Isolationist policies start to catch NZ up

On the eve of Prime Minister Helen Clark’s meeting with United States President George W. Bush, and other officials, it is not just the US in Anzus that New Zealand should be concerned about, writes NICHOLAS KERR. Closer to home, our relationship with Australia is not what it used to be either.

[This op-ed originally appeared in the Otago Daily Times, New Zealand, March 27, 2002

IT WAS recently revealed that the United States sounded out New Zealand’s policy on nuclear armed and powered ships in late February. One could be forgiven for thinking that this might be the real reason the New Zealand Prime Minister, Helen Clark, made a statement on 11 March that the prospect of a free trade agreement (FTA) with the United States was slim.

She suggested it was because of the US recession, its upcoming federal election and the recent introduction of tariffs on steel.

In Australia, there has been no such talk of a dampening of prospects for a US-Australia FTA. On the contrary, in January, Newt Gingrich, the former speaker of the US House of Representatives, told the National Press Club in Canberra that he thought that of all the countries hoping for an FTA with the US, Australia is the obvious first choice. It is also interesting to note that Australia is negotiating its FTA without New Zealand.

It would appear that New Zealand’s isolationist policies, whether deliberate or not, are beginning to catch her up. Nowhere is this more striking than in the current composition of Mr Bush’s White House and cabinet. At least seven of his top advisers or appointees worked for President Ronald Reagan when New Zealand’s fourth Labour government imposed the ban on nuclear ships, including Dick Cheney, the Vice-president; Andrew Card, Mr Bush’s Chief of Staff; Colin Powell, the Secretary of State; Dick Armitage, deputy Secretary of State; Robert Zoellick, the US trade representative; and Donald Rumsfeld, Secretary of Defence. All of these men have long memories and will not have forgotten New Zealand’s behaviour, whether right or wrong, during that period.

Nor will they have forgotten Ms Clark’s decision to bail out of a deal to lease 28 F16 jets from the US in 2000. More recently, New Zealand has taken its own stance on the Kyoto agreement on climate change, and broken away from the US and Australia in particular, as well as Japan and Canada, as a
member of the JUSCANZ group.

As a sovereign state, New Zealand has every right to take these sorts of decisions. However, they come at a cost. The penalty for the decision on nuclear ships was New Zealand’s exclusion from Anzus. Other less visible costs have been incurred in terms of diplomatic relations, but the current likelihood of Australia striking an FTA with the US ahead of New Zealand will bring home to all New Zealanders the price we are paying.

The New Zealand Institute of Economic Research estimates gains of $1 billion from such an agreement. Brian Mulroney, the former prime minister of Canada, put it more colourfully to Ms Clark, when he said that the US-Canada free trade agreement was “like falling down a gold mine”.

But it is not just the US in Anzus that New Zealand should be concerned about. Closer to home, our relationship with Australia is not what it used to be: The Australian newspaper recently summed it up with the headline “Rock-solid mates become distant acquaintances”.

As Australia has benefited from its consistent economic reforms over the past 15 years, New Zealand has become less relevant. While Australia is New Zealand’s biggest trading partner, New Zealand only ranks fourth for Australia. And as Australia’s economy has been growing strongly and is set to be the best performing industrialised economy this year, New Zealand continues to muddle along.

Further driving the rift between the countries is the perception that New Zealand is becoming a bludger when it comes to defence. With the scrapping of its Air Force Skyhawks New Zealand is now implicitly relying on Australia (and/or the US) to come to its aid should it come under attack, at no cost. There are also concerns that New Zealand’s immigration policy is too liberal, and that we are a back door for immigrants wishing to enter Australia.

The collapse of Ansett under the ownership of Air New Zealand, and the recent performance of the NZRFU over the 2003 World Cup, have done nothing to improve relations. As a result of these perceptions we are also paying a price. Last year, Australia removed many New Zealand rights to permanent residence, citizenship and social security. The Australian Stock Exchange is changing the rules for foreign companies with dual listings, and in spite of CER looks likely to make no exception for New Zealand companies. And Australia is leaving New Zealand out of its negotiations for an FTA with the United States.

In April last year, Ms Clark opened the New Zealand Memorial on Anzac Parade in Canberra. Its two bronze arches represent the handles of a flax basket which are supposed to represent the shared “load” of our long relationship. Over the past two decades, New Zealand has not been carrying its share.

If she had walked a little further up Anzac Parade, the Prime Minister would have noticed the Desert Mounted Corps Memorial. It depicts a mounted Australian Light Horseman defending a New Zealander who stands beside his wounded horse. Should New Zealand’s independent streak continue, this may be a visual metaphor of things to come.

The writer, a New Zealand business consultant living in Sydney, is a graduate of Victoria University in commerce and in French language and literature, and has a masters degree in business from the University of Rochester.