It’s not just ‘fake news’ media lining up against Donald Trump, world trade experts are warning Australia about the fallout from the President’s protectionist policies.
Australia exporters including dairy and grain are expectantly eying the recently renegotiated Trans Pacific Partnership, despite the US’ absence.
But University of Adelaide George Gollin Professor of economics Kym Anderson argues the outcome from the biennial meeting of the World Trade Organisation (WTO) in December told a “pretty disappointing story”.
“Australia takes the view the best way to improve its trade standing is through the WTO, where we can get agreement among all countries, so you can negotiate once and get a global outcome,” he said.
Mr Trump is a strident critic of the WTO and the US threw its weight to hold up negotiations over future trade deals and blocked the appointment of Appellate Judges to the WTO’s dispute resolution body, creating a logjam of bickering nations.
The President has a very shallow understanding of how trade works, and he doesn't seem to understand that imports aren’t a bad thing for an economy
- Professor Vince Smith
The US withdrew from the Trans Pacific Partnership (TPP) last year and Mr Trump is flirting with an exit from the North American Free Trade Agreement (NAFTA).
However, on the domestic front, a president’s influence on domestic subsidies and price regulation is buried under the weight of lawmakers in Senate and House ag committees who control the US Farm Bill - and routinely in favour of the partisan interests of their states.
Australia is lobbying Mr Trump to back away from his protectionist policies, but Malcolm Turnbull recently said he did not expect the US to join the TPP “anytime soon”.
“We're certainly not counting on it. It would be great if they did, it is a real engine for jobs, for investment.”
Mr Anderson spoke at the Australasian Agricultural and Resource Economics Society’s conference in Adelaide this week.
“The alternative is time-consuming regional bilateral negotiations. But the risk is that the next day another county comes along, signs another agreement and all our benefits are diluted,” he said.
The US may yet be tempted to sign up and gain its slice of the long-awaited deal between 11 Asian and South American nations, expected to be confirmed in March.
“There are several options which the US could take. It could join under the terms of the current arrangements, but it’s likely Trump would want to dictate terms,” Mr Anderson said.
“There is also the prospect China may look to join the TPP, which would be a great achievement in its own right, and that might frighten the US into joining.
“If China joins there might be some losses to existing preferential trade arrangements, but overall it would be a great gain for our economy.”