere. It’s already very evident. We don’t have, for instance, the equivalence of an agency within Pacific countries to look at the quality of goods that’s on our shelves, for instance. We still have the problem of the supply to Pacific Islands states of the fatty offcuts from the meat industry, not only of Australia and NZ but also the US, turkey tails and all that kind of stuff. The impacts of that alone on the health of Pacific Islands is enormous.

We have investors coming in now and taking up land and producing food. There is a particularly controversial example in Fiji with a South Korean enterprise which is actually a religious or church group. There are concerns about its membership and how they may have been robbed of their life savings, and got behind this church-led enterprise. It’s doing very well in terms of setting up an octopus-like number of different enterprises. Very nice food outlets, which are being enjoyed, but you can see this kind of change taking place.

We see for instance much leasing of land, also in the tourism industry. There has been the opening up of land through liberalising land laws – not to make it possible to purchase land in the Pacific because customary ownership systems of land are still very intact and some of them are constitutionally protected. But they have found ways of long-term leasing and you have as good as lost it. This is particularly evident in Vanuatu, where being unable to buy back the improvements made on the land, such as a big hotel, make it nigh impossible. Capital comes in, produces goods for export. It is not local people who are necessarily benefitting from the opening of land, markets and investment opportunities. There are very definitely benefits to external and foreign investors. Other worrying likely developments in the Pacific in the very near future involve mining and the race for the oceans with deep sea mining, which a number of the Pacific Island states have a shared interest in as well.

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