In the academic field of international relations, New Zealand plays a role as a “merchant state” along with such economic centers as Germany, Singapore and South Korea. The concept of the merchant state was first articulated by Richard Rosecrans in his 1986 book The Rise of the Merchant State. Rosecrans argued that merchant states recognize that “they can do better by domestic economic development supported by the world market for their goods and services than by attempting to conquer and assimilate large tracts of land.”
Former New Zealand Prime Minister Robert Muldoon (1975–1984) would agree with Rosecrans. In 1980, Muldoon remarked that “our foreign policy is trade. We are not much interested in the normal issues of foreign policy, we are interested in trade.” But Muldoon was a shrewd, albeit controversial, politician who was fully aware that trade took place in a geopolitical context. And the geopolitical context of 2023 is markedly different from the heyday of globalization between 1991 and 2016, when the idea of a rules-based international order took pride of place in the liberal democratic world.
This reality was highlighted by then-Prime Minister Jacinda Ardern at the Lowy Institute in Sydney last July when she summed up the reality of contemporary world politics with the statement that “it’s dark out there.”
An international order based on rules has always been more of a dream than a reality. China, the complete opposite of a liberal democratic state, joined the main rules-based institution, the World Trade Organization (WTO) in 2001. Bush to the Joe Biden administrations, detail how Beijing has deftly circumvented the letter and spirit of WTO rules. But let’s be clear: China is no aberration. Many illiberal states have succeeded in what are ostensibly rules-based. Some are even unofficial allies of the US: Saudi Arabia, Egypt and the United Arab Emirates.
In short, the pursuit of a rules-based international order ran into the rocky shoals of world politics long before Donald Trump could advance his America First policy as President of the United States, which included the withdrawal of the United States from the Trans-Pacific Partnership. business contract.
What is the position of New Zealand’s merchant nation as the country enters the 2023 general election season? New Zealanders recognize that a country, as a small nation in the international system, needs to trade in order to survive and prosper. This explains why Beijing’s Marxist-Leninist political system has not been an obstacle to China becoming New Zealand’s main trading partner since 2017. COVID-19 years. Notably, in 2021, China and New Zealand signed an update to their 2008 free trade agreement.
However, there is a clear gap in New Zealand’s trade portfolio. Wellington has free trade agreements with Australia (since 1983), China (since 2008), the UK (since February 2022) and one is under consideration with the European Union (negotiations completed June 2022). And New Zealand has signed several multilateral free trade agreements, most notably the Comprehensive and Progressive Trans-Pacific Partnership and the Economic Framework for Regional Cooperation.
Notably, there is no free trade agreement between New Zealand and the US. This is not due to lack of effort. In October 2002, then US Trade Representative Ambassador Robert Zoellick announced Washington’s support for a free trade agreement with both New Zealand and Australia. While the US-Australia Free Trade Agreement was signed on January 1, 2005, the New Zealand Free Trade Agreement was the victim of controversy over US intervention in Iraq. In May 2003, the US embassy in Wellington stated that the Bush administration was not prepared to enter into negotiations “at this time”, although it kept open the prospect of future negotiations.
This future has arrived. Indeed, if not now, then when? A free trade agreement between New Zealand and the United States makes sense for both countries, and the reasons for this are not only economic but also political.
Consider New Zealand’s current strategic circumstances. Wellington needs to balance the imperative of increased trade, even by taking action to consolidate its sovereignty, to avoid pressure or even outright coercion. This is not an abstract concern. China’s foreign policy has a clear track record that makes trade diversification a matter of New Zealand’s national security. And the way to address the vulnerability created by trade is to reduce the country’s relative, not absolute, trade with China, where there is still room for growth.
One might ask, is this mission impossible? Fortunately, no. Japanese, Singaporean and Vietnamese relations with China are an instructive example of how states have a long history of active trade with Beijing while maintaining an independent foreign policy.
New Zealand has good reason to study the diplomacy of these states with China. It is hardly a secret that a feature of Xi Jinping’s tenure as leader (from 2012 to the present) has been China’s increased propensity to selectively apply economic, diplomatic, and military sanctions when its values and interests have been called into question. China has been practicing what strategists call “coercive diplomacy” against New Zealand’s only treaty ally (Australia), its regional partners (Japan, South Korea and various ASEAN states), European liberal democracy (Norway), and even its fellow Marxist-Leninist. an alliance partner state (North Korea).
Australia has drawn Beijing’s ire after Scott Morrison’s government called for an independent inquiry into the origins of COVID-19. The tariffs were put in place and remain in effect today, even after the election of Anthony Albanese in May 2022.
Some of Wellington’s key regional partners have felt the sharp decline in Chinese power. South Korea came under pressure from Beijing in 2017 after Seoul allowed its US alliance partner to place missiles in South Korea to defend against North Korea. In addition, there are well-established Chinese sovereignty disputes with Japan in the East China Sea, and with a number of Southeast Asian states in the South China Sea.
And from 2010 to 2016, Norwegian exports were sanctioned by China following the decision of the independent Nobel Committee to award Chinese human rights and democracy activist Liu Xiaobo the Nobel Peace Prize in 2010. Finally, China signed up for successive rounds of the UN Security Council. . Sanctions against its alliance partner North Korea for its pursuit of nuclear weapons.
Thus, there is a clear need for New Zealand to increase trade with other partners. What’s in it for the United States?
Increasing rivalry between China and the US has heightened the need for Washington to redouble its efforts to engage with Indo-Pacific states that are not formal allies. There is a window of opportunity for the United States to further improve relations with partners like New Zealand to advance the fundamental national interests of both states in encouraging China to focus on cooperation to stabilize the Indo-Pacific.
Turning to Wellington, Washington will knock on the open door. China’s post-2020 coercive diplomacy against New Zealand’s treaty ally, Australia, convinced Wellington of the reality of regional concerns about Chinese foreign policy trends in a way that no high-quality US diplomacy could ever do. And those fears are exacerbated by the projection of Chinese power into the Pacific Islands region and, in particular, by Beijing’s high-profile initiatives regarding the Solomon Islands in 2022.
Now is the right time to push forward a free trade agreement between New Zealand and the US. US relations with New Zealand have experienced a renaissance in recent years. On the economic front, the United States is currently New Zealand’s third largest trading partner and its largest services market. This builds on long-standing security collaborations, exemplified by covert intelligence collaborations through the Five Eyes group.
The relationship is also expanding into new areas. Cooperation on space-related issues was carried out through the Artemis Accords. Taking advantage of New Zealand’s advantageous geographic location to launch satellites, the New Zealand Rocket Lab collaborated with various US government agencies, including the National Reconnaissance Agency and the National Aeronautics and Space Administration, which helped launch rockets from the Mahia Peninsula on New Zealand’s North Island. .
US President Calvin Coolidge (1923-29) is famous for his saying that “America’s business is business.” This is very similar to the American version of Robert Muldoon. Why not take the next step and work out a free trade agreement between New Zealand and the US? Now is the time to act.