Bold leadership required to build global trust

Helen Clark Foundation Honorary Senior Fellow Stephen Jacobi highlights the growing lack of trust in international affairs, which bodes ill for addressing critical global problems. This piece was originally published in Newsroom.

An old saying goes that to outrun a grizzly bear you don’t need to run fast: you just have to run faster than the person running next to you. A similar unedifying spectacle has been on display in Washington DC recently with US trading partners racing to make sure they are not treated as “least favoured nation” when it comes to tariffs. It’s understandable given the economic stakes, but it doesn’t do a lot for global co-operation.

Diplomacy is mostly a long-term game. Alliances and partnerships require constant attention. Negotiations can take years not months to conclude. Abrupt decisions can have unintended and damaging consequences. Trust built up over time can be quickly eroded.

Today’s global environment is marked by an upending of the order (or imperfectly managed disorder) to which we had become accustomed since the end of the Cold War. Geo-politics is back and “trumping” (sic) geo-economics. The world now faces more military conflict than it has for some time – in Europe, Africa and the Middle East, as well as escalations in South Asia just recently – although the causes of these conflicts run deep across generations. The US/China relationship remains difficult, despite a trade deal and somewhat less bellicose commentary from Washington. But the fault lines are deeply entrenched and flash points in the South China Sea and Taiwan strait remain – an accident could easily lead to conflict.

The world has been witness to thirty years of progressive trade liberalisation and economic integration – markets becoming more open, borders becoming more like bridges, sometimes with tolls, rather than high and impenetrable walls. But this new wave of protectionism is giving way to something different. The art of the deal is replacing the rule of trade law; a new licence has been given for protectionism, not just in the US but in other countries as well.

We are also seeing a blurring of the lines between security and economic dimensions. Trade bans and tariffs are not just economic instruments but means of political coercion. Take for example China’s trade actions against Australia, now thankfully removed, or in recent days the US threat of a 50 percent tariff on Brazil seemingly because of the Brazilian justice system’s handling of a case against former President Bolsonaro.

What is a small, open and trade dependent economy, far away from overseas markets, to do? There’s little doubt we are beginning to feel the cold winds of these developments, despite the distance. Over time we have proved ourselves remarkably adept at navigating a complex and changing world. We have long experience right back to colonial days in dealing with countries larger and more powerful. Apart from trade threats from France during the Rainbow Warrior affair, we have not experienced significant coercion, not even as a result of our principled anti-nuclear legislation. Our independent foreign policy, with Australia as our only formal ally, has served us well. While we have very little to offer trading partners in terms of access to our small market, around 80 percent of our trade now flows to markets where we have free trade agreements (FTAs). Not all of them provide largely tariff-free market access, but some do, most importantly China. How we continue this delicate balancing act between competing political and economic partners is the key issue facing our foreign policy today.

New Zealand has always sought to be a responsible global citizen, with soft power influence which belies our size. What we cannot contribute with hard power like arms or funding, we substitute with ideas and practical co-operation. We are willing to join new arrangements and attend to the plumbing of the international system by serving on bodies at the United Nations or the World Trade Organisation. It’s not just altruism – smaller countries need the insurance of multilateral institutions to help protect them from the larger powers. We have for example won every dispute settlement case we have taken in the WTO.

These institutions and processes are today under threat. The world risks paying a high price if they are permanently damaged. Because precisely at a time when trust between nation states is at an all-time low, we face some unprecedented challenges. The most pressing is the climate crisis which risks radically altering the way we live, or even the ability to live at all, certainly in some parts of the world not so far from Aotearoa. We are also in the midst of a technological revolution, with new technologies like artificial intelligence with potential to revolutionise the way we work. With such significant change come new threats for which we need to be prepared. Add to that a lack of economic and social development in numerous countries and the very real risk of another pandemic, it’s easy to see that more international co-operation is required not less.

In this conflicted and less trusting world, New Zealand is not without agency. We have a vital interest in preserving the international system which has served us so well: this means engaging proactively and respectfully with the United Nations, even if we ourselves may face criticism, and implementing, not questioning, the undertakings like the Paris Agreement we have entered into. This is exactly the time when our support matters. But the rules alone may not save us.

While firmly anchored together with our Pacific whanaunga in our own neighbourhood, we are part of many different groupings of countries – now is the time to leverage and mobilise those relationships. We should of course continue to co-operate with the large powers where it makes sense to do so. At the same time, we should lend our independent voice and soft power to build new coalitions fostering peace and development: the recent multi-country statement on Gaza is welcome but could go further. Another is the Prime Minister’s recent outreach to CPTPP partners and the EU calling for a new dialogue on global trade rules. Expanding and deepening CPTPP should also be on the agenda.

The biggest risk to New Zealand today is that we could find ourselves trapped in one or other “camp” based on others’ interests and values. While some may play poker, raising the stakes at every turn, we should remain open to a range of views and partners as we play the long game of diplomacy.

Mā te rongo, ka mōhio. From listening, comes knowledge.

Stephen Jacobi is a consultant in international trade, government relations and economic development. A former diplomat, he stepped down from the NZ International Business Forum in June and in July was appointed Honorary Senior Fellow at the Helen Clark Foundation.