President Trump signs an executive order to withdraw from the TPP
by James O’Neill*
The policy bankruptcy of the present Australian government has been exposed again with its reaction to the signing of an executive order by US President Donald Trump to withdraw the US from participation in the Trans Pacific Partnership (TPP).
They could not argue that they were not warned. In the course of the election campaign, all three of the major contenders, Hillary Clinton, Bernie Sanders and Donald Trump, had expressed their opposition to the treaty.
After Trump was elected he repeated his vow to scrap US participation. Australia’s Prime Minister Malcolm Turnbull clearly did not believe him, claiming that historically, US Presidents had spoken against free trade only to change their minds when once in office.
That stance betrayed a number of traits that characterize this government. Most obviously, Turnbull thought that others were like himself: express one view only to repudiate it or ignore it once elected. The message that voters are sick of this type of behaviour has apparently not yet sunk in.
Secondly, there was a fundamental dishonesty in claiming that the TPP was a gold-plated trade deal that would ensure Australia’s future prosperity. It never was a trade deal. Only 7 of its 29 chapters actually dealt with trade. As to being the magic key to future prosperity the World Bank calculated that it would add 0.4% to Australia’s GDP by 2030. Not per year: in total. That is about as much as the Australian economy has grown by each quarter on average over the past thirty years.
Similar research in the United States shows a comparable scale of net benefit between 2017 and 2025.
Thirdly, the reaction further reinforced the image of this government’s inability to treat the electorate like adults, notwithstanding Turnbull’s promise when he replaced Tony Abbott as Prime Minister to engage in a mature adult dialogue.
Former President Obama was much franker with the American electorate. Explaining why the United States was leading the way under his administration for the TPP, he acknowledged that if “we didn’t make the rules, China will.”
If the TPP was not primarily a trade deal, then what was its true purpose? The evidence is overwhelming that it was an instrument of American policy designed first and foremost to maintain American hegemony in the Asia-Pacific region.
The underlying policy objective was to restrain and hinder the rapidly growing dominance of China in the region and elsewhere. An identical motive was the driver behind the European equivalent of the TPP, the Transatlantic Trade and Investment Partnership (TTIP). The two agreements excluded China and Russia respectively.
This reveals the fourth element related to Turnbull and Trade Minister Ciobo’s response to Trump’s actions. The two insist that the TPP can proceed, with China and Indonesia replacing the United States.
One seriously questions what parallel universe Turnbull and Ciobo are occupying. The Australian government has just spent the last seven years negotiating a treaty that was specifically designed as part of an anti-China policy. This is despite the fact that China is by a considerable margin Australia’s largest trading partner.
Australian prosperity over the past thirty years has been built upon essentially digging holes in the ground and then selling the products extracted thereof to China.
Turnbull may think that he can use China as an off-course substitute, but that is not the Chinese way of doing business. The reaction therefore betrays another fundamental weakness in Australia’s approach to Asian relationships. It is a failure to understand that the Anglo-American thought culture and its associated behaviour carries no weight at all in dealing with Beijing.
The magical thinking permeating Australia’s approach to its Asian trading partners is further exemplified by Australia’s conduct in the international arena. At the same time that Australia was negotiating its anti-China TPP agreement, it was adding further provocations by joining with the Americans in its reckless behaviour in the South China Sea.
That US Secretary of State nominee Rex Tillerson in telling his confirmation hearing that China would be prevented from accessing the artificial islands it has built in the South China Sea personified that recklessness. The White House press spokesman reiterated that stance on Tuesday.
That extraordinary statement appears to enjoy the support of the Australian government. It may come as a surprise to Turnbull, Julie Bishop and others, but blocking access to those artificial islands amounts to an act of war. Do they even begin to realise the disjunction between expressing a desire that China will replace the US as a partner in a revamped TPP and at the same time endorsing what amounts to an act of war? One suspects not.
While Turnbull continues his ridiculous posturing China steadily consolidates its role as the world’s number one economy (on a parity purchasing power basis). It is doing so in part by constructing the world’s largest ever infrastructure program, the One Belt, One Road (OBOR) initiative that was announced in 2013.
China is also pioneering technology in ways that Australians are barely aware of, through for example, radical innovation initiatives in Shenzhen, the “hardware capital” of the world.
The piece de resistance however, has been the construction of a series of alternative trade and development frameworks and their associated financial structures. These form part of the OBOR network spanning three continents.
These alternative trade and investment structures include the Shanghai Cooperation Organisation (SCO), which since its inception in 1996 has grown into what is arguably the world’s most important regional grouping. Its member, associate and dialogue states just happen to produce all of the minerals that Australia has grown rich on supplying to China. Their products are available furthermore, by high-speed rail links unhindered by such US-Australian provocations as blocking of the Malacca Strait (Operation Talisman Sabre).
Another Chinese proposal is the Regional Comprehensive Economic Partnership (RCEP), which links the 10 ASEAN nations plus China, Japan, South Korea, New Zealand, and Australia. Although founded in 2012 it has effectively been on the back burner and only now enjoying a modest resurrection in the Australian media because of the demise of the TPP.
The latest initiative, again launched by the Chinese in 2014, is the Free Trade Area of Asia and the Pacific (FTAAP). This has been completely ignored by the Abbott and Turnbull governments. If Turnbull was serious about wanting China in a group trade deal then this is the obvious vehicle. The indifference of the government demonstrates their lack of sincerity.
Instead of pouring resources into developing the RCEP and FTAAP and thereby creating mutually beneficial trade arrangements in our nearest and most important trading partners, we are being treated to the delusional fantasies that bedevil Australian foreign and trade policies.
Australians risk waking up one morning and finding that the Asian-Pacific region has passed them by, and with it the opportunity to be an integral part of the world’s most dynamic and innovative region.
We will be left to dream of what might have been if only we had a government with the integrity, intellectual honesty and foresight to see the world as it really is.
*Barrister at Law. He may be contacted at email@example.com
Photo credit - Toronto Star