An official from the Trump administration tells Reuters the U.S. president will seek quick progress toward a bilateral trade agreement with Japan in place of the Trans-Pacific Partnership deal he abandoned this week. Graham Mackay reports.
DONALD Trump may have made his worst decision so far in choosing to wage a verbal war on Australia.
The battle lines were drawn via his rude phone conversation with Malcolm Turnbull before he revealed plans to tear up the 2005 free trade agreement between the countries.
“The humiliation of Turnbull through [White House press secretary Sean Spicer’s] mispronouncing of his name and calling him the president of Australia showed the esteem they hold for other countries,” Dr Jeffrey Wilson from the Perth US Asia Centre told news.com.au. “Since World War II we’ve been a close ally. We need to look at who else we can have a relationship with — principally China, but also Japan, Indonesia and Korea all present economic opportunities.
“We always looked to the US because we’ve been allies for a long time, they’re trustworthy. Now America is so obnoxious it’s time for change.”
Dr Wilson, whose report on trade in the Asia-Pacific under Mr Trump will be published next week, said it was time to think seriously about building ties elsewhere.
WILL TRUMP TEAR UP THE US-AUSTRALIA TRADE DEAL?
He’s already ditched the Trans-Pacific Partnership, called the North American Free Trade Agreement the “worst deal ever” (presumably aside from the refugee deal with Australia) but many doubt he would follow through on abandoning lucrative trade links.
Foreign Minister Julie Bishop dismissed the idea Mr Trump would follow through on his plan to tear up our trade agreement during her dinner with Chinese Foreign Minister Wang Yi on Tuesday, since the terms are so favourable to the US.
But Dr Wilson said the billionaire businessman showed no sign of backing down from his “blind adherence to silly campaign promises that hurt everyone”.
At the time the deal between Australia and the US was made, there was criticism that it didn’t do enough for Aussies, in terms of access to US markets for agricultural products, for example.
The deal is one of the few agreements in which the US runs a trade surplus, so it would be surprising if Australia was in the firing line “if insanity prevails and he starts trade wars.”
Dr Wilson points out that if no country agreed to deals in which they had a deficit, there would be no deals made. “Trade is a lot more than deficit and surplus,” he said. There are other potential important advantages in terms of investments and imports of cheaper products.
“Trump’s base is the white working class, he picks up on this idea you don’t have jobs because they’ve gone to Mexico and China. He’s committed to doing something that at least looks symbolic.”
But much of the work done in these countries is unlikely to swing back to the US, Dr Wilson argues. “Big W and Target are a sea of cheap plastic products. The assembly of these would earn you 50 cents to a dollar an hour. There’s no way anyone in a Western country could afford to live on that.
“This argument we need to bring jobs back home — a lot have been taken by robots, not gone overseas.
“He’s promising something he can’t deliver.”
WHY A TRADE WAR COULD SPELL DISASTER
If Mr Trump does rip up trade agreements with ten other countries he has identified, the damage to nation like China would have a ripple effect for Australia.
“Thirty per cent of our exports go to China,” said Dr Wilson. “If it goes down along with the attached ecosystem there would be a problem there.”
If one country were to decide it is above international trade law, every country that does abide by the law could start a trade battle.
“There’s a risk that spirals out of control, like during the Great Depression.”
That would be a “disaster for Australia”, says Dr Wilson, as a small country for which trade and foreign investment are a vital part of the economy.
Just the threat of such an outcome means the government will be looking at contingency plans.
TRUMP ‘NOT A TRUSTWORTHY PARTNER’
Whether the trade deal is renegotiated or not, the President has sown a seed of doubt with Australia that could see the nation switch alliances to focus more on Asia in a major blow for the US.
“A lot of this election stuff, people didn’t think would happen,” said Dr Wilson. “Really office has not curtailed the idiocy. Maybe no one’s ever going to wake up.”
America is important to Australia for export, but it might not be the end of the world if we had to find new partners. And this is already happening.
Mr Wang’s visit this week is a clear attempt to capitalise on the President’s perceived failings and present China as — incredibly — a steadier alternative to the US. We regularly trade minerals and agricultural products, but there are many other avenues to explore.
“If [Mr Trump] does try to stop us exporting products, we might go to other countries, primarily China but also Indonesia, Bangladesh, Pakistan,” said Dr Wilson. “Australian ministers go overseas a lot and will be more focused on Asian countries that are reliable and honest. Trump is none of those things.
“The US under Donald Trump is not a reliable or trustworthy partner, he is capricious. He has no regard for international law.
“This is China going to all these countries Trump has pissed off and saying, we’re reliable and respectful. This is a charm offensive and it will only intensify.”
With the US President skipping the charm entirely, it might just work.