WikiLeaks cable: NZ-China FTA
5:30 AM Sunday Dec 19, 2010
This is one of the diplomatic cables about New Zealand held by Wikileaks.
April 23, 2008 SUBJECT: DAS CHRISTENSEN'S MEETINGS WITH GNZ ON THE NZ-CHINA FTA, TIBET
Classified By: Pol/Econ Counselor Margaret B. McKean; Reason 1.4 (b) an d (d)
1. (C) Summary. During EAP DAS Christensen's April 7 visit to New Zealand, MFAT officials explained that the China-NZ
free trade agreement (FTA) derived from New Zealand's concern over becoming marginalized in emerging East Asian trade
relationships, coupled with China's willingness to enter into serious negotiations with New Zealand that could lead to
the first Chinese FTA with an OECD country. GNZ officials agreed with DAS Christensen's observation on the continued
utility in coordinating private messages to Beijing as a means of maintaining positive engagement with China on issues
of shared interest in East Asia and the Pacific region. MOD officials downplayed growing military-to-military ties with
China, noting that the exchanges and visits offer limited substance and insight. End Summary.
MFAT CEO Murdoch on NZ-China FTA: "A Strategic Decision"
2. (C) MFAT CEO Simon Murdoch, accompanied by MFAT Deputy Secretary John McArthur, Asia Division China Unit head Graeme
SIPDIS Waters, and Americas Division Director Carl Worker, welcomed DAS Tom Christensen on April 7 by outlining their
perspective on the China FTA. Murdoch placed the agreement in historic perspective, pointing out that New Zealand has
been examining its regional trade relations since the mid-1990s in the context of trade liberalization talks within
APEC. Three years ago, the troubled Doha Round discussions worried New Zealand, said Murdoch, and there were signs that
an APEC-based trade agreement would not work. An ASEAN Plus 3 trade partnership appeared to be more promising, continued
Murdoch, and that troubled New Zealand, which has a fear of being marginalized. At the same time, New Zealand has
pursued bilateral FTAs with its major trading partners. New Zealand's efforts with other more developed nations in East
Asia, he continued, have met with mixed success; New Zealand has concluded bilateral agreements with Australia,
Thailand, and Singapore in the context of the P-4, but Japan and South Korea remain closed. New Zealand continues to
discuss an FTA with ASEAN and Malaysia, noted Murdoch. However, when New Zealand pulsed the Chinese three years ago,
emphasized Murdoch, there was more receptivity than New Zealand had anticipated. Given that China is one of New
Zealand's most important trading partners, Murdoch said that if the Chinese were interested, New Zealand needed to be
interested and the negotiations got underway.
3. (C) DAS Christensen congratulated Murdoch on New Zealand's achieving the FTA with China, asking New Zealand's
thoughts on the ASEAN Plus formulations. Murdoch responded that ASEAN Plus China, ASEAN Plus Japan, and ASEAN Plus Korea
talks are making progress. A New Zealand Plus Australia Plus ASEAN formula is one that appeals to New Zealand, he noted.
However, given China's interest in an ASEAN Plus agreement, New Zealand decided that it would be strategic to get in
now.
John McArthur explained that the recently signed FTA with China was the fourth in a series of "firsts" for New Zealand;
the first to sign a bilateral agreement on China's WTO admission, the first to recognize China's market economy status,
and the first to launch free trade talks with China.
Murdoch added that New Zealand's views on China mesh well with former Deputy Secretary Zoellick's notion of encouraging
China to be a responsible stakeholder in the international community.
4. (C) Christensen said that USG policy on China is tracking well, although China as a responsible stakeholder remains
an aspirational target rather than a reality. There have been positive shifts in China's position, he said, noting that
there are long-term consequences when China makes statements on other countries' internal affairs and reconsiders its
relationships with friendly governments. The Chinese have been very helpful on North Korea. On a range of issues, the US
often would like more from China and believes that China is generally too patient with problem regimes.
On Sudan, Christensen opined that China does not get the credit it deserves. China has gone from defending Khartoum to
putting pressure on the Sudanese government. China now supports the three-phase UN plan, has pushed Sudan to move to the
second phase and deployed 135 peacekeepers (of 315 promised) to Darfur -- the first non-African peacekeepers in Darfur.
This constitutes real progress from China's position on Sudan in the summer of 2006, underscored Christensen.
On Burma, China is not where the US would like it to be, he said, although Christensen acknowledged that UN special
envoy Ibrahim Gambari likely would not have been granted access to Burma had it not been for the Chinese. The USG was
disappointed in Gambari's December visit, which China tends to label all such engagement as progress and call for more
patience in Washington. Christensen said Iran is an outlier in Chinese foreign policy; although China has signed three
UNSCRs, China still pursues large economic deals and sells conventional arms to Iran. Iran is exporting instability in a
part of the world of strategic value to the Chinese, summed up Christensen. We are trying to convince Beijing that its
actions toward Tehran are not helpful to China nor to the international community.
5. (C) The MFAT CEO asked if the North Koreans may be stalling in the Six-Party Talks until there is a new US
administration. DAS Christensen emphasized that if true, this would be a mistake. President Bush is fully supportive of
the Six-Party Talks process and has an excellent and experienced team in place. If North Korea is serious about
negotiating on this issue, the best time to do so is this year. Murdoch offered that the New Zealand Ambassador to South
Korea makes periodic visits to North Korea and he would ensure a similar message is passed at the next opportunity.
He noted that FM Peters went to Pyongyang late last year and would be willing offer ODA as a sign that countries like
New Zealand would be willing to normalize relations with New Zealand if there were sufficient progress in the Six-Party
Talks. Christensen responded that New Zealand's voice was important because there is an advantage to being a democracy
outside the Talks that can provide an independent analysis.
John McArthur said that New Zealand could also offer scholarship programs and exchanges for North Korean officials to
learn English. He reminded Christensen that many officials from the Vietnamese Foreign Ministry received English
language training in New Zealand in the 1980s.
MFAT Roundtable
6. (C) MFAT Deputy Secretary John McArthur chaired a GNZ interagency roundtable with DAS Christensen, opening the
meeting by characterizing the NZ-China FTA as the biggest step since the December 1972 establishment of diplomatic
relations between the two countries. New Zealand's profile in China will be raised as a result, continued McArthur, and
small countries like New Zealand need to take advantage of such opportunities in today's global environment. Following
the signing of the deal the same day (April 7), said McArthur, the government will launch outreach events in New Zealand
over the next several months to explain the agreement, address concerns, dispel rumors, and outline opportunities to New
Zealand businesses. The next procedural step will be to forward the agreement to Parliament; with the two main political
parties (Labour and National) supportive of the deal, it will go through, he added. New Zealand missions in key capitals
have briefed counterparts in foreign trade offices in Washington, Canberra, Brussels, Seoul and Tokyo.
7. (C) DAS Christensen explained that, to appreciate US-China relations, it is important to look at the improvements in
the relationship over time, and not as a snapshot. USG objectives are to shape China's choices -- both regionally and
around the world. The USG is not, he emphasized, trying to contain China. Christensen rehearsed his earlier observations
regarding specific countries (North Korea, Sudan, Burma, Iran), noting that China recently has shown a willingness on
important occasions to move away from its policy of non-interference in the domestic affairs of friendly governments
after seeing that such a policy does not always produce needed results for China's diplomacy.
8. (C) McArthur observed that Chinese economic growth is fueling military expenditures of a non-transparent nature, and
asked DAS Christensen to comment on China's emergence as a military power in the region and implications for Taiwan.
Christensen confirmed that the USG views with seriousness China's military buildup. China is developing forces that
could pose challenges to other forward deployed forces, he said. We would like to know much more than we do about these
deployments. Also unclear are the doctrinal shifts within the military that might be occurring as China acquires new
equipment. The USG response is to keep our own presence and alliances strong, continued Christensen, while increasing
military-to-military contacts and dialogue with China.
9. (C) Deputy Secretary McArthur said that China has been courting New Zealand in its military relations, offering
language training for New Zealand defense attaches, contacts at the Ministerial level, and exchange of ship visits. Such
contacts date to the late 1980s, but New Zealand is approaching China in a "clear eyed" sort of way, explained McArthur,
recognizing China's size but also the potential for Chinese behavior to "become ugly." It makes sense for New Zealand to
have contacts and remain plugged in, the Deputy Secretary continued, not that New Zealand necessarily sees a role for
itself. Christensen observed that New Zealand has had some genuine Chinese warfighters visit New Zealand and not just
the respectable faces Beijing deploys to western countries. McArthur responded that China uses Australia and New Zealand
as a "testing ground" for such visits.
10. (C) Moving to Taiwan, McArthur asked DAS Christensen to discuss next steps for Taiwan in its relations with Beijing.
Christensen observed that the recent Taiwanese elections provide the potential for a return to positive momentum in
areas such trade and tourism, and a degree of relaxation on the mainland could manifest itself. The Taiwanese public
rejected the referendum on applying to the UN under the name Taiwan, which should reduce the military threat to Taiwan,
and could make it possible for the United States and like-minded states to push more effectively for greater space for
Taiwan in international organizations. In response to a question as to how well China understands the countervailing
forces in Taiwan, Christensen said that there are some mainland officials who understand Taiwan much better than they
used to. John McArthur allowed that the Chinese Ambassador in Wellington came in on instructions following the March 22
election of Ma Ying-jeou. Although the Ambassador gave a reasonably stolid representation, said McArthur, Beijing was
clearly relieved at the results. One of the key points centered on China's continuing concern about the outgoing regime.
Christensen said that the USG position to Beijing regarding the recent Taiwanese elections is that it is best for China
to simply wait out President Chen Shui-ban's administration and to focus on the future administration in Taiwan. The USG
message is that Beijing's continued squeezing of Taiwan in the international arena only leads to a more confrontational
response by Taiwan's public.
11. (C) With respect to the Pacific Islands, MFAT's Stuart Horne noted that, with 8 countries recognizing Beijing and 6
countries linked to Taiwan, the battle lines are pretty evenly drawn. China's objective is to limit Taiwanese space in
the Pacific and a few million dollars can make a huge difference in countries where the population may be in the several
tens of thousands of people. McArthur added that China wants to be seen as a credible player in the Pacific, and New
Zealand tries to move Beijing to follow the Paris Principles with respect to aid and development. The increased numbers
of mainland Chinese and Taiwanese in the region have added to tensions, particularly in the Solomon Islands, he added,
but at least China recognizes that is acceptable to have a conversation on their role in the Pacific. In addition to
China and Taiwan, however, Cuba and Venezuela have entered the picture, remarked McArthur.
12. (C) DAS Christensen offered that the USG does not get involved in the sovereign state debate but cares very much
about its effect on undermining governance in the region; Undersecretary Henrietta Fore is planning to visit Beijing to
engage with the Chinese on assistance issues. The USG would like China to accept the Paris Principles and work
cooperatively with multilateral institutions, added Christensen. China is not well-organized internally on foreign
assistance and has a multitude of actors; the MFA is not in the lead.
13. (C) Deputy Secretary McArthur briefed DAS Christensen on recent discussions between New Zealand and China on Tibet.
He noted that had it not been for the deaths in Lhasa, the signing of the NZ-China FTA and associated bilateral dialogue
might have gone reasonably smoothly. There was strong pushback from the Chinese following the New Zealand Parliamentary
statement in which the Chinese used very personal language against the PM. The GNZ did not publicize it, but MFAT called
in the Chinese Ambassador to underscore New Zealand's unhappiness. Christensen offered that the problem will persist
until the Olympics unless Beijing decides to take positive action by reaching out to the Dalai Lama and having
discussions on religious freedom and greater Tibetan autonomy. The Dalai Lama actually has met all of Beijing's
conditions: he has consistently stated that he does not pursue independence, and he has rejected violence repeatedly,
said Christensen. McArthur noted that the Chinese have demonized the Dalai Lama in a very public way, which makes it
difficult to enter into a dialogue with him.
Discussion with MOD Assistant Secretary John McKinnon
14. (C) DAS Christensen and MOD CEO and Secretary John McKinnon (a former New Zealand ambassador to China) had a useful
exchange on New Zealand's mil-to-mil relationship with China. McKinnon said that there is a certain amount of "defense
diplomacy" but he's not certain it amounts to much substance nor provides great insights. Generally, the Chinese
approach New Zealand in tandem with Australia, he said, and there are two types of mil-to-mil contacts: high-level
visits by military leaders as well as conventional visits such as the Chinese ship visit of last year. New Zealand and
China participated in a search and rescue exercise in the Tasman Sea with Australia; it was not of profound importance,
observed McKinnon, but the fact that it took place at all was significant. Most of the senior GNZ defense officials have
been to China but the Secretary characterized these as standard tours. That said, GNZ contacts promote confidence
building and provide an opportunity for New Zealand to press China on transparency issues, but McKinnon stressed that he
would hesitate to say that there's more to the mil/mil relationship than that.
China's ability to mix with other countries more readily suggests a growing confidence level. He added that the People's
Liberation Army has asked New Zealand to send "more operational" people on staff exchanges; China is sending staff-level
officers so New Zealand is expected to reciprocate. McKinnon added that due to personnel limitations, a GNZ response
will be incremental.
15. (C) The US faces the same issue, noted DAS Christensen, who added that the Chinese sent to the US often speak in the
abstract; the conversation is too one-sided as the Chinese always want to quiz US operators on practicalities. The USG
is trying to establish better and more reciprocal mil-to-mil linkages, remarked DAS Christensen, who informed the MOD
official that the US would start a nuclear dialogue with China focused on the historical lessons of crisis management
involving nuclear powers; there would be no weapons-specific discussion in this dialogue. The US also conducts exercises
with the Chinese, and Christensen mentioned recent search and rescue operations in the South China Sea as well as off
the western US coast.
16. (C) McKinnon offered that the high-level Chinese military visits are carefully calibrated, and Chinese officials say
what they are permitted to stay within certain parameters -- there is not great insight as a result but occasional
frankness, he added. DAS Christensen observed that some of the Chinese military officials to visit New Zealand have been
military leaders with operational portfolios and genuine military knowledge. He added that recent visits to China by
senior PACOM officers have resulted in entry to some new sites and submarines, as well as agreement to establish a
defense hotline. McKinnon asked about Chinese reaction to the Pentagon's annual white paper on Chinese military
capability. Christensen responded that the reaction is always vitriolic, but expected by Washington; the Chinese realize
that it is a Congressionally mandated report and that we have no choice but to provide one on schedule.
17. (C) McKinnon asked about the spectrum of views within Washington regarding China policy. Christensen said that
within the interagency, there is good consensus that the USG needs to remain prudent and cautious; accusations that the
USG is trying to contain China are erroneous. Maintaining USG military strength is one factor in shaping China's choices
and is not at all at odds with the engagement strategy. McKinnon said that New Zealand's mil-to-mil relations with Japan
are also improving. DAS Christensen noted that China is concerned about encirclement, so pursues more improved bilateral
relations with Korea, India, and Japan. Any perceived enhancement of GNZ-GOJ relations will likely spur the Chinese to
respond in kind to the Japanese, offered Christensen, so New Zealand can play a positive role in encouraging better
Sino-Japanese relations by improving its own relationship with Japan.
18. (C) Responding to questions on Tibet, Christensen emphasized the importance of like-minded countries sending similar
private messages to Beijing, although he estimated a 20-30 percent chance of success in moving the Chinese government
towards a constructive dialogue with the Dalai Lama. Christensen characterized Beijing's vilification of the Dalai Lama
as a public relations nightmare. Some Chinese academics who are politically well connected with Chinese authorities
understand the situation; others, however, are unaware of the Dalai Lama's position on Tibetan issues because they have
only heard the Beijing propaganda, remarked Christensen. DAS Christensen allowed that the Chinese had exercised some
restraint in handling the riots in Lhasa, using water cannons and armored personnel carriers instead of sending in
tanks. Moving the Chinese to successfully address this issue in the lead up to the Olympics will be a challenge, both
DAS Christensen and McKinnon agreed.
Comment
19. (C) Despite the absence of a number of GNZ officials who had traveled to Beijing for the NZ-China FTA signing, DAS
Christensen nevertheless had a useful set of meetings, and addressed an audience hosted by the New Zealand Institute for
International Affairs (NZIIA). GNZ interlocutors greatly appreciated Christensen's overview of US policy towards China.
GNZ views track well with our own, and New Zealand officials agree that an engaged China is more likely to play a
positive role in the Pacific region as well as in global affairs. To that end, they will continue to be willing partners
in coordinating messages to Beijing on a range of issues, and New Zealand's new trade status with China ensures their
voice is heard. GNZ officials are realistic, however, as to how much weight is accorded to their views, but see
engagement as the best means of potentially influencing Chinese actions. All DAS Christensen's interlocutors underscored
a strong desire for the USG to play a role in the East Asia Summit (EAS), to which Christensen responded by noting that
USG engagement remains strong in the region and that the USG will continue to look for practical ways to engage
diplomatically with regional actors. End Comment.
20. (U) DAS Christensen has cleared this message.
KEEGAN
ENDS