By Geoffrey Miller of the Democracy Project
ANALYSIS: The gloves are off.
That might seem to be the undertone of surprisingly tough talk from New Zealand’s foreign and trade ministers.
Winston Peters, the foreign minister, may be facing legal action after making allegations about former Australian foreign minister Bob Carr on Radio New Zealand.
Carr had made highly critical comments about Pillar II of the Aukus pact, which New Zealand is contemplating joining, at a conference held by New Zealand’s Labour Party opposition in Wellington in mid-April.
Meanwhile, trade minister Todd McClay has engaged in some plain speaking of his own. In a press release on Thursday, McClay called Canada’s refusal to comply with a ruling in New Zealand’s favour on ‘tariff rate quotas’ by the disputes settlement body of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) ‘cynical’ and ‘disappointing’.
The minister said he was seeking legal advice, as New Zealand had ‘no intention of backing down’.
Canada has been allocating a large share of its preferential duty quotas for dairy products to its own domestic processors. This has heavily limited the ability of lower-cost exporters such as New Zealand to enter the Canadian market.
To outsiders, it might seem surprising that Australia and Canada are on the receiving end of the remarks made by the New Zealand ministers. All three countries are members of the Five Eyes – and Australia is New Zealand’s only formal ally. And New Zealand Prime Minister Christopher Luxon sought out his counterparts from both Australia and Canada in December and February to issue joint statements on Gaza.
However, the exceptions probably prove the rule.
Bob Carr is from the same Labor Party as Australian Prime Minister Anthony Albanese. However, no love appears to be lost between Carr and the current Australian Labor Party leadership when it comes to foreign policy issues. In 2021, Albanese was heavily critical of an internal party motion supported by Carr which called for a boycott of Israel.
In trade, the picture is more complex. It is true that New Zealand, where there is largely a bipartisan consensus on the merits of free trade, has a long track record of speaking up for itself when it feels hard done by – even against close partners.
Most famously, this included successfully taking a World Trade Organization (WTO) dispute in 2007 against Australia over the country’s long-standing de facto ban on importing New Zealand apples. The WTO case is now largely forgotten. When it is remembered, it usually as a technocratic measure that did not affect wider bilateral relations.
Indeed, New Zealand’s other previous WTO cases have mostly been against other Western countries with which it has generally had improving relations – including Canada, the European Communities and the United States.
Over the years, New Zealand governments have openly expressed frustrations and trumpeted successes on the trade front. However, as trade issues increasingly become entangled with wider geopolitical concerns – witness the rise of ‘friendshoring’ in arrangements such as the US-led Indo-Pacific Economic Framework (IPEF) – this general approach may be changing.
For example, New Zealand largely kept quiet after the WTO ruled in 2022 that US steel and aluminium tariffs introduced under the Trump administration contravened the rules of the global trade body. When pressed in a media interview, then trade minister Damien O’Connor would only say ‘it is an anomaly in what is otherwise a very positive and valuable relationship’.
New Zealand is a third party to WTO disputes against the metals tariffs lodged by other countries. Moreover, the case was an important point of principle: the US refused to comply with the ruling, citing a national security exception in the dispute settlement process. The issue also helps to explain why the United States continues to block the appointment of judges to the WTO’s Appellate Body.
No real progress was made on the dispute settlement issue at the WTO’s Ministerial Conference in Abu Dhabi in February, at which Todd McClay served as deputy chair. But McClay avoided mentioning the failure in his press release after the event, instead focusing on successes such as an extension to a moratorium on digital duties (for which McClay had led negotiations) and a string of bilateral meetings.