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Trade Winds
After TPP, Australia Looks To China On Trade

Trade winds are quickly shifting, as Australia moves to embrace China’s alternatives to the Trans-Pacific Partnership (TPP). Financial Times reports:

Australia is throwing its weight behind China’s efforts to pursue new trade deals in the Asia-Pacific region amid a growing acknowledgement the US-led Trans-Pacific Partnership agreement is dead in the wake of Donald Trump’s election victory. 

Steven Ciobo, Australia’s trade minister, told the Financial Times that Canberra would work to conclude new agreement among 16 Asian and Pacific countries that excludes the US. 

He said Australia would also support a separate proposal, the Free Trade Area of the Asia-Pacific, which Beijing hopes to advance at this week’s Asia Pacific Economic Co-operation summit in Peru.

“Any move that reduces barriers to trade and helps us facilitate trade, facilitate exports and drive economic growth and employment is a step in the right direction,” Mr Ciobo said Wednesday.  

As we noted this past week, the election of Donald Trump and the imminent demise of TPP have given China an opening to pitch its own trade deals. Australia is the first major U.S. ally to peel off and publicly announce its intention to sign on to China’s deals. Others may soon follow suit, as China makes a renewed push to finalize the Free Trade Area of the Asia-Pacific (FTAAP), which has been under discussion for over a decade, and the Regional Comprehensive Economic Partnership (RCEP), which China has been developing since 2012.

The United States will be present at discussions about FTAAP in Peru this year, but given the current circumstances it is unlikely to join in. If China does negotiate a successful deal, it will be a major economic and diplomatic achievement for Beijing, potentially allowing Beijing to set the rules of the road for Pacific trade for the foreseeable future.

Throughout his campaign, Donald Trump took a harsh rhetorical stance against free trade, much to the delight of his base, while the Left has been animated by a protectionist backlash as well. Yet the abdication of U.S. leadership on free trade is set to give Beijing a major victory at Washington’s expense. The Trump Administration will need to pursue an alternative strategy to restore U.S. credibility and ensure that the United States remains relevant in the Pacific.

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  • FriendlyGoat

    The Obama trade negotiations were an attempt to elevate protections for the environment and for workers in all participating countries to the highest possible levels commensurate with realities of competitive trade and different conditions in different countries. Negotiations led by China will be doing no such thing, of course.

    People are about to learn that neither trade nor trade deals are decelerating anywhere. We either were to be in the position of leading to obligate groups of countries to raise labor and environmental standards for the benefit of all people including our own workers, or we can find ourselves competing with the poorer standards negotiated elsewhere while our noses are in the air. What we refuse to ratify is not a relevant point except to the extent of losing global stature and respect. What we have to compete with is always the point.

    • Jim__L

      … And for the past eight years (and more!) we’ve done nothing but hemorrhage jobs, while massive foreign markets fail to materialize.

      Time for creative thinking.

      • FriendlyGoat

        There was a line from Butch Cassidy and the Sundance Kid where (Robert Redford) said to (Paul Newman), “You just keep thinkin’, Butch, that’s what you’re good at”. The chances of Republican policies advancing living-wage jobs on a long term basis in this country are not promising.

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