How international issues could gatecrash the Ardern honeymoon

Attempts to renegotiate the TPP provide the immediate task, but defence also looms as a big challenge for a government with three key internationally focused positions filled by NZ First MPs, writes the director of the Centre for Strategic Studies, David Capie

One of the biggest surprises to emerge from talks to form a new government last week was the allocation of three international roles to New Zealand First. Winston Peters returns to the foreign minister’s job he held during Helen Clark’s third term, former soldier Ron Mark takes on defence, and Fletcher Tabuteau gets the job of under-secretary for foreign affairs, a position outside cabinet.

For NZ First to take one of the important outward-facing jobs might have been unremarkable, but to get three set Wellington tongues wagging. After an election dominated by domestic issues such as housing, health and child poverty, some wondered if the allocation of these portfolios to the junior coalition member meant we should expect a more introspective government with reduced attention to international issues.

There is no doubt Labour will have its hands full advancing an ambitious domestic agenda and drafting a mini-budget before Christmas. But Jacinda Ardern is an internationalist in the Helen Clark mould and never likely to take a hands-off attitude to New Zealand’s wider interests. Even if she were minded to focus on Labour’s domestic-focused 100-day action plan, international issues have a found way to gatecrash the new government’s honeymoon. Indeed, the next few weeks promise to be a fascinating test of its policy settings and the cohesion of the new three-party governing arrangement.

The new foreign minister, Winston Peters, and the prime minister, Jacinda Ardern. Photo: Labour Party

First up will be a series of Asia-Pacific Economic Cooperation forum meetings in Vietnam from 5-11 November followed by the East Asia Summit in the Philippines a few days later. As it did for John Key in Lima in 2008, APEC will provide the new prime minister with a remarkable opportunity to get the measure of her regional and global counterparts. Ardern is assured of glowing coverage as she shares the limelight with presidents Donald Trump and Xi Jinping, as well as more like-minded partners such as Justin Trudeau of Canada and Michelle Bachelet of Chile. But away from the cameras, APEC and the East Asia Summit will also provide the prime minister and her foreign minister with the chance to set out the government’s positions on a host of regional security issues like the South China Sea and North Korea, and on various proposals for bilateral and regional economic integration. Foreign counterparts will be carefully scrutinising Ardern’s language to see if there is any shift from the Key-English government’s settings.

The biggest challenge will come in how the government responds to the pressure to conclude a TPP-11 by the time leaders meet on the sidelines of APEC on 10 November. Labour has strong credentials in support of free trade but wants to renegotiate the Trans Pacific Partnership, now absent the US, to allow NZ to restrict foreign ownership of housing. Winston Peters has similar concerns and has also criticised TPP’s Investor States Dispute Settlement process (ISDS) – a position he shares with the Greens, whose members loathe almost everything about the agreement.

Trade negotiators are holding their final round of meetings in Japan today to see if they can settle on a final deal to take to trade ministers. There are various ways to skin the cat of foreign ownership, but opening up negotiations to revise the ISDS provisions looks harder. When Peru raised the possibility of making changes recently, Japanese officials bluntly warned them they’d go with a TPP-10 if necessary.

This will put significant pressure on David Parker to find a compromise that can be sold to the three governing parties and their diverse supporters. The new trade minister’s most recent comments suggest the government thinks it may be able to introduce legislation to restrict foreign buyers before a TPP deal comes into force. But Parker was notably less firm on the ISDS, saying only that he’d asked New Zealand’s negotiators to use their “best endeavours” to get the clause out.

It’s hard to imagine a New Zealand government walking away from a deal that would offer a long-sought FTA with Japan, especially at a time when protectionism is on the march globally. But if a renegotiation isn’t possible, Prime Minister Ardern will find herself with a difficult decision: opt out and raise questions about New Zealand’s commitment to trade liberalisation or opt in and disappoint some of her supporters just a few months into her term. Comments blaming the former government for the predicament New Zealand finds itself in suggest the ground might be being prepared for the latter.

If trade will provide the new government with one big call to make, other challenges lie in defence. On national security, New Zealand First’s instincts are to the right of National, and prior to the election its MPs talked of doubling defence spending and restoring an offensive capability to the Air Force. In contrast, Labour’s Grant Robertson hinted that there might be cuts, calling planned acquisitions “a $20 billion wish list” and saying he wants to take a close look to make sure New Zealand is getting value for money.

The Labour-New Zealand First coalition agreement squares this circle by including an ambiguous commitment to “re-examine the Defence procurement programme in the context of the 2016 Defence Capability Plan budget”. Officials will be keen to find out what this means, but they already know Ron Mark as a long-standing critic of defence procurement. He is certain to want to take another look at prospective purchases, the most urgent of which is the replacement for the ancient P-3K Orions.

None of the parties in government will see any advantage in announcing billions in new defence spending so soon after an election focused on dealing with domestic problems. Some sort of strategic review – potentially even a new Defence White Paper – looks likely to buy time and reassess priorities. But there is a looming logjam in defence modernisation: maritime surveillance is only one of several big-ticket items coming up for replacement. If the dark economic clouds Winston Peters has warned about come to pass, then a major rethink in the structure of New Zealand’s defence force might be in the offing.

Handing three internationally-focused positions to New Zealand First was one of the bigger surprises to come out of last week’s announcement, but it plainly does not signal a coalition government disengaged from global and regional affairs. Rather, there are some early signs from the coalition of a pragmatic approach to international issues that Helen Clark would recognise. There will be change, but for the most part there won’t be a dramatic departure from what we’ve seen over the last nine years. However, TPP and defence could yet be the exceptions to the rule. It may be that dealing with international issues is where the new prime minister’s formidable political and communication skills are going to be needed most.

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