Exporters urged to diversify in trade war
THE escalating US-China trade war is set to leave Australia “in the worst possible position of any global economy”, a leading trade expert says.
The solution, Rabobank’s Michael Every said, is for Aussie farmers to diversify their export markets now, before Australia is forced to choose sides in what could likely become a cold war.
“The clash between the US and China is not going away, it’s not an aberration … it’s going to get worse,” Mr Every said.
Mr Every’s warning comes after Australia’s Parliament last week ratified the TPP-11 – the biggest global trade deal in history, which US President Donald Trump walked away from – and as meetings continue for the 16-member Regional Comprehensive Economic Partnership, which includes China. China is Australia’s more important trading partner economically, with ag exports hitting $12 billion last year, compared with $3.8 billion to the US.
But Australia’s diplomatic and cultural ties are historically more aligned with the US. He said recent issues of Australian beef and wine stuck at Chinese ports were “a warning shot”: “They can turn the tap off and stop buying from you completely overnight”. The US this month concluded a new trade deal with Canada and Mexico, which prevents either of them entering agreements with a non-market economy (ie. China) – a move Mr Every described as “economic warfare dressed up as trade” that the US could try bringing to the Asia-Pacific.
“At some point, the US is going to come crashing back into the region because it’s too geopolitically important … the price of protecting you is we want a new trade deal on our terms and you don’t deal with China,” he predicted.
Mr Every dismissed views of Australia benefiting from new trade opportunities in China, with the US currently locked out, as short-termist and “completely naive”.