Over the past few days Malcolm Turnbull has desperately tried to breathe life into the TPP. Donald Trump’s YouTube message this week made it pretty clear that this has all been in vain. It’s dead.
What should be of more concern to our Prime Minister is the risk of a trade war erupting next year between the United States and China, prompted by the President Elect’s plan to impose a 45 per cent tariff on all Chinese goods coming into America. That would be a disaster for Australia and the whole world. Former Reserve Bank board member Warwick McKibbin has done modelling for the World Bank that indicates it could reduce economic growth in Australia by 5.6 per cent and plunge us into recession.
Instead of picking puerile fights with Labor on trade and foreign affairs Malcolm Turnbull should be a bit more focused on this. Even better, he could use the mobile phone number The Shark gave him to help avert it.
Labor doesn’t need a lecture from Malcolm Turnbull about trade. When it comes to trade we have the runs on the board. The average Australian family has an extra $3,900 in their pocket every year because of the tariff cuts and trade reforms we implemented in the 1980s and 1990s. That’s the conclusion of the Centre for International Economics.
They weren’t popular. Tariff cuts never are. They cost us votes. Through the rose coloured glasses of history we tend to think they were obvious and easy. They weren’t. As Paul Keating remembered last year:
“The hard part was persisting with the cuts politically, particularly during the worst years of the recession, when any other government would have walked away from them.”
We are lucky he did. It saved us from becoming the banana republic he talked about or what the late Prime Minister of Singapore Lee Kuan Yew warned we might become: the poor white trash of Asia.
Our economy is now three times the size it was in the 80s. We became more productive and more competitive. New businesses and new jobs were created. Real wages went up. Living standards went up. Unemployment fell and our economy has grown every year for the past 25 years. Better than any other country in the world.
That’s our record. Everything the Liberals have done in trade pales in comparison.
We are a trading nation. Trade is the key to our success. It always has been. Selling everything from gold to wool to wheat to iron ore. In 2016 that also includes things like education, LNG and professional services. And the biggest market for all of this is just above us.
We sit on the edge of the fastest growing region in the world. By 2030 Asia will be the home of three billion middle class consumers. What’s in the pockets of the average Australian family in 20 years time will depend on how successful we are in getting our fair share of this massive market.
Free Trade Agreements (FTAs) are part of this. Labor supports high quality FTAs that put Australian workers, businesses and farmers first. Indonesia and India are the next cabs off the rank. Both are very important. Two-way trade with both of these countries at the moment is massively underdone.
Region-wide FTAs can also do more than just improve market access and cut tariff and non-tariff barriers. Done right, they can improve security and stability in our region by binding the economies of the big powers of the Asia Pacific further together.
That was one of the weaknesses with the TPP. It included the US but not China. It was part of the Obama Administration’s pivot or rebalance to Asia. A demonstration by the United States to the smaller countries of Asia of its commitment to our region.
Unlocking the full potential of the rise of the biggest middle class the world has ever seen requires peace and stability. And that requires more than just US engagement in Asia, it requires the United States and China at the same table, working together. Neither feeling excluded, contained or disadvantaged. And neither imposing new tariffs on the other.
Malcolm Turnbull could play a positive role in convincing Donald Trump that slapping a 45 per cent tariff on all China goods would inevitably lead to retaliation by the Chinese Government and that sort of trade war would be bad for everyone.
If there is another trade agreement down the track that takes the place of the TPP another thing Malcolm Turnbull could do is reverse the decision he made in the TPP to allow companies to bring in workers from Canada, Peru, Mexico, Brunei, Malaysia and Vietnam without first checking if there is an Australian worker who can do the job.
This is a basic process called Labour Market Testing and Malcolm Turnbull traded it away for these six countries. That was a mistake. It’s not protectionism to ask a company to check if there is an Australian who can do the job before they bring in someone from overseas, it’s just common sense.
There is also a lesson Malcolm Turnbull could learn from Bob Hawke and Paul Keating. They proved that the best way to boost trade and the standard of living of all Australians isn’t what we do with other countries, it’s what we do here at home. Boosting productivity and competitiveness. That is what has made us the country we are today, and it requires a lot more than just empty rhetoric about jobs and growth.
MEDIA CONTACT: KORENA FLANAGAN 02 9790 2466