ON AMERICA, TRADE, TPP , AND INTROSPECTION

"We don't believe that America in its heart has changed its view in relation to free trade but we recognize that there is a certain level of introspection going on."

The Hon. Joe Hockey

Joe Hockey is Australia's ambassador to the United States, and on November 21, he was in Detroit, where he spoke to the Detroit Economic Club. His remarks were light-hearted in the beginning, constructively diplomatic at the end - today's quote is from the final paragraphs - and gutsy in the middle. 

Hockeytown is one of the sobriquets for Detroit, and so at the start of his speech Ambassador Hockey joked, "You named the town after me and I even understand that you named the stadium after me - the Joe!" 

In the gutsy mid-section, he talked about Australia's changing industrial landscape. "Last month," he said, "the last Fords rolled off the production line when Ford Australia ceased manufacturing vehicles in Australia."

And it isn't just Ford, all of the major car companies that produced in Australia have either left or are leaving: Mitsubishi, Ford, General Motors, and Toyota. The pain of those decisions was noted. "It was really, really hard for those families," Ambassador Hockey said, but there is a larger context. "Australia hasn't had a recession for 26 years," he said. 

 
His comments on Australia's automobile sector included a discussion of the changing nature of manufacturing, specifically the increasing reliance on automation and robotics and the concomitant loss of assembly-line jobs. On that development, Ambassador Hockey challenged the notion that we should lament these changes, saying: 

"[F]or those of you that have ever stood on a production line, most people want to get off of it in one form or another, improve their skills.

I don't think anyone aspires for their child to spend their whole life on a production line in a low technical capacity job. They want people to expand, to develop their skills, to build a base. And that's what we all aspire to." 

The heart of his speech, however, was about two things: the tremendous opportunities of Asia - opportunities for both Australia and the United States-and the free-trade policies necessary to seize them. Here are just a few excerpts from the Ambassador's comments on those themes:

"By any measure of economic growth, the Asian region is undergoing massive transformation. At the heart is the emergence of a consumer-driven middle class, currently 500 million people, growing to 3 billion people in 15 years' time - 3 billion."

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"On Average more than 40,000 new businesses are set up each day in China."

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"As you see the emergence of this Chinese middle class what do they want? They want better health care, better education for their children - don't forget for a long time they've only been allowed to have one child. Every child is precious, let me emphasize that - I've got three, but every child is precious. Because of the single child policy, China has two things that are particularly focused on. Number one that child gets everything they can possible have - there's ferocious competition in education - ferocious competition. But because of the one child policy China has the biggest demographic bubble in the history of humanity - aging population. That child somehow has to pay, for not only themselves and their opportunities, they've got to pay for their parents aged care and health system. They can see the challenges coming down the pipeline.

"What's America brilliant at? Innovation, particularly in health, pharmaceuticals, aged cared, health research. Do you want to get into that market? Australia got into that market through a free trade agreement with China."

And then he segued to TPP saying:

"And that's part of what the Trans Pacific Partnership was about - creating a platform that allowed the United States, not only to immediately partner with countries like Vietnam, Japan, Australia, of course Canada, Mexico, Peru but to use that as a platform to launch into Indonesia, to launch into other countries in the region, particularly China and potentially at the end of the day - India as well."

As events unfolded, of course, November 21, was not a good day for TPP. While Ambassador Hockey was in Detroit that day explaining the benefits of TPP, President-elect Trump chose November 21 for a statement to the American people on what he plans to do once he takes office. He said:

"On trade, I am going to issue a notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country. Instead, I will negotiate fair, bilateral trade deals that bring jobs and industry back to American shores."

We doubt Ambassador Hockey knew that the President-elect would deliver that particular message on that particular day, though certainly he was well aware of the lay of the political land. Indeed, that awareness is clearly evident in his reference to "a certain level of introspection" in America. 

And we do not fault Mr. Trump for a straightforward pledge to follow through on a campaign promise. But it is unlikely that the reality will be as uncomplicated as that.  Our guess is that, at some point, the promise to keep America out of TPP may need to be revisited. 

 
Claude Barfield of the American Enterprise Institute has an excellent, on-point article on The National Interest website. In it, Mr. Barfield makes " The Case for a Rump TPP," that is, the idea that the other eleven countries in TPP should go ahead without the United States. "Even without the United States formally in the TPP," Mr. Barfield writes, "the precedent setting results of the agreement would be profound." 

 
His idea hardly seems far fetched, as TPP countries seem to be moving in just that direction. For example, in a report published yesterday, November 30, the Joint Standing Committee on Treaties of the Australian Parliament recommended moving forward on TPP. In the language of the report: 

"The Committee supports the Trans-Pacific Partnership Agreement between the Government of Australia and the Governments of: Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States of America, and Vietnam and recommends that binding treaty action be taken."

We are not sure about all of the others, but Japan and Singapore are moving in the same direction. We'll supplement that observation with something a little more rigorous in a future entry. Here we'll simply ask this question: Does the United States really want to be the leader who was left behind? 

At the moment, of course, that is a purely hypothetical query, but it is one that could become starkly real for the Trump Administration as events follow events in the post-inauguration world.