NZ’s Luxon Says Rules-Based Global Trade Order Is Challenged

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(Bloomberg) — New Zealand Prime Minister Christopher Luxon said the global trading environment has changed substantially since the pandemic and the rules-based system that served nations well over many decades is increasingly under threat.

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“I think there’s three big shifts that are happening” Luxon told Bloomberg Television Saturday at the Asia Pacific Economic Cooperation meeting in South Korea. 

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“We’re seeing a shift from rules to power; we’re seeing very much a strong connection between economics and security; and the third thing we’re seeing is a lot more national resilience rather than globally connected supply chains,” he said. “So there’s no doubt about it, the rules-based system that has served us well for 70 to 80 years is challenged.” 

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Luxon’s comments echo those of Canadian counterpart Mark Carney, who said at the same meetings that “the old world” of rules-based trade and investment “is gone.” Both nations are seeking to increase trade and security links in Asia as US President Donald Trump’s protectionist policies re-write the playbook.

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“As a small trading nation, as we want to do business with as many people as possible, as many places as possible,” Luxon said. “And so our real focus as a new government has been an Indo-Pacific reset.” 

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He cited free-trade talks with India and Gulf nations, as well as a plan to boost links between Europe and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free-trade pact between 12 nations including New Zealand, Japan, Canada and Australia.

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Canada is also aiming to develop ties across the region as its relationship with the US worsens, seeking to finalize a free-trade deal with the 11-member ASEAN bloc and double exports to markets outside the US over the next decade. Carney is also boosting defense ties with the region, signing a defense cooperation agreement with South Korea and touring the shipyard of Hanwha Ocean Co., one of the two final bidders to build as many as 12 submarines for Ottawa.

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On the defense front, “a big focus for us has been to make sure that we are totally interoperable” with Australia, Luxon said. “Our only ally is Australia and it makes sense for us to be a force multiplier for what they’re doing, and for us to be as synergistic as possible.” 

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That push for alignment with Canberra looks to also be leading to deeper defense ties with Japan, with the New Zealand Defense Minister Judith Collins telling her Japanese counterpart that her nation was interested in the Japanese built Mogami-class frigate at a meeting in Kuala Lumpur over the weekend, according to Japanese media. 

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The Australian navy has already decided to purchase 11 of the ships, and the head of the New Zealand Navy also expressed interest in the ship in a recent visit to Tokyo, according to local media.

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While Luxon wouldn’t comment on the likelihood of New Zealand also buying the ships to replace aging ANZAC-class frigates, he emphasized that his country is already expanding its defense relationship with Japan and extolled a “fantastic” meeting with new Prime Minister Sanae Takaichi at the APEC meetings last week. 

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For New Zealand, the “Indo-Pacific region is both where prosperity and security sits,” and those two things “are inextricably linked,” Luxon said. “You can’t have one without the other. They are mutually dependent on each other.”

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—With assistance from Andy Clarke.

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