Trade Minister Damien OConnor in early talks on US Indo-Pacific initiative

If things had gone according to plan, New Zealand Trade Minister Damien O’Connor would be in Geneva now, wrapping up the first big ministerial meeting at the World Trade Organisation since 2017.

Instead he got as far as London and returned early after it was called off because of Covid’s new Omicron variant.

He is now having his third stint in managed isolation and quarantine (MIQ), although this time it is a seven plus three combo -seven days in a Christchurch hotel and three at home.

In Geneva he had planned to advance New Zealand’s free trade talks with the EU with bilaterals with some member countries including Poland and Bulgaria.

He was also due to have launched a ministerial statement to halt increases in fossil fuel subsidies, following the Apec leaders’ agreement, and to make progress on the elimination of fisheries subsidies and agricultural subsidies.

It was also to have been the first ministerial chaired by the director general Ngozi Okonjo-Iwaela, who was appointed in March.

“There are indications it might still be held in person next year,”O’Connor said. “The alternative is to do it virtually, but probably the sooner the better. There has been a lot of work gone on.”

It was to have been an important meeting to push for the spread of Covid vaccines.

“It is really essential because until we have people vaccinated and protected from Covid, life won’t get back to anywhere normal,” he said.

Despite the disappointment that Omicron scuppered the 12th ministerial conference (MC12), it was not a wasted trip.

O’Connor visited Singapore, where he met with the United States Secretary of Commerce Gina Raimondo on a new US initiative in its nascent stages.

And he visited Australia, the first trade minister to visit there since the global pandemic began.

The US initiative is an intriguing one and is still not clearly defined.

It was first announced in October by President Joe Biden in his virtual speech to the East Asia Summit, an annual event held by Asean which New Zealand also attends.

It is now dubbed the Indo Pacific Economic Framework, although when Biden mentioned it, it did not have a name. “We intend to launch a new programme and initiatives to enhance our co-operation across the range of issues totalling more than $US100 million,” Biden said.

Raimondo jointly met with O’Connor, his Australian counterpart Dan Tehan and Singapore counterpart Gan Kim Yong to talk about it, and held a press conference about it the next day.

While it is clearly part of the United States’ contest with China to remain the dominant power in the Asia Pacific region, it is still very much a work in progress.

“We are here in the region listening to our partners in the region about what is most important to them, hearing from them, and together figuring out what elements might be in a potential partnership that we will work on together next year,” she said.

But it is clearly a move to address supply chain weakness that were laid bare by Covid – and would be catastrophic in any scenario of conflict between the US and China.

She said that areas for the framework would include supply chain resiliency including semi-conductors, cybersecurity, setting digital economy standards, infrastructure, privacy, export controls, and clean energy.

For supply chains, for example, she said it could involve working with allies to map supply chains, monitor and manage them “to co-ordinate in a strategic way our investments in this area.”

She held discussions in Malaysia with more than 15 companies in the semi-conductor supply chain.

She also said the US stood “ready to jumpstart much-needed infrastructure projects across the region” that would support trade, commerce and the digital economy.

O’Connor said it had been a “useful discussion” with Raimondo.

“We have committed to progress areas where we see some joint objectives and it is not trade -it is around infrastructure, supply lines. It is around general engagement at every level between like-minded countries,” he said.

“There was no set framework per se to discuss other than an agreement that we should all work together to build up some resilience in an area that has been battered by Covid and we want to rebuild opportunities for small and medium enterprises, but not just in the areas of trade. This is a general engagement between us.

“I think Covid has just woken us all up to the exposure we have to major disruption and what that does for our communities, our countries and our economies.”

He said New Zealand had always been an advocate of plurilateral agreements.

“They start small and who knows what they may grow to?”

In Geneva, O’Connor had been planning to see US Trade Representative Katherine Tai, whom he met in Washington in early October, but he was less gung ho than new US ambassador Tom Udall was this week about the prospects of a free trade agreement.

“We do have brief discussions on it,” said O’Connor, “But they have been quite clear they are not ready to re-engage at the moment and we have said that the door is open for the time that they are ready to re-engage.”

On other trade issues, O’Connor would not put a timeline on when Britain would accede to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
He was clear that the UK application, as the first from outside, would be completed before the applications by China and Taiwan would be considered.

And with reference to the trade conflicts between China and Australia, O’Connor said: “It will be essential I’m sure that some of those issues be resolved before China would be accepted by all members into CPTPP.”

But they were two separate processes.

“It is not for New Zealand to make judgment. It for us to participate along with other members of CPTPP in what must be an objective and consistent process of receiving requests for accession and then working through those properly.”

Asked about his priorities for the first quarter of next year, O’Connor said that concluding the FTA with the UK would be the highest priority -it is only at the stage of an agreement in principle.

“It is unlikely we will make huge progress in the EU in the early stages of next year but we hope by the middle of the year, we can get on with that.”

O’Connor is also hoping to get to Expo in Dubai next year and off the back of that, to perhaps revive the FTA that was concluded with the Gulf states in 2009.

“With the Gulf states, we’ve had negotiations in previous years that we would like to pick up off the back of Expo.”

Foreign Minister Nanaia Mahuta was there recently for Te Aratini, an indigenous-focused festival as part of Expo, and New Zealand was a location of great interest.

“The story of New Zealand is one that many people want to find out about. I think our profile internationally has been enhanced through Covid, through what has been and is seen as good management of Covid in challenging times.

“That provides us with an opportunity to explain who we are, where we come from and how we can engage, both through goods and services around the world.”

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