Prime Minister Hipkins on the Trade Price of Everything

Prime Minister Hipkins set out a positioning New Zealand for security and trade, unevenly related.

The first position is the speech delivery context, a specialist audience of New Zealand’s diplomatic corps, the Institute of International Affairs, senior ministers, key players from across the security establishment, and officials from relevant departments and agencies. This text is hence exceedingly vetted as a summary of not only Hipkins’ thinking but – since he’s only been in the job six months – also summarises all the agencies that will have inputted. They are hearing themselves summarised back to themselves.

The task Hipkins sets up is how the Government is acting to protect and advance the safety and security of New Zealand and New Zealanders, in the context of those countries that have most influence over us.
Hipkins first reminds us of how COVID chilled the entire global system of commerce and diplomacy together, and became “the greatest global economic shock since the great depression.”

Diplomacy faltered when it was solely by Zoom. This was quickly followed by Russia sparking a global energy price shock not seen since the oil crisis of the 1970s. Russia’s induced food crisis, oil crisis, and supply chain crisis were on top of the previous COVID crisis and they “contributed significantly to global inflationary pressures we are seeing around the world.”

The underscore there is that while in domestic politics this government is being blamed for its own spending causing inflation to rise, in reality it mostly emanates from pressures far greater than any New Zealand government could ever alter. It’s also a useful reminder of the scale of shock we have gone through together both as country and as entire world.

The above sets of interrelated crises have spurred polarisation and a simply less rational world. Hipkins has no strong optimistic sense this will return.

Hipkins is aware that New Zealand’s interests in sustaining rational international politics lie in rational international trade. That is of course the bedrock of our international diplomatic approach whether National or Labour.

Hipkins devotes much of the speech to five regions and their trade relationships with us: Australia, the United States, United Kingdom and Europe, the Pacific, and China. They are our sources of dependence, of trade, of international support or risk, the primary area of the world for us. They are the key to “our economic prosperity, enhancing our national security, and promoting domestic harmony.”

Hipkins emphasises the benefits of a foreign policy that is independent but not neutral. So he starts off with New Zealand’s most important ally, Australia. Finally, after decades, we have Labour Prime Ministers on both sides of the Tasman and the improvement to the relationship has been immediate.

2023 is 40 years of CER, 50 years of the trans-Tasman travel arrangement and 80 years of diplomatic relations. We are also increasingly interoperable in defence, but still a very, very small comparative contribution to any force that would need to defend us, so sensibly Hipkins keeps the Australian lens clearly on trade not defence.

The question Hipkins leaves unanswered however is: if NZ-AU relationships are so dependent on two leaders getting along or not, why isn’t there even a question arising about a stronger structural bind that could rise us above the vagaries of who is elected in any one term.

Hipkins then comments on the United States relationship. He emphasises that the world is reliant on the United States to set up and maintain a “system of international rules and norms that help keep New Zealanders and our interests safe.” It is merely obvious that, when our sea and air lanes are disrupted by crisis, as they were in the multiple crises Hipkins outlined above, the United States was and is the power that repairs and sustains those same trade lanes.

Then Hipkins again underscores specific relationships with Secretary Blinkin and Ardern’s meeting with President Biden. As with Australia however, once those relationships depart, what system would stop that relationship falling? An absence.

Hipkins’ comments on Europe and the United Kingdom are rightly celebratory, with the United Kingdom Free Trade Agreement coming into force in May and also the European Union agreement also concluded. These are diplomatic triumphs for New Zealand and will result in outstanding commercial opportunities for New Zealand business. Hipkins rightly points out that “73.5% of our total exports will be covered by an FTA once the EU FTA enters force, up from 50% when we took office.” The United Kingdom FTA alone is valued at up to $1 billion a year to our GDP and to boost our exports to the UK by 50%.

However Hipkins sets out New Zealand’s independent-but-not-neutral position to the Russian war stating: “… we must continue to fly the flag for peace, conflict resolution and disarmament. … New Zealand plays a role in avoiding polarisation – it’s what we’re good at and known for”. He then outlines our significant diplomatic, military and humanitarian assistance supporting Ukraine against Russia: “We will keep making targeted contributions where they can make the greatest difference.”

This is difficult but not impossible to square with being an independent country that is not neutral. But it’s pretty ad hoc compared to the diligent time and effort that our government and its diplomatic corps put into trade.

Hipkins then turns to the Pacific, in which small countries worry most about climate change and larger countries worry about jockeying for allies. The reality of climate impact is largely failing to interrupt our focus in positioning New Zealand into whatever military letter-set the United States has invented in any one year.

It is only when Hipkins gets to his final assessment – China – that he sets out any dissonance between our trade interests and anything remotely defining an ideal or value we might hold beyond mercantile access. “New Zealand’s national interests require continued engagement with China, and cooperation where our interests converge.” He puts a lot of store – rightly – on keeping the dialogue peon even when it is tough.

What is weird in treating all these countries and blocs as separate topics is that he just can’t join them together to make sense of our interests. I’d go back to historian Ian MacGibbon’s three primary assumptions about New Zealand: we can only be threatened physical by a major power, we can’t ever defend ourselves with the resources available, and external trade is actually our most important defence against anything. Hipkins just can’t seem to join actual dots between mercantile and defence interests, and any other values we might have.

Hipkins underscores trade access as a fundamental posture for New Zealand, which holds true whether National or Labour are in power. So Hipkins underscoring the success of the recent trade mission and diplomatic visits with good reason. But it is hard to detect anything other than mercantilist value in his text.

Also weirdly, in his section on emerging threats he notes that cyber actors, “some of whom are state sponsored, are increasingly emboldened.” That’s a pretty careful tiptoe around China and Russia. This is, finally, where Hipkins can point to actual institutional effort from New Zealand generating international results beyond trade, but weirdly coy.

It is also perplexing that a country proven to be so vulnerable to poorly regulated internet speech, can’t seem to raise the primary cause of this risk, namely that the United States has generated vast companies which has a liability shield law in Section 230 of the 1996 Communications Decency Act that no user “shall be treated in as the publisher or speaker of any information provided by another information provider.” Calling out this self-regulated global disaster would surely be the task of any country calling itself an “honest broker” on a world stage of countries, tech companies and civil society as we have in the Christchurch Call.

What Hipkins does do is flag that he will be releasing “an interrelated set of strategic policy documents and assessments, spanning across New Zealand’s national security, defence, and foreign policy – including New Zealand’s first National Security Strategy.”

This seeks to integrate together: combat-capable defence, responses to disinformation as a security threat, building a national conversation on security, supporting Pacific resilience and security, strengthening security ties in the broader Indo-Pacific, and strengthening the global system of rules and norms that have served New Zealand well. If Hipkins can pull this off it will be a first. It will be impressive if he can generate such dialogue beyond the ‘deep state’ audience he was speaking to. With the election coming up and his proclivity to dump major policy at will, I’m pessimistic anything eventuates out of this at all.

He spent the first two thirds of the speech emphasising a successful mercantilist approach to international affairs with little reference to defence, but in the last third there’s a vast set of policy and agency work on defence and threat posture. It’s like they are two different speeches jammed together.

Hipkins should not, for a guy with no foreign policy background and 6 months in the job, be blamed for being unable to set out an integrated trade and defence posture even though they are our national bedrock. But his speech crafters, across all the multiple agencies, could at least make an effort. For example he could be a lot more open about when kind of AUKUS arrangement we need and why that is in our interests, not just how our anti-nuclear stance makes our ability to join very narrow from the outset. If the Christchurch Call shows us capable of independent thought, why can’t we show how we are exercising it with AUKUS?

More broadly, for the scale of the crises we have endured, there should have been a resounding dividend of renewed diplomatic strength. Instead what we have is just another trade deal and just another unrelated ad-hoc defence cluster.

Hipkins concludes by outlining our pride in the formation of an independent foreign policy that is independent but not neutral. What Hipkins hasn’t done and needs to do is set out for this generation what structural moves we will generate beyond supporting mercantilist rules that secure us beyond the vagaries of one politician or another.

He concludes: … “I’m committed to continue our legacy on the world stage as a force for good.”

Hipkins certainly makes the case for cross-parliametary foundations on trade security and prosperity.
But Hipkins fails to set out what our “force for good” actually is.

That is what you get when you measure the trade price of everything, and the value of nothing, which is to say: MFAT.