The treasurer, Josh Frydenberg, has joined Australia’s voice to a coalition of nations urging the US and China to abandon their trade war, arguing the entire global economy is suffering as a result.
In a pointed plea that doesn’t mention the economic superpowers by name, but is unmistakably aimed at them, the treasurers and finance ministers of four middle-power nations – Australia, Canada, Singapore, and Indonesia – have warned “the risks of collateral damage are growing”.
“We should not resort to unilateralism and protectionism,” the group write in an article on the website of Australian Strategic Policy Institute publication the Strategist. “Pursuing confrontation instead of dialogue will only exacerbate risks, erode confidence and weaken the prospect of global economic recovery. Compromise is key to achieving win–win outcomes and mutual trust.”
While acknowledging that legitimate issues in the global trade system must be addressed, Frydenberg, the treasurer of Australia, Heng Swee Keat, deputy prime minister and finance minister of Singapore, Sri Mulyani Indrawati, finance minister of Indonesia, and Canadian finance minister Bill Morneau argue that uncertainty over the global outlook is forcing a slowdown in trade and manufacturing.
“Financial-market volatility and currency instability are on the rise, amid declining capital flows to emerging economies. Deteriorating global trade conditions are affecting investor confidence, business spending and productivity.
“We need to reverse course, and that requires acting collectively … we need to protect free and open markets.”
The ministers said the multilateral system established after the end of the second world war “allows both big and small countries to fulfil their potential”. Australia, Canada and Indonesia are members of the G20. Singapore is a regular invitee to the forum as leader of the Global Governance Group of small to medium-sized economies.
“The free flow of trade, investment and ideas has helped lift more people out of poverty than ever before,” the ministers write. “And the world’s growing middle classes are now broadening the opportunities for further exchange of goods, services and innovation.”
The ministers argue the multilateral system, in particular bodies such as the G20, can return the global economy to a more transparent and cooperative environment.
They cite the 2008 collective response to the global financial crisis and the 2015 measures to address multinational corporate tax avoidance as examples of international cooperation that had benefited all countries.
“To restore lost confidence, our multilateral system needs newfound strength to withstand the complexity of our current circumstances.”
The ministers’ remarks come as US president Donald Trump continues to escalate his rhetorical trade war against China, describing it as a “threat to the world” and arguing Beijing uses money made through unfair trade practices to boost its military spending.
“Obviously, China is a threat to the world in a sense, because they’re building a military faster than anybody,” Trump said. “I view China in many different ways. But right now, I’m thinking about trade. But, you know, trade equals military.”
Since July 2018, the US has imposed tariffs on US$360bn of Chinese goods and has plans to tax nearly all Chinese imports by the end of 2019. China has retaliated with tariffs on more than $110bn of US products.
Signs of progress are undermined by setbacks. Last week, about 400 goods, including plastic straws, dog leashes and Christmas tree lights, were excluded by the US from tariffs. But a Chinese trade delegation hastily cancelled a planned visit to farms in Montana and Nebraska, a trip widely forecast as indication Beijing may have been prepared to increase its purchases of US agricultural products.
As both countries prepare to return to high-level negotiations next month, Trump quashed speculation he might settle for an interim trade deal with China to boost the US economy in the lead-up to the presidential election next year.
“I’m looking for a complete deal, I’m not looking for a partial deal. We’re looking for the big deal.”
The US is publicly burnishing its collegiate credentials, meeting with key allies in recent days. Trump has had effusive and high-profile public events with the Australian prime minister, Scott Morrison, and the Indian prime minister, Narendra Modi, in the past week.