What the end of the TPP means (for Australia and the world)

This was to rescind his predecessor’s efforts to put flesh on the bones of a ‘pivot’ to the Asia-Pacific via a broad-reaching trade agreement known as the Trans Pacific Partnership.

" We may well be witnessing the end of an era in which pax Americana - with all its flaws - underpinned unprecedented global prosperity."
Tony Walker, Author and former editor

Thus at the stroke of a pen Trump removed the United States from participation in an initiative that would underpin the continued liberalisation of Asia-Pacific trade from the shores of Latin America to countries on the periphery of the South China and East China seas, representing 40 per cent of global economic output.

Whether this signals the end of American leadership in a continued process of globalisation which has lifted hundreds of millions of people out of poverty remains to be seen, but we may well be witnessing the end of an era in which pax Americana - with all its flaws - underpinned unprecedented global prosperity.

In effect and symbolically Trump is declaring, if not an end to, then a pause in America’s commitment to multilateralism defined by such trade agreements as the TPP, or the functioning of the World Trade Organisation, or indeed the United Nations itself.

Suspicion of - if not outright hostility to - such multilateral institutions has been a hallmark of Trump’s policy statements, including a speech delivered to Centre for National Interest on April 27, 2016 and in his inaugural speech on 20 January, 2017.

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ANTAGONIST

Trump’s antagonism towards a globalising world was summed up by the following extract from his inaugural.

“We assembled here today are issuing a new decree to be heard in every city, in every foreign capital, and in every hall of power,” he said. “From this day forward, a new vision will govern our land. From this day forward, it’s going to be only America first, America first.’’

Leaving aside the rhetorical flourishes that accompany any such presidential address, this was just about as abrupt a departure from the past, as it is possible to imagine allied with a following bald statement that “protection will lead to great prosperity and strength”.

For a trading nation like Australia - dependent on the continuing opening of markets and reductions in trade barriers - this was a troubling intervention.

While Trade Minister Steve Ciobo insists Australia is committed to proceeding with TPP, removal of America from the 12-nation partnership will rob it of its cornerstone participant. The question of whether Congress, in its present sour mood as far as trade is concerned, would ever have ratified the TPP is now moot.

One of former US President Barack Obama’s signature initiatives is dead and along with it for the time being Australia’s expectations of orderly American leadership in the continued reduction in trade and investment barriers in its own neighborhood.

Ciobo’s pledge to soldier on is a reasonable response to such a setback, but he would know a TPP without American participation will be robbed of much of its momentum.

LOOKING TO CHINA

Inevitably, participants in what remains of TPP will look to Beijing for a lead in a continued process of regional trade liberalisation. As one of China’s principal trading partners we should seek to make the best of this reality.

How then should Canberra view this development in the wider context of relations with the new Trump administration whose policies, more or less across the board, signal a radical departure from a post-World War II foreign policy in existence since the days of Harry Truman?

Australian policymakers need to approach a new Trump world – with its risks of a return to a 1930’s style isolationism or perhaps a form nineteenth century mercantilism – with extreme caution, not antagonism but wariness.

Australia’s national security interest dictates a continued close working partnership with Washington, but not at the expense of its national interests and its values.

In all of this uncertainty the national interest should predominate over woolly arguments for adherence to an alliance born in the aftermath of World War II as the Cold War divided the world into competing blocs.

The worst approach for Canberra would be to cling to an outmoded model on which to base its foreign policy. The world is in flux, if not disarray.

At risk of re-engineering a cliché we have entered new, and uncharted Trumpland that in its worst case might come to resemble the chaos that prevailed in early twentieth century Europe.  This heralded the first of two Great Wars.

In his new book A World in Disarray: American Foreign Policy and the Crisis of the Old Order, Council on Foreign Relations President Richard Haass makes an eloquent argument for what he describes as stare decisis, the Latin phrase for ‘let it stand’ unless there is good reason to change course, or disrespect precedent.

“The United States has to be wary of sudden or sharp departures in what it does in the world. Consistency and reliability are essential attributes for a great power. Friends and allies who depend on the United States for their security need to know that this dependence is well placed," Haass writes. 

"If America comes to be doubted, it will inevitably give rise to a very different and much less orderly world. One would see two reactions: either a world of increased ‘self help’, in which countries take matters into their own hands in ways that could work against US objectives, or a world in which countries fall under the sway of more powerful local states, in the process undermining the balance of power.”

Haass cautioned particularly against eroding a ‘one-China policy’ by enabling a Taiwan lobby to reassert itself, as well as fraying of the 2015 nuclear agreement with Iran - imperfect though it is - thus isolating America from its allies who are party to the agreement.

He also warned against m oving the US embassy from Tel Aviv to Jerusalem thus antagonising not simply the Palestinians, but the entire Muslim world which regards Haram al-Sharif -from where the Prophet is believed to ascended into heaven - as its third-holiest shrine after Mecca and Medina. American interests and personnel would be threatened worldwide.

Australia has no interest in the sort of disruption which might result from any of these steps. Policymakers would be well advised to make this clear in private discussions with their American interlocutors, and publicly as well, so there can be no doubt about Canberra’s views.

America’s foreign policy establishment from neo-conservatives to liberal progressives, virtually as one, has risen up against Trump’s foreign policy prescriptions, with a few scattered exceptions including George Friedman, chairman of Geopolitical Futures, the geopolitical forecasting shop.

According to Friedman, Trump has a “coherent and radical foreign policy.’’

“He is proposing a redefinition of US foreign policies, based on current realities, not those of 40 years ago. It is a foreign policy in which American strength if maximised in order to achieve American ends…The World has changed, but the shape of US policy has not. Translating this into reality will, for Trump, another matter,” he writes.

This might be regarded as an understatement.

Tony Walker is a former international editor of The Australian Finance Review

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