Institute for Private Enterprise » Trade

US Defence & Immigration Policies; US/China Trade; OZ Energy Policy

Des Moore — Sat, 12 Jan 2019 04:57:09 +0000

Where Does US Defence Policy Stand Now

Trump’s sudden announcement that the US intends to “immediately withdraw” troops from Syria (and much reduced troops for Afghanistan) has caused much confusion as to US defence policy and, following the resignation of Mattis as Defence Secretary, Trump has found it difficult to get a replacement. While consistent with his election manifesto, Trump appears to have recognised that he was being too hasty and it appears he has accepted the view of National Security adviser, John Bolton, that the withdrawal be extended over a longer period and that it should first involve the elimination of IS (which Trump initially claimed had been achieved). Even so, policy uncertainty remains.

This has been increased by an address made by US Secretary of State Pompeo in Cairo, who declared the US was committed to “expel every last Iranian boot” from Syria where, in alliance with Russia, Tehran, in its drive for regional hegemony, has been propping up the murderous Assad regime. Without mentioning Mr Obama by name, Mr Pompeo heaped scorn on the former president’s “misguided” thinking on the use of military force and reluctance to call out “radical Islam”. That was a reference to Mr Obama’s preference for the term “violent extremism” when referring to Islamist terrorism and his call for an “opening towards Muslims” that would “transcend stereotypes”.

“Remember: it was here, here in this very city, another American stood before you … he told you that radical terrorism does not stem from ideology. He told you 9/11 led my country to abandon its ideals in the Middle East,” Mr Pompeo said as he argued Mr Obama had misjudged the Arab Spring uprisings. The Obama administration’s Middle East policy, he said, was an example of “what not to do”, whether in striking the nuclear deal or abandoning long-time ally Hosni Mubarak, Egypt’s ruler, allowing him to be brought down by an uprising orchestrated by the Muslim Brotherhood” (see Pompeo on US Middle East Policy).

It is difficult to see how Pompeo’s statements can be reconciled with Trump’s.

Who Will Break the Deadlock on Mexican Wall?

The refusal by Democrat’s House Speaker Pelosi and Senate Minority Leader Schumer to give Trump approval (in the House) for any finance for building the border wall with Mexico poses a challenge to Trump now facing a majority in the House. In return, Trump has refused to approve finance for a large number of federal government employees and has threatened to declare a national emergency which (it appears) would allow him to obtain indirectly finance for the wall. But Trump says he is “not yet” taking such action.

Trump has defended his position not with a tweeter but by making his first formal address from the Oval Office (see Text of Trump’s Address on Border) and has announced that he will not now attend the Davos meeting in Switzerland which purports to give major international leaders an opportunity to expound their international policies.He is also reported as actively promoting his view particularly in the south of US.

The Democrats are using the opportunity to remind people not only of their new majority position in the House but also of the problems which Trump is experiencing on implementing some of the various policies he advocates and the problems created by the partial shut-down of the federal government. However, the Democrats are not reported as addressing the illegal immigrant problem which previous Presidents have acknowledged and, in respect of which, some have supported cross Mexican border measures, albeit not one stretching across the country as Trump promised in his election manifesto.

In an editorial yesterday The Australian points out that “in 2017 the number of undocumented migrants apprehended for crossing into the US was just over 300,000, the lowest number in 46 years. In a year, however, that figure has jumped to 400,000. A Morning Consult/Politico poll shows 42 per cent of Americans believe there is a “crisis” on the border, 12 per cent perceive it as “a problem” and only 12 per cent see nothing amiss; Democratic leaders would be wise not to ignore those numbers” (see Merits in Border Security).

In short, the President of the US is correct in identifying an immigration problem, although he should have started to do that some time ago when he had control of both houses. He did of course attempt early in his Presidency to limit immigrants from seven mainly Muslim countries and there has been an ongoing debate in the US on the extent of controls on immigrants. The increasing immigrant policy problem faced by various countries, including the development of the UK’s English Channel problem (see Migrants Attempting to Cross English Channel), may now attract more support in the US for some tightening of controls.

As Greg Sheridan points out, “it is legitimate for Clinton, Schumer, Pelosi and other Democrats to argue that Trump is proposing a bigger wall than that which they previously supported, or that they have changed their minds. What is not legitimate is to claim that Trump’s proposed wall — refashioned rhetorically now into a barrier, and to be made of steel rather than concrete — is a unique crime against the very essence of humanity and decency. And the wall or barrier or fence that Trump wants to build would certainly help control illegal immigration. So, as ever, there is a good deal of plain common sense in the Trump proposal and it is also what he promised on the election trail … In the next few days Trump will either escalate, by declaring a national emergency and using extraordinary powers — which would be ridiculous but might be effective politically — or capitulate, with some minimal face-saving compromise. In the meantime he has again succeeded in being the trapeze artist from whom no one can avert their eyes” (see Sheridan on Trump’s Wall Explanation).

The Morrison government has made no comment on this matter. Without supporting Trump’s building of the wall, it would be appropriate in circumstances where there is a general public discussion on immigration policy for Australia to indicate support of the US’s attempts to establish an effective regulatory system to control migrants. That is, of course, a potential major election issue here.

US Trade With China

An article published in the Wall St Journal reports that talks on US/China trade have resumed and that this constitutes “a show of Beijing’s seriousness”. At this stage the representatives on each side are not the most senior but the preparedness of China to engage in talks follows an agreement reached between Trump and Xi in December that the US would suspend until March tariff increases on $US200 bn of Chinese imports and thereby give the Chinese time to address what the US regards as unfair trade and economic practices (China became a member of the World Trade Organisation in 2001).

China has an enormous trade surplus with the US, with in 2017 its exports to the US amounting to $506bn and its imports from the US only $130bn (see China’s Large Trade Surplus With US). This appears to confirm that Trump has correctly threatened trade action against China not for protectionist reasons per se but because China is not conforming with WTO rules. Even so, the various aspects discussed in the attached indicate the complexity attached to any unwinding of Chinese restrictions, which extend to investment in China. As a major source for Australian exports, it is important that a satisfactory outcome be achieved.

Energy Policy

In my Commentary of 1 Jan I drew attention to the Morrison government’s decision to carry-over emissions credits obtained under the Kyoto agreements and that this meant that Australia’s emissions reduction target of 26% by 2030, as agreed by Turnbull, will in practice be much less. I also noted that, as a result, the Coalition is an even better position than it was to contrast the adverse economic effects with Labor’s much larger target of a 50% reduction by 2030.

However, there remains much that needs to be done to effect a reduction in electricity prices and the operation of the electricity market. In his analysis of the problems that still exist, climate expert Alan Moran pointed out on January 9 that the latest report by the Energy Regulator, “in line with other official analyses, hugely understated how the electricity market has been undermined by 15 years of government subsidies to the inherently low-quality supply that is wind/solar” (see The Australian Energy Regulator’s Wholesale electricity market performance report).Moran offers a disheartening conclusion as follows:

“Its analytical shortcomings aside, the report’s call for stable policy is a forlorn one. With half a dozen major Commonwealth policy direction changes since 2001 (and many others at the state level) there is zero prospect of policy stability. There never can be such stability when energy policy is inextricably tied to emission reduction policy and the targets for renewable energy vary from zero to 100 per cent”.

If the Morrison government can further moderate its energy policy, it would increase its electoral chances. But as John Roskam said last Friday in an article in the AFR “The Liberals are terrified to talk about industrial relations, they don’t have an energy policy and on questions of values such as freedom of speech and freedom of religion they can’t agree among themselves on a position”. A lot of policy changes are needed.

US Wins at G20; Morrison Meets Trump; Germany Fails To Successfully Employ Renewables; Stone on Immigration

Des Moore — Sun, 02 Dec 2018 06:05:20 +0000

US Wins at G20 and Morrison Performs Well

Although there has been a “final statement” by leaders attending the meeting of the G20 in Argentina, the text does not seem available on the web and nor does the communique. However, some media are reporting on what was agreed. The outcome on trade was expected to reveal something on the what has been described as a dispute between the US and China (but which has implications for all trading nations). It appears that the US did succeed at G20 in obtaining agreement that the present arrangements need to be changed. The words reported as being used in the communiqué are as follows

“International trade and investment are important engines of growth, productivity, innovation, job creation and development,” the communique says. “We recognise the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement.”(see G20 Meeting According to the Guardian)

The US also appears to have successfully downplayed the notion that globalised agreements on policy issues are the way to go.According to the Guardian report, in particular “speaking off the record, a senior US official told reporters the US “specifically preserved and explained our position for why we’re withdrawing from the job-killing Paris agreement”. The official claimed to have seen signs of “the coalition fraying” among some signatories to the Paris deal, “like Turkey, like Saudi Arabia, like Russia”. Separately, it is reported that all except the US agreed on retaining Paris, although some only agreed reluctantly (the next IPCC meeting starts in Poland tomorrow). Note also the downplaying of the role of the IMF.

Historically, international meetings such as the G20 (which started with meetings every six months but these are now only yearly) have in practice had little effect on policy decisions made by individual countries, particularly by the US. Under Trump’s Presidency the US will be even more “nationalist” in its influence (particularly through his White House adviser, John Bolton) and, even with the establishment of China as a more influential nation internationally, there is no sign of “globalisation” of policies.

However, the meetings do provide an opportunity for smaller countries such as Australia to meet with the larger countries and let their leaders know of any bilateral support or opposition. Morrison took advantage of this in his 25 minute meeting with Trump, which occurred because Trump cancelled his sideline meeting with Putin because of Russia’s attack on the Ukraine navy. While it appears that Morrison failed to use the opportunity to explain why Turnbull ceased to be PM, he seems to have indicated support for the US on trade and on its policy on Iran and terrorism generally. According to Weekend Australian, “the Trump administration views Mr Morrison as a hardliner on border protection and has looked favourably on the Prime Minister’s pushback against Iran and his review considering shifting Australia’s embassy from Tel Aviv to Jerusalem”.

Trump certainly gave Morrison a big tick (see Morrison’s Meeting with Trump) and he should now use that to his advantage in Parliament and in enunciating Liberal policies. But as The Australian’s political editor points out, he can’t do it all himself. Rather, “Morrison needs to broaden that argument into a strategy based on policies that have been worked through with his colleagues and give his fractured followers something to focus on apart from each other” (see Shanahan on Morrison). As I argued in my Commentary last Thursday, Morrison needs to indicate that Turnbull’s (losing) policies have been changed and, in particular, his energy policy must ensure that electricity prices will fall substantially not through the so-called big stick approach but through a competitive market.

Energy Policy

On Energy Policy, there are recent developments which reinforce the views of skeptics on policies reducing CO2 emissions. These include

An assessment by a German analyst that “More and more people are about to realize, that supplying the world with stable energy from sun and wind only, will be impossible. Germany took on the challenge to show the world how to build a society based on green energy. They have now hit the wall. Germany has not reduced CO2 emissions over the last 10 years despite huge investments in green energy production capacity” (see Interesting Comment on Renewable Energy);
An assessment by a local physicist of the composition of C02 suggests that not only are ocean sources and plant sources independent but only some 27% of fossil fuel emissions remain in the atmosphere;
An analysis by Swedish sea level expert Nils-Axel Morner indicates that, contrary to IPCC reports, the rate of increase in sea levels has not increased.
Increased analysis showing mistakes in official temperature measurements which falsely show a faster increase in temperatures and a failure to acknowledge that the cause of increases is importantly due the natural causes.

The Morrison government could reduce the sympathetic beliefs by sections of the public, including last week’s street rallies by 10 year old children, that temperature and other weather changes are due mainly to human-caused production of fossil fuels. That would require a publication of a comprehensive report authored mainly by skeptics and should help the government justify the modification of existing targets of emissions and renewable.

Stone on Immigration

I have previously drawn attention to arguments advanced by Stone for a substantive reduction in immigration rates and for not signing up to the UN playing a role in advising on immigration policy. He has now published an article in Spectator complimenting Morrison on the government’s decision that Australia will join the US, Israel, Austria, the Czech Republic, Poland, Croatia, Hungary and Bulgaria in refusing to sign the UN’s ‘Global Compact on Migration’. At the same time he asks why the UN proposal to provide advice on refugees has been signed by Australia and why Morrison’s announcement to consider a reduction of only 30,000 from the immigration target of 190,000 (see Stone on Immigration). He points out that “Australia not only has a large and exceptionally costly refugee and other humanitarian resettlement program, but also makes contributions to countries (e.g., Jordan) where refugees are encamped, and in many cases to their countries of origin (most notably, Afghanistan)”.

Morrison Active But No Major Policy Statements

Des Moore — Tue, 06 Nov 2018 12:46:04 +0000

Morrison Active But Short on Major Policy Statements

My last Commentary (4 November) was headed “How Much Longer Can Morrison Last” and suggested that he must quickly address major policy issues and stop announcing handouts mainly designed to demonstrate that he is an “active” PM. But his decision to establish a electoral promotion bus to travel around parts of Queensland has so far not produced major policy statements. Of some interest is that senior Queensland Liberal Steve Ciobo (who voted for Dutton in the leadership spill) “refused to say yesterday whether the leadership switch to Mr Morrison would help improve the government’s stocks in the state”: ‘I don’t think it serves anyone’s purpose and I also don’t think, frankly, that Queenslanders or indeed Australians more generally, care about what’s happened,’ Mr Ciobo told Sky News (see Morrison Qld Bus Tour).

There have been, and remain, opportunities to make major statements or explanations of policies.

The first relates to the US’s announcement not only of a re-imposition of sanctions against Iran but an increase compared with what they were before Obama (with help from the Europeans) announced a virtual abandonment of them. An editorial in today’s Australian points out that “Just as Scott Morrison is right to have announced an updated review of Australia’s support for the deal, so should Europe do the same”. It also quotes the assessment by Colin Rubenstein (of the Australia/Israel & Jewish Affairs Council) that “Archives of smuggled Iranian intelligence documents revealed by Israel have shown that, contrary to assertions Tehran has been complying with the deal’s terms, it has pursued “a (secret) strategy of noncompliance and incomplete disclosure of its nuclear capabilities and ambitions in violation of the (deal’s) letter and spirit” (see Sanctions on Iran).

With Iran so reliant on its oil exports, and already experiencing a high unemployment rate, the US sanctions will make it increasingly difficult to continue to finance terrorist groups in the Middle East and, in particular, those groups which are a major threat to Israel and which are taking quasi-military action against residents of that country. It will also make it difficult for European countries to sustain their agreement with Obama to accept Iran’s undertaking not to develop its nuclear capacity. A statement endorsing the US announcement could be presented as, inter alia, strengthening Australia’s support of the US and its alliance with that country.

The second opportunity for Australia to make a major statement has been on immigration. In my previous Commentary I drew attention to the excellent article by Judith Sloan outlining the strong domestic support for action to reduce immigration (see Reduced Immigration a Possible Morrison Winner).

A third opportunity would be less about making a major statement than providing an indication that Australia strongly supports the announcement by Chinese President XI that it will open its economy. Inter alia, XI has just stated that “China has pursued development with the door open and succeeded in transforming a semi-closed economy into a fully open economy. Openness has become a trade mark of China. China’s door will never be closed. It will only open still wider” (see China to Open Economy). China is of course far from providing the openness which XI claims as its objective: but it is a promising development.

So too is the apparent change in Chinese attitude to Australia through its invitation to our Foreign Minister to pay an official visit to China. As Greg Sheridan points out, Australia has been prepared for some time to stomach the failure to receive such an invitation while also being “as close to the Trump administration on broad security issues, especially Indo-Pacific security issues, as any nation in the world”. While one has to see how this works out in practice, it should be officially acknowledged as being as welcome as the open economy is (see Improved Chinese Relations Reflect Trump).

Australia should also recognize that these developments in Chinese policy almost certainly at least partly reflect the response to Trump’s trade policy. The apparent inability of the World Trade Organization to ensure that China conducts a “fair trade” policy has arguably forced the US in particular to take measures which force China to adopt such a policy in its trade with the US and, in doing so, this inevitably extends to trade with other countries. This has been widely criticized as threatening a move to a “protectionist war” between countries. But it appears that the US has set itself up as a de facto WTO and that genuine protectionist policies are limited. It runs a deficit on international trade (ie imports exceed exports) of over $US50 bn a year and this has been increasing.

Government Policies/Advocacies

Des Moore — Thu, 04 Oct 2018 00:56:06 +0000

Today’s media contains reports which are of serious concern in regard to the capacity of governments and political leaders to operate or propound policies which are in the interests of communities considered as an entity rather than of particular groups. These are briefly described below and, except for two, the attachments.

Morrison Government Policies

I have already expressed some concern that the Morrison/Frydenberg government is portraying itself as too close to the Turnbull regime. This seems to be reflected in statements and policies which are now being made and/or implemented by those two. For a start, it is now reported that, instead of distinguishing his government from Turnbull’s, Morrison has in fact offered Turnbull in New York that some of his travel costs on “government business” could be met (see Turnbull’s Travel Costs Offered by Morrison). This comes on top of his acknowledgement of having frequent contact with Turnbull in NY.

And, although Morrison is attacked front page in the Fairfax press on failures (sic) to implement climate change policies or indeed to take them further (see Fairfax Attacks Morrison for Abandoning NEG), Fairfax overlooks his retention of emissions reductions and increased renewables while continuing, contradiction ally, to claim that power prices will be reduced and that he has appointed a minister to do this. No indication has been given as to what attitude the government takes to the IPCC report to be released on Sunday next and which is already reported to once again be endorsing the dangerous warming theory. This despite it being the umpteenth such report which has made incorrect temperature predictions and failed to attribute to reasons other than CO2 increases which may have caused temperature increases (see attached letter published in The Australian by expert analyst William Kininmonth on CChange).

As to the budget, the Australian’s David Uren notes that while “the Morrison government appears to have decided that budget repair is mission accomplished,

big spending decisions — the $4.6 billion fix for school funding and the $9bn fix for Western Australia’s GST — are unlikely to be offset by savings. There is still a drought package, a small business tax package and a federal election to come” (see Morrison/Frydenberg to Ease Budget Policy?). Yet while both Frydenburg and Morrison have acknowledged that new spending should be offset by savings, they do not give any undertaking of such action. Uren rightly concludes that “there should be a greater buffer against adversity in the budget before we start spending surpluses that are yet to arrive”.

As to the ABC, apart from the appointment of the very pro-ABC Ferguson as acting chair (for which there has been no explanation), Morrison seems happy that the inquiry by the Departmental head will provide a satisfactory basis for possible changes. Yet controversies continue about what actually happened to instigate the sacking of Guthrie and why Ferguson could not have been requested by the Minister for Communications to make obviously-needed changes as a condition of her appointment. In the attached article (ABC Stuck with Greenism) former Chair Maurice Newman identifies many but his reference to the failure to handle complaints (0.5% upheld !), and the rejection of an analysis by expert Meteorologist Bob Fernley-Jones, indicate the need for immediate change (and for there to be a change which would give credibility to the government).

As to foreign policy, the increased foreign activity by a China, now run by a Marxist who has “shuffled” leaders to centralized power in himself, requires much greater expressions of concern by Australia. This applies to inter alia a number of Chinese activities including in the South China sea. Defence Minister Pyne, who addressed a dinner I attended on Wednesday evening, said that Australia will be participating in an official group which will be sailing through the SC sea but did not say whether that group would accept any Chinese restrictions and what it would do if the Chinese acted as it did against a US ship (see Chinese Threaten US Warship).

Morrison’s attempt to explain that Australia has good relations with both the US and China fell short of what our foreign policy requires, which would include endorsement of US policy supporting independent nations and which recognises how important to us the US is militarily. Pyne mentioned that we have increased defence spending since the cut-backs under Labor and said the aim is to lift defence spending to 3% of GDP from the 1.9% aim in 2018-19. But we are small and the planned new subs have not yet been started and will not be ready until 2030.

This situation requires closer support of US defence/foreign policies, including the de-nuclear policies in regard to Iran, which has now attempted a bomb plot in France where the counter-government for Iran is situated (see France Threatened by Iran). The US describes Iran as “the world’s top sponsor of terrorism” and it has conducted terrorist activity in countries distant from itself. Australia should recognise and support the US policy on Iran.

Interpreting the Summit

Des Moore — Sat, 16 Jun 2018 03:04:38 +0000

Some Possible Implications of the Summit

As might be expected with a meeting which lacked definitive agreements, the media (and other commentarists) containmuch speculation today about what has happened and what might now happen. The general reaction seems to be that, while NK has agreed in principle to denuke, that is no different to what his father and grandfather did and it is unlikely that much will be achieved on that side. On the Trump side there are expressions of concern that too much has been conceded unnecessarily.

My letter below, published today in The Australian with some deletions by Ed but restored below in square brackets, takes a more optimistic view under the heading used by Ed – Denuclearisation in Practice Will Demand Finesse

“What is the biggest threat to life on earth? Answer: That the crazy leader of a country with nukes will send a few off to countries he doesn’t like and millions of people will then be killed before he is. [Does this crazy person seem like the present leader of North Korea? Answer: Yes, without doubt.]

What should we do about it? First the leaders of the most important country in the word (the US with its nukes) warns him of the dangers to his country unless he denuclearises. Second, when that doesn’t work, those same leaders tell him there is a better life available for him and his fellow citizens. Third, when that doesn’t work either the current leader of the USA offers to talk to him one-on-one about the benefits from denuclearisation.

After many years of failure, this has now been done. But many don’t like the current US leader and object to what he is offering Mr Crazy, even to meeting him at all. Others would say that the current US leader has shown courage and adopted the only available course short of war.

And, as Prime Minister Turnbull said, isn’t it worth a “red hot go”, all the more so as Trump can withdraw his offer of benefits without any loss except perhaps to his status? [Well, yes and that Trump guy deserves praise.]”

But more comprehensively, Chris Kenny, has an article which gives the best analysis of both Trump and (to a lesser extent) Kim and suggests that the treatment of Trump by the media and other branches of US society (add Australia and other countries) is astray (see Kenny on Trump). This is summed up in the following extract

It is embarrassing to watch, and unhealthy for the players as well as the democracies they serve. Rather than learn anything from the Trump ascendancy they seem determined to teach their nemesis a lesson. But their vitriol can only help Trump, bringing his defiance of the media/political class into sharper focus, highlighting his achievements and ensuring his enemies are stuck in the mire of their disastrous 2016 campaign instead of thinking about how they might do better in 2020. This must be the longest dummy spit in political history.

Kenny argues that Trump has been successful because he “speaks to voters” and is “the exemplar at targeting his audience”, which “makes him a more authentic and honest communicator than other politicians” and this means that his inconsistencies are downplayed. “In other words, even though he sometimes thinks different things at different times and sometimes gets things wrong, Trump says what he thinks. There is no filter. He doesn’t care about the parsing in full carried out by journalists; he tidies up directly with the public”.

I recommend that Kenny’s article be read in full.

This is not to overlook that there are potential problems posed by Trump’s agreement with Kim and these are discussed in Sheridan’s article (see Sheridan on Trump). They include

His “contemptuous and counter-productive disregard for US alliances, his exaggerated need to personalise every issue around whether he is flattered, and his general inability to follow though anything with consistency”. But that Trump has been critical of some in alliance with the US is often justified by their failure to maintain the principles of western beliefs and they have, in fact, benefited from Trump taking back the US’s role as world leader which was lost under Obama. Trump is not the only President to differ with US alliances: Australia has differed with the US in its interpretation of what the west should do in the Vietnam War and the withdrawal from Iraq. Certainly, Trump’s handling of the recent G7 conference might have been done more diplomatically, but his actions contrast with the failure of such conferences in the past to reach any substantive agreement because they judged it best to be ‘diplomatic’;
His agreement with Kim has “been woollier and less specific than the previous (NK) ones”. But the Kim agreement to denuke has only just started and there is no indication that a nuclear (or other) attack on another country (incl SK) will not result in US assistance in some form;
His suspension of US/SK military exercises does not constitute a potential reduction in US help to SK (or other countries in the region).That suspension can be changed overnight and the US troops remain in SK and will reportedly be more active in other ways. It is far too early to see a US withdrawal from Asia;
Trump’s declaration that it is OK for China to remove some of its sanctions against NK contrasts with Trump’s National Security Strategy which identifies China as a strategic rival. Depending on what sanctions are removed this could be of concern, although it may be in response to a prior agreement with China, which appears to have helped pressure Kim to emerge from his shell. In any event Trump has not let China off the hook by his announcement yesterday that the US will put a large volume of China’s exports to the US on tariffs.
Sheridan’s quotation of the critical view by a senior George Bush official (that T doesn’t understand what alliances mean) is a surprise and fails to recognize that Trump has started, or tried to start, a new era in the (smaller) significance of alliances and has started the America First alliance.

Trade between the US and NK was not an issue at the summit, if only because about 75% of NK trade is with China. But NK trade is an issue that relates to Trump’s encouragement to NK to open its economy. More generally, with the new tariffs on imports from China coming on top of the general tariffs on steel and aluminium (with some exemptions), it appears that trade will become an increasingly important issue on Trump’s agenda. I was reminded of this by today’s report that the EU Trade Commissioner is about to visit Australia (see EU Supports Rule Based Order)

I am not up to date with Australia’s trade in agriculture with the EU but some readers of this Commentary will be aware of the Common Agriculture Policy adopted before the EU was formed by the then existing EEC (the monetary union did not start until the 1990s) . The tariffs put on agricultural imports from outside the EU, and the subsidies for EU farmers, stopped or largely reduced our exports to the EU and those exports were only “saved” by the opening up of the Japanese and (later) Chinese markets. The latest report by the EU reports that it is now exporting agri-food products of E138 bn (up 5% on last year), that it has a net trade surplus of E21bn in such products, and that assistance to farmers (ie subsidies) takes about 40 per cent of the EU Budget. Yet the attached report has her denying that European agribusiness policy is protectionist. “It is sensitive for us. I don’t think it’s correct to say we have a protectionist policy here; we reformed our common agricultural policy quite profoundly last year.’’

This is just one of the examples of why Trump is correct in claiming that existing international arrangements have adverse effects on the US (and on Australia). It is bad news that the EU TC has been working with Australia’s Ciobo to attack US trade policy. We should be helping the US where that country can legitimately claim to be unfairly treated.

ANU Disease Spreads; G7 Win for Trump

Des Moore — Mon, 11 Jun 2018 06:44:00 +0000

ANU Disease Spreads

The refusal of the ANU to accept a course on Western Civilisation has “inspired” support from other academics. By contrast with the Vice Chancellor at the ANU, the VC at Sydney, Michael Spence revealed on June 5 he was considering entering into a memorandum of understanding with the Ramsay Centre to collaborate on a funded course and scholarship program. Dr Spence described the course as “really interesting” and “very, very far from the kind of thing you might imagine”. “It is all primary texts: there is certainly nothing like Harold Bloom in the curriculum,” he said, referring to the prolific but polarising US literary critic.(According to Wikepedia, Bloom has inter alia surveyed the major literary works of Europe and the Americas since the 14th century, focusing on 26 works he considered representative of the Western canon, which is^] the body of books, music, and art that is widely accepted –but subject to dispute- as the most important and influential in shaping Western culture).

According to The Australian, “University of Sydney academics have reacted furiously to the news, with more than 100 — including refugee and pro-Palestine activist Nick Riemer, fellow boycott Israel campaigner Jake Lynch and Tim Anderson, who courted controversy by defending Syrian leader Bashar al-Assad — signing an open letter signalling that they are “strongly opposed to the university entering into any arrangement with the Ramsay Centre. The letter, written by Dr Riemer and history professor Adrian Vickers, refers to “political leanings” of the Ramsay Centre board, chaired by former Liberal prime minister John Howard and including Tony Abbott. It accuses it of propagating a “conservative, culturally essentialist, and Eurocentric vision” and claims its program embodies “chauvinistic, Western essentialism”. “We are deeply disturbed by the possibility of Ramsay Centre courses being part of our institution, to say nothing of the significant and justified reputational damage that the university collectively, and its academics derivatively, would incur as a result,” the letter says. “We belong to a multicultural and hybrid society in a world traversed by serious geopolitical and social animosities. Collaborating with the chauvinistic Western essentialism that the Ramsay Centre embodies would be a violation of our crucial role in promoting a society of diversity, inclusiveness and mutual respect.”

(see Sydney Uni on West).

It is difficult to see how these academics would see that “reputational damage” could be incurred if the Ramsay proposal was accepted and a course taught at Sydney or ANU. Rather the opposite. Their action has almost ensured such damage – of them. My own contacts with university academics (and students) indicate that those who purport to be “modern” are often astray: in science, for example we see many academics who claim that temperatures will rise dangerously if we humans continue to have lives which use fossil fuels which have been developed under Eurocentric innovation; in music, the “Eurocentric vision” still embraces Bach and Beethoven, as does Gilbert and Sullivan; and so on.

Turnbull has indicated that he plans to talk with the ANU’s VC, although the danger there is that both have greeny views. One hopes that Turnbull will remind Schmidt (and other VCs) that the taxpayer provides considerable funding to universities and he expects genuine diversity in available courses. It appears that the general reaction to the universities would favour “disciplinary” action. I had a brief letter published amongst a number of others published by The Australian, viz

Credit to Maintain Strength of Western Canon

Letter Published in Weekend Australian, June 9-10 (Bits in square brackets deleted by Ed)

It is useful to know from the vice-chancellor of the ANU, Prof Schmidt, that the institution is not “anti-Western values” and that the decision not to accept the Ramsay Centre proposal for a course on Western civilisation reflected no more than a possible impingement on academic autonomy. Although not stated, this implies that the course and the staff would need first to be approved by the ANU.

But while approval by the university is naturally appropriate, was Schmidt’s concern that such a course might conceivably develop such an impingement? [(“Turnbull wants answers over axed uni course”, 8/6)].

It would also be useful to know whether the ANU’s Centre for Arab/Islamic Studies has courses and staff which are approved by the centre. [That would ameliorate concern that many have felt about reports that some staff or visiting presenters may have sought to persuade students of the merits of civilisations and policies in countries such as Iran.]

Des Moore, South Yarra

G7 Communique

There has been considerable speculation about how Trump would handle the G7 meeting held in Canada on 8-9 June and chaired by Canadian President Trudeau. Some Australian media suggested he would be “isolated”. As it turns out, it seems more accurate to say the other way around!

First, Trump started by proposing that Russia be restored as a member (it was removed after its invasion of Crimea and its activities in Ukraine). This was rejected by other G7 members and the only reason Trump may have proposed it is to upset the others.

Second, the G7 Communique apparently agreed by the G7 did not include any reference to the Paris Agreement on climate change, presumably because Trump would not have accepted any such reference.

Third, the Communique does include an agreement to “modernize the WTO to make it more fair as soon as possible”. It also calls on “all members of the Global Forum on Steel Excess Capacity to fully and promptly implement its recommendations. We stress the urgent need to avoid excess capacity in other sectors such as aluminum and high technology”. This appears to be consistent with Trump’s policy on changing international trade arrangements and his recent increase in tariffs on steel and aluminum imports.

Fourth, Trump has now withdrawn his agreement to the Communique because, he claims, that at a news conference after the meeting Trudeau made critical statements and indicated (probably for home consumption) “I have made it very clear to the President that it is not something we relish doing, but it is something that we absolutely will do,” Trudeau said. “As Canadians we are polite, we’re reasonable, but we also will not be pushed around.” It is relevant that 75% of Canada exports go to the US. Read more here.

All up, it seems clear that, while Trump was isolated, he has won the first round with European/Canadian countries. As with Canada, the members of Euro have favourable trade balances with the US. Australia has been exempted from the US tariff changes (US exports to Australia are over twice as large as our exports to the US). Of course, nobody wants a trade “war”: but Trump is in a strong position to challenge the basis on which some exports are sent to the US.

Our Power Bills

Des Moore — Fri, 15 Sep 2017 11:10:57 +0000

Is Turnbull Capable of Determining an Energy Policy?

Today’s Australian says that the Renewable Energy Target (RET) of 23.5% by 2020 will not be changed as part of what is described as Turnbull’s overhaul of energy policy (see Renewable Energy Target). That target was reduced by Abbott when he was PM and the recent National Party Conference voted to “repudiate the central finding of the Finkel review for a clean energy target and eliminate subsidies for renewable to maximise the difference with Labor over surging power bills”, and hence to reject the Finkel proposed clean energy target of 42% of renewable energy by 2030. However, it appears that the halt to increasing the RET mainly reflects the mounting cost of the subsidies, which ran to a remarkable $2 billion just last year and which may already have reached the point where a continuation of the scheme would exceed the RET target without any new investment. There is a reference in today’s report to the likelihood of allowing more subsidies to those whose projects have not been completed. In other words the taxpayer is handing out money to a badly constructed scheme, not to mention the bad decision to have one at all before properly reviewing the basic need for it.

The National Party Conference vote also refers to “surging power bills”. That has led Shorten to claim that during the time the Coalition has been in office (since 2013) the average cost of electricity to households in Sydney has increased by $1000. However, while Energy Consumers Australia (which is part of the Environment Department) is reported as saying Turnbull is correct in claiming Shorten is wrong, the latest web Update of Energy Consumers does not extend beyond January 2017 and would exclude the very sharp recent increases. My AGL electricity bill for September (which arrived two days ago) is 40 per cent higher than it was a year ago when calculated on a daily basis. That is an increase of $360 per quarter or about $1440 a year if continued. Further, contrary to Turnbull’s recent announcement that electricity retailers have agreed to be more explanatory, AGL offered no justification.

Separately, the ACCC head is reported as classifying AGL as a monopoly but being over-ruled by the Competition Tribunal. There is a strong case for Turnbull to insist on another inquiry (AGL’s share price has risen). Reports of a survey also indicate that very few believe policies which are current or promised by each major party will lead to lower prices. Indeed, even if AGL’s Liddell generator is bribed to continue beyond 2022 (AGL has said publicly that it wouldn’t), each party promises to further reduce the use of coal-fired generators and prices must increase further. Turnbull’s attempt to devise an energy policy by appointing Finkel as Chief Scientist and commissioning him to report on that policy even though he has no background in climate policy, is to put it mildly a policy in total disarray.

Andrew Bolt rightly says that Turnbull “can win the next election just by fighting Labor’s global-warming crusaders on electricity prices. In fact, he and Energy Minister Josh Frydenberg have banked on it. But Turnbull is wrong: the way he and Frydenberg are fighting — timidly and erratically — is backfiring” (see Bolt on Turnbull). Turnbull and his advisers have made so many bad decisions on energy policy that he is adding to his polling problem.

Iran and North Korea

The testing by NK of missiles capable of carrying a nuclear weapon (or worse) has been subjected to enormous public attention and questioning in the media, with the latest missile this morning landing in the Japan sea and being accompanied by a statement from an NK authority to the effect that Japan should be sunk too. This will add to the case for a pre-emptive response.

But what has been neglected has been the threat from Iran. The attached article by an Israeli policy analyst at Melbourne-based AIJAC draws attention to several aspects of the mounting threat from there, including the report that Iran may have obtained 19 advanced ballistic missiles from NK, its hosting of the head of Iran’s Parliament (sic), and its policy of establishing greater influence regionally, including in Iraq/Syria (see AIJAC on Iran/NK Threat) The author concludes that “If there is one lesson from North Korea, it is that failure to act now to halt Tehran’s progress will have serious repercussions later.Iran’s hegemonic ambitions and destructive activities already extend well beyond its borders. Adding nuclear weapons to the mix will set up a dangerous future for what is already the world’s most fragile and unstable region”.

Shann On Improved Econ Outlook

Ed Shann, who is one of Australia’s best economic analyst, writes in today’s Herald Sun that “China is booming again” and that the world economy looks healthier than for some time. This assessment is encouraging and contrasts with other rather gloomy ones (see Shann on China/World Outlook).

EU & Australia Free Trade Agreement?

I was amused to read yesterday that, in responding to the possible adverse effects from Brexit, the President of the EU said the EU should strike new trade deals and “we are asking that we open up negotiations with Australia and New Zealand”. This after many years of discriminating against imports from Australia!

Turnbull & Trump

Des Moore — Wed, 25 Jan 2017 13:04:11 +0000

As we get closer to the resumption of Parliament on Tuesday 7 Feb, many have increasingly wondered what issues the Turnbull government will prioritise in the New Year and how it will react to the new Trump government in the US. In today’s Herald Sun (see below), Terry McCrann suggests that Turnbull has offered few indications of the policies he intends to pursue actively and gives the impression that he is ill prepared to handle the new policies which Trump has indicated he intends to pursue in the US. This confirms, McCrann says, what he said back last April when he wrote that “Turnbull was a complete dud”. Perhaps Turnbull will make his position clearer in his promised major address on February 1.

As regards Australia’s foreign trade policy, it is pertinent that Trump has quickly confirmed what he repeatedly said during the election that the US will not be a participant in the Trans Pacific Partnership (TPP) agreement (Clinton said that too). The TPP was signed in February 2016 by only 12 countries after seven years of negotiations but has not come into effect because only Japan had ratified it before Trump confirmed his position. True, the agreement contained measures to lower both non-tariff and tariff barriers to trade and was presented by all member governments as conducive to increased trade and economic growth. True also is that, along with his decision to re-negotiate the North American Free Trade agreement and his threat to offset alleged subsidization of Chinese exports, Trump is therefore widely seen as a “protectionist” and a threat to international trade generally.

But it is in reality difficult to say to what extent this is or will be the case. There are certainly some analysts who dispute that there would have been net benefits from the TPP as agreed by only 12 countries and who see the current international treatment of Chinese trade more as a political policy aimed at modernise China and open up that country’s economy and social relationships. It is also possible that, as the supposed world leader in freeing up trade, the US has accepted trade agreements or trade policies which have not been favourable to it in net terms and which the Trump would be justified in changing.

Whatever, McCrann is right in saying that the TPP is dead, buried and cremated. It was futile for the Turnbull government to have Trade Minister Ciobo apparently attempting in Washington to revive the TPP by persuading Republicans to support such a policy. Surely our government would have decided before Trump took over that it would accept a US withdrawal from the TPP given that Trump had announced such a policy early in the US election campaign? Surely too it would have recognised that any attempt to have China take the place of the US, as Turnbull has seemed to suggest is a possibility, would be unrealistic given that China was not involved in the TPP negotiations and that Australia already has a “free” trade agreement with China?

What has quickly become clear is that Trump intends to pursue the same extended policy as Obama viz wherever possible, and wherever he judges it will benefit America, he will use his executive power to make decisions which reverse those made by Obama. Moreover, Trump is making these decisions as quickly as possible on the basis that he has an electoral mandate. It remains to be seen how far he can go with such an approach without experiencing legal challenges. But it seems likely that he will be able to reverse the many executive decisions made on environmental policy either by Obama himself or through his direction to the Environmental Protection Authority. Such reversals have important implications for Australian environmental policies and, judging by his handling of trade policy, Turnbull and his Cabinet will not have already considered them adequately, if at all.

As more is revealed about the background to Obama’s decisions in other areas, Trump is likely to implement more reversals. I have already mentioned that the now former head of CIA, John Brennan, had denied any connection between Islamic religion and militancy. This evening’s news reported that Trump has announced a policy of restricting immigration and access to the US for refugees and visa holders from Iraq, Iran, Libya, Somalia, Sudan, Syria and Yemen ie countries with predominantly Muslim populations. Also reversed are the prayer arrangements apparently made at the White House for Muslims and some other religions (see article below from a conservative news organisation in the US on Obama Crushed After Trump Orders White House To Stop His Sickest tradition).

Many commentators have complained that Trump’s policies have created uncertainty that will have adverse effects for his government and there is no doubt that there are numerous groups strongly protesting and demonstrating against his decisions. The other side of that coin is that Obama created uncertainty about US policies, both foreign and domestic, through the many major changes he made over the eight years he was in office and which also had many adverse effects. Arguably, while most of the media did not support Trump’s proposals, they were all subjected to intense scrutiny during a long election campaign in a democracy and should now be accepted as legitimate. Interestingly, the NY Times has apologised for its treatment of the election campaign. Perhaps the opposition will now start to moderate to the norm in democracies.