3 Nov 2019

One night in Bangkok

6:50 am on 3 November 2019

Analysis: The last-minute cancellation of APEC in Chile has left the East Asia Summit (EAS) in Thailand as the new main game in town.

Bangkok city skyline at dusk, Business district area of Bangkok Thailand

Bangkok will host many world leaders this week with trade and security high on the agenda. Photo: 123RF

The two summits are usually held close together; APEC is viewed as the heavy-hitting event, with high-level representation from global superpowers.

Many of those countries, including the United States, China and Russia, will also have a presence at the East Asia Summit, but the big names like Donald Trump, Xi Jinping and Vladimir Putin, will not be there in person.

However, the EAS remains a significant gathering for New Zealand, as it has a specific focus on vital trading and security challenges, right on our own doorstep.

It is comprised of the Association of East Asian Nations countries, as well as influential dialogue partners.

Topics expected in the discussions include the de-nuclearisation on the Korean Peninsula, the South China Sea dispute and the gnarly RCEP multi-lateral trade deal, to name but a few.

Prime Minister Jacinda Ardern is en route to Bangkok where the EAS will be held over the next few days, where she expects the "intensity" to be increased after the cancellation of APEC, as there will now be just the one opportunity for member countries to engage.

Ms Ardern is only on the ground in Bangkok for about 36 hours.

And for some countries it's a matter of who's not there, rather than who is turning up.

The Chinese Prime Minister Li Keqiang is attending, but not President Xi Jinping.

Representing the United States will be National Security Adviser Robert O'Brien, who is not a member of Donald Trump's Cabinet, along with Commerce Secretary Wilbur Ross, prompting commentary in some media this was could be seen as a "snub" to the region.

US President Donald Trump(R)waves next to new national security advisor Robert O'Brien on September 18, 2019 at Los Angeles International Airport in Los Angeles, California.

National Security Adviser Robert O'Brien, left, will be the United States' representative at the East Asia Summit in Bangkok, however, President Donald Trump will not be there. Photo: AFP

That's not a view taken by Ms Ardern, who says New Zealand does not "interpret things in that way".

"We continue, though, to encourage good engagement from the US and others within the region; we are the focal point for a number of significant issues that have the potential to impact globally".

But ultimately representation at summits like the EAS was a "matter for each individual country", she says.

It was expected that President Trump and President Xi had intended to seal some kind of agreement towards resolving their trade war on the sidelines of APEC.

Todd McClay

Todd McLay Photo: NZ Parliament

The dispute has had a negative global impact, says Ms Ardern, and there has been a missed opportunity for dialogue.

Former Trade Minister Todd McClay has described the cancellation as a "very big setback" for New Zealand, as access to ministers and heads of states at these events is important.

It means Ms Ardern will not have the opportunity for another sit down with President Trump, he says.

"My advice to Jacinda Ardern would be 'get on a plane and get to Washington' and have a frank one-on-one with the President of America in the White House. He's indicated he's keen on a trade deal, we should be doing everything we possibly can to move forward".

NZ keen participant in RCEP talks

RCEP is made up of the 10 ASEAN nations, plus six other countries including New Zealand, China and India.

The nations cover 3.5 billion people, with a combined national output of US $27 trillion, and accounting for 32 percent of global trade.

But after years of talks, there is little optimism a deal will be struck any time soon.

New Zealand already has established trade relationships with the countries involved, but any kind of free trade deal with India - either through RCEP or a bi-lateral agreement - remains elusive.

There is "no clear sense" of whether RCEP will be concluded this year, says Ms Ardern, but New Zealand remains a "very, very active participant" in negotiations.

Mr McClay says RCEP needs to "fix problems" that remain with countries like China and India, otherwise there is no point.

During his time New Zealand was the one pushing back, as it was not willing to settle for a poor quality deal, he says.

"Ironically India was in the other area wanting to sort of pull everyone lower.

"New Zealand has to be promoting high quality deals because actually few countries will anymore."

Stephen Jacobi from the New Zealand International Business Forum says the outlook for RCEP is not "particularly positive" despite our political determination.

There is no point if each country is unwilling to liberalise trade and allow new business to occur, he says.

"All countries need to make concessions to open up their markets, it seems that India is most reluctant to do this ... India is going to have to make some concessions to the whole group so that this negotiation can move forward".

He expects an announcement about the text of the RCEP agreement could be made during the Bangkok meeting, with further work to be done around market access.

But the times are not "terribly favourable" for deals between multiple countries, he says.

"Protectionism is growing around the world, governments are rethinking their position on these things. From a business perspective we find it deeply dismaying, and making progress is incredibly difficult."

However, there are some examples where multi-lateral deals have been advantageous to New Zealand, says Ms Ardern, like the CPTPP which has delivered better access to markets like Japan, where that had not been possible at a bi-lateral level.

"RCEP poses a really good opportunity for access to India, but that hasn't been without its challenges so it's a little early to say what the final agreement will look like", she says.

Meanwhile, it's understood China and New Zealand have come to an agreement on the upgrade of their free trade deal, but it's unclear when an official announcement would be made.

South China Sea on agenda again

This South China Sea dispute has been raised at each EAS Ms Ardern has attended, and she expects this year will be no different.

Competing territorial claims in the sea, involving China, Vietnam, the Philippines, Brunei, Taiwan and Malaysia have led to a conflict that's remained unresolved for decades.

China has been building small islands and military facilities there for years, prompting criticism from countries like the US, and consternation from countries with competing claims.

The South China Sea is a major trading route, with about a third of global shipping passing through it.

New Zealand traditionally has not taken sides in the dispute, but takes the position that international conventions around the 'law of the sea' and freedom of navigation are important and need to be upheld.

It has supported work being done to establish a Code of Conduct, says Ms Ardern, "to try to bring all parties to agreement".

That agreement provides a "focal point" as a mechanism to find some sort of resolution, she says. And she views it as playing an important role "but obviously there are tensions there".

Push for denuclearisation on Korean Peninsula

Ms Ardern also expects an "ongoing focus" on the Korean Peninsula, where even in recent days there have been reports of further missile testing.

Reuters reported on Thursday that North Korea fired "two suspected missiles" into the sea between the Peninsula and Japan, the first since talks in Sweden between the U.S. and North Korea on 5 October.

New Zealand continues to maintain its position on "the ongoing, verifiable need for denuclearisation" on the Peninsula, says Ms Ardern, and has been playing an active role by monitoring the sanctions put in place by the United Nations.

"We've deployed our people to help... because it is in New Zealand's best interests to try to see that denuclearisation occur."

The international community would want to see pressure "continue to be applied", she says, so there have been some tangible results from the discussions that have already taken place with the likes of the United States and North Korea.

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