Prime Minister Christopher Luxon’s proposal that the CPTPP countries and the European Union combine to present a free trade face to the world in contrast to the USA and President Trump’s tariffs appears to be gathering momentum.
New Zealand and its traditional trade ally Singapore are leading the charge in bringing the two groups closer together.
The EU Trade Commissioner Maros Sefcovic will be in Singapore today for talks, which are sure to embrace the proposal.
POLITIK understands that Trade Minister Todd McClay has also had a long phone call with Sefcovic this week to talk about the proposal.
Meanwhile, in London, the Financial Times is reporting a European Commission official saying that while it was “still very early days”, the two sides have “moved into a space where we’re willing to look at some sort of structured co-operation with [the] CPTPP”.
If it happens, it will be something of a diplomatic triumph for Luxon and McClay and a high point for New Zealand’s trade negotiating team.
Luxon was the first leader to float the idea, which he did last month when he discussed it in phone calls with Singapore Prime Minister Lawrence Wong and EU President Ursula von der Leyen.
He is expected to travel to Europe late next month for the NATO summit, which will give him an opportunity to discuss the idea with his European counterparts.
Lawrence Meredith, the EU Ambassador to New Zealand, was positive about the proposal when he spoke to POLITIK yesterday.
“I think you can sense a dynamic both on the side of President von der Leyen and here from Prime Minister Luxon to consolidate with those partners who are both most trusted and most committed to free trade, and this is a very interesting idea which the President has made very clear that we want to look at how we can explore further the closer links,” he said.
“I think it’s clear to both us and New Zealand that we really need to strengthen connections with trusted partners.
“So in that context, there was a conversation recently between Prime Minister Luxon and President von der Leyen, and President von der Leyen was very clear that we will definitely explore what more we can do in making the links closer between the CPTPP and the European Union.
“Absolutely.
“Because this brings together partners who are both trusted and committed to free trade.”
The power of the proposal is that between them, the EU and the CPTPP would have around 30 per cent of total world trade in goods and services.
This would make any coming together a formidable opponent to the USA and its universal tariffs.
“We don’t want a trade war,” said Meredith.
“If there is going to be engagement, we are ready to take measures, but Commissioner Sefcovic has already been to the United States three times this year, and it’s very clear that we stand for free trade.”
It is that idea that the way to oppose Trump is to promote free trade that was the subject of Luxon’s speech on April 10.
He said that New Zealand would continue to work with like-minded countries to promote free trade and explore the role of the CPTPP in strengthening that vision.
“One possibility is that members of the CPTPP and the European Union work together to champion rules-based trade and make specific commitments on how that support plays out in practice.
“My vision is that it includes action to prevent restrictions on exports and efforts to ensure any retaliation is consistent with existing rules.”
He said his government would keep making the case for free trade, overseas and at home, with a strong voice and a consistent message.
“I think that’s worth fighting for, and I’m up for that fight,” he said.
Later on the same day, he spoke on the phone with EU President von der Leyen, and an official EU readout on the conversation noted that she discussed the prospects for closer co-operation between the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), “in which New Zealand plays a leading role.”
“She expressed her interest in exploring this further as part of her broader commitment to free and fair trade and fostering strong partnerships around the world.”
Luxon also spoke to Singapore Prime Minister Lawrence Wong the same day about his proposal.
Four days later, von der Leyen spoke on the phone to Wong, and they talked about the Luxon proposal.
“President von der Leyen reiterated the importance of predictability, transparency, fairness, and openness in the global trading system, the only way the system can function, thrive and benefit all,” the official readout said.
“In this context, the President discussed the potential for closer co-operation between the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
“This follows her initial conversation on the topic last week with Prime Minister Christopher Luxon of New Zealand.”
New Zealand has unique credibility with the CPTPP as it was one of the founders, along with Chile, Singapore, and Brunei.
And its uncompromising support for the “Coalition of the Willing” over Ukraine and its membership of NATO’s Pacific Four (Japan, South Korea, Australia and New Zealand) has given it credibility within the EU.
“This is about countries that are trusted partners, that have shared values, working more closely together in areas of mutual benefit and mutual priority, meaning we hugely appreciate New Zealand’s steadfast support on Ukraine,” said Meredith.
“Equally, we want to work with New Zealand on its foreign policy priorities in the Pacific.
“These are strategic interests, number one.
“Secondly, that translates both in terms of the economic, just described at the different forums and summits, but also security interests.”
The idea that the CPTPP and the EU get closer together is not new.
In February, the Washington-based trade think tank, the Peterson Institute, published a paper suggesting that there were areas where the two groups could find common ground.
That has been endorsed in another Institute paper published last week where the author, Alan Wolff, suggested that, at a minimum, a group of like-minded countries could forge a path forward together for trade policy coordination and then possibly deeper economic integration.
A former EU Trade Commissioner, Cecilia Malmström, who is a fellow at the Institute, has also recently endorsed a coming together of the EU and the CPTPP.
“A vast network of friends and allies is exactly what is needed,” she said.
And so, just as it was at the beginning of the CPTPP, then the Digital Electronic Partnership Agreement and most recently the Agreement on Climate Change, Trade and Sustainability involving New Zealand, Switzerland, Iceland, and Costa Rica, New Zealand is once again taking the lead on international trade agreements.
The Prime Minister may well be on a winner here.
