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‘The Asian Century’: Aus, NZ

Written By: - Date published: 10:50 am, October 29th, 2012 - 22 comments
Categories: australian politics, business, defence, economy, overseas investment, tourism, trade - Tags: , ,

The Pacific has become a major site of the struggle between the US and China for international dominance. The NZ government seems to be playing both sides, while Key is personally more aligned with the US (his Hawaiian hideaway, salivating at the thought of meeting any top US government representative, and his frequent trips to the US). Meanwhile, Australia is aiming to be a major player in the region.

Julia Gillard has launched a highly-publicised white paper (“Australia in the The Asian Century”) focused on Australia captialising on the future as “Asian”. Al Jazeera reports:

An ambitious plan aimed at maximising links with booming China and other Asian economies will power Australia into the world’s top 10 wealthiest nations by 2025, the government has said.

By engaging in more business with China and India in particular, Australia aims to lift Asia’s impact into its economy to one third by 2025, from 25 per cent now.

“Whatever else this century brings, it will bring Asia’s return to global leadership, Asia’s rise. This is not only unstoppable, it is gathering pace,” Prime Minister Julia Gillard said on Sunday.

Gillard has identified policy areas such as

  • education (All Australian schools will engage with at least one school in Asia to support the teaching of a priority Asian language: Mandarin, Hindi, Indonesian or Japanese)
  • tourism and food
  • minerals (Asian countries want a lot)
  • encouraging more Asian investment in Aussie (lower trade barriers, but no changes to the rules)
  • government support for Australian business missions to Asia
  • 12,000 Aussie awards to Asian countries to encourage people-to-people links.

The plan is to make Australia a key player in the region.  According to Al Jazeera,

Gillard said China, India, Indonesia, Japan, South Korea and the US would be Australia’s key partners, and the rise of Asia’s middle classes would bring opportunities in industries from health and care for the aged to food and travel.

Not a major role for NZ then?  Whatever happened to John Key’s idea of making NZ a significant international financial hub?

Gillard acknowledged that Australia will need to carefully balance Australia’s links with both the US and China.  According to Al Jazeera, the focus will be on Australia balancing:

 its defence and security ties to the US with supporting China’s military growth and stronger role in the region…

Gillard claims the US’s defense capabilities provide a stabilising presence, enabling the building of trust and co-operation in the region.   But such a balance will be very tricky to pull off.  Already Australia and NZ are launching into negotiations of an ASEAN trade agreement (The Regional Comprehensive Economic Partnership) rivalling the TPP. Gordon Campbell asks:

So if Craig Emerson is right and the RCEP is indeed “the perfect vehicle for advancing Australia’s interests in the Asian century” where does that leave the evidently less than perfect TPPA? Are we hosting something of a lame duck here in Auckland in December? And how do we propose to juggle a deal under the TPPA umbrella led by the US that – for example – promotes tighter copyright, patent and other IP provisions to which we apparently object, while negotiating a more “feasible” deal on much the same matters with China, Japan and the rest of ASEAN? In the end, which set of provisions will have priority under NZ law? Such a juggling act may test the skills of even the redoubtable Mr Groser.

Campbell claims that the RCEP looks like a better deal because it is more inclusive, while TPP is US dominated, and an “American delusion”.

Gillard’s Asian Century white paper and the RCEP don’t open up a whole new ball-game, but they are significant developments in the ongoing US-China struggles in the region.  It’s something that our government and opposition parties need to put some thought into, and incorporate into relevant policies.

22 comments on “‘The Asian Century’: Aus, NZ”

  1. Rogue Trooper 1

    Timely article karol :)

  2. muzza 2

    Gillard claims the US’s defense capabilities provide a stabilising presence, enabling the building of trust and co-operation in the region, enabling the building of trust and co-operation in the region

    So heaps of weapons, and military capability builds trust and co-operation then, thats fantastic!

    Don’t recall the Chinese attacking anyone recently, but do see the US destabilising Burma quite nicely at present!

    USA also moving through northern Africa, in an attempt to disrupt China, by the time you add the Pakistan situation, which is also about China/Russia, and Iran/ME, which is about China/Russia, one see’s who the agressor is, and so I don’t really agree with Gillards comments quoted above!

    • Gosman 2.1

      “Don’t recall the Chinese attacking anyone recently…”

      Quite possibly this is due to what Gillard was referring to in relation to the US providing a stabilising presence. It isn’t as if China has no historical grievences that they might be tempted to utilise their military to resolve.

  3. Populuxe1 3

    The “priority languages” thing in schools is a bit of a nonsense really. The point about teaching languages in schools is to learn something about linguistics. There’s no point teaching Hindi when per head of population more Indians than continental Europeans speak fluent English. Bahasa Indonesia is probably the easiest language to learn because it’s basically a kind of rationalised Malay with a simplified grammar – unfortunately it’s not as widely spoken in Indonesia by ordinary people as the regional languages like Javanese and Balinese, and it’s idioms are tricky. I don’t think Mandarin and Japanese should be taught in schools at the expense of French, German and Spanish, mainly because Mandarin and Japanese are so complex there is absolutely no way of getting any kind of meaningful fluency at school level, whereas with the European languages you can get to be conversationally fluent and get some benefit from understanding how languages work. The push for Asian languages in schools comes mainly from the pro-business types who have no understanding of linguistics or language teaching

  4. Rich 4

    So how does this fit with Australia’s “deputy dawg” military posture, which is hostile and suspicious of it’s northern neighbours?

    And how is it anything other than assuming China will get rich and Aus will dig up the desert and sell it to them?

    And what if we get a massive crash and social upheaval in China (a country without the safety valve of vote-ocracy, growing at an unsustainable rate and with a large portion of its population excluded from the rewards of modernisation)?

    The current coal slump is causing enough problems for Aus – what if it’s not a blip but a peak?

  5. Lanthanide 5

    Notable lack of Russia or any EU country in that list of key partners.

  6. Wayne 6

    RCEP and TPPA are not an “either, or”. The US is one of the two largest nations in the Asia Pacific, and is our third largest trading partner after Aus and China. So it makes sense for NZ to have free trade agreements with all three (which is also the consensus of the Labour Party).

    The challenge facing Australia is the same that we also have. Both nations are counting on a constructive relationship with both China and the US. Any other option would be worse, not just for us but the whole region. Both nations are here to stay. The US is as much a Pacific nation as any other; think of Hawaii, Guam, American Samoa, all of which are part of the US, and that is not going to change.

    • lprent 6.1

      The US is one of the two largest nations in the Asia Pacific, and is our third largest trading partner after Aus and China. So it makes sense for NZ to have free trade agreements with all three (which is also the consensus of the Labour Party).

      Agreed – EXCEPT that from what is known about the TPPA is that it appears to be going well beyond the bounds free trade agreement and increasingly looks like the imposition of an alien legal system.

      About the only area that we have any actual trade barrier to the US at present is in agriculture (and that is a pretty minimal barrier compared to the actual marketing in the US). The only trade restriction we have that the US probably even notices is the central buying of Pharmac. But by the sound of it the current negotiations are heading into areas like software patents that have the potential to effectively cripple our local software industry, making setting up companies here a whole lot harder and more expensive, etc etc. In fact virtually everything I’ve seen exposed looks like it makes NZ a whole lot harder.

      So tell me, apart from the ego’s of MFAT ministers and personnel – why are we we involved in this fiasco?

      • Gosman 6.1.1

        As far as I was aware it was the US that asked to join in the trade discussions that we were involved with from te start rather than the other way around. In this regard I would expect the US to have to offer some concessions to the other parties otherwise they could quite rightly tell the US to sling their hook. Regardless of this is the fact that any Trade deal would still have to be submitted to each nations political process for ratification. Given this is unlikely to happen before the next election there is plenty of time for you to nix the deal before it becomes law.

        • Colonial Viper 6.1.1.1

          Regardless of this is the fact that any Trade deal would still have to be submitted to each nations political process for ratification.

          Nice dodge there.

          The TPPA is not legislation and does not require the approval of the House to become binding upon the Crown.

          • Wayne 6.1.1.1.1

            While the agreement itself can be signed by the government, any changes that would affect existing legislation would require amending legislation. That obviously includes copyright and patents law. That means a final TPPA will have to go through parliament.

            If TPPA is ratified by 2014, which is actually quite possible, it could be before Parliament in 2014 or 2015. If there was a change of Govt, I reckon Labour would expect to pass it into law. But the Greens will be no help. That is not so different to the China FTA. NZF and the Greens voted against. The parliamentary majority came from Labour and National acting together.

            You said that TPPA would not help, except in agriculture, but that is really big for NZ. Fonterra would really benefit from access to the US market, and that would benefit the whole economy. And along with Fonterra would be all the ancilliary farm and food processing manufacturing firms.

            • lprent 6.1.1.1.1.1

              You said that TPPA would not help, except in agriculture, but that is really big for NZ.

              I think you were referring to my comment. What I actually said was that it would make very little difference as far as I can see.

              About the only area that we have any actual trade barrier to the US at present is in agriculture (and that is a pretty minimal barrier compared to the actual marketing in the US).

              The main barrier into the US markets hasn’t been actual trade barriers for decades. There may be some residual tariff barriers or quarantine regulations or whatever. And I rather expect that their removal won’t make it into any resulting agreements based on past trade agreements that The US has been involved in and the dysfunctional politics on the hill.

              But they make very little difference anyway. It is simply hard and expensive work to market in that extremely competitive market. Ask any exporter (including me). So…

              Fonterra would really benefit from access to the US market, and that would benefit the whole economy. And along with Fonterra would be all the ancilliary farm and food processing manufacturing firms.

              Bullshit. I see a lot of unspecific assertions like this. What I never see are any numbers even back of the envelope numbers.

              My back of an envelope figuring says that the actual effect of removing trade barriers to the US market is damn near meaningless compared to effect of opening up of the Chinese market. It is a hell of a lot easier and less expensive to get into any under-developed markets than it is to get into such a competitive market where you are always going up against established companies. You can do it in the tech sectors where you have something different. But nothing Fonterra does is particularly innovative.

              Furthermore our tech industries are currently our third largest exporting sector as a whole, growing faster than agriculture or dairy, and they employ more people directly and indirectly. From what TPPA information has peeked out from under the suffocating covers, it tends to indicate that the negotiating twerps haven’t figured out how they’re likely to cripple those tech industries. So when it comes to getting legislation through there will be a hell of a lot more resistance than there was with the chinese free trade agreement.

              • Actually the US market doesn’t want a free trade agreement with New Zealand, nor does Russia; really it shows a desperate National government trying to cut deals. This is all centered around the myth that a ‘free trade agreement’ is the best trade agreement; in fact the best trade agreement is one that favors the interests of both nations without hurting each other’s interests. We could have a great trade agreement with Russia and with the US; if the NZ government stopped pushing this fantasy, where pharmaceutical companies gladly give in to pharmac and Russian farmers ignore the costs of NZ competition.

                • Gosman

                  If this is correct the why did the US request to join an existing process that was already in place between us and other nations? If they don’t care about free trade then they would have stayed out of the negotiation process completely.

                  • karol

                    As I understood it, a major part of TPPA is the copyright, patent and other IP provisions – all the issues around Hollywood promotions, Dotcom etc. The quote I gave from Gordon Campbell in my post points to that. That will result in the juggling exercise required to balance the TPPA on those issues, and the likely different angle ASEAN takes on them in RCEP.

                  • lprent

                    Because it doesn’t look much like a “free trade” agreement anymore. It looks like a “restriction of trade” agreement to spread the US ideas about intellectual property in exchange a for a few meaningless baubles of reduction in barriers for old tech – like agriculture.

                    Makes a lot of sense from the US perspective. It makes very little sense from the perspective of our economic well-being.

                  • Draco T Bastard

                    If this is correct the why did the US request to join an existing process that was already in place between us and other nations?

                    What happened after the US joined that process? Oh, that’s right, the US dominated it and set the direction.

                    If they don’t care about free trade then they would have stayed out of the negotiation process completely.

                    They don’t care about free-trade. They care about being able to get their hands upon other nations wealth – just like every other empire in history.

                • lprent

                  …really it shows a desperate National government trying to cut deals.

                  I get the feeling that it is more a vanity project for MFAT and whatever ministers they can drag along these days. Helps with the US and allows shallow people to strut on the world stage.

                  But it really doesn’t look like it is viable in terms of getting past the various countries involved.

        • lprent 6.1.1.2

          Regardless of this is the fact that any Trade deal would still have to be submitted to each nations political process for ratification.

          The problem is that the details of the trade agreement are currently under wraps except to a carefully selected few. They appear to have been selected to be stakeholders who benefit from the agreement going forward and not from people and organisations who might be adversely affected. Even then they haven’t exactly been briefed except in a PR way – only looking at positives. Apparently parts of the agreement are intended to not be public until years after it is ratified.

          Trade agreements and alliances etc don’t go through parliament. They are ratified by orders in council. The only access from the public will be when some parts of our legislation get amended (where it can’t be done by orders in council). So parliament won’t get to look at the whole thing.

          MP’s of course aren’t exactly selected for either their intelligence, their skill in business, or their understanding of complexities. So I’d expect that they’d be happily spun to as each bit of legislation comes up for. You need this kind of thing to be visible to the public eye for scrutiny.

          It is easier to simply state that any ‘trade’ agreement that has been done so far from the public eye as this one has been should never be ratified.

          And I should point out here that I usually support free trade agreements. This one just seems to have gone from something that was straightforward 5 years ago to something that I wouldn’t touch with a bargepole.

  7. Australia has worse ties than New Zealand to China, mainly because of it’s military ties to the United States and the white paper it published that targets China. Whereas New Zealand has worse ties than Australia to the United States because of a small and under-funded military alongside the longstanding nuclear dispute; and recently on the environmental front, a failure to agree over the new zone around the Ross dependency.

  8. tc 8

    Stay the F away for anything Gillard is up to and chart our own course as OZ has mineral wealth the NACT have wet dreams about which we don’t and never will.

    Keep calm and move on with an NZ focus, cue the laughter as we all know where keynocchio is taking us.

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