Free trade or protectionism – two Australia’s and the TPP

The Land, Colin Bettles 24 Jan 2017

THE US has been called a bitterly divided nation due to Donald Trump’s upset election as President, driven by a strong rural vote – at odds with a metro-centric demographic – that craved protectionist policy moves like exiting the Trans Pacific Partnership (TPP).

And after this week’s reaction to news the US had now officially quit the TPP after Mr Trump’s inauguration, it seems two vastly different worlds also exist in Australia on free trade.

From Katter country in far north Queensland, through to Prime Minister Malcolm Turnbull’s plush Sydney Liberal electorate of Wentworth.

Unlike independent federal MP Bob Katter’s sparse agricultural fuelled seat of Kennedy, Mr Turnbull’s electorate measures a mere 38 square kilometres and captures popular tourist havens like Bondi Beach and the delights of Rushcutters Bay and Kings Cross.

Kennedy is about 570,000 square kilometres and comprises vast and challenging primary production lands often tested by Mother Nature; including grains, beef cattle, cotton, tobacco, fruit and vegetables, dairy products and peanuts.

In a statement, Mr Katter reacted with glee to the US abandoning its commitment on the 12-nation TPP, while Mr Turnbull expressed regret saying trade deals like the TPP opened up new economic opportunities for Australian agricultural exports sold into markets like Japan.

Mr Katter described himself as “Australia’s staunchest critic of free trade” and said he was “delighted” by the overnight news of President Trump formalising the US’ retreat on the TPP deal.

He said in Australia, the ALP and LNP leadership sadly still hold a “religious fundamentalism for the open market – or marketisim”.

“The world suffered under communism, fascism, imperialism – marketisim is just as bad,” he said.

“In the early ‘90s when the government applied globalisation policies to wool, wool was the biggest export item in Australia – in today’s money, $12 thousand million a year.

“It is now around $2 thousand million.

“The economists say there are 10 jobs per million dollars, so 100,000 wool industry jobs vanished from inland Australia – congratulations to your marketisim.”

Disqualified WA Senator and ex-WA grains farmer Rod Culleton supported Mr Katter’s view saying Australia should also exit the TPP like the US and abandon all free trade deals.

“I cracked a tinny (opened a can of beer) when I heard that Donald Trump had signed up for the US to back out of the TPP,” he said.

“I’m not a big drinker but I went to the fridge and cracked a tinny and I put it up and said “Good on you mate – that’s what Australia needs to do”.

Mr Culleton said the TPP was “devastating” for Australian farmers and was the reason why they’re only getting $80 a tonne for oats.

“Australian farmers grow the best commodities in the world and we’ve got the best conditions and we just need to go out with our brand,” he said.

“We don’t need to be forming any partnerships because our product sells.

“The farm gate price hasn’t improved much at all over the past 50 years I can give you the tip – farmers still have the carrot swinging just in front of their noses and they don’t need it.

“They can simply get it pulled in a bit so they can get a decent bite out of it.

“We just need to keep it simple stupid in this country and we’ll go very well.”

But at a media conference today, Mr Turnbull lauded the economic gains of free trade and said losing the US from the TPP was, “a big loss – there is no question about that”.

He said he and his Prime Ministerial counterparts in Japan, NZ and Singapore were now working to see how they can ensure momentum is maintained, towards open markets and free trade.

“Believe me, protectionism is not a ladder to get you out of the low growth trap – it is a shovel to dig it deeper,” he said.

“Believe me, our jobs, our economic future depends on bigger opportunities and bigger markets for what we produce – that is what we’re about – Aussie jobs.”

Mr Turnbull said President Trump had said America would not proceed with the TPP – but his Secretary of State Rex Tillerson had been a longtime advocate for it, while the Republican Party in the US Congress had also been strong supporters.

He said it was possible that US policy could change over time on the TPP, as it had done on other trade deals.

Mr Turnbull said there was also an opportunity for the TPP to proceed without the US.

He said he’d held active discussions with other leaders as recently as last night and “We believe in trade”.

“It is not for me to say what is good for other countries own domestic economies but believe me, if you believe in Australian jobs, if you want more Australian businesses to succeed, if you want more Australian workers to have well-paid jobs with businesses that are exporting to the biggest markets in the world than you’ve got to support trade,” he said.

“That’s why our Trade Minister is there seeking to secure new trade agreements with Indonesia – a new trade agreement with India.

“We signed one last year with Singapore as you know and in the previous Parliament: China, Korea and Japan.

“We are constantly working to open the doors of new markets and open wider the doors of existing markets for Australian exporters because that is where the jobs are to be found.”

Mr Turnbull said there was already a China-Australia Free Trade Agreement but potential also for China to join the TPP.

Asked whether any modelling had been done to see whether the TPP was still viable for Australia, without the US, he said New Zealand’s analysis showed that most of the TPP’s benefit would still accrue to that country, with no US.

Mr Turnbull said Australia was a much bigger trading nation than the US as a percentage of GDP, and many more Australian jobs – as a percentage – depended on trade than do American jobs.

“Trade is critical and that is why it is important for me to remain engaged and my ministers to remain engaged with our counterparts,” he said.

The US Wheat Associates (USW) and National Association of Wheat Growers issued a joint statement saying they were disappointed by President Trump’s executive order to withdraw the US from the TPP.

They said until an alternative trade policy was established, export opportunities in the promising Pacific Rim markets that could help US wheat farmers at a time when they need it most “are very much at risk”.

USW Chairman Jason Scott said US wheat farmers depend heavily on export demand to determine their per-bushel income.

“We can compete very effectively in Asian and Latin American markets where the demand for high quality wheat is rapidly increasing and our organisations took a long-view of the benefits TPP held out – a trade agreement that promoted economic growth abroad as a way to grow export sales and prosperity for farmers at home.”

NAWG President Gordon Stoner said without the TPP or alternative agreements, US farmers would be forced to the sidelines of trade while losing market share in the region to competitors including Australia, Canada, Russia and the European Union.

He said those countries had current agreements or are negotiating new ones with countries outside the network of existing US trade agreements.