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Making China Great Again

“Passing the TPP (Trans-Pacific Partnership) is as important to me as another aircraft carrier,” said former US defence secretary Ashton Carter two years ago, as the negotiations on the huge new free trade organisation were nearing completion.

Given that the United States already has twice as many aircraft carriers as all the rest of the world put together, that comment could be taken several ways, but Carter actually did mean that the TPP was strategically important in his eyes. As it was for ex-president Barack Obama, who saw the TPP as America’s main tool for containing China’s growing influence in Asia.

China, deliberately excluded from the 12-member club, saw it that way too. The official Hsinhua news agency regularly referred to the TPP as “the economic arm of the Obama administration’s geopolitical strategy to make sure that Washington rules supreme in the region.”

But the Obama administration is gone, and Donald Trump has just cut off that arm. “A great thing for the American worker, we just did,” Trump said after signing a document withdrawing US support for the TPP on Tuesday.

In fact, quitting the TPP is unlikely to do American workers much good economically, but it may not do them much harm either. Most analyses have concluded that the deal wouldn’t have had much effect either way on US wages and jobs – but leaving the TPP will certainly have a big impact on US power and influence in the world.

Xinhua was right: for Obama, the TPP was always more about the strategic rivalry with China than it was about economics. It still is, but Donald Trump’s electoral strategy has obliged him to declare war on free trade.

The voters that Trump targeted most heavily were working-class Americans who felt betrayed and abandoned as the well-paying jobs in manufacturing disappeared. However, there was no point in telling them that automation was destroying their jobs (which it is), because he could not plausibly promise to stop automation.

But if he claimed that the real problem was free trade, which allowed the Chinese and Mexicans and other sneaky foreigners to steal American jobs…well, he could certainly promise to stop that. He would build walls, cancel free-trade deals, even launch trade wars. It all sounded pretty credible, if you didn’t know that the vast majority of the lost jobs were really being stolen by robots.

So once he was in office, Trump was obliged to “unsign” the TPP deal, even though its main purpose, from Washington’s point of view, had been to perpetuate American economic and strategic dominance in Asia and freeze China out. In the eyes of Trump’s supporters (and maybe even in his own), he was slaying a dragon.

It looks different through the eyes of America’s erstwhile partners. As Singapore’s Prime Minister Lee Hsien Loong said in August, eleven other countries had to make big and politically painful concessions in return for access to the huge US market. “If at the end, waiting at the altar, the bride doesn’t arrive, I think that people are going to be very hurt.” And hurt feelings do matter, even in diplomatic circles.

The biggest cost to the United States is the fact that America’s defection from the TPP doesn’t automatically kill the notion of an Asian free-trade bloc. Australia is already talking about keeping the TPP going without the United States, but the likelier outcome is that the Asian members start trying to link up with China, Indonesia and even India in China’s proposed Regional Comprehensive Economic Partnership.

In that case, the United States could end up excluded from a free-trading bloc that includes half of the world economy. The dominant economy in that bloc would be China’s, so the main practical effect of Trump’s action would be to give a major boost to China’s power and influence in the world.

This pattern is likely to be duplicated in other areas where Trump is pledged to abandon long-standing US diplomatic commitments. It is already happening in the domain of climate change, where Trump’s decision to “unsign” the 2015 Paris treaty to curb global warming has opened the door to a leadership role for China instead.

At the World Economic Forum’s annual meeting in Davos earlier this month, China’s President Xi Jinping said that “all signatories must stick to” the Paris deal: “walking away” from the pact would endanger future generations. And while Trump is slashing US spending on climate change, Xi has pledged to invest $360 billion in renewable energy in the next four years to reduce China’s greenhouse gas emissions.

It’s easy to look good in the eyes of the rest of the world when the standard of comparison is Donald Trump’s administration. He is making China great again, even if that is not quite what he intended.
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To shorten to 725 words, omit paragraph 10. (“It looks…circles”)

The End of the Big Trade Deals

US president-elect Donald Trump announced on Monday that he will cancel the “Trans-Pacific Partnership” on his first day in office (20 January 2017). That will kill the TPP off for all 12 countries that agreed on it just over a year ago: as Japan’s Prime Minister Shinzo Abe said, the TPP would be meaningless without the involvement of the United States. But then, it was pretty meaningless even with American involvement.

Japan and the US were the only two really big economic players in the TPP deal. All ten other partners – Canada, Mexico, Peru and Chile on the eastern side of the Pacific, and Vietnam, Singapore, Brunei, Malaysia, Australia, and New Zealand on the western side – have a total population scarcely bigger than that of the United States alone.

It was really just an attempt to create a Pacific trading bloc that excluded China, thereby preserving what was left of the traditional US and Japanese domination of the region’s trade. For just that reason, the other big trading economies of the region, Indonesia, the Philippines and South Korea, stayed out of it. They preferred to play the giants off against one another.

Chinese influence and trade in South-East Asia may grow modestly as a result of the TPP’s cancellation, but no profound transfer of power or wealth will ensue. There were no big tariff cuts coming as a result of the TPP anyway, because actual taxes on international trade were already low. The real focus was on removing so-called “non-tariff barriers”.

The classic example of a non-tariff barrier was Japan’s attempt in the 1980s to ban imports of foreign-made skis on the grounds that Japanese snow was “unique”. A great deal of detailed haggling in the TPP talks went into breaking down thousands of similiar (and sometimes equally ridiculous) barriers to trade, but any country that wants to keep those gains can just incorporate the same deals into bilateral trade treaties with other ex-TPP members.

Not many jobs would have been gained or lost, in the US or elsewhere, if the TPP had gone into effect. The same is true for the US-European Union equivalent of the TPP, the Transatlantic Trade and Investment Partnership (TTIP), which was dead in the water even before Trump was elected. Donald Quixote is attacking windmills, not dragons, because the great free-trading spree of 1990-2008 has already come to an end.

It was not working-class American voters who killed TTIP. It was mainly European consumers who didn’t want hormone-laden American beef, US-grown GM foods, and chlorine-washed American chickens on their supermarket shelves.

To be fair, European left-wingers also played a role in mobilising opposition to the deal, by raising the (probably correct) suspicion that the “Investor-State Dispute Settlement” process (ISDS) in the proposed treaty was designed to cripple the ability of European goverments to impose high safety standards in health and environmental issues.

Most of the jobs that moved from developed to developing countries in the heyday of “globalisation” (or often, in the US case, just from Rust Belt states to Sun Belt states where wages were lower and unions were weak or non-existent) left long ago. In recent years eight American jobs have been lost to automation for every one that went abroad.

Most economic strategies, including both protectionism and free trade, conform to the law of diminishing returns. The same goes for political strategies, but they tend to lag even farther behind the realities. That’s why the old white working class in the US (and therefore Trump) still feel compelled to “fight “ free trade – and why even Hillary Clinton, once an enthusiastic advocate of the TPP, was ultimately obliged to turn against it .

When she finally made that U-turn, Reince Priebus, the chairman of the Republican National Committee, mocked her as “a case study in political expediency.” Now he has been appointed as President Trump’s chief of staff, and he will change his tune accordingly. But the cross-party consensus on this does not make it the right tune.

The truth is that these now aborted free-trade deals were merely the finishing touches on an edifice whose basic structure was completed more than a decade ago. Those who had devoted their lives to building that edifice simply kept on doing what they were good at doing, necessary or not. And all the while technological change was conspiring to make them as irrelevant as the people who so vehemently opposed them.

Cultural lag being what it is, the last battles in this long war – probably between the US and its NAFTA partners, Canada and Mexico, and between the US and China – are yet to be fought. We may be entering the next decade before the political process anywhere seriously engages with the reality of automation as the main destroyer of jobs. But reality always wins in the end.
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To shorten to 725 words, omit paragraphs 7 and 8. (“It was…issues”)

It’s Abrupt Climate Change, Stupid

16 February 2014

It’s Abrupt Climate Change, Stupid

This is not how it was supposed to happen. The standard climate change predictions said that people in the tropics and the sub-tropics would be badly hurt by global warming long before the people living in the temperate zones, farther away from the equator, were feeling much pain at all.

That was unfair, because it was the people of the rich countries in the temperate zone – North America, Europe and Japan, mainly – who industrialised early and started burning large amounts of fossil fuel as long as two centuries ago. That’s how they got rich. Their emissions of carbon dioxide over the years account for 80 percent of the greenhouse gases of human origin that are now in the atmosphere, causing the warming, yet they get hurt least and last.

Well, what did you expect? The gods of climate are almost certainly sky gods, and sky gods are never fair. But they have always liked jokes, especially cruel ones, and they have come up with a great one this time. The people of the temperate zones are going to get hurt early after all, but not by gradual warming. Their weather is just going to get more and more extreme: heat waves, blizzards and flooding on an unprecedented scale.

“In 2012 we had the second wettest winter on record and this winter is a one-in-250-years event,” British opposition leader Ed Milliband told The Observer newspaper last Friday. “If you keep throwing the dice and you keep getting sixes then the dice are loaded. Something is going on.”

The “something” is abrupt climate change. In Britain, it’s an unprecedented series of great storms blowing in off the North Atlantic, dropping enormous amounts of rain and causing disastrous floods. In the United States and Canada, it’s huge blizzards, ice-storms and record low temperatures that last much longer and reach much further south than normal. Welcome to the “temperate” zone of the northern hemisphere.

There have been extremes in the “temperate” parts of the southern hemisphere, too. Australia has just had the hottest year ever, with record-breaking heat waves and severe bush-fires. Argentina had one of its worst-ever heat waves in December, and parts of Brazil had record rainfall, floods and landslides. But that is probably just the result of gradual, relentless warming. The abrupt changes seem to be mainly in the northern hemisphere.

Geography may explain the differences. There isn’t all that much land in the southern temperate zone, and the vast expanses of ocean that surround it moderate the land temperatures. Moreover, the polar jet stream in the southern hemisphere simply circles the Antarctic continent, and does not operate over land – whereas the northern polar jet stream flows right across North America and Europe. And it’s the jet stream that matters.

The extreme weather trend in North America and Europe is less than five years old, so the science that might explain exactly what is happening is still quite tentative. The first hypothesis that sounded plausible, published in 2012 in Geophysical Letters, blamed a slowing of the northern hemisphere’s polar jet stream.

The paper, entitled “Evidence linking Arctic amplification to extreme weather in mid-latitudes,” was written by Jennifer Francis of Rutgers University and Stephen Vavrus of the University of Wisconsin-Madison. The authors’ methodology has been challenged by other climate scientists, but I think that in the end Francis and Vavrus will turn out to be largely right. That is not good news.

They start with the fact that the Arctic has been warming faster than anywhere else on Earth, so the difference in temperature between the Arctic air mass and the air over the temperate zone has been shrinking. Since that difference in temperature is what drives the jet stream that flows along the boundary between the two air masses, a lower difference means a slower jet stream.

Now, a fast jet stream travels in a pretty straight line around the planet from west to east, just like a mountain stream goes pretty straight downhill. A slower jet stream, however, meanders like a river crossing a flood plain – and the big loops it makes extend much further south and north than when it was moving fast.

In a big southerly loop, you will have Arctic air much further south than usual, while there will be relatively warm air from the temperate air mass in a northerly loop that extends up into the Arctic. Moreover, the slower-moving jet stream tends to get “stuck”, so that a given kind of weather – snow, or rain, or heat – will stay longer over the same area.

Hence the “polar-vortex” winter in North America this year, the record snowfalls in Japan in 2012 and again this winter, the lethal heat waves in the eastern US in 2012 – and the floods in Britain this winter.

“They’ve been pummelled by storm after storm this winter (in Britain),” said Jennifer Francis at the American Association for the Advancement of Science conference in Chicago last week. “It’s been amazing what’s going on, and it’s because the pattern this winter has been stuck in one place ever since early December.” There’s no particular reason to think that it will move on soon, either.
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To shorten to 725 words, omit paragraphs 6 and 7.  (“There have…matters”)

Australia and East Timor

10 December 2013

Australia and East Timor

By Gwynne Dyer

And now for something completely different: a spy story that isn’t about Edward Snowden’s disclosures and the US National Security Agency’s surveillance of everything and everybody. This one could come straight out of a 1950s spy thriller: a microphone buried in a wall, a listening post manned by people with headphones, and transcripts of secret conversations delivered to negotiators.

Now it’s true that Australia is a member of the Gang of Five, more formally known as the “Five Eyes” (the United States, Canada, the United Kingdom, Australia and New Zealand), which share most of the information that they acquire through hi-tech mass surveillance. That’s the kind of spying that Snowden’s leaks are about, and whatever Australia picks up through this process it presumably shares with its co-conspirators.

It was in this context that Australia listened to the phone conversations of Indonesia’s president, Susilo Bambang Yudhoyono, his wife, and eight potential successors. When Indonesia recalled its ambassador from Canberra and protested, Prime Minister Tony Abbott swatted the protest away with the line they are all using now: “All governments gather information and all governments know that every other government gathers information.”

The Indonesian reply was a classic. “I have news for you,” said Foreign Minister Marty Natalegawa. “We don’t do it. We certainly should not be doing it among friends.” He was, he said, deeply unhappy about the “dismissive answer being provided” by the Australian government. So Australia has managed to alienate its biggest neighbour, probably for no advantage to itself, just as the United States has alienated Brazil with the same tactics.

But the kind of spying under discussion here was too shameful to share even with the other Four Eyes of the “Anglosphere”. It was an Australian-only operation mounted in 2004 to gather information about the negotiating position of a very poor neighbouring country, East Timor, so that Australia could rip its neighbour off in a treaty that divided a rich gas field on the seabed between them.

The treaty in question, “Certain Maritime Arrangements in the Timor Sea”, always seemed a bit peculiar. The CMATS treaty gave Australia a half share in the massive Greater Sunrise field, which is said to be worth $40 billion. But that field lies just 100 kilometres (60 miles) south of East Timor, and 400 kilometres (20 miles) from Australia.

The normal rule on international seabed rights would put the boundary equidistant between the two countries, but that would have given East Timor sovereignty over the entire gas field. Instead, CMATS postponed a final settlement of the seabed boundary for fifty years, and in the meantime gave Australia 50 percent of the revenue from the Greater Sunrise field.

The existing gas field off East Timor’s coast has only about ten years’ life left, and the the East Timor government depends on gas revenues for 95 percent of its incomet, so it was very vulnerable in those negotiations. The Australian negotiators could exploit that vulnerability because they had daily updates on how desperate their Timorese opposite numbers were: the Australian Secret Intelligence Service had bugged the prime minister’s and the cabinet offices.

Four ASIS operatives did the job, pretending to be part of a team of Australian aid workers that was renovating East Timor’s government offices. The man who gave the order was Australia’s foreign minister at the time, Alex Downer – who now runs a public relations firm that represents Woodside Petroleum, a major Australian company that was the main beneficiary of the treaty. Funny how things work out.

The operation would never have come to light if the former director of technical operations at ASIS, who led the bugging operation, had not had an attack of conscience on learning of Downer’s link to Woodside. He told East Timor about it, and the Timorese government then brought an action before the Permanent Court of Arbitration at The Hague demanding that the CMATS treaty be cancelled.

The Australian government’s response was to arrest the whistle-blower and cancel his passport last week so that he could not travel to The Hague to testify, and to raid the Sydney offices of Bernard Collaery, the lawyer who is representing East Timor before the Court.

The documents seized include an affidavit summarising the whistle-blower’s testimony at the Court and correspondence between Collaery and his client, Timorese president Xanana Gusmao. It’s more of the same sort of behaviour: the Australian government has decided to brazen it out.

Can Australia get away with this? Not legally. As Collaery says, “It was a carefully premeditated, involved, very lengthy operation with premeditated breaches of the Vienna Convention on the Law of Treaties, and premeditated breaches of the Vienna Convention on Diplomatic Relations. This is a criminal conspiracy, a break-in on sovereign territory and a breach of Australian law.” And he has three more whistle-blowers lined up to testify too.

But the case may still be settled out of court, because East Timor is still desperate. Woodside has not yet started developing the Greater Sunrise field, and it will never do so if there isn’t a deal. Offer East Timor another 10 percent and a promise to go ahead, and it will probably drop the case. The poor cannot afford justice.

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To shorten to 700 words, omit paragraphs 3, 4 and 13. (“It was…tactics”; and “Can…too”)