Mark Johnson: ‘Forget TPP, go for other deals’

A Former Macquarie deputy chairman says Australia shouldn’t waste political capital on the faltering TPP.

Reserve Bank board member Heather Ridout.

Former Macquarie Group deputy chairman Mark Johnson has cautioned against wasting political capital on the faltering Trans-­Pacific Partnership as business heavyweights line up to back other trade pacts, including a deal championed by China.

Mr Johnson pointed to the attitude of Donald Trump, who has confirmed he will not back the landmark TPP that covers 40 per cent of the world economy.

“If it were me, I would not waste political capital on it but I would go to work in the region where ­obviously there is the ASEAN initiative and also there’s the Chinese initiatives,” Mr Johnson told The Australian.

“That’s where now the hope lies, I think.”

It was important for Australia to pursue “the best” bilateral deals but to “put the best effort you can into regional deals, because somewhere some time you’ve got to hope that it will all come back together and this grand ambition of a free trade area of Asia-Pacific might look a little closer.”

But he noted the “tide is apparently strongly against trade deals at the moment”.

The comments come as Trade Minister Steven Ciobo defended the government’s approach of trying to keep the TPP alive without US involvement, saying this was “absolutely” not a waste of time.

Mr Ciobo told the ABC that “if it comes to pass that we need to make small changes in order to capture the benefits of the TPP and not have the United States as part of it, well then so be it.”

After Mr Trump’s inauguration as President, the White House website was updated to say the US would withdraw from the TPP.

Corporate leaders said trade liberalisation remained crucial and urged the government to press ahead with a slew of deals including bilaterals and the ­Regional Comprehensive Economic Partnership that covers 16 countries covering the ASEAN group and regional trading partners including China but excludes the US.

(The US-led TPP does not ­include China.)

Reserve Bank board member Heather Ridout said regional free trade pacts “shouldn’t be about politics, it should be about trade”, while ANZ group executive for international Mark Whelan said trade growth was “vital for local jobs”.

CBH Group chief executive Andrew Crane, who is also on a key taskforce advising the top 20 global economies on trade, ­issued a strong plea that Australia “shouldn’t take the foot off the pedal” where free trade pacts were concerned.

“I would definitely, being involved in Australia’s exporting industry and agricultural industry, say just because the job is difficult, doesn’t mean we shouldn’t do it,” Dr Crane said.

“We should try all avenues be they bilateral, plurilateral and multilateral because I can see in practice that when Australia does achieve either access to trading blocs or preferential access through bilateral agreements, it does benefit Australia.”

The CBH Group is the nation’s largest exporter of grain.

Dr Crane said the so-called “TPP minus one” option could slash barriers to trade and “that’s going to be good for us if that door is still open”.

The RCEP was also “a very compelling group of countries”.

Mr Whelan, who has ultimate responsibility for the bank’s Asian markets, backed the recent comments from Australia and Japan that the TPP was a ­priority.

“Even if the TPP does not get ratified, we need our elected leaders to keep looking for opportunities to help our manufactures, our farmers and our services companies compete on the global stage,” Mr Whelan said.

Ms Ridout, the former Australian Industry Group boss who chairs Aust­ralian Super and is a director of the Australian Securities Exchange, said she felt “the government is very right to send a strong signal that Australia’s interests lie in freer trade and open borders”.

“We need foreign investment in Australia and open access to markets. We spend more than we save and we make more than we consume,” Ms Ridout said.

“On both counts we need to have a very open approach to trade and investment.

“It’s extremely important we continue to send that strong signal. I think that’s what the government is doing.”

Ai Group chief executive Innes Willox said if the TPP fell over, “it would be disappointing but not a disaster”.