Donald Trump's brief You-Tube video on Monday in which he announced his intention to withdraw from the Trans-Pacific Partnership trade deal on day one of his new administration had been widely expected. And though millions of Mr Trump's supporters may have rejoiced at the news, the reaction from abroad will have been be less positive, particularly if the incoming president also makes good on his threat to impose tariffs on Chinese imports.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The consequences of a Trump-induced trade war with China may not be severe as some suggest since both countries have too much to lose financially by allowing tensions to escalate. But the Trump initiative suggests the post World War II era of growing trade liberalisation, much of it led by the US and the institutions it helped established like the World Bank and the International Monetary Fund, may be about to slow appreciably.
This is an unwelcome development for Australia, whose commitment to free and open trade in multilateral and bilateral forums, has been near total. Again, though, the forecasts of doom may prove to be premature. For one thing, China appears eager to claim the mantle of the world's champion of free trade if indeed the US chooses to abandon it. It has already made significant strides toward assuming a more forceful global trade presence, having announced in 2013 its "One Belt, One Road" initiative to create a land and maritime Silk Road between China and Europe, one encompassing Africa and Oceania as well. That was followed by the launch of the Asian Infrastructure Investment Bank a year later.
Given Beijing's globalist agenda, it's not surprising that some of the 12 countries involved in the TPP talks should have discussed inviting China on board during back-room discussions at the recent Asia Pacific Economic Co-operation summit in Peru. How Beijing might react to such an offer is hard to divine since it was originally excluded from the TPP by US President Barack Obama.
The TPP was a key element of Mr Obama's strategic pivot to Asia, and China reacted by pushed ahead with its own regional free trade deal, the Regional Comprehensive Economic Partnership. The RCEP's standards for the environment, labor rights and intellectual property protection are much lower than the TPP, and Beijing is probably unlikely to forego the possibility of an agreement in which it has invested symbolic leadership – no matter what kudos might be gained by assuming leadership of the TPP from the US.
Having booked seats at both the TPP and the RCEP tables, and elected to a foundation member of the AIIB, Australia is well place to avoid any potential backwash from the isolationist tendencies of Mr Trump. That China seems prepared to come forward to preserve the system of open and fee global trade is further good news, though it should not blind our major parties to the fact that Beijing is adept as Washington at driving hard trade deals.
