Author: Andrew Robb
Publication: Talking 2030
It is human nature to prefer the status quo; to keep things just as they are, to oppose change particularly when it means you have to change too.
History is littered with political populists who have played to this sentiment, often at great cost to communities.
President Trump is one such modern day populist looking to take the trade world backwards with the potential to incite a trade war, and much more. Trump’s removal of the USA from the TPP (Trans Pacific Partnership agreement) means that this 21st century, high-quality agreement has been bludgeoned. The USA was 70 per cent of the GDP included in the original 12 country agreement.
Going ahead with the TPP without the USA is the right thing to do (it will put pressure on the US as they lose concessions available to others), but their absence denies the region massive growth opportunities in the meantime that would have been delivered, including to the USA.
So, priority number one is to keep major pressure on the USA to re-join the TPP.
Priority number two in terms of trade reforms is easy to determine by following where the growth will be in the decades ahead; namely the Asia Pacific region. Our backyard.
While we have bi-lateral agreements now with many of the countries in our region, the next priority must be to improve those agreements, and to lock in one set of trading rules across the region, using the 12 country TPP as an example.
The awkwardly named RCEP (Regional Co-operation Partnership agreement) represents an immediate opportunity. RCEP includes all ten ASEAN countries plus China, India, Japan, South Korea, New Zealand and Australia. It has been under negotiation for some time, and includes six countries that are also in the TPP. The important point is that it includes the reluctant India. As well, China is involved.
Over time, if you put the TPP (with the USA back in) and the RCEP together you achieve one set of trading rules for the whole Asia Pacific region — an Asia Pacific Free Trade region. Harmonising trading rules would have a hugely beneficial impact on the cost of moving goods and services between countries within the region, as well as promoting investment levels. It can be done. Look at the TPP. Many said it could never be negotiated.
While we have negotiations progressing on other fronts, and all liberalisation takes us forward, it is important to weigh up the benefits for the effort expended.
The EU and the UK look appealing, but the existing level of farm subsidies mean that half the agricultural producers would go out of business without them. It will be a hard row to hoe, with politics getting very much in the way.
Download the dissuasion paper here: https://www.talking2030.com/discussion-paper