The Australian Strategic Forum Q&A

Ben Packham: Thanks James. Welcome to Simon Birmingham, one of the busiest ministers in the government right now and Simon Jackman from the United States Studies Centre. Thanks for joining us tonight. Our topic today is trade and navigating the US-China relationship. Now, let's jump right into it and hopefully there’ll be some audience questions towards the end of the session.

Could I start with you, Minister? Just hoping to hear your reflections on the election of Joe Biden and what we can expect regarding America's role in the world and in world trade, and what that will mean for Australia?

Simon Birmingham: Well thanks, Ben, and thanks for the opportunity to be part of this strategic forum today. The election of President-elect Biden and his team is certainly something that we have acknowledged, and we wish them well. We don't necessarily expect to see a dramatic change in terms of the trade posture of the United States, to jump straight to your question there. But I would want to stress that I think the nature of engagement is perhaps what will be the most important and defining aspect as we look to what a new administration brings. The world has long benefited from US leadership. But leadership requires engagement in a way that enhances alliance building, that delivers the type of momentum to get results. And what I hope, when it comes in particular to trade policy from a Biden administration, is that when they engage in the World Trade Organization, it is about building the momentum and the alliances across partners of similar values and perspectives to get results to reform that organisation. The WTO is not perfect. Its decision making processes, it’s adjudicated processes, its appeal processes do take too long. They can be too complex. And we are certainly thinking about those implications right now in relation to some of the potential WTO challenges that Australia is in and may be in in the years to come. So, a Biden administration, if they are to tackle those grievances that the Trump administration has rightly identified, needs to also then be about building support for those grievances and even more importantly, building support for the solutions to those grievances. And that's where US leadership and their administration can perhaps make the most tangible difference in successfully extending and building the alliances that can get results in terms of improving and fixing those challenges in a multilateral institution like the WTO, not simply highlighting problems and leaving a circumstance that potentially degrades it over time.

Ben Packham: Thanks, Minister. Simon Jackman, what do you say Joe Biden's election means for America first? And how much scope do you think he will have to reshape America's foreign policy and return to a sort of multilateral global stance in the world?

Simon Jackman: Yeah, it's a mixed picture on that, Ben. And indeed, let me also thank The Australian for inviting me to this strategic forum today. Great to be on board. Look, the watchword out of the Biden team has been competition, not confrontation with China. So, I think it's important for Australians to realise that some of the big picture reframing of America's view on the world and its relationship with China stays in place under a Biden administration. It's one of the defining, I think, accomplishments, the signature accomplishments of the Trump administration it’s his remaking the American’s strategic mindset. I think the key difference with a Biden administration is that it will put alliances and multilateral institutions more front and centre in the way it goes about that case offshore. But there are some very important onshore, in the US, constraints on the ability of the Biden administration to go, I think, as aggressively down that route as it might hope. And first of all is COVID, COVID, COVID. And I think the new administration comes to office, as we're all watching this surge in cases in the United States. It's distressing to watch, number one, but you start to think through the implications for where the American economy is going and where the American political centre of gravity is going to go, and that new administration is going to be utterly consumed with that pressing policy matter.

So what does that imply for the ability to get on with these more externally focused initiatives that Australia would welcome it, sort of, multilaterals being way more front and centre in American trade policy for one thing and then other elements of its foreign and security policy for that matter as well? I think what it means is that it's just very limited bandwidth to prosecute the case politically. All the things that a new administration has to do in the American system - standing up that new administration; that, essentially that top third of the civil service in the United States rotating with the new administration, getting confirmations through the US Senate. I think all of that takes place set against the priority to get COVID sorted out, number one. And number two, it's perhaps, given the economic costs of COVID, it's perhaps not the best time for the US to be sort of, I think for American political leaders, to be starting to articulate a return back to a more liberalised view about international trade, winding back tariffs and what not to put in place under Trump. So I wouldn't hold that breath on a quick dialing back to sort of the status quo antics on that. I think there's a whole bunch of sort of to do with the usual forces of inertia, but they are thoroughly compounded by just the amount of political gravity that will go into dealing with COVID.

And I would also add, frankly, a big unknown is the amazing power that Donald Trump continues to hold over his party and how that translates into the appetite for a Republican-controlled Senate to be as cooperative as I think Democrats might hope it would be. I think that remains an open question and yet another source of some uncertainty about the United States, under a Biden administration, to sort of start to prosecute some of the things that Biden talked about during the campaign. And where that takes us, Ben, I think it takes us back to what is the architecture that's in place, that is sort of low cost things for the United States to prosecute, to move a more liberal trade agenda along. And for that, I point to the Australia-US free trade agreement; what's in there? Is that a channel for Australia and the US to make some progress, holding our breath, looking for a US return to the CPTPP or something like that. I sort of put probably in the too hard basket for the foreseeable future. But what is there that we have already in the architecture, say in the bilateral with the US or other multilateral institutions that the US is part of, what can- what are some small to medium wins we can perhaps notch, just given, I think, a mature and a frank understanding of just where the US domestically is with its politics and its appetite for moving as aggressively on these things as the rest of the world might kind of cope.

Ben Packham: Well, Simon Birmingham, there’s a fair bit in that. I mean, doesn't seem like a US entry to the TPP is on the horizon rise any time soon. What are your sort of forecasts for the US-China trade war as the presidency passes to Joe Biden? Do you think he'll be under pressure to maintain that sort of stance against Beijing and you mentioned the WTO before, I mean, practically how will US re-engagement in that body pan out do you think and practically, what will that mean for Australia?

Simon Birmingham: Thanks, Ben. Well there’s a few things to unpack there. Look, I think in terms of the US engagement in the TPP, as I said in my pretty much first remarks to you, we don't anticipate a dramatic pivot or change in terms of US trade policy between the administrations. We look perhaps to the nature and manner of engagement and the way that then sustains and supports alliance building over a period of time, including in the WTO, as being an important vehicle for how we see change and ultimately, affect improvements in trade policy around the world.

And the TPP perhaps is in, you know, the same camp where from an Australian perspective, we've made clear the door remains open to the US. It remains one of the significant achievements of PM Turnbull working with PM Abe to be able to bring the TPP into effect when the US withdrew, when at various junctures, New Zealand and Canada went a little bit wobbly and ultimately, all of those issues were resolved to bring it into effect, which means it's a live agreement; it can bring new parties to the table at any time. Doesn't have to be this year or next year; it could be further down the track. And we will make the case consistently that it is of benefit, not only in terms of opening up trade, market or access. It's a benefit in terms of the caliber of the TPP as an agreement; that it is world leading in terms of the terms and standards that it sets in areas like digital trade and e-commerce, or in areas like state owned enterprises and competition policy-type approaches. And of course, that strategically, it is of enormous value in terms of engagement in this region. And that has been a consistent message from Australia to US administrations for a long period of time that US engagement is a force for good in terms of the peace and prosperity of our region, that US engagement needs to be across the different pillars of engagement between nations, and that should include economic and trade pillars.

Now, the TPP is not the only vehicle it can be achieved through, but it certainly is an important and useful one. In terms of the WTO …

Ben Packham: And the US-China trade relationship?

Simon Birmingham: So look, the US-China trade relationship is clearly one that has been through quite a tumultuous period of time. I agree with Simon that the types of tariffs and measures put in place are unlikely to see some sort of swift change or move there. I think what we would hope and expect is there might be some greater elements of consistency or predictability, which is important in terms of trade or foreign policy in all of its elements. And so, the unusual nature of some of the agreements struck to date are things that we have questioned and urge that they need to be, of course, applied in the WTO consistent manner. I would hope the new administration will ensure that that is the case - that if they are striking trade agreements with China, that they have trade agreements that don't undermine partners, that don't strike special terms for the US, contrary to those WTO commitments that both the US and China are party too.

But of course, firmness in position is important as well. And so, the understanding that is- that has occurred in terms of the US and their need to position themselves to compete effectively, especially in areas of technology, is a very important part of the type of global competition that has driven advances in innovation across the globe and is also important to the US and their engagement right across the world.

Ben Packham: And Minister Birmingham, what's your prediction for how soon the WTO could begin to sort of function as it once did, you know, with the appellate body and so forth?

Simon Birmingham: There’s a few- there’s quite a number of challenges now there for the WTO. Firstly, it needs a new Director-General in place, and the appointment of that Director-General has, has stalled at the final hurdle right now. And I hope and urge all countries involved in that deliberation to recognise that a proper process has been run, that we had two high caliber women as the final candidates, and that we ought to rally behind the one identified through that process who is most likely to achieve consensus. And that I hope that the US, and all other parties too, of those discussions will enable that breakthrough to occur. Sooner rather than later would be better, but if it does have to wait until, until after January 20, well, so be it.

Then yes, the appeal body process, which is very much at the heart of, perhaps, some of the remarks I was making before this. The Trump administration has rightly identified problems; we've got to move from the problems to the solutions, and how we build the alliances, and the support to achieve those solutions. And I think that is the real challenge for a Biden administration coming in.

The battle- again, the battle there is, in terms of putting a timeline on it as you’ve said, Biden administration needs to build those alliances and then achieve consensus for reform in the WTO. And consensus is not easy to come by in the WTO process with so many countries of so many disparate positions at the table. So I, again, wouldn't want to anticipate a quick fix, but I hope that we can see early prioritisation of addressing those WTO issues – it is an important institution for the world.

We've seen, through this crisis, that a collapse in global trade volumes has a real impact on economies and jobs across countries around the world. And so, you do need that structured, rules-based approach to international trade that gives confidence for businesses, investors to take the risks that are inherent in trading and engaging internationally. And so, that is very much where our message will be, to prioritise engagement and alliance building at the WTO, focused on the solutions around the appeals body that can then give confidence, hopefully, to achieve the reforms that are necessary, and to re-spark the investment and growth that is necessary for trade to resume as normal.

Ben Packham: Simon Jackman, what are your predictions for the US-China relationship? And do you think that that might, if there is some improvement in that relationship, give Australia an opportunity for some sort of a reset with Beijing?

Simon Jackman: It’s interesting. One of the tropes that we are constantly batting away through the US Studies Centre, is that Australia's relationship with China is somehow completely determined by America's relationship with China. I think Ben and the Minister would know this intimately, those of us with a close eye on Australian strategic affairs and policy making in Canberra understand that Australia is more than capable of forming its own view about relations with China, and its own policy settings there. And that somehow the alliance with the United States is- there's a one-to-one mapping as to what our policy settings will be is- you know, I think is wildly unrealistic and misunderstands, fundamentally I think, how complicated and delicate the conduct of Australian diplomacy and how setting out foreign policy has been.

And frankly I think, in the main, how good a job successive governments have done with that extremely delicate act of prosecuting Australia's national interests, Number 1. But Number 2, okay, so what will change as a result of the Biden administration? One is, I think, the idea that alliances will be much more central to the way the US engages in strategic competition with China, I think will be- is a welcome, is a welcome development. Less America first, and less – I think the Minister used the word, unpredictability. I think, I think putting alliances and a sense of a firm footing, and perhaps an articulation of what is the strategic end state we're going for here? And we can use words like rules-based international order, free and open Indo-Pacific - but let's fill in the blanks a little more, and let's understand what our contributions will be to that, [indistinct] the capabilities and presence that Australia has, thickening up our relationship with Japan, what role the Quad will play on the security side.

But all of these other elements to what, to what presence in the region looks like? A way, necessarily so, from, I think, a way we've often thought about a relationship with the United States as, as being through the alliance and through the defense and security channel. There's so much more aide to that relationship, and, and as this group would understand, you know, the United States, for one thing, is our largest investment partner - both inbound and outbound. There's a lot more to the Australian-US relationship than the friends(*) channel.

Now, why is that relevant? Because we need those other channels in the relationship to stand up, to be part of the presence that's delivered, in both- in things like the Australian Government’s Pacific Step-up initiative, you know, I think, you know, increasing focus to South-East Asia as well.

The Alliance needs to sort of do two things. One is, operate regionally, Number 1. And Number 2, operate multi-dimensionally to deal with the plethora of challenges we face all the way through trade and investment over here, through to the security over there. And I think that's what we can expect to see, perhaps not immediately out of the Biden administration. But I think that, that sense is deeply ingrained in the, the circle of people around Joe Biden, and an understanding of the depth of the challenge that, that China's rise poses - Number 1. And Number 2, the only way that the Western democracies will be able to balance, or pick the appropriate word there, China is in concert with one another. And I think those are the things we can expect to see out of a Biden administration? And things, I think, the Australian Government will be, will be advocating forcefully for.

Ben Packham: We've got about five minutes left in the session. I'd love to ask you, Mr Birmingham, just on that issue of relationships and alliances. The Prime Minister being in Japan overnight, you know, we, we have strengthened our defence relationship with Japan, and, we have a sort of de facto alliance with Japan now. And the acquired in it as well is growing in importance, strategic importance. How, how large do those relationships loom for Australia going forward? And does that make it all the more difficult for us to return to a sort of more normal relationship with China?

Simon Birmingham: Ben, the strengthening of those relationships is something that successive Australian Governments have, have sought to do, and indeed, the Reciprocal Access Agreement signed with Japan shouldn't be viewed in the prism of today's headlines or today's issues because this is an agreement that has been the subject of negotiation for many years. And this is not a new idea that's come along during the context of this year, it is an idea and an aspiration that has been in place for a number of years preceding, indeed, many things and, indeed, dating right back to even when we were still only signing FTA’s with countries like Japan and China, for example.

So I do think we've got to keep a real sense of the long term perspective on the importance of some of those developments and engagements, and not buy into the immediacy of analysis that sometimes comes about as a result of it. They are important breakthroughs and it is only fitting and appropriate that Australia and Japan, as liberal democracies with shared commitments and values, particularly around market based economic principles and general freedoms and liberties, ought to cooperate in a very close way. And we are two significant G20 economies within our region who align in more closely and tightly held values and approaches to our systems than most other countries.

So it makes sense that we would want to strengthen our cooperation, including our Defence cooperation, in the types of ways we’ve done so. But that shouldn't be viewed in a way that creates ruptures with other nations - that ought to be seen as business as usual in many ways for Australia. And certainly doesn't change any of the posture or approaches that we take to the other nations in the region with whom we also seek to strengthen relations where we have mutually beneficial, complementary approaches to things. And you heard that in the Treasurer's speech just before that, when it comes to the relationship with China, our approach remains a consistent one.

Now, it’s consistent on the areas that have long been matters of difficulty. Australia's approaches to issues of human rights have been points of tension in the relationship for decades, and we've been consistent about that. But equally, we've been able previously to work beyond those points of tension and to achieve enormous strengthening of the people to people, ties of business to business ties. And we ought to remember that that strengthening has come at a great lift in terms of not only the economic benefits in both countries, but lifting hundreds of millions of people out of poverty, improving health and education and other outcomes in China and in other countries across our region, and there are human outcomes to be celebrated as well.

And that's why we continue to have a very strong posture of wanting to see the continued development of China's prosperity, and that continues to provide those types of benefits to people within China and across the region. But it has to be done in an environment where the region has stability, and order, and respect for a peaceful development of prosperity right across the region.

Ben Packham: Well, we're almost out of time here, but just 30 seconds or so, Simon Jackman, what- how do you see the wests recovery when a vaccine arrives? How quickly can they get back on track?

Simon Jackman: I think the magic word is vaccine. And I think we're at a really cool period right now. The way the case counts are exploding in the United States, backed up against- you know, we heard there’s good news out of these vaccines. But I think so much depends on, you know, in Australia's national interest, by the way. We need a powerful, resilient, engaged America; an America that is consumed and tied down by COVID is not in Australia's national interest. So there’s an awful lot at stake here -not just for the United States, but I think we're in- we're living- literally we're talking months. I think a lot turns on what happens over the next six to 12 months. If we're still in this situation where we are now with the pandemic six to 12 months from now, I think there are 10 to 20 year consequences of, of what- of a delay of that sort. To be blunt, I think we're, we’re at a really pivotal moment, not just for what happens over the next year or two in the world, but potentially over the next couple of decades, and potentially here in the region.

Ben Packham: Well, let's hope that 2021 is a lot better than 2020. Gentlemen, thanks very much for participating today. And back to you, Jackson.