While Prime Minister Malcolm Turnbull is in New York and plans to harangue his American hosts about the benefits of free trade, his Trade Minister is in Hong Kong to assure Chinese investors that we don’t have a racist investment policy.
Steve Ciobo is in Hong Kong for two days and dropped a copy of a speech he is delivering today to the Credit Lyonnais Securities Asia forum to the Financial Review, presumably to ensure that its message wasn’t lost locally. Ciobo wants to explain that “Australia’s approach to foreign investment is non-discriminatory” despite Treasurer Scott Morrison’s Ausgrid decision. Morrison banned both a Chinese mainland state-owned company and private Hong Kong firm Cheung Kong Infrastructure from purchasing the NSW poles-and-wires outfit, on unspecified “national security” grounds.
The decision was particularly insulting to Cheung Kong, which is already a massive investor in Australian infrastructure and which owns half of telco Vodafone — but is suddenly deemed a national security risk at a time when the government is battling internal pressure from xenophobes within its ranks and blatant racists in the Senate to block foreign investment. The only thing Cheung Kong has in common with China’s State Grid is that both are Chinese.
But while it does one thing at home, the government says something very different abroad. Turnbull is in the US partly to lobby Congress to pass the Trans-Pacific Partnership trade deal tout de suite. If it’s not passed in the looming lame duck session of Congress, it will fall to the new president to prosecute — and both Trump and Clinton have said they oppose the deal.
Turnbull looks to be on a fool’s errand. House Speaker Paul Ryan was blunt last month in his refusal to bring the deal to a vote, saying “as long as we don’t have the votes, I see no point in bringing up an agreement only to defeat it … They have to fix this agreement and renegotiate some pieces of it if they have any hope or chance of passing it.” Senate GOP leader Mitch McConnell agrees, saying it won’t come on for a vote this year, despite Barack Obama’s efforts to rally political and business support for the deal.
The best bet for the future of the TPP is renegotiation — which will take years. But that’s OK — at least that will give the government time to do something it has refused to do before now: conduct a genuine, independent assessment of the costs and benefits of the deal.
The TPP is being swamped in the US by a fatal mix of conservative anger that it doesn’t deliver enough for US companies, progressive unhappiness with the investor-state dispute settlement mechanism, which hands multinational companies the power to demand compensation for policy changes, and the view, which now in the Trump era extends right across the political spectrum, that free trade is bad for US jobs.
The TPP, of course, is not a free trade agreement, but a preferential trade agreement with minimal benefits for countries like the US and Australia — although at least the US government permitted an analysis of its benefits to actually be conducted. But such free trade fictions form a core part of this government’s economic agenda, despite the repeated insistence of independent bodies like the Productivity Commission that they deliver few if any benefits, and might even be harmful to Australia’s interests.
It’s one thing to talk the talk on free trade, but this government walks a very different walk. Not merely does it have a foreign investment policy that would be right at home in the White Australia era, but manufacturing protectionism is central to its economic narrative. It has closed one protected industry, automotive manufacturing, and opened another — naval shipbuilding — where the subsidy per job has two extra zeroes on it: the subsidy per job of the car manufacturing industry was around $10,000 a job; the subsidy merely for building the new Royal Australian Navy submarines locally will be more than $3 million per job.
And it won’t even let consumers enjoy the upside of the end of automotive protectionism — being able to buy secondhand vehicles overseas. Instead, local car retailers will continue to be protected by a wall of punitive tariffs to stop Australians from enjoying something New Zealanders take for granted — buying a secondhand vehicle and importing it. In this case, we’re told “safety” is the reason for that particular form of protectionism, but that’s just a cousin of the “national security” line used to justify blocking Chinese investment and blowing tens of billions in taxpayer dollars building dearer, poorer-quality subs here.
Turnbull ought to look in his own backyard before lecturing overseas politicians about the dangers of a slide back into protectionism.