Treading on the giant's toes

By GEOFF CUMMING

Like many couples going through a bad patch, George and Helen are talking through intermediaries.

It seems one side, highly sensitive after a recent tragedy, has taken offence over the other's ill-chosen words.

Their relationship has always had its ups and downs but they've managed to smooth over their differences. He sees things in black and white and tends to shoot from the hip. But he is rich and powerful and she needs him a lot more than he needs her.

She is diminutive but likes to take the moral high ground. She likes to think she's more tolerant but her sharp tongue can get her into trouble. In this case, drawing a comparison with an old rival proved a "coup de grace".

"Personal attacks are beyond the call," says a spokesman for one.

"It wasn't personal," replies the other's support network.

George, who happens to hold all the cards, has responded by withholding privileges. Helen's enemies say she opened the door for a neighbour, perhaps a more natural suitor who has brazenly courted George's favours, to reap the rewards at her expense. For the past week we've been hearing their gleeful thunder on the US declaration that it is in no hurry to negotiate a free trade agreement with New Zealand.

"It's $1 billion of trade, jobs and opportunities Helen Clark has cost us," says National leader Bill English. "Loose lips and her determination to indulge her personal views ... have cost us our place in the free trade queue."

His foreign affairs spokesman, Wayne Mapp, brands it "the most significant rift in relations with the US in 20 years - and it's getting worse."

Act's Richard Prebble goes even further, calling it the most serious setback since Britain joined the European Community in 1973.

Apart from the advantages to Australian producers of open access to the world's most avaricious consumer market, it raises the prospect of business and foreign investors fleeing New Zealand to set up camp next door.

Strange, then, that business leaders are raising far less hysteria. Chamber of Commerce head Michael Barnett says free trade talks with the US were several years away before the Iraq invasion and that's still the case. "We had begun our lobbying - that's your first year's work. When you consider the negotiations will probably go on into 2006, you can almost guarantee there will be things we do as a nation in the meantime that will enable the negotiations to continue.

"The reality check is we didn't have anything, so how could we lose it - and we hadn't even advanced as far as some people make out."

Retired diplomat Terence O'Brien backs Barnett's assessment that New Zealand was nowhere near securing a free trade deal before Iraq. And, like many observers, he queries the emphasis on its importance.

"This idea that it's worth $1 billion is absolute nonsense - it's a figure plucked out of the air. And there's no talk about what we might have to give away in order to get the concessions.

"We have really lost our sense of proportion about this."

The NZ-US relationship has many strands, says O'Brien, former Ambassador to the UN and now a senior fellow at Victoria University's Centre for Strategic Studies. But under the Clark Government, the free trade agreement has assumed a political dimension and become the acid test of the relationship.

"We have allowed this thing to sort of mesmerise us ... we have to treat the relationship as having more than one facet."

The trade deal has eluded New Zealand since it was first mooted in the 1980s, despite intensive lobbying. Its on-again, off-again pursuit is entirely consistent with a relationship which has always been that of a mouse to an elephant: New Zealand hardly registers in Washington's corridors of power although we are desperate to have our voice heard on trade.

In the US consciousness, we are admired for our human rights record, commitment to free trade and clean, green image. We win points for punching above our weight in humanitarian aid and international peacekeeping. Through the United Nations, we are seen as a voice of reason and a supporter of multilateralism.

If our nuclear-free policy rules us out as an ally, we remain, as Secretary of State Colin Powell put it, "very, very, very close friends."

We have our differences, but we keep talking.

"We have taken a view over Iraq which is different to America," says O'Brien. "Some of the things said in public have been unwise, but in my opinion they have no material bearing on our chances of getting a trade agreement in the near future. We need to leave the bid on the table but simply move on."

An expert on international affairs, Stephen Hoadley, also doubts that the rhetoric coming from Washington will affect the trade deal timetable. Neither does he see it as a serious blow to the relationship.

Hoadley's book, New Zealand United States Relations, published in 2000, chronicles more than 50 disagreements between the two countries over defence, diplomacy and trade. It concludes that the relationship is far from quarrelsome.

The book notes that a minority of New Zealanders have always been ambivalent towards Americans and suspicious of the global spread of US power and capital.

But our interests, policies and styles frequently coincide while our differences are far less severe than in most other bilateral relationships.

Hoadley, associate professor of political studies at Auckland University, says our defence policy has been a sore point ever since the nuclear-free fallout in the mid-1980s. But even then, trade did not suffer, military ties continued unofficially and diplomatic differences were smoothed over through negotiation.

The gradual healing of the breach suffered a setback soon after Helen Clark took office, when the Labour-Alliance coalition cancelled the F-16 fighter plane lease deal. The present spat will further reduce our standing in Washington but the Bush Administration's response does not amount to punishment.

"It's not cancelling any trade privileges, it's not pulling its diplomats out - I don't think regime change in New Zealand is on their agenda.

"If we begin to look for concrete consequences, maybe New Zealand has moved further back in the queue for a free trade agreement but that doesn't affect anything at operational level."

But if the trade deal is a purely domestic hot potato, the difference of opinion over Iraq is still a significant foreign policy issue.

Hoadley believes the Government has underestimated the impact of September 11 on US thinking and the importance it now places on global security, acting unilaterally when it sees fit.

New Zealand's adherence to multilateralism is now seen as slightly eccentric in Washington.

"Officials are saying where you stand on security now is more important than it used to be. This is something New Zealand finds very hard to grasp."

Peter Cozens, director of the Centre for Strategic Studies, says New Zealand has tended to be superficial in its analysis of American affairs and needs to take a much broader view of US politics and power.

"We are suffering to a degree from a sort of moral absolutism in this country which is clouding a more pragmatic view of world affairs," says Cozens. "That's not saying we shouldn't have an ethical foreign policy, but it's very much in our interests to take a far more pragmatic view of Americans and the problems as they see them.

As the "unipolar" power in world affairs, the US no longer always needs to take a multilateral approach."It would be folly of us to keep poking it in the eye in an ill-informed way."

Terence O'Brien is wary of any sign that the US is less willing to tolerate dissent over security issues. "Does it still recognise that good friends are allowed to disagree and talk through their differences?

"The 'either you are with us or against us' mindset which flows from the terrorist attacks is still strong."

But O'Brien says the present dispute is "nothing we can't handle." While Britain and Australia made a strategic commitment to the US after September 11, New Zealand should not subscribe to the idea that the world in future can only be run by a monopoly power. To do so would be to betray the principle of running the world on a fair and equitable basis through multilateralism which has guided our foreign policy for 60 years.

"Without ignoring the American position, New Zealand must have sufficient confidence in itself and its ability in these situations."

Wayne Mapp stands by his assertion that this is the most serious rift in the relationship since the anti-nuclear dispute. "Back then there was a clear separation between security issues and trade issues - the consequences were essentially military-related," he says. "What's emerging now is that there are closer linkages between trade and security in the relationship."

While he concedes there was no deal to begin free trade negotiations, "a situation was being set up so that could actually happen. That clearly is no longer the case - that's a huge change."

It may take five or 10 years to get back on the US agenda for talks, he says.

But as Australia negotiates, there are growing doubts that it will achieve a meaningful agreement without giving away too much. US conditions include the removal of foreign ownership restrictions, local content quotas and pharmaceutical subsidies.

Phil Lewin, former head of the NZ Embassy's trade division in Washington, cannot see America offering unrestricted access to its dairy market to anyone in the short term. Like most business leaders, Lewin believes working for global trade liberalisation through the World Trade Organisation promises far greater rewards.

But a bilateral deal with the US is still worth having, even if it's only a framework agreement, says Lewin, now chief executive of the Wellington Chamber of Commerce. "That's clearly in Australian minds - acknowledging each other as respected partners that wish to trade more with each other."

There was considerable support for New Zealand's case for a free trade deal during Lewin's time in Washington during the Clinton presidency. It's clear from public statements now that things "could be better".

"A complex set of equations govern the relationship. The current Administration values security considerations far more explicitly."

But New Zealand could still pursue a deal by "hanging in there, putting up sensible arguments why it's in both countries' interests to get closer economically and keep accentuating the positive."

In other words, business as usual for a lopsided relationship which has proved robust enough to agree to differ on many issues.

Herald Feature: Iraq