Fran O’Sullivan: Chris Hipkins deftly keeps onside with China and the US

Prime Minister Chris Hipkins meeting Chinese President Xi Jinping last month. Photo / Nathan McKinnon

OPINION

Chris Hipkins has staked out his Government’s stance on foreign policy ahead of a possible “significant” bilateral meeting with Joe Biden at the Nato summit next week.

The Prime Minister chose Parliament’s old Legislative Chamber as the place to stress that the United States was New Zealand’s “long-standing friend and partner”, in an address yesterday to the New Zealand Institute of International Affairs.

This was an important positioning statement so soon after Hipkins’ highly successful official visit to China, where he met the top brass — President, Premier and Communist Party chief — in what has been portrayed within China as the first visit by a foreign leader leading a substantial mission.

The “Chinese really laid it on” was the takeout for some who had been on earlier missions and saw the array of positive news stories in Chinese media, including all the major social media channels.

The overlay of Chinese propaganda, where various official media distinguished New Zealand’s stance from that of other regional players, was not lost on critics of Hipkins’ visit.

But as he has made clear, he is focused on “bread and butter” issues right now, and in a high inflationary environment where this economy is being slammed, having New Zealand’s bread buttered by China is not an opportunity that a pragmatic Prime Minister will decline.

This is the type of pragmatism that was also exhibited by former prime ministers Helen Clark, Sir John Key and Dame Jacinda Ardern, though all — perhaps apart from Key, who remains a “China bull” — would place caveats on where we stand today, in a difficult international security environment.

Hipkins is clear that China remains New Zealand’s most “complex relationship”.

“However, putting up walls and closing doors doesn’t serve us well in the long term; engagement is always preferable to isolation.”

The choice of words is instructive. Several of New Zealand’s security partners have backed away from “engagement” with China, instead preferring “containment” via a range of economic tariffs and other sanctions. However, they are hesitant to use the label “containment”, given China’s status as their key trading partner.

But with the Nato summit fast approaching and a meeting with Biden likely, it was important for Hipkins to stake out where he stands on the United States.

“The US has long been pivotal to setting up and maintaining the system of international rules and norms that help keep New Zealanders and our interests safe,” he said. New Zealand would also be actively engaged in the Indo-Pacific Economic Framework for Prosperity (IPEF). His address was well-timed and well-pitched.

Hipkins was due to meet the United States President in Papua New Guinea during a major meeting with other Pacific leaders this year, but Biden pulled the plug.

In a range of formal and informal statements over the past 10 days, Biden has staked out his expectations for the summit. He wants Sweden admitted to the security alliance – existing Nato members Turkey and Hungary have opposed this.

China’s relationship with Russia will inevitably be on the Nato agenda, too, as it has been in prior meetings.

It is clear that Hipkins supports Nato’s stance on Ukraine. “Russia’s illegal invasion of Ukraine fundamentally undermines the international rules-based system that is so important to New Zealand. It has had significant impacts on the global economy, as well as New Zealand’s economic recovery.”

But he is also applying a hedge.

China is New Zealand’s largest market, but Hipkins has stressed that “putting eggs in many baskets” is preferable.

To that end, the Labour Government has negotiated new free trade agreements with the United Kingdom and the European Union. These will provide more avenues for our exporters in coming years.

New Zealand trade ministers have been assiduous in keeping doors open over the years to make good on the assurances given when the UK decided to abandon its “South Pacific farm” and join the EU. The upshot was a huge shock to the New Zealand economy.

There are plenty of war stories: the New Zealand trade minister who lashed out on an OECD panel in Paris, saying that “the French keep their farmers as pets” – the interpreter misheard and said “farmers as pigs”.

But these laugh-out-loud moments do not disguise the gulf in understanding and farming practices between New Zealand and EU countries.

China is New Zealand’s largest market, but Hipkins has stressed that “putting eggs in many baskets” is preferable. Photo / NZME

When I went to see former EU Trade Commissioner Pascal Lamy in Brussels two decades ago, he lambasted New Zealand farming practices: “Why do you leave your cows out in the cold and snow in winter and to be sunburnt in summer? Why don’t you shelter them?”

Lamy had more to say. In a very lengthy early-morning conversation, he pointed out that a crucial difference between Europe and New Zealand was that many European nations — such as his home country, France — had been invaded during world wars and had a different view on the necessity of providing food security to their people. Hence, subsidies.

Interestingly, China — at that stage a developing nation — agreed in the 2008 New Zealand bilateral free trade deal to totally phase out dairy tariffs and give open access by the early 2020s.

The immediate tariff savings from the EU deal are not large: $100 million annually. However, this is still the highest at the commencement of any New Zealand trade deal, and will increase as various phase-ins occur. Projections suggest New Zealand will ultimately benefit by up to an additional $1.8 billion annually through increased exports.

Notably, the US has yet to negotiate a free trade deal with New Zealand — although the US State Department has flagged a potential halfway house deal in earlier years. The much-vaunted IPEF does not (yet) offer any concessions for New Zealand exporters when it comes to greater market access and tariff reductions either.

If Hipkins gets his sit-down with Biden, he should make the point that the US also needs to step up.

Ardern did just that in her Oval Office meeting last year.

With an election pending, Hipkins must (at times) be wondering if this will be his last overseas swing as Prime Minister.

If so, he should make the most of his access.