Gordon Campbell on Australia scoring trade points with China

It hasn’t been a great year for Trade Minister Tim Groser. The Trans Pacific Partnership deal has been deadlocked all year, amidst increasingly desperate attempts to jawbone it towards the finishing line. Secondly, we’ve just concluded an FTA with Korea that lacks adequate milkpowder provisions, which can only be read by the Japanese (in a TPP context) as a sign that we will perhaps settle for less. To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. This has not escaped the attention of the Japanese press, who reported the Aussie FTA this morning in this fashion:

The agreement gives Australian dairy farmers tariff-free access within four years to China’s lucrative infant formula market, minus any of the “safeguard” caps that currently restrict competitors from New Zealand.

As the Japan Times story pointed out, Australia is trying to shift its economy away from a ‘mining boom’ to a ‘dining boom’ - and it has the same burgeoning Asian middle class in its sights as we do:

Paul Glasson, vice president of the Australia China Business Council, hailed the much-improved access for up to 40 service industries including health, law and aged care, as well as for agricultural products such as dairy, rice, wheat, wool and cotton.

Once the agreement is fully implemented, Australian Trade Minister Andrew Robb said in a statement, 99.9 percent of Australia’s current resource, energy and manufacturing exports will enjoy duty free entry into China.

“Wine makers, currently selling more than 200 million Australian dollars worth of goods to China each year despite tariffs of between 14 and 20 percent, will also see tariffs eliminated over four years. Tariffs on horticultural products, seafood and other goods accounting for 93 percent of Australian exports by value will also be reduced to zero by 2019.

Clearly, Australia now has the momentum on trade with China, and New Zealand will be playing catch-up when Chinese President Xi Jinping visits here later this week. On RNZ this morning, Groser was making the best of a bad situation, and talking up the Australian gains as an opportunity for New Zealand to bring forward the removal of those “safeguard” caps on our dairy exports, which Groser cited as due to expire in 2019. On Xi’s visit here tomorrow, it will be interesting to see if the Chinese leader will accept the arguments for putting his trans-Tasman suitors on an equal footing.

The race to succeed Ban Ki-Moon
While we await the anointing of the next Labour Party leader this afternoon, there was a fascinating piece of leadership speculation published last night – about the likely next UN Secretary General - by veteran UN watcher Colum Lynch in Foreign Policy. Lynch does a great job of explaining (historically, geographically and in terms of realpolitik) just how the UN’s main players and its regional power blocs go about the business of selecting the global organisation’s leadership. Yes, Helen Clark does get a mention and – as reported in this column a few months ago – Lynch also casts Clark’s cost-cutting drive at UNDP as a way in which she has been pressing her credentials for the top job.

Helen Clark, a former prime minister of New Zealand and currently the head of the U.N. Development Program, is believed to be running a stealth campaign for U.N. chief from her day job…

…In recent months, Clark has been trying to earn a reputation as a reformer by launching a belt-tightening campaign that has led to rare staff cuts at the U.N. Development Program. But her candidacy took a hit in October when the United States' congressionally created watchdog responsible for monitoring U.S. funds for the payroll of Afghan police sharply criticized the U.N. Development Program for mishandling hundreds of millions of dollars in foreign assistance for the Afghan National Police. The U.N. agency countered that it had drawn the world's attention to the misuse of funds but that it had limited authority to guarantee that Afghan authorities used the funds correctly.

As Lynch explains, there are strong arguments for why either an East European or a Latin American should be considered the frontrunner this time around, for the top job. Ultimately, the wishes of the General Assembly are less important than the veto powers exercised by the five permanent mem,bers of the Security Council. Last time around, it was the US ambassador to the UN John Bolton and his Chinese counterpart Wang Guangya who secretly met and agreed to scupper the prospects of the Indian candidate Shashi Tharoor and propel Ban Ki-Moon into the top job:

Years later, Bolton acknowledged in his memoir that the Indian's candidacy broke "one of the UN's unwritten conventions, namely that SGs should come from smaller fry [countries]." Bolton wrote that U.S. Secretary of State Condoleezza Rice had confided to him that in choosing Ban she was underscoring America's preference not only for a candidate from an allied country but for an individual who was weak. "I am not sure we want a strong secretary general," Bolton claimed she said.

After two terms of Ban’s ineffectual rule, will the P-5 really want to install another round of impotence at the UN? The longer the crisis in the Ukraine festers, the harder it will be to find an Eastern European acceptable both to Russia and to the rest of the Security Council permanent members. And finally, talking of the Ukraine…On the eve of the G20 meeting, Russia’s President Vladimir Putin did a long and fascinating two part interview with German television. The transcripts are here and also here.

Among the points that Putin makes – besides citing Kosovo as an example of “separatism” accepted by the West - is that the trade deal reached between the EU and the fledgling government in Kiev had major economic repercussions for Russia:

Let us look at what the EU-Ukraine Association Agreement stipulates. I have said this many times, but it appears I have to repeat it once again: it eliminates the import duties for the European goods entering Ukrainian territory, brings them down to zero. Yet as Ukraine is a member of a free trade zone within CIS, zero customs tariffs have been introduced between Russia and Ukraine. What does that mean? It means that all European goods will flow through Ukrainian territory directly to the customs territory of the Russian Federation.

There are many other things that may not be clear for people who are not informed regarding these matters, but they do exist. For example, there are technical regulations that are different in Russia and in the EU, we have different standards. Those are standards of technical control, phytosanitary standards and the principle of determining the origin of goods. By way of an example I would cite the component assembly of cars in Ukrainian territory. According to the Association Agreement, the goods manufactured in the territory of Ukraine are intended for our market within the framework of the Russian-Ukrainian free trade zone. Your companies that invested billions of euros in factories in Russia (Volkswagen, BMW, Peugeot, Citroen, the US Ford, and others) entered our market on completely different terms, on condition of deep localisation of production. How could we accept that?

So we said from the outset, "We agree, but let us proceed step by step and take into consideration the real problems that can emerge between Russia and Ukraine." What were we told in response? "It is none of your business, so get your nose out of these affairs."

Dolly Gets Pitiful
I don’t really think this song is a vote by Dolly Parton for anyone in particular for the Labour leadership, but…it could well be prophetic.

ENDS

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