US President Donald Trump’s war against free trade deals could work well in Australia’s favour, particularly agricultural exports, says a long-time American farm lobby economist and adviser to Washington lawmakers.
Australia has a three- or four-year window of opportunity to make valuable farm trade headway at the US’ expense in the Asia-Pacific according to Dr Bob Young, who has just retired as chief economist and deputy director of public policy for the powerful US Farm Bureau.
The farm bureau represents 6 million US farmers, and ironically, a majority them helped elect the boisterous Republican business mogul to office a year ago.
Dr Young told the Australian Farm Institute (AFI) President Trump’s decision to pull the US out of the Trans Pacific Partnership free trade pact plans early this year was likely to hobble US trade expansion in Australia’s back yard, particularly with Vietnam and Japan, which had been considered key priorities for US exporters.
“The US is not clear where its trade policy is headed,” said Dr Young, speaking at the AFI round table forum in Sydney.
The Trump administration has taken a tough stand against trade deals it believes are undermining US industry and employment.
However, at the same time it is backtracking on promises to scrap the North American Free Trade Agreement (NAFTA) after Mr Trump realised US farmers were most likely to be hardest hit by tighter trade arrangements with Mexico and Canada.
Dr Young said Australia’s farm sector and trade negotiators would be wise to make the most of the indecision now miring US trade negotiators.
America was also talking of reviewing its solid trade arrangements with South Korea – another TPP member and a major importer of US and Australian beef - although that message, was being confused, too, by President Trump’s supportive commentary towards Seoul while he fights a war of words with communist North Korea.
“I’m very disappointed we have let the many opportunities associated with the TPP go,” Dr Young said.
“There’s potential for Australia to get in and establish strong long-term relations with Vietnam directly, or through a new TPP which excludes the US,” he said.
“Vietnam was going to be a big opportunity for the US, but we are not going to be there as a distraction for at least the term of the current presidency - so that’s four years, maybe more.”
Dr Young said while Australia already had strong trade relationships with Japan, Tokyo’s moves to further free up trade arrangements via the TPP would be a serious lost opportunity for the US, giving Australia, New Zealand and others the chance to proactively develop stronger farm export ties while the US was not on the radar.
“Japan is a big economy with a lot of money,” he said.
“I’d doubt if Japan is keen to enter direct bilateral talks with the US, instead of the TPP – the Japanese want to see numerous other trading partners making similar concessions and providing them with trade advantages at the same time.”
Meanwhile, although Japan, Australia and others were still keen for a TPP-style pact to evolve without the US, Dr Young said he was also uneasy about China taking a lead role in alternative deals.
“What bothers me about the US walking away from the TPP is who steps in to fill the void,” he said.
“We think it is clear China is stepping in to set the region’s trading rules.
He said the US President’s preference for bilateral trade deals directly between the US and individual trade partners may eventuate, but they would require much negotiation work at a time when Washington was unwilling to employ more trade negotiation staff than were already committed to existing goals, including modifying NAFTA.
He said while free trade deals and an over-reliance on imports was being blamed for job losses and a slowdown in US domestic economy wealth, the reality was new technology had wiped out far more jobs in the past three decades.
Even the computer industry had suffered.
Computer equipment production output had increased 1400 per cent while employment in the sector was now 37pc lower than in the 1990s.