In a troubled world, Prime Minister Anthony Albanese is using two overseas visits to strengthen Australia’s ties with rival superpowers, the US and China. While geostrategic differences will remain, a philosophy is available to bring all nations together – the philosophy of free trade.
Australia can be the champion of free trade. We have the necessary credibility, based not only on what we have long espoused abroad but, more importantly, what we have done at home.
Joe Biden and Anthony Albanese in Washington: there was plenty of conviviality, but trade was off the menu. Alex Ellinghausen
Overnight on Monday, Trade Minister Don Farrell announced that negotiations for an EU-Australia free trade agreement had stalled. The European offer was not commercially meaningful for Australian farmers. It was not an offer of free trade, but one with many conditions that were not commercially viable for Australian farmers.
The National Farmers’ Federation urged the minister not to sign any deal just for the sake of it. He didn’t and never intended to do so. It was the right decision. Negotiations might resume at some future date.
In Washington last week, even the hardest markers judged Albanese’s time there a resounding success. Biden and Albanese seem to have established a warm rapport and spent an extraordinary amount of time in convivial talks.
However, one item not on the American menu at the state dinner in honour of Albanese and his travelling party was free trade. Not even the presence at the dinner of a congressman named Adam Smith could swing that one.
The US still has in place a raft of tariffs imposed by the Trump administration, mostly against China but also against the European Union, that clearly violate the rules of the World Trade Organisation.
The Biden administration persists in vetoing appointments to the Appellate Body, effectively rendering the WTO’s dispute-settling system impotent.
And just last week, the US walked away from long-running WTO negotiations on new digital trade rules.
A leading advocate of global trade liberalisation after World War II, the US is now a leading opponent of free trade.
In a rare display of bipartisanship before the 2016 presidential election, Democratic candidate Hillary Clinton and Republican candidate Donald Trump announced their opposition to US membership of the Trans-Pacific Partnership (TPP). This was after the Obama administration had picked it up and run with it as its pivot into Asia.
Now the wheel has turned, and China is seeking membership of the TPP minus the US, which the US is opposing. It’s one thing to oppose a country joining a club of which you are a member, but it is entirely another to oppose its membership of a club you refuse to join.
Australia should use its credibility to champion trade liberalisation as the pathway to peace and prosperity.
China’s interest in joining this club – now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – was made clear to us during last month’s visit to Beijing for the resumed High Level Dialogue between the two countries.
But now in the US, even if the Biden administration were disposed towards trade liberalisation, domestic politics make such a conversion impractical.
If the Democratic Party is to win the 2024 presidential election against the Republican Party – which will field either Trump or one of his Make America Great Again (MAGA) disciples – it will need to retain the support of the rust belt states of Pennsylvania, Wisconsin and Michigan that it lost to Trump in 2016 but regained in 2020.
In the 1980s and early-1990s, when Hawke, Keating and their cabinet colleagues were dismantling Australia’s tariff walls, they had philosophical support from Republican presidents Ronald Reagan and George Bush snr. But even then, Australia had to fight for Australian farmers caught in the crossfire of an agricultural subsidies war between the US and the European Union.
But the dominant faction in the contemporary Republican Party – the MAGA mob – is now heavily protectionist, against China and, in the WTO, against the rest of the world.
Before Albanese’s visit to China and following his government’s efforts with the Chinese leadership to stabilise the relationship, China has removed tariffs on Australian barley, beef and hay, while signalling their removal from wine. Restrictions remain on lobster and on beef from several processing facilities.
China will no doubt raise Australia’s anti-dumping duties on some fabricated steel products. China has already objected to Australia’s anti-dumping duties on Chinese-made wind towers, which appear set to be removed.
Whatever the motivations behind China’s decisions over the years before last year’s federal election to impose trade restrictions on selected Australian goods, the direction now is in favour of freer trade.
Australia should remain the champion of free trade with the US and China, and in international and global forums such as APEC and the WTO. Our decisions to dismantle Australia’s trade barriers unilaterally, starting with the Whitlam government’s across-the-board tariff cuts 50 years ago, and pursued comprehensively by the Hawke, Keating and Howard governments, have given us the standing to argue the case for free trade.
At a time when international support for free trade has crumbled, Australia should use its credibility to champion trade liberalisation as the pathway to peace and prosperity. Albanese’s forthcoming visit to China is another opportunity to spread the word.
Craig Emerson is managing director of Emerson Economics. He is a distinguished fellow at the ANU, director of the Australian APEC Study Centre at RMIT and adjunct professor at Victoria University’s College of Business.