Big trade agenda for Damien O’Connor at Davos

In the first of a two-part series, Fran O’Sullivan talks to Trade Minister Damien O’Connor about the big issues for New Zealand at Davos.

Damien O’Connor will join the ranks of global trade heavyweights when he joins
Davos on Wednesday for the World Economic Forum’s annual jamboree.

This is the first time that “Davos” has been held in person at its usual time in January in the Northern winter since the start of the Covid-19 pandemic.

It was canceled in 2021 and moved to May last year and was almost held. But there is no place for face-to-face meetings with the trading power brokers who will be present in the Swiss mountain town located 1,560m above sea level.

New Zealand’s Minister for Trade and Export Growth should be booming.

O’Connor has seen many of the “huge piles of bags” at airports around the world over the past year without being caught himself. “It’s a clear condition for everyone in my office – just keep going” he said. “That can be a big challenge if you’re traveling for two weeks.

“But it does mean it’s a little bit more secure.”

What is less certain is the atmosphere he will run into when he arrives in Davos.

German Chancellor Olaf Scholz tops the list of world leaders heading to the World Economic Forum (WEF). The WEF reports that 52 heads of state and government along with 56 finance ministers, 19 central bank governors, 30 trade ministers and 35 foreign ministers will show up to discuss a wide range of issues including war in Ukraine, climate change, them, the pandemic and the global economic outlook.

The leaders of the United Nations, the International Monetary Fund and the World Trade Organization (WTO) will be among them.

But the focus on trade is at the top of O’Connor’s agenda.

He is trying to build more momentum on a WTO waiver agreed in Geneva last year to temporarily ease the global easing of intellectual property rights on Covid-19 vaccines and treatments to allow them to be produced on a much larger scale. He will also recommend that the WTO agreement on fish subsidies be implemented and that there should be a strong focus on further reform including agricultural subsidies.

“These are the areas where we will be pushing really hard.”

In fact, the WTO is in crisis. It has not had a functioning appeals body since the United States vetoed the appointment of new appeals judges in 2019 and progress has been slow to break the news.

New Zealand is a member of the “Ottawa group” – 14 like-minded WTO members including Australia, Brazil, Canada, Chile, the European Union, Japan, Kenya, South Korea, Mexico, Norway, Singapore, Switzerland and the United Kingdom – will meet in Davos to keep the reform agenda moving forward.

Behind the scenes, there is talk of a “big market” being designed in which the European Union and the US could be persuaded to trade aspects of their agricultural protections if China gives some way to its industrial subsidies.

But that is for the future.

An early forum panel, including WTO Director-General Ngozi Okonjo-Iweala and BlackRock CEO Larry Fink, will examine how trade and investment tensions are undermining growth and confidence. The big question they face is how leaders can reshape the current system to develop a new agenda for trade, growth and investment.

Both the United States and China have major roles to play here.

At the end of last year there was a stir among world advocates of fair trade, including New Zealand ministers and officials, when US Trade Representative Katherine Tai lobbed a grenade saying that the WTO “walking on very thin ice” when he did. ruled that the United States violated trade rules with the Trump-era steel and aluminum tariffs.

Tai claimed that the ruling of the WTO dispute panel seriously challenged the integrity of the system because it “goes deep into creating requirements and parameters for determining national security that is legitimate or not”.

She also felt that the organization should not be in the business of second-guessing the national security decisions made by sovereign governments.

The Government still has no formal response to the steel tariff ruling affecting New Zealand companies – and more importantly the US response.

O’Connor says, “we have carefully studied that decision and at this point we have not reached any formal position as to where to go but it is clearly an anomaly in an otherwise very positive and valuable relationship. “

In a classic understatement, he continues, “we will point out the strangeness that is a disadvantage to a part of our economy that provides a valuable link to the US.

“We are not going to swallow the market, we will have no effect, but we have a part, and we would like to think that our access to that market is fair and reasonable.

“It’s not at the moment.”

Others are less polite.

The Washington DC-based “traders” – experts Scott Miller and Bill Reinsch – interrupted their influential podcast saying that if WTO rulings are not respected it will be the “law of the jungle”.

Kevin Rudd – who will also be present at Davos – said that America must “stop throwing some foreign allies under the bus on trade and economics if it wants to build international support to push back against China.” “

Australia’s former prime minister, who is currently president of the Asian Association, has been getting his shot in before he is sworn in as his country’s next Ambassador to the US in March and is being forced to take a more diplomatic approach. take (“become a pumpkin” in his. words).

O’Connor now has an opportunity to voice his concerns in person.

Tai confirmed at the weekend that she will travel to Davos and participate in a stakeholder dialogue entitled The Case for Trade, attend a meeting of WTO ministers on the sidelines of the forum, and chair meetings with foreign colleagues.

O’Connor does not expect the US to change its position in the short term.

“I think we need to work with them as a trusted like-minded partner and make sure we don’t get caught and pushed while the elephants are falling, and we don’t get trampled.

“And that can easily happen when it comes to a small trading country like ours when you have such significant trade tensions.”

His approach is to handle these issues in a consistently “Kiwi” way – respectful, consistent and principled. “We have always been a supporter of fair trade, open trade and transparent rules and I think that goes a long way and enables us to have very fruitful discussions with China and the United States on issues that we still have disagreement in them. “

O’Connor emphasizes that a consistent position also applies to China when New Zealand supported Australia in its WTO case against China’s imposition of barley tariffs.

What worries WTO members is China’s tendency to coercively impose trade restrictions when faced with other issues.

In Australia’s case, China’s punitive sanctions have affected about A$20 billion in exports, from coal to barley, wine and lobsters.

There are signs of rapprochement.

China’s top diplomat in Australia, Xiao Quin, has revealed that bilateral talks are taking place in Geneva which could lead to a solution if the Albanian Government drops its WTO challenges on wine and barley.

O’Connor admits that the story has turned out well.

“If the WTO can’t get the big players to play ball, even when the cases have gone against them, and the appellate body doesn’t really exist, how does the WTO then work for the benefit of the players less?” he questions.

“Just as the UN cannot always solve all the issues, the WTO will always be under some kind of pressure. But it’s still the best game at home – not just for developed trading countries like ours but for developing countries too.”

While at Davos, O’Connor will take part in a session on Indigenous Peoples, and on Trade which New Zealand has prioritized in its host year of Apec 2021.

When asked what worries him most about trade, he points to the war in Ukraine which has had a huge impact on energy and food security, which are often at the heart of social cohesion.

“I hope that Europe will get through the winter in a way that allows its people to be safe and sound but if not, there will be flow-on implications – that flow into global trade.

“And I hope that China and the US continue to work on their differences. Given their interdependence, they acknowledge and respect that and then work on the inevitable tension that occurs between two major competitors in sport, commerce or trade.”

COMING UP: The growing momentum of the CPTPP