Terence O'Brien: Softly, softly the way to wooing tigers

Terence O'Brien

Helen Clark's visit next week to China and Japan, preceded immediately by a visit to New Zealand by the influential President of the China People's Congress, Wu Bangguo, signify a particularly intense and important phase in our foreign policy in East Asia.

The Government's recommitment in 2003 to serious pursuit of relationships with the region has had, as one centrepiece, a free trade agreement with China.

Three rounds of official negotiations have happened since last November and the Prime Minister clearly hopes to lend top-level impetus to the process by her exchanges in Beijing, and with the Congress President.

New Zealand's aim is to secure a high-quality comprehensive agreement with China by 2007. The negotiations will not be easy. Key interests, especially as they relate to the future for domestic manufacturing in this country, will be on the table.

Significant gains, on the other hand, are possible in agricultural, food and other primary commodity exports.

Striking the right balance and demonstrating that balance to the satisfaction of our producers, manufacturers, service industries, Parliament and the public will be a demanding challenge for the Government.

Our endeavours are the subject, too, of interest in several quarters. We are the first developed economy with which China has agreed to enter into free-trade pact negotiation.

Others will follow and, for China, New Zealand is in one sense a trial run, as a small, unthreatening, modern developed economy.

Other free-trade agreement aspirants will be watching progress closely and in particular precedents set by the New Zealand-China negotiations. For its part, China will not want to fall at the first hurdle and this perhaps gives our negotiators some small leverage.

The huge contrast in size and potential between the two sides might suggest China could accommodate New Zealand readily enough, but the issue of precedent will be at the forefront of Chinese minds.

We, on the other hand, will not want to be a loss leader for China's new trade policy.

There is an important wider background. The free-trade pact negotiations coincide with growing pressure on China from Washington about the United States trade deficit, in particular over the valuation of the Chinese currency and the mounting volume of China's textile trade now that the World Trade Organisation multifibre agreement has lapsed. It had protected Northern Hemisphere industrialised markets from Chinese competition.

Washington should have some interest, then, in New Zealand's progress with the free-trade pact and, perhaps, for broader geopolitical reasons.

The trade negotiations coincide with a particularly tense period in China-Japan relations over the legacies of 20th-century war.

The Prime Minister's visit to Tokyo, and to the World Expo in Aichi where New Zealand has invested in a significant pavilion, comes at an especially sensitive time.

While our attention is inevitably absorbed by the Chinese free-trade agreement, and Japan has evinced no readiness to explore similar possibilities with us, it is vital that we maintain, and be seen to maintain, an even-handed attitude to the two powerful neighbours.

Japan remains our third-largest market ($3.4 billion), nearly double that of China ($1.7 billion) - at the moment.

The visits to the two capitals provides the Prime Minister with the opportunity to express the hope that two of our most important friends will make up their differences. Reconciliation is, after all, a central principle of New Zealand's own democracy.

In Tokyo, high-level reiteration of our commitment to deepening the relationship (witnessed by the Aichi involvement) will, however, necessitate judicious handling of the vexatious issue of whaling, over which public passions on both sides run high.

Behind these significant visits is yet another issue: the momentum is gathering in East Asia for some new form of regional co-operation machinery to meet regional needs more exclusively.

The visits to the capitals will allow New Zealand to assess whether China-Japan differences may impede progress that is driven to an appreciable degree out of Southeast Asia (Asean).

Since the 2003 recommitment to Asia policy, New Zealand, mindful of the impetus for new regional architecture, has reinforced efforts to engage with Asean. We have signalled readiness to sign the Treaty of Amity and Co-operation, which is the Asean mission statement.

We involved ourselves actively in the post-tsunami recovery and have received over the past year an impressive list of heads of government or senior visitors from Thailand, Singapore, Laos, Vietnam, Indonesia and Malaysia.

We participated by invitation with Australia in the 2004 Asean Summit, where agreement was reached by Asean to begin free-trade pact negotiations with New Zealand and Australia.

This last is testament to the tenacity of successive New Zealand governments, which persisted with the idea even as Australia, for various reasons, lost enthusiasm.

Similarly the constructive New Zealand attitude to Treaty of Amity and Co-operation signature differentiates us from Australia.

The leaders of Northeast and Southeast Asia will meet at a November summit in Kuala Lumpur.

An invitation to New Zealand would signify acceptance of the country's involvement in a high-level process out of which, eventually, new forms of regional co-operation may emerge.

The Prime Minister's visit to Beijing and Tokyo provide the occasion as well to demonstrate how and why we merit involvement at the November summit and beyond.

Top-level exchanges in both capitals on regional and global issues will require deft diplomacy because there are important differences between them over Taiwan, over Japanese expectation about a permanent United Nations Security Council seat, even over tactics on the Korean Peninsula, where China's role is a significant contribution.

Rules-based international order is under great pressure and a recommitment by all major powers is indispensable.

On these and other issues we can display in Tokyo and Beijing capacities for impartiality and independent judgment that reinforce a claim to be a worthwhile partner in any future regional organisation.

* Terence O'Brien is a senior fellow of the Centre for Strategic Studies.