Trump victory could spark New Zealand rethink at APEC in Peru

Donald Trump’s sweeping election victory has set the stage for this year’s APEC summit in Peru.

At least 14 leaders have so far confirmed their attendance at the leaders’ summit in Lima from November 15-16. China’s Xi Jinping, Japan’s new Prime Minister Shigeru Ishiba and Canada’s Justin Trudeau will all be in Peru – as will New Zealand’s Prime Minister Christopher Luxon.

Peru is a particularly enthusiastic Asia-Pacific Economic Cooperation (APEC) forum member and is hosting events for the third time since it joined in 1998. The 2024 meeting shares one important parallel with previous APEC gatherings held in Peru in 2008 and 2016: it will directly follow a US election that brought a new President into the White House.

Donald Trump’s overwhelming win and the economic plans for his upcoming term – which include general global tariffs of 10-20 per cent, with a 60 per cent tariff on Chinese goods – will invariably dominate sideline conversations throughout APEC leaders’ week.

For New Zealand, APEC might be the beginning of a rethink of its wider approach that has sought to align Wellington more closely with Washington. The shift has brought New Zealand to the cusp of joining Pillar II of the AUKUS defence pact that currently involves Australia, the United Kingdom and the United States.

Trump’s return to the White House may mean everything is now back on the table.

A year after taking office, Christopher Luxon has yet to visit China – and neither has Winston Peters, New Zealand’s foreign minister. Peters is also expected at APEC, as is Chinese foreign minister Wang Yi. It will be interesting to see how the New Zealand ministers interact with their Chinese counterparts during their time in Peru.

For China, New Zealand’s biggest trading partner, APEC will be a chance to showcase an alternative and very much pro-trade vision. While in Peru, Xi is set to inaugurate a new Chinese-backed megaport in Chancay, some 80 kilometres north of Lima.

Chancay will be a gamechanger for Peru, but its impact will also be felt further afield. From opening, the port will be able to accommodate new megaships carrying up to 18,000 twenty-foot equivalent container units (TEUs). Future expansion will upgrade capacity to 24,000 TEUs. For comparison, the biggest container ship ever to call in New Zealand carried 11,294 TEUs.

The aim is for Chancay to become a transhipment hub for much of Latin America.

For New Zealand, the new ‘go big or go home’ mentality of global shipping could be a major opportunity to become a new air, sea and services hub. In 2021, a report for the New Zealand China Council estimated the direct economic benefits of a potential ‘Southern Link’, taking advantage of New Zealand’s location half-way between Asia and Latin America, could total $NZ1.87 billion over its first decade.

Back in Lima, APEC’s 35th anniversary summit is a chance for some reflection. Against a backdrop of geopolitical polarisation, the bloc’s unusual inclusivity (a product of post-Cold War optimism) is now a major selling point. The group’s 21 members from around the Pacific Rim include both China and Taiwan, along with Japan, Russia and the United States.

The pay-off from APEC has been substantial for Wellington. Collectively, APEC economies represent 38% of the world’s population and more than 60% of global GDP.

Arguably, the biggest single success has been the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade deal between 11 countries that are all also APEC members. The CPTPP has its origins in bilateral talks held between Singapore and New Zealand on the sidelines of the APEC gathering in Auckland in 1999. Chile and Brunei then made it the P4, before other APEC members became interested, ultimately leading to the CPTPP that entered into force in 2018.

For New Zealand, the CPTPP has opened up traditionally protectionist markets such as Canada and Japan. It also almost gave New Zealand lucrative free trade access to the United States – but Donald Trump withdrew from the pact upon taking office in 2017.

APEC has also helped smaller members like New Zealand to build stronger ties with Latin America. Mexico, Chile and Peru all joined APEC in the 1990s, before a moratorium on new members put a halt to further expansion. All three are also in the CPTPP.

But as APEC begins in Peru, there is a sense that New Zealand’s ties with Latin America have never quite lived up to their full potential. While New Zealand enjoys $NZ3 billion of two-way trade with Latin America, just a single direct airlink connects the two continents – a six-weekly flight to Chile from Latam Airlines. A short-lived second service from Air New Zealand to Argentina was suspended in 2020 and never resurfaced after the pandemic.

At the political level, New Zealand’s focus on Latin America has been inconsistent. On the positive side, New Zealand became an observer to the ‘Pacific Alliance’ grouping of Chile, Colombia, Mexico and Peru in 2012 and began negotiations on a free trade agreement with the bloc in 2017. And when Peru last hosted APEC in 2016, New Zealand could be relied upon to send ministers and officials to key meetings of trade and finance ministers that come earlier in the full-year calendar of APEC events.

This time around, land information minister Chris Penk was dispatched to May’s trade ministers’ gathering – and apparently no New Zealand minister at all went to the finance ministers’ meeting held last month.

The apparent reduced commitment so far in 2024 is somewhat disappointing, especially since New Zealand itself knows how important APEC can be. A founding member since 1989, Wellington itself last hosted APEC in 2021 and pulled out all the stops to make the event a success, despite the Covid-19 pandemic forcing a switch to a virtual format.

Then there is last month’s unfortunate closure of the Latin America Centre of Asia-Pacific Excellence (CAPE) – New Zealand’s only real centre of academic capability for the continent. The decision to shut the Latin America CAPE was made by the outgoing Labour Government in 2023. But the move was not reversed by Luxon’s centre-right coalition, even though it was a National Party-led government that had established the centre in 2017.

More optimistically, New Zealand is at least planning to attend in full force in Lima this month.

In addition to Prime Minister Christopher Luxon and foreign minister Winston Peters, trade minister Todd McClay is also expected in Peru. For all three ministers, APEC will be a chance to meet more of their counterparts. And for the Prime Minister, a chance to shake hands with China’s Xi Jinping beckons.

Luxon has made infrastructure a key focus of his domestic programme. At the international level, the new opportunities from the Southern Link proposal and the Chancay port could be attractive. Immediately prior to APEC, McClay is leading a trade delegation to the China International Import Expo (CIIE) in Shanghai.

In terms of Latin America, the Peru trip will complement a visit by McClay to Brazil in October, when the trade minister attended a G20 trade and investment ministerial meeting as an invited guest. Elsewhere in Brazil, McClay was accompanied by Auckland mayor Wayne Brown, who promoted the Southern Link concept and the idea of a new flight via Auckland linking São Paulo with China.

Donald Trump’s comprehensive US election victory will be firmly on the minds of leaders who are heading to Peru. As Trump looks set to steer the United States in a more protectionist direction, this year’s APEC will be a reminder that there are plenty of worthwhile options to do business elsewhere.

APEC could unlock a world of fresh and exciting opportunities, particularly when it comes to New Zealand’s ties with Latin America.

The summit in Peru could also see Wellington reenergise its engagement with Beijing.

And as Donald Trump prepares to re-enter the White House, it may also prompt a reassessment of New Zealand’s overall foreign policy trajectory.

—

Geoffrey Miller is the Democracy Project’s geopolitical analyst and writes on current New Zealand foreign policy and related geopolitical issues. He has lived in Germany and the Middle East and is a learner of Arabic and Russian. He is currently working on a PhD at the University of Otago on New Zealand’s relations with the Gulf states.