Following its recent General Election, New Zealand has seen a change of government. After a number of years of a National-led coalition (National is the main centre-right party), the new government is a coalition between Labour (the main centre-left party) and New Zealand First, a party that is largely the personal political vehicle of the colourful, charismatic and controversial Winston Peters – who will now become NZ’s Foreign Affairs Minister.
Overnight, the new Coalition Agreement has been released. One of its provisions is to “initiate Closer Commonwealth Economic Relations” (CCER). CCER is NZ First jargon for the addition of other Commonwealth countries to the existing Australia-NZ Closer Economic Relations Treaty (CER).
Peters set out his proposals for a CCER in a speech in February 2016, in which he said he hoped the UK would leave the EU to “heal a rift” with NZ that occurred when the UK joined the EEC. He noted that Boris Johnson had backed a migration agreement between the UK, NZ, Australia and Canada, suggesting that a future migration agreement between these four countries could be based on the current Trans-Tasman Travel Agreement (the agreement between Australia and NZ that allows an automatic right to live and work).
As well as such a migration agreement, he said there should also be a Closer Commonwealth Economic Relations Treaty, adding Britain, Canada, and perhaps in due course South Africa (to which NZ has traditionally been particularly friendly, especially because of sporting links) and India. Peters also dismissed a trade deal with the EU as a “fiction” and said it had been a mistake for NZ to show solidarity with Europe in restricting trade with Russia. Instead, Peters said NZ should do a new free trade deal with Russia. (Indeed, the Coalition agreement includes a commitment to “work towards a Free Trade Agreement with the Russia-Belarus-Kazakhstan Customs Union.)
This is an important development. Whilst by itself a trade agreement with NZ would be nice enough, and NZ has already been identified as one of the first countries to do a trade deal with the UK post-Brexit, NZ alone is relatively small.
But the NZ government is now proposing a much broader agreement than simply a bilateral NZ-UK deal. Instead, it is proposing a trade deal that would include the UK, Canada and Australia (the world’s fifth, 11th and 13th largest economies – two G7 and three G20 members), with the hope of adding in South Africa and India at some stage.
The Labour Party leader, Jacinda Ardern, had gained some headlines in September for suggesting New Zealand should become a republic and had indicated it would be necessary to renegotiate the Trans Pacific Partnership trade agreement NZ has up to now championed, suggesting to some commentators that she might be both less interested in closer relations with the UK and in freer trade generally. In some quarters the news of a deal with the often-protectionist NZ First had reinforced that concern.
However, with Peters now to become Foreign Affairs Minister and with the pursuit of a CCER built into the Coalition Agreement, it is clear that NZ’s position will not be anti-trade (or indeed, anti-immigration) per se. Instead, NZ will be keener on particular new preferential trade and migration partners — specifically the UK and Canada, to add to its existing arrangement with Australia.
NZ has form in brokering large international trade deals – the Trans-Pacific Partnership was started by NZ and Singapore.
The NZ government is not alone in favouring a broader new multilateral trade deal in which the UK would be included alone with significant other Commonwealth economies. Canada’s opposition Conservative Party favours a joint UK-Canada-Australia-NZ trade agreement (with its leader Andrew Scheer repeating his call for such an agreement only last Friday). With the NAFTA talks breaking down there must be interest on the Canadian government side, also. In Australia a number of Senators have argued for adding the UK and Canada to the CER Treaty, almost exactly as the NZ government now proposes.
The ball is in the UK’s court. The UK government should now say yes, it is interested in participating in a Closer Commonwealth Economic Relations Treaty that includes Canada and that it would consider the addition of other countries in due course. The NZ government has taken the initiative. We should respond.
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