Time for a protocol on our approach to the world?

Colin James’ remarks at Australia-New Zealand Leadership Forum, 14 May 2004

Since journalists are more about questions than answers, I will approach this with a series of questions.

I want first to say, however, that I think we under-rate the dissimilarities, divergences and disjunctions in the relationship, which in my view are growing.

That is not to deny it is a close relationship: in geographical proximity (by the standards of this sparsely populated part of the world); in the high degree of shared cultural history and institutions among the majorities of both countries; and, since the 1980s, in our integrated economy.

But I argue that this closeness is the result of an ethnic accident, the accident of colonisation by the British. Underneath this very thick veneer, the two countries are very different � in geology (Australia is old and worn and New Zealand young and volcanic); in climate, flora and fauna; in geography and size (Australia, large continental, a hop from Asia, New Zealand small, archipelagic and Pacific); in indigeneity (both in character and in numbers).

This subterranean magma of difference has begun to force its way up through fissures into the relationship — which in any case exhibits significant differences on the surface landscape: different perspectives on the world which generate different strategic imperatives that are only dimly understood in Australia (1); a different history in the Pacific (southwest v south); asymmetry (Australia can think about itself without reference to New Zealand (2), New Zealand cannot think about itself without reference to Australia); and, arising out of the ethnic accident and the asymmetry, an often puerile sibling rivalry, especially on New Zealanders’ part.

I am not suggesting that that ethnic accident is about to lose all force or that the ties which that accident embedded in the Tasman relationship are about to dissolve. Around threequarters of each population are primarily products of that ethnic accident and the institutions, so cultural affinities are strong, the populations intermingle easily and there is, when abroad, a sense of commonality (though not, by the way, what is mistily called the “Anzac spirit”, which in Australia seems to mean the Australian spirit).

What I am suggesting is that if this relationship is to develop well, we will need to stop minimising the differences and as adults take due note of them, note that they are going to become more apparent and more operative and order our affairs accordingly. And that means not taking commonality for granted and instead working at it — at the government level, at officials level, in business and with more intelligent media inquiry.

This is as important in our dealings with the rest of the world as in our dealings with each other. That world no longer evolves incrementally. The changes are often now disjunctive: step-changes in technology jolt communications, production and exchange; non-state and sub-state political activity (terrorism) has shaken old security assumptions; new ideologies drive new and sometimes dangerous movements; there is suddenly a mercantilist vogue for bilateral, plurilateral and regional economic arrangements; the international balance of economic, and eventually strategic, power is shifting fast.

This world poses new challenges and opportunities to two small countries at the bottom of the world. It doesn’t require a lockstep response. But it does require us to rethink the response and to do it consciously and not continue the haphazard decision-making, in the name of “sovereignty”, that put us together in East Timor but chose very different routes into Iraq and competed for trade deals (New Zealand first with Singapore and China, Australia first, and decidedly alone, with the United States).

My starting point is the single economic market. New Zealand has long sought this, in spirit if not in name, but has been blocked by uninterest or contempt among officials in Canberra. There is widespread delight in this country that Australia in the past couple of years has begun to see the value for Australia in a single market and if Margaret Jackson wants to bully New Zealanders into it (as a headline suggested earlier in the week), business in this country will happily pretend to be bullied if that is part of what it takes — provided only, as Business New Zealand pointed out this morning, that it doesn’t lay Australia’s heavy regulatory hand over business here and tax us the Australian way, especially the GST.

But beyond the single market, what? Here I begin my questions.

Question 1: Should the two governments develop a protocol for handling bilateral and plurilateral trade negotiations?

The single market implies concerted action. That is the antithesis of the dog’s breakfast of the past five years as we have each gone our own way and then often scrambled to catch the other up (though also pursuing a CER hookup with Asean). Developing a protocol does not mean always acting as a pair in harness in negotiations. There will be occasions where a trailblazing approach by one is the best route for both and occasions when complementarity — good cop, bad cop — may work best. The point of a protocol is to examine the best route and then take it, for both countries’ benefit. New Zealand’s surprise on Singapore and Australia’s on the United States are at odds with the single market idea.

Question 2 follows from question 1: Should the two governments develop a protocol for handling responses to third-country and international regulatory initiatives?

The single market says yes. This is not just a matter of regulatory initiatives by international bodies. New Zealand companies worry about “regulation by stealth” from Australia through parent companies of subsidiaries here; but that is actually a subset of regulation of both countries’ companies by stealth from the United States and Europe.

In both cases, the logic of the single market suggests business on both sides of the Tasman would jointly advocate such protocols to their governments. This forum could be a mechanism.

Question 3: Should we presume that the balance of wealth and economic activity will continue to shift from the Atlantic countries towards east and south Asia, and in particular to China and India?

My answer would be yes, for the next 20 years.

Question 4 follows from question 3: Assuming the balance does continue to shift towards Asia, is Australasia in the Asian picture or an outlier?

I suggest: (1) as China develops we will find ourselves increasingly in its economic, and therefore strategic, sphere of influence and less firmly in the United States’ sphere; (2) Asian migrants are Asianising us and will link us with Asia; (3) trade agreements will draw us closer and partially integrate our economies with those of Asia.

But we are an outlier — geographically, historically, culturally, in our approach to philosophy and science. We are European. And that raises a hard question.

Question 5: What new or modified ideologies, forms of religion, social movements and political tendencies will develop in Asian societies? And how will we adapt?

I suspect not well.

Question 6: Will Asia be a force for scientific and technological innovation and change to match, and maybe over time eclipse, that of the Atlantic nations?

If so, this could significantly change the economic environment in which we live.

The answer to the questions 6 and 7 depends in part on the role China will play as it becomes more economically, politically and militarily powerful (assuming its middle class does not undo that progress as it enriches itself and develops a taste for customised goods and services and lifestyle and for some sort of democracy). This leads to a multipart question:

Question 7: (1) How smoothly will China manage its economic development and transition to a version of Asian capitalism? (2) Can China develop a rule-of-law basis for its version of Asian capitalism? (3) How will the Communist Party respond to the inevitable middle-class demands for diversity and customisation. (4) How will the Communist Party manage the devolution of power and the transition to multi-choice voting? (5) How will it manage the Hong Kong and Taiwan questions and, in particular, might Taiwan be the pretext for war if a hard-pressed regime in China or Washington chose at some time in the future? (6) Will China, in its dealings with smaller nations in and around Asia, revert to the imperialist treatment of its long past, treating its neighbours as modern vassals? Will it be expansionist whenever it sees economic necessity? Or will it be a nation among nations, albeit one with great power, as the United States usually is?

Question 8: What will happen in the China-Korea-Japan triangle? There are some fears in Japan of a Korea that sees itself as in the Chinese sphere and is maybe nuclear. Japan will retain its economic pre-eminence for a good while yet but China presents some huge uncertainties for economic strategy both at the national and firm level.

Question 9: Where will India go? Can it be an economic and strategic counterweight to China in a bipolar Asia? Short-term answer: not with Gandhi.

Question 10: Will South-east Asia develop economic strength as a region? Will its development continue to be uneven? Will it be stable or volatile?

Question 11: What will the United States’ response be to the rise of China and India? Will it redevelop its presence in north and south Asia? Will it compete for influence? Will it retreat? Will it turn protectionist against the Chinese and Indian economic challenges?

Question 11A: What if anything will Europe’s response be to the rise of China and India?

Question 12: Can or should Australia and New Zealand coordinate their roles in the Middle East? Apart from oil, refugees and the potential to export instability through Islamic terrorism, how directly important is the region to Australasia?

Question 13: What should be the principal preoccupations of Australia and New Zealand in the south and southwest Pacific and should/can they be coordinated? There was tension over the response to the Solomons and some discomfort in New Zealand over the Australian plan for the South Pacific Forum. Australia sees a threat of terrorism to its east and north-east as improbable states turn into failed states, economically, politically and socially. New Zealand has limited experience in that area. But seen from Wellington, Australia is a latecomer to concern about the Pacific. New Zealand has long seen the Pacific as its lake but actually has paddled mainly in the relatively calm Polynesian part that was its micro-empire.

Question 14: What about transnational challenges? Piracy is on the rise, particularly in Asia waters; terrorism has become an international preoccupation; hydrocarbons may become scarce as a result of revolution and/or the energy demands of China and other fast-developing economies; pressure will grow on marine, land and mineral resources, which abound in Australasia; the mass movement of peoples is unlikely to abate in the short-term; communication technology and practices are still evolving very rapidly. Are these matters for Australia and New Zealand to respond to individually or can joint responses usefully be developed?

Question 15: What do both Australia and New Zealand both have in abundance? “Space to think”, which will be one of their strongest attractions to investors, entrepreneurs and corporations. And “space to rest and recreate”, which will be a strong attraction to crowded, rich Asians. How will our two countries apportion their space as demand intensifies? Is this a matter for coordination?

Logically, these huge challenges and uncertainties should drive Australia and New Zealand beyond the single market to transcend the tensions and divergences and coordinate their responses, with a consciously developed mixture of individual, complementary and joint action — and no more in competition.

The divergences are real. They will grow. The media will magnify them. But they are outweighed by shared interests.

That is where I think this forum can play a part, by generating a sensible voice in each country to put the counterfactuals for the other country when critics or the media badmouth it and to argue for coordinated responses and action in the wider world in which both of us have to live.


(1) Australians often seem to view New Zealanders rather as Professor Higgins did Eliza in My Fair Lady, when he asked, “Why can’t a woman be more like a man”: Why can’t a Kiwi be more like an Oz?

(2) Paul Kelly, in his book of his excellent television series on the century of federation, mentioned New Zealand a total of seven times, three of those in connection with Gallipoli and all seven just fleeting mentions, some of them no more than asides, one a footnote. New Zealand is not mentioned in the context of Anzus; CER was not mentioned at all. Yet Kelly is knowledgeable about and sympathetic to New Zealand.