New Zealand Unites European and Asia-Pacific Trade Blocs for Collaboration

New Zealand’s initiative to bridge the gap between European and Asia-Pacific trading blocs has resulted in significant progress, with a crucial meeting scheduled to take place in Australia in the coming weeks. Prime Minister Christopher Luxon has been advocating for enhanced dialogue between the European Union (EU) and the 12 nations involved in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in light of concerns regarding U.S. President Donald Trump‘s tariffs.

During the New Zealand – European Union Business Summit held at the Viaduct Event Centre in Auckland on March 17, 2024, EU Trade Commissioner Maroš Šefčovič confirmed that both trading blocs are collaborating on a joint statement for the upcoming meeting. Topics of potential collaboration include reforming the World Trade Organization (WTO), a matter of growing urgency given recent trade tensions.

Šefčovič highlighted that the idea for this collaboration emerged from discussions between Luxon and Trade Minister Todd McClay prior to the escalation of global trade volatility this year. He remarked, “I believe that the weight of such cooperation is pretty significant,” emphasizing the importance of working together to address key issues.

One of the main challenges facing the EU within the WTO framework is the stalled dispute settlement mechanism. The WTO’s appellate body, which adjudicates disputes over alleged violations of international trade rules, has been effectively rendered non-functional since 2017 due to the U.S. blocking the appointment of new judges. Šefčovič noted that both blocs could advance an alternative resolution process that began in 2020, which has been adopted by nearly 60 countries, including the United Kingdom.

He stated, “When we cannot get, currently, 166 members of the WTO on board [with the alternative resolution], let’s work with those who are willing to simply respect these rules on a so-called plurilateral basis. And that’s just one of the ideas.”

The discussions between the EU and CPTPP will also encompass topics such as e-commerce and electronic customs processes, aimed at facilitating business operations without conflicting with existing free trade agreements, including the NZ-EU deal. Notably, this dialogue will run concurrently with talks between the CPTPP and the Association of Southeast Asian Nations (ASEAN).

While expectations for a direct response to the Trump tariffs from this dialogue remain low, McClay emphasized the long-term nature of these discussions. “This is a conversation that started a while ago, before President Trump was elected. This is a body of work that I think has the opportunity to endure and go on for a very long period of time,” he stated.

McClay expressed agreement with Šefčovič regarding the need for WTO reform. Another critical issue on the agenda is making the moratorium on tariffs applied to e-commerce permanent. “We have an opportunity to advance some of the issues in the WTO that are important to businesses and all of our countries collectively, as two very large trading blocks,” he said.

In his opening remarks at the summit, Luxon highlighted the significance of cooperation between the two blocs. He stated that if they could agree not to take actions undermining the fundamental rules of the multilateral trading system, it would provide a substantial boost of confidence to that system. He noted New Zealand’s role as a small country at the forefront of establishing trading rules and expressed concern over Trump’s tariffs.

Luxon’s commitment to this collaborative effort included reaching out personally to EU Commission President Ursula von der Leyen, underscoring the importance of this initiative for New Zealand and its trading partners.

As the world navigates a complex trade landscape, this collaboration between New Zealand, the EU, and the CPTPP presents an opportunity to redefine international trade relations and foster economic resilience.