When it comes to regional trade in the Trump Era there’s the good, the bad and the ugly. Such was the general sentiment at the Perth USAsia Centre’s public panel, ‘Regional Responses to the Trump Trade Shock.’ The panel discussion, which took place on the 29th of May 2018, saw four international trade experts discuss recent trends in the regional trade system, their implications for the Indo-Pacific region and what role Australian businesses and policymakers can play in ensuring an open, rules-based trade environment. The panelists - Dr Taeho Bark, South Korea’s former Trade Minister; Ambassador Frank Lavin, the CEO of Export Now; Ms Andrea Gleason, the Director of the WA State Office at the Department of Foreign Affairs and Trade; and Mr Andrew Parker, the Executive General Manager of International Services at Australia Post - all offered a unique and informed perspective on the topic.
In her opening statement, Ms Andrea Gleason emphasised the Australian Government’s commitment to promoting free trade in the Indo-Pacific, as exemplified by their recent Policy White Paper and continued involvement in numerous Free Trade Agreements. Ms Gleason noted the concerning trend towards protectionism in the region - the result of animosity towards the negative effects of globalisation, both real and perceived. Despite this, Ms Gleason remained positive and emphasised the opportunities presented by rapid economic growth in Asia, the growth of e-commerce and Australia’s established position in US and European markets.
Professor Taeho Bark offered a very different perspective, suggesting that the current world trade environment is the most difficult since the Second World War. Professor Bark highlighted the unpredictability of the Trump Administration, the dormant US-China trade war and the possibility of tariff retaliations from China and the EU as causes for concern. Professor Bark argued that the world does not currently have the means to address these concerns because institutions, such as the World Trade Organisation (WTO), were undermined by power disparities between advanced and developing economies. WTO reform, the Professor argued, was fundamentally important for the creation of an institutional environment that is more inclusive of those countries who are currently ‘losing’ in the game of global trade.
Ambassador Frank Lavin, on the other hand, was ‘fundamentally optimistic about global trade’ and believed that market logic would ultimately prevail to steer the world in the right direction. Ambassador Lavin argued that current trends are characterised by both continuity and change. ‘Continuity’ because the march of global trade has gone on unimpeded and ‘change’ because trade liberalisation has come to a halt. The reason for this halt, he argued, was a shift from ‘economic rationalism to economic nationalism’ amongst political leaders. Regarding the China-US trade tensions, Ambassador Lavin suggested that these were indicative of the strengths and the weaknesses of the Trump Administration. On the one hand, the US has demonstrated a willingness to highlight China’s trade malpractises, but on the other hand their ability to deal with these malpractices is lacking.
Mr Andrew Parker suggested that globalisation as we know it, as well as the growth that it has entailed, is under threat from backlashes against its less favourable outcomes. Australia is by no means exempt from this anti-globalisation trend. Mr Parker emphasised automation as a particular threat to Australia, where an estimated five million jobs will be susceptible to these changes. The solution, Mr Parker argued, was to diversify our economic base into rapidly growing markets, such as e-commerce. As an example, he cited the efforts undertaken by Australia Post to help businesses take advantage of new technologies and FTAs, with a particular focus on the Asia region wherein Australian products have a reputation for being clean, green and safe.
Many different issues were raised in the subsequent panel discussion. A dominant theme in the discussion was the need to recognise that not everyone benefits from international trade. Instead, the benefits of free trade tend to be disproportionately localised in big or well-resourced businesses. Consequently, consumers are more exposed to the negatives of international trade that are dominant in the media and thus their interpretation of globalisation becomes skewed. Recommended solutions to this phenomena included accentuating the positives of free trade to consumers, better enabling consumers to experience the benefits of free trade and simplifying FTAs in a way that makes them more accessible to small and medium-sized businesses.
Another topic discussed by the panel was the need for Australia to find new ‘friends’ in the international system. There was a general recognition that the US under Trump has become increasingly less dependable. Consequently, Australia should become more flexible in its approach to international relationships and should seek ‘common ground’ with other countries in the Indo-Pacific region. Japan, India, Indonesia and Korea were all cited by Ms Gleason as strong candidates for improved relationships. Professor Bark suggested that Australia work closely with fellow ‘middle power’ countries, such as Canada and Korea, in order to bolster their collective strength.
The discussion ended with each panellist offering one recommendation for effective 21st century trade policy. Ambassador Lavin suggested consistency in the international trade capabilities of companies as essential to ensuring broader access to international markets. Ms Gleason recommended that trade policy be relevant to the changing needs of the business community. Professor Bark recommended encouraging the involvement of SMEs in international trade as a way of preventing market domination by large multinational corporations. Mr Parker noted the huge opportunity presented by the growing middle class in Asia. Professor Gordon Flake closed the discussion with the suggestion that internationalism was an easy political scapegoat for problems which ultimately stem more from automation than from trade.