C O N F I D E N T I A L SECTION 01 OF 05 WELLINGTON 000140

SIPDIS

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STATE FOR EAP/ANP; EEB PLEASE PASS TO USTR

E.O. 12958: DECL: 04/14/2018
TAGS: ETRD PHUM PREL NZ
SUBJECT: DAS CHRISTENSEN'S MEETINGS WITH GNZ ON THE
NZ-CHINA FTA, TIBET

REF: WELLINGTON 121

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

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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 wi

th 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

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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.

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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

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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

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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.


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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