We must avoid a trade war at all costs: former NZ PM

Illustration: Xia Qing/Global Times

Editor’s Note:

The 2024 Imperial Springs International Forum was held in Madrid, Spain on December 11-12. The forum brought over 50 former heads of state, heads of government and leaders of international organizations to share their ideas on the urgent global issues that countries need to deal with. On the sidelines of the forum, Global Times (GT) reporter Wang Wenwen talked to Jenny Shipley (Shipley), former prime minister of New Zealand, over issues ranging from multilateralism, trade and AUKUS.

GT: What do you think are the most urgent challenges facing today’s world in terms of promoting multilateralism?

Shipley: The institutional framework of multilateralism is fragile. While it served the world well, it does need both reform and commitment. It will not work unless people do what they say they are going to do and uphold the commitments they make.

There’s a leadership question, then there’s a reform question, then there’s a revitalization question. Each of the three is very important. The WTO is critical at this moment if we are committed to multilateralism, particularly in the economic space. If there is conflict, there has to be a space to find resolution, but the WTO is not functioning as it should.

So it’s very important, when we have these moments where large nations’ trading environment is fragile, we try to revitalize the environment so that if there are disputes, we have ways to move these things forward rather than a clash of giants.

GT: You mentioned trade. How do you analyze the trend that some countries are initiating trade wars? 

Shipley: We must avoid a trade war at all costs. No one wins a trade war; no one wins almost any war. While the ideas that lead to the language and reality of war are real, the success of leadership is to be able to avoid that consequence. 

There are high risks. Even a small nation like New Zealand tried to use tariffs historically to protect our own industries. It just puts up the cost of goods to your citizens and defers important decision-making. It doesn’t solve the problem; it simply delays it. 

The rise of China is a magnificent story of development, success, technology advancements and a contesting of space. But we don’t need to go to war. All the leaders of the world need to try and persuade the US and EU not to use tariff protections. This escalation of tension which may lead to retaliatory action — which in some instances is reasonable by the way – doesn’t take us to a conclusion. It simply leads us more to a war of trade.

We’ve come too far to let this happen. The development over the last 20 to 30 years has lifted so many people out of poverty and raised hope. We mustn’t let this moment destroy that. We must avoid a trade war and we must avoid using trade as a weapon of threat to other nations, by listening to each other and speaking to each other properly, but not being afraid of competition. Competition worldwide has allowed development to occur as we’ve seen.

I believe in inclusion. I believe in open trade. I welcome China’s ongoing commitment to opening up further and to global trade. But there’s still work to do. I think we can navigate this if we are careful.

GT: Different countries view China’s rise differently. How does New Zealand see China’s rise?

Shipley: We have been part of that. New Zealand is very proud to have supported China’s accession to the WTO. We did it not only for China, but if we’re going to work together, we need to be in a rules-based system. New Zealand is a very small economy, but we’re an open economy and we sell and buy from the world to maintain our standard of living.

That relationship formed a very strong foundation for how we work together, even today. We also secured the first free trade agreement – a large nation and a small nation working through the challenges of how you frame that and where you can get the mutual benefit of being open together. We speak frankly on things we disagree on, but we actually focus on what we can agree on. Yes, there are differences, but let’s try and find the common values and use those as a basis to move forward in trade, international policy and the de-escalation issues that are facing us right now.

GT: You talked about New Zealand’s open attitude toward Chinese trade. Recently, new Chinese car manufacturer Leapmotor officially landed in New Zealand, with the first units of its fully electric SUV arriving in the country. What is your view on the development of Chinese EVs and the tariffs imposed on them?

Shipley: New Zealand is an open economy. We like to have the best of what’s available worldwide. China is a leader. I recently had a chance to visit Chery in Wuhu, which was incredible – automation, a highly productive site, massive use of AI in its development and production and modern design. Why wouldn’t the Western economies use these vehicles which are equal or better than many others produced worldwide?

You have to conclude that it’s a protectionist mechanism. At a moment where we are trying to reduce emissions worldwide, it is stupidity to not allow electric vehicles that are accessible to citizens to flow freely. It’s not so much they are blocking China; they are protecting their own industry and delaying the transition to a competitive environment.

China and others who support open markets need to continue to give a voice to this issue. Why would European car users want to pay more for their cars when there is an equal quality if not better in terms of choice? I think part of the international narrative needs to include not only nation-to-nation conversations but actually consumers’ interests. What is in the interest of consumers – having access to great vehicles that are low-emitting and help the planet. Citizens want that chance. 

I think part of the role that former leaders can play is to help amplify that narrative. We are all in this process together and protectionism hurts our future opportunities for our young people because we are delaying decisions and leaving it to the next generation to grapple with these problems. Former leaders often feel a sense of urgency that we mustn’t misuse our chance to make a difference, and protectionism is simply delaying making the differences we need worldwide.

GT: On the topic of security, the AUKUS alliance that comprises of the US, UK and Australia has raised security concerns in the region. Will New Zealand ever join the AUKUS alliance, as some media reports have speculated?  

Shipley: New Zealand has always maintained an independent foreign policy. We have historically been aligned with the Western alliances. We have turned up at every major international war. But we are an engaged nation, not a divided nation. I am sure that the New Zealand government will exercise very careful judgment as they weigh up New Zealand’s interests here. 

We are often the first to try and discourage people from the increased risk of nuclear war, which is very real at this moment. We’ve learned over the years that our independent, small but developed voice is more valuable not only to us but to the world by maintaining that position. There is a lot of discussion around this topic at the moment, as there is around global alliances, and the New Zealand government will make its decision in due course. 

We believe in engagement and the attempts to retain that engagement help us deal with the trade wars and tensions around nuclear anxiety and risk. We are a very small but articulate voice of reason. I hope that’s a position we maintain.