Buying exemptions: Donald Trump's tariff deal

5 Comments

 

The announcement by Donald Trump that he would make good his promise to take protectionist measures to bring back flagging industries has sent shudders through the free trade lobbies of the world.

Fiona Katauskas cartoonUtilising the 1962 Trade Expansion Act, Trump announced a 25 per cent tariff on steel imports, and a ten per cent rate on aluminium, due to come into effect next week. 'If you don't want to pay tax,' extolled Trump, 'bring your plant to the USA. There's no tax.'

White House trade advisor and populist Peter Navarro had taken a fairly absolute line, one always dangerous in Trumpland, by insisting that tariff exemptions were out of the question. 'As soon as he starts exempting countries,' explained Navarro to Fox News, 'he has to raise the tariff on everything else.' Just to show that he is attuned to the habituated schizophrenia of the current administration, Navarro told CNN in a separate interview that exemptions were possible, provided they served US interests.

Both Canada and Mexico were the first anointed powers to be spared, though this would come at the cost of renegotiating the North American Free Trade Agreement. There was, claimed Trump, 'great flexibility and cooperation to those who are really friends of ours', though it was a heavily costed flexibility. To date, both Canada and Mexico are resisting linking such dispensations with the Trump administration's renegotiating strategy.

Australia has been similarly spared — at some troublingly nebulous price. Malcolm Turnbull duly boasted that Trump 'would not have to impose tariffs on Australian steel and aluminium'. The battling prime minister had been 'relentless in fighting for Australian jobs and Australian exports and that's what I've done'.

On Saturday, Trump tweeted about developments with Turnbull over his commitment 'to having a very fair and reciprocal military and trade relationship'. But something was brewing. 'Working very quickly', stressed a suggestive Trump, 'on a security agreement so we don't have to impose steel and aluminium tariffs on our ally, the great nation of Australia!'

What, tittered the Canberra press gallery, did these words mean? In February, Trump had pressed Turnbull to deploy Australian forces in freedom of navigation exercises in the South China Sea. The feeling was palpable; that Australia was, as its political representatives have done for repeatedly shallow and untutored reasons, readying for another military plunge.

 

"The gross inequality between the powers has been neatly clothed in the language of accommodation and common ties."

 

Foreign Minister Julie Bishop insisted that nothing of the sort was taking place. 'There is no further security arrangement,' she told reporters in Adelaide on Sunday. 'There was no reciprocal arrangement as a result of the tariff exemption.' The exemption was linked to US national security considerations, rather than any new adventurism. 'The United States was not asking anything in return.'

This exemption affair has done little to encourage Australians keen on pushing a more robustly independent line from Washington's policies. A form of ceremonial subservience, and total deference to US power, has been exhibited.

The gross inequality between the powers has been neatly clothed in the language of accommodation and common ties. In one instance of crawling enthusiasm, business figures, including former golfer Greg Norman, attempted to woo the President by letter.

'We respectfully request', gushed the petitioners, 'that your economic team consider the historic trade surpluses, our $1.29 trillion two-way trade between the United States and Australia, and our critical defence relationship before taking any action that might have demonstrable impact on the mutually beneficial American-Australian bilateral relationship.'

Such sentiments are striking for embracing the inherent inequality of the Australian-US relationship. To be in deficit with the United States is seen as a good and necessary thing. It was a stance well and truly assured with the signing of the Australian US Free Trade Agreement during the Howard years, an arrangement typified by a stark ignorance on the part of Australia's negotiators. Even more damningly, the agreement actually reduced Australia's trade with the rest of the world while privileging US access to Australian markets in a blatant act of preferential liberalisation.

The other side of the price is Canberra's inconsistent approach to the US tariff regime. Australia's governments are pleased to embrace free trade even as they permit a power to impose tariffs. The Turnbull government has also shown indifference to any measure of redress that will be taken by states against Washington in the World Trade Organisation. 'Obviously, as a country that will be exempt from those tariffs,' confirmed Turnbull, 'we don't have a basis to bring a complaint, so I just want to be clear about that.'

While any reference to a 'security' trade-off might well be technical rather than substantive, the specific nature of this exemption further highlights Australia's self-dictated role as an emissary of US interests. An emissary, as it were, with an appealingly glorious and growing deficit.

 

 

Binoy KampmarkDr Binoy Kampmark is a former Commonwealth Scholar who lectures at RMIT University, Melbourne.

Cartoon by Fiona Katauskas

Topic tags: Binoy Kampmark, Donald Trump, Malcolm Turnbull, tariffs, free trade

 

 

submit a comment

Existing comments

President precedent. Circa 1963, then POTUS said America would no longer invest in the economies of supposed allies that failed to support it in its "peacekeeping role in South East Asia" (ie its brutal invasion and genocide of Vietnam and its people) Great War coward Menzies started conscription and backed the massacres of 3.8 million, and the money kept rolling in.
james marchment | 14 March 2018


Pres Trump`s words are somewhat enigmatic but he has to invoke national security reasons for anything he does on tariffs, and this could just be about giving him wiggle-room for special deals. If it is about getting Australia to support US in freedom of navigation exercises then that is not a bad thing, in m opinion, for moral, rule of law and national interest reasons. China should not be allowed to bully their neighbours so flagrantly without some protest. More pertinent to the whole tariffs argument is Australia`s very questionable use of so called "anti-dumping" rules to do the same thing as Trump, to the financial detriment of the common-good of the community as a whole. Trade protection is almost always bad policy except perhaps for the early industrialisation phase in poor developing countries.
Eugene | 14 March 2018


Isn't it patently obvious that with Trump everything is considered a "business"transaction. One of my mentors in university days had a saying- "nature gives you nothing for nothing and damned little for fourpence". Substitute "Trump" for "Nature" and you have it in one. You don't support us in the UN Security Council? then we will cut off your aid, because it shows you are ungrateful. There is no such thing for him as a moral imperative, or humanitarian largesse, let alone recognition of past support from others. And the craven grovelling of Turnbull and Bishop is absolutely galling. There is always a price, transaction by transaction. Running a country, and indeed running international affairs is just like running a business, right?
Dennis | 14 March 2018


The problem with trying to be moderate is that you’re defined by those at the edges. The raw fact is that if you’re not a great power, you’re a vassal, unless you’re a cheeky vassal like North Korea. Even then, you can only go as far as your patron allows. Since China needs vassals to counter-balance the US, Australia is either a vassal of the US or of China. Unlike Canada and Mexico, we don’t have the advantage of being a Siamese triplet to the US. With future improvements in technology, the US might not even need Pine Gap. If the special Atlantic relationship is only a wistful legend in the UK’s lunchtime (What? US diplomats can’t speak and read French, German, Spanish/German, Portuguese, Italian, Greek, Polish, Hungarian, you name it, and do their own connecting with Europe?), there’s no special relationship between the US and Australia, just THE KING and i. Swiss and Swedish neutrality only works if the great power opponents need neutrality for their own purposes. Trump is duty-bound to help his unemployed. Australia just has to factor that into any scheme it has to be indispensable to Trump.
Roy Chen Yee | 14 March 2018


I was conscripted and served in Vietnam in 1970/71.This service experience was to affect the course of my life, ultimately causing my retirement due to continuing ill health related to my war service. The current government's subservience to US policy sickens me, particularly when you have a very unpredictable POTUS in charge in the US. I have absolutely no doubt that Trump's decision to exempt Australia from his ill conceived Tariffs will drag us into yet another idiotic US military adventure. It's about time we stood on our own two feet!
Gavin | 15 March 2018


Similar Articles

Russian spy games: a Novichok fact check

  • Justin Glyn
  • 19 March 2018

It's like the plot of a John Le Carre novel: A former double agent found unconscious on a park bench; allegations Mother Russia poisoned him with a secret nerve agent; diplomatic repercussions. Before assuming life imitates art, it would be well to check our facts, not least because stumbling into war with a nuclear power is a silly thing to do.

READ MORE

Finding freedom after fleeing North Korea

  • Eunhee Park
  • 21 March 2018

Freedom is a common word that is often used in our daily lives, but it is not easy to define. Freedom for me means being able to express myself and be outspoken. It means thinking for myself and being free to be curious. Finally it means preserving important economic, social, and cultural rights. I am a North Korean refugee who escaped in 2012 for this freedom.

READ MORE

We've updated our privacy policy.

Click to review