NZ pausing funding to Cook Islands
Photo:
RNZ / Samuel Rillstone
Foreign Minister Winston Peters has announced New Zealand will pause funding to the Cook Islands, following a deal signed between the Cook Islands signed with China.
It comes on the eve of Prime Minister Christopher Luxon's meeting with Chinese President Xi.
In a statement, Mr Peters says funding for the Cook Islands will not resume until the island nation "take concrete steps to repair the relationship and restore trust".
RNZ Pacific's Caleb Fotheringham discusses the development with Kathryn.
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Scoop
12 minutes ago
- Scoop
Explainer: Why Has New Zealand Paused Funding To The Cook Islands Over China Deal?
Article – RNZ New Zealand has halted more than $18 million in development assistance to its realm country. But the island's prime minister said his government was 'aware' it was coming. Christina Persico, RNZ Pacific Caleb Fotheringham, RNZ Pacific , RNZ Pacific New Zealand has paused $18.2 million in development assistance funding to the Cook Islands after its government signed partnership agreements with China earlier this year. This move is causing consternation in the realm country, with one local political leader calling it 'a significant escalation' between Avarua and Wellington. A spokesperson for Peters said the Cook Islands did not consult with Aotearoa over the China deals and failed to ensure shared interests were not put at risk. On Thursday (Wednesday local time), Cook Islands Prime Minister Mark Brown told parliament that his government knew the funding cut was coming. 'We have been aware that this core sector support would not be forthcoming in this budget because this had not been signed off by the New Zealand government in previous months, so it has not been included in the budget that we are debating this week,' he said. How the diplomatic stoush started A diplomatic row first kicked off in February between the two nations. Cook Islands Prime Minister Mark Brown went on an official visit to China, where he signed a 'comprehensive strategic partnership' agreement. The agreements focus in areas of economy, infrastructure and maritime cooperation and seabed mineral development, among others. They do not include security or defence. However, to New Zealand's annoyance, Brown did not discuss the details with it first. Prior to signing, Brown said he was aware of the strong interest in the outcomes of his visit to China. Afterwards, a spokesperson for Peters released a statement saying New Zealand would consider the agreements closely, in light of the countries' mutual constitutional responsibilities. The Cook Islands-New Zealand relationship Cook Islands is in free association with New Zealand. The country governs its own affairs, but New Zealand provides assistance with foreign affairs (upon request), disaster relief and defence. Cook Islanders also hold New Zealand passports entitling them to live and work there. In 2001, New Zealand and the Cook Islands signed a joint centenary declaration, which required the two to 'consult regularly on defence and security issues'. The Cook Islands did not think it needed to consult with New Zealand on the China agreement. Peters said there is an expectation that the government of the Cook Islands would not pursue policies that were 'significantly at variance with New Zealand's interests'. Later in February, the Cooks confirmed it had struck a five-year agreement with China to cooperate in exploring and researching seabed mineral riches. A spokesperson for Peters said at the time said the New Zealand government noted the mining agreements and would analyse them. How New Zealand reacted On Thursday morning, Peters said the Cook Islands hadn't lived up to the 2001 declaration. Peters said the Cook Islands had failed to give satisfactory answers to New Zealand's questions about the arrangement. 'We have made it very clear in our response to statements that were being made – which we do not think laid out the facts and truth behind this matter – of what New Zealand's position is,' he said. 'We've got responsibilities ourselves here. And we wanted to make sure that we didn't put a step wrong in our commitment and our special arrangement which goes back decades.' Officials would be working through what the Cook Islands had to do so New Zealand was satisfied the funding could resume. He said New Zealand's message was conveyed to the Cook Islands government 'in its finality' on 4 June. 'When we made this decision, we said to them our senior officials need to work on clearing up this misunderstanding and confusion about our arrangements and about our relationship.' Prime Minister Christopher Luxon is in China this week. Asked about the timing of Luxon's visit to China, and what he thought the response from China might be, Peters said the decision to pause the funding was not connected to China. He said he had raised the matter with his China counterpart Wang Yi, when he last visited China in February, and Wang understood New Zealand's relationship with the Cook Islands. Concerns in the Cook Islands Over the past three years, New Zealand has provided nearly $194.6 million (approximately US$117m) to the Cook Islands through the development programme. Cook Islands opposition leader Tina Browne said she was deeply concerned about the pause. Browne said she was informed of the funding pause on Wednesday night, and she was worried about the indication from Peters that it might affect future funding. She issued a 'please explain' to Mark Brown: 'The prime minister has been leading the country to think that everything with New Zealand has been repaired, hunky dory, etcetera – trust is still there,' she said. 'Wham-bam, we get this in the Cook Islands News this morning. What does that tell you?' Will NZ's action 'be a very good news story' for Beijing? Massey University's defence and security expert Anna Powles told RNZ Pacific that aid should not be on the table in debate between New Zealand and the Cook Islands. 'That spirit of the [2001] declaration is really in question here,' she said. 'The negotiation between the two countries needs to take aid as a bargaining chip off the table for it to be able to continue – for it to be successful.' Powles said New Zealand's moves might help China strengthen its hand in the Pacific. She said China could contrast its position on using aid as a bargaining chip. 'By Beijing being able to tell its partners in the region, 'we would never do that, and certainly we would never seek to leverage our relationships in this way'. This could be a very good news story for China, and it certainly puts New Zealand in a weaker position, as a consequence.' However, a prominent Cook Islands lawyer said it was fair that New Zealand is pressing pause. Norman George said Brown should implore New Zealand for forgiveness. 'It is absolutely a fair thing to do because our prime minister betrayed New Zealand and let the government and people of New Zealand down.'
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33 minutes ago
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Primary sector firmly on China agenda despite education and tourism focus
Despite China's economic slowdown, primary producers are holding onto value by offering premium products that appeal to a Chinese middle class focused on health and wellness. Prime Minister Christopher Luxon has touched down in Shanghai as China's booming economic growth is slowing. China is New Zealand's largest trading partner and took $21.5 billion of New Zealand exports in the year to March. Two-way trade totalled $39.1b during that same period. Luxon says there's still a lot of economic opportunity in the market. But some have described New Zealand as reaching 'peak China' and should look elsewhere amid a softening Chinese market, while others continue to warn of overexposure in some areas of primary exports. Ahead of this trip, which kicks off with two business-focused days in Shanghai, followed by the politics and foreign diplomacy in Beijing, Luxon told Newsroom his main objective was to help boost the lagging tourism and education markets. Though China is New Zealand's largest source of international tourists and third-largest tourism market, those numbers were still lagging behind pre-Covid levels. If Luxon were able to help New Zealand get 'share of mind' in those areas and help remove any policy barriers, then it'd be a success. Among the 28-strong business delegation were a strong contingent of tertiary education leaders, including Victoria University of Wellington and Te Pūkenga, as well as Tourism NZ, Māori Tourism and other organisations with tourism wings, such as Ngāi Tahu Holdings. And though the three-day programme would no doubt include visits to universities and tourism-focused events, the primary sector would also be a core part of the Prime Minister's agenda for the week with dairy, meat and produce-focused events. 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Zespri – the umbrella brand selling New Zealand kiwifruit around the world – has been exporting to China for 26 years, and in earnest for the last two decades. The last 10 years has seen a rapid rise, thanks in large part to the expansion of China's middle class. Now, Zespri is selling about 22 percent of its kiwifruit into China, accounting for 27 percent of the brand's global value. Chair Nathan Flowerday told Newsroom that although Zespri was a global brand, China was an important market. But that didn't mean there weren't challenges facing primary producers as they faced the country's economic slowdown. The primary sector food and fibre exports accounted for $17.9b of New Zealand's goods shipped to China, but a slowdown in economic growth meant prices were softening and middle-class consumers were needing to be more selective with how they spent their money. Beyond the slowing economic growth, the Chinese Government had also proven it was not above using economic coercion to hit back at countries making diplomatic statements or actions it didn't like. Though Australia had been hit hard by this in the past, New Zealand had only suffered isolated suspected cases of shots across the bow, including limited shipments of goods sitting at China's ports and a government safety notice to tourists travelling to New Zealand. Both came in the wake of the Huawei saga during the Jacinda Ardern administration, and in both instances the government denied they were in retaliation for New Zealand's refusal of Huawei 5G infrastructure. But the possibility China could pull that lever in the future underscored an added need for the export sector to diversify away from China, as well as maintaining a strong diplomatic and leader-to-leader relationship. In 2016 Zespri was caught up in a short-lived diplomatic spat over an investigation into the dumping of Chinese steel. Media reported that Zespri's China representative was warned by Chinese officials that New Zealand could face economic retaliation if New Zealand went ahead with the investigation. Trade Minister Todd McClay was trade minister then too, and apologised to the Prime Minister for not being better briefed about China's threat of trade retaliation. Flowerday said Zespri was well insulated against these possibilities. In regard to the potential for a diplomatic blowback, he said it was up to the Government to make its decisions. But Zespri's focus was on building strong relationships within China. 'China is no different to any other market that we treat with transparency and respect … to make sure that we've got really clear, open communication channels with our partners in the market. I mean, that's the best that we can do.' 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Another food producer looking to find innovative ways to set itself apart was Rockit – a company that produced 'snack-sized' apples. Rockit Global chief executive Grant McBeath said China was a key market, with growth in China reaching more than 50 percent per year. This trip represented a significant opportunity to grow brand recognition, build trust and accelerate growth, he said. While on the ground, Rockit would sign a partnership deal with Chinese fruit store chain Xian Feng, which had 2000 stores across the country. But having a coveted brand didn't come without challenges. Zespri has been involved in a legal stoush in recent years, after clippings of its Sun Gold kiwifruit were stolen and taken to China. The company that took the clippings was ordered to pay $12m in reparations, but didn't have the money to do so. Since then, Sun Gold – or 'G3' – kiwi have been grown locally. And in some cases, the local growers have slapped counterfeit Zespri labels on the fruit. Earlier this year, a counterfeiter of the Zespri kiwifruit labels was sentenced to jail for more than three years for their part in the brand fraud scheme. Flowerday said it was monitoring the growing of the G3 kiwifruit in China, because there was a risk some of this fruit could make its way into Zespri's distribution channel. There could be an opportunity in the future to partner with local growers, he said, but they'd first have to ensure the fruit was up to Zespri's safety and quality standards. The brand employs about 100 people in-country, which allows them to keep their finger on the pulse, properly understand systems and ensure connections are forged with the right people. Building relationships on the ground was key to success in any market, Flowerday said, but especially in China. 'It's all about respect.' And showing up. Last year, during his first 12 months as chair, Flowerday travelled to China four times. In the last decade, he's been there more than a dozen times. Though trips like this were an opportunity for well-established and new businesses to get a better feel for the local market, travelling together as a group on the Air Force Boeing-757 also allowed New Zealand businesses to connect and learn from each other – what's working, what's not, what trends are being established. It also allowed them coveted photo opportunities at deal signings and announcements with the Prime Minister. 'Being part of the New Zealand team, going up there, it's always just a great privilege,' Flowerday said.
1News
34 minutes ago
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Luxon heads to Beijing as Cooks aid pause news breaks
Prime Minister Christopher Luxon has wrapped up his Shanghai visit, and said $871 million of commercial agreements were signed today between New Zealand businesses and their Chinese counterparts. He is now headed for Beijing, where he is set to meet with China's president Xi Jinping, and other leaders from the country. Earlier today, it was announced New Zealand has paused nearly $20 million in development assistance to the Cook Islands over its recent dealings with China. Trade delegation bound Beijing for a meeting with President Xi Jinping and Premier Li Qiang (Source: 1News) But before departing Shanghai, the Prime Minister said New Zealand's trade relationship with China is "one of our most important" with two way trade "exceeding NZ$39 billion" in the year ending March 2025, which accounts for "more than 20%" of New Zealand's total goods and services exports. ADVERTISEMENT Watch more on the timing of the Cook Islands support pause on TVNZ+ He said the agreements signed today is "a clear sign of strength and momentum in our trade relationship". (Source: Prime Minister's Office) "We also announced we would be making it easier for Chinese nationals to transit via New Zealand by removing the need to get a transit visa, instead being able to get a New Zealanders Electronic Travel Authority (NZeTA), significantly cutting costs and time for visitors." 'This resulted in one of the major announcements in Shanghai, that China Eastern Airlines was launching twice weekly flights to South America via Auckland.' In Shanghai, Luxon was joined by New Zealand business leaders across the food and beverage, health and wellbeing, education and tourism sectors, along with Ministers Louise Upston and Mark Mitchell. 1News Pacific correspondent Barbara Dreaver unpacks the withdrawal of aid funding due to dealings with China. (Source: 1News) ADVERTISEMENT During the Shanghai trip, Luxon participated in a livestream event with Upston, which he said was watched by over 10 million people, to promote New Zealand travel offerings. He also visited Fudan University, one of China's most prestigious academic institutions, to "promote New Zealand as a destination for world-class research, study, and partnership". Luxon then met with Shanghai Party Secretary Chen Jining to discuss Shanghai as a gateway for a high proportion of New Zealand goods, services and people-to-people flows, and other bilateral issues. Luxon's trip to China has come amid global uncertainty, amid the escalating conflict between Iran and Israel. After his meetings in Beijing, the Prime Minister will then go to Europe to undertake bilateral visits in Brussels and the Hague, and take part in the NATO summit.
