New Zealand is hedging its bets on the pace and success of Asia-Pacific free trade agreement negotiations, throwing in its lot with the China-led Regional Comprehensive Economic Partnership, as well as the Trans-Pacific Partnership championed by the US.
Prime Minister John Key and his Australian counterpart Julia Gillard yesterday attended meetings on the TPP with US President Barack Obama and the RCEP at this week's East Asia Summit in the Cambodian capital, Phnom Penh.
New Zealand was among the prime movers for the TPP and will host the next round of multi-lateral negotiations. It was also in on the ground floor when the RCEP was first mooted at a summit of the Association of South-East Asian Nations a year ago.
"You never know how these things are going to play out so it is always possible that TPP falters and then RECP becomes the significant trade agreement," Mr Key told reporters at the summit. "Hopefully, it doesn't happen with TPP, but you never know."
Ms Gillard echoed that sentiment, saying: "We're prepared to be in all starters that can get us there to that broader vision, which is why we will be there for the [RCEP], which is why we will be there for the TPP."
Mr Key announced New Zealand's participation when negotiations are launched for the 16-nation RCEP, which will involve the 10 members of Asean, plus New Zealand, China, India, Korea, Japan and Australia.
New kind of cold war
While the New Zealand International Business Forum welcomed the announcement, anti-TPP campaigner and Auckland University law professor Jane Kelsey says the competing trade pacts were proxies for a new kind of cold war between the US and China.
"John Key needs a reality check if he really believes New Zealand can remain best friends with both sides in the escalating face-off between the US and China over the 'most significant free trade and investment deal ever'," she says.
"The US-dominated Trans-Pacific Partnership Agreement is pitted against the proposed Regional Comprehensive Economic Partnership that pivots around China as well as India."
However, other international reports suggest the greatest sparring at this week's conference was between China, Japan and Asean nations such as the Philippines over the escalating tensions created by competing claims to islands in the South China Sea.
"The TPPA has now become a geo-political pact. There is a serious risk that participating governments will sign up for strategic reasons to a text that surrenders their domestic economies and grants undue influence over their policy decisions to powerful, largely US, corporate interests," she says.
"The people of the participating countries will not only have no say in the process of either set of negotiations, they risk becoming collateral damage in a new version of the cold war, as old players flex their muscles in the new arena of competing so-called free trade agreements."
At home in Asia
But NZIBF chair Graeme Harrison says New Zealand's involvement in both sets of negotiations is proof that "New Zealand's home is in Asia.
"The initiation of a free trade negotiation with Japan is particularly welcome. Japan is now the only Asian economy with which New Zealand neither has an FTA or a negotiation under way," he says.
It would also bind in India and China in a pact which would cover around half the world's population, more than a quarter of its trade and economic activity amounting to around $US23 trillion annually.
"TPP and RCEP were mutually reinforcing as potential pathways to a wider Free Trade Area of the Asia Pacific (FTAAP)," Mr Harrison says.
"There can be many paths to a broader vision for regional economic integration. New Zealand is fortunate to be directly involved in both major initiatives. TPP is further advanced but both TPP and RCEP are significant.
"Because of its wide coverage RCEP could be even bigger than the TPP in terms of its contribution to economic welfare."
RCEP also becomes a vehicle for negotiating a free trade relationship with Japan, New Zealand's fourth-largest trading partner, and for improving the chances of an FTA with India, which has stalled, NZIBF's Stephen Jacobi told BusinessDesk.
He disputed suggestions the RCEP initiative was being driven by China. "It is an Asean initiative."