With and through Australia to a bigger game

Julia Gillard strewed apples before our Parliament in February: permission to sell them (sometime) to her sacred tribe. John Key took with him to the Australian Parliament last week a key to the medicines chest: permission (soonish) to regulate for his sacred tribe.

But there is a bigger question and it is bigger for New Zealand than for Australia: where does the “family” (as Gillard and Key call it) go now? Just keep to itself in its little suburban house or join with others in the neighbourhood in an extended family? Will big-sister Australia do that anyway and leave little-sister New Zealand home alone?

These questions are being asked in some quarters in Wellington.

Start with Key’s small step last week: he will sign up to the Australia New Zealand Therapeutic Products Authority (ANZTPA) to jointly regulate medicines and medical equipment, negotiated by the Clark government but stalled in Parliament in 2007 by National and the Greens.

The Greens argued on sovereignty grounds, even though New Zealand has equal weight on the agency’s governing council. They and National said it would adversely affect small operators here because it included alternative and organic medicines which have not been regulated.

Annette King and Tony Abbott had agreed to change the law to allow those operators to opt in and not be forced in. But National was obdurate.

That scored some own-goals. Big multinational pharmaceutical firms, already grumpy about Pharmac, object to paying a special fee for approvals for a micro-market: the risk is they won’t bother for some. New Zealand exporters to Australia have had to meet Australian rules.

It was also not well received in Canberra. Australia felt it had bent over backwards to soothe little-sister worries of big-sister domination. In effect, it was making available to New Zealand its much bigger pool of experts for this highly technical function.

And it had ambitions that other countries, particularly in south-east Asia, might adopt ANZTPA standards as an alternative to the big and often cumbersome United States and European regulators. New Zealand’s participation would have given the agency international status.

While New Zealand politicians were thinking in trans-Tasman terms, the Australians were looking outward.

That encapsulates the big question looming over the trans-Tasman relationship and in particular the single economic market (SEM) process. SEM aims to make doing business in each other’s countries closely similar to doing business at home and is the negotiating focus under CER, the 1983 closer economic relationship free trade agreement.

CER is the world’s deepest bilateral deal, reaching far into business regulation, court processes, standards and professional qualifications. There is a single labour market. New Zealand ministers and officials sit in meetings of their federal and state counterparts. No two countries are as close, socially, politically and economically.

But is that it? CER was originally conceived not just to be a two-way Australia-to-New Zealand treaty but also to be outward-looking, a basis for economic interaction with other countries.

SEM is specifically trans-Tasman (though there are international spillovers). Progress depends on politicians’ and officials’ enthusiasms in two distinct jurisdictions aligning on specific items.

Go back three decades to CER’s precursor, the New Zealand Australia Free Trade Agreement. Ministers haggled over the trade status of small quantities of peas and wallets. Fed up with this waste of their time and security-conscious amid global uncertainties, Australian ministers demanded a step-change.

There have for some time been similar signs in Australia and at the Australia New Zealand Leadership Forum of frustration and urge for a new step-change. Meantime, the two countries have done trade deals separately — with one exception.

The exception is the ASEAN grouping of south-east Asian countries: around 600 million people and some big and fast-growing economies. ASEAN’s deal is with CER. Put ASEAN and Australia together in a single market and it would far outrank China in New Zealand’s export book. Australia is actively forging links in ASEAN.

That has prompted thoughts in Wellington that, amid new huge global changes, it may be time to rework the trans-Tasman nexus. A customs union is one option.

This would lock New Zealand into Australia in international deals but also lock Australia into New Zealand and eliminate the risk little sister gets left home-alone. The catchphrase: with and through Australia into ASEAN and/or the wider, changing, world.

This thinking has surfaced as officials draft a “New Zealand Inc” strategy for Australia, to be followed by one for ASEAN. (China, India and the United States have been done but not made public.)

Last weekend the new CER-ASEAN partnership forum met. A multi-minister CER summit is due. If they were bold, ministers could start talking about renovating the family home.