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A Trump TPP U-turn would put our relationship with China under the spotlight

Apr 15, 2018
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Updated April 16, 2018 08:05:22

Consistency has never been one of his strong points.

Still, Donald Trump‘s abrupt U-turn on the Trans-Pacific Partnership last week was, on any measure, a jaw dropping policy reversal.

This was the US President who campaigned for an inward looking America, who argued the US had been a trade victim, that it had been ripped off for years on dud trade deals.

This was the man who pulled the plug on the TPP just two days into his Presidency and until last week was ramping up an anti-trade tariff tirade against China.

Could it be the penny finally has dropped for the US President? Has he finally realised that, like most of these agreements, the TPP isn’t and never was about free trade?

It was designed primarily as a strategic agreement to limit China’s power within the Asian region.

Beyond that, its secondary goal was to cement the dominant position of American multi-nationals, particularly pharmaceutical and tech companies.

If the US does indeed rejoin the pact, it may just force Australia to make some hard decisions about our China relationship and adopt a coherent foreign policy.

A hugely strategic asset for Beijing, Australia provides vast amounts of raw material for its development, both economic and military.

As our biggest trading partner, our wellbeing is inextricably tied to China.

From a security perspective, however, our interests lie with the US as a bastion of free market democracy.

Free trade or captured?

Just on two years ago, in mid-June 2016, Trade Minister Andrew Robb finally inked a free trade agreement with his Chinese counterpart, Commerce Minister Gao Hucheng in Canberra.

Almost a decade in the making, it was roundly applauded by almost all, including former prime minister Kevin Rudd.

Then-prime minister Tony Abbott certainly didn’t underplay its significance.

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“It will change our countries for the better, it will change our region for the better, it will change our world for the better,” he declared.

The numbers are yet to be compiled on whether our trade has been materially affected by the agreement.

Two-way trade between Australia and China already had grown strongly in the four years prior to signing the agreement, rising from $120 billion annually to $155 billion.

What has changed is our leaders’ attitude towards Beijing and, as a result, China’s view of us.

“Media reports have suggested that the Chinese Communist Party has been working to covertly interfere with our media, our universities and even the decisions of elected representatives right here in this building,” Prime Minister Malcolm Turnbull told Parliament last December.

“I take these reports seriously. Our relationship with China is far too important to put at risk by failing to clearly set the terms of healthy and sustainable engagement.”

The sudden change in the China relationship

Last week, reports emerged that Chinese interests were engaged in building a port on Esperito Santo, a northern island of Vanuatu.

Chinese interests already had built a new official residence for Prime Minister Charlot Salwai as part of an ongoing series of exceedingly generous gifts in the form of development grants.

The new port, it was claimed, could be expanded to accommodate naval vessels; a move that would deliver China only its second foreign naval base.

The first opened in Djibouti in the horn of Africa last year.

The response from Canberra initially was muted and confused until Mr Turnbull warned our biggest and most favoured trading partner to not consider such a move, as it would threaten regional stability.

China has since denied any intention of establishing a Vanuatu military facility.

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It’s not the only potential Pacific incursion.

Your columnist has learned that a China-based company has been involved in attempting to take control of Nauru’s telecommunications network.

Until recently, we have pandered to Beijing, rather than upset the flow of cash from mineral exports.

While our Defence White Paper last November raised concerns about a rapidly rising China, which greatly angered Beijing, Foreign Minister Julie Bishop has been reluctant to engage on Chinese attempts to dominate the South China Sea by building military bases on reclaimed land.

For years, democracy and human rights abuses largely were off limits while issues such as Tibet were barely mentioned in official dialogue.

Money talks

While the rest of the developed world was plunged into recession during the financial crisis, Beijing’s massive stimulus program sent resource prices soaring and a deluge of cash into the Australian economy.

It should come as no shock, therefore, to learn many of our political leaders have forged close ties to the Middle Kingdom.

Labor linchpin Sam Dastyari was forced to fall on his sword over revelations of his dealings with wealthy Chinese business leaders while still in office.

But his misadventures highlighted the ease with which many former leaders had capitalised on their China connections.

Both previous Trade Ministers, Andrew Robb and Bob Carr, have found themselves in the employ of Chinese tycoons, reaping huge rewards for consulting or promoting Chinese interests almost immediately after leaving Parliament.

Mr Robb, in particular, came under fire for his association with Landbridge Group — a Beijing company that recently acquired the Port of Darwin to the amazement of Washington — and his $880,000 a year consultancy fee.

In a stinging rebuke to Mr Turnbull’s efforts to improve transparency and eliminate the perception of conflicts, he claimed the clampdown had impugned his character.

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“The unqualified emphasis and prominence given by government ministers to my supposed situation, alongside Senator Dastyari, has supported the clear implication and smear asserted by an earlier Four Corners program that I am engaged in some form of treasonous activity,” he wrote in a letter to government members.

“No more damaging implication could be levelled against a present or former political figure.”

Xi’s trump card

Hainan is known as China’s Hawaii.

Tropical and palm studded, the southern China island even hosts an annual World Surf League championship event each year.

Last week, however, it was the annual Boao Forum — Beijing’s answer to the west’s Davos annual gathering — that took centre stage.

It was a notable gathering for two reasons.

The first was the complete absence of Australian political invitees this year, reflecting Beijing’s displeasure with Canberra.

And the second was an unexpected shift towards trade diplomacy towards its greatest rival, America.

A few days after Mr Trump threatened to further ramp up a trade war with China, President Xi Jinping took a different tack, with a soothing speech offering trade concessions to America over automobiles and a range of other products.

Washington hardliners hailed Mr Xi’s olive branch as testimony that their tough stance was working.

Mr Xi had been forced into a humiliating backdown, they claimed.

Mr Xi’s speech, however, did something Mr Trump has been incapable of in recent months. He calmed global markets, already on edge over events in the Middle East.

Within days, it was Mr Trump in reverse, inexplicably trying to revive a US-dominated TPP — without China.

We’ve successfully played both sides for a quarter of a century.

But it’s a strategy that will become increasingly untenable as China challenges America for global dominance.

Topics: industrial-relations, international-aid-and-trade, business-economics-and-finance, donald-trump, trade, government-and-politics, world-politics, foreign-affairs, australia, china

First posted April 16, 2018 07:55:11

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