APEC and G20 present tough choices for Albanese

Anthony Albanese faces his first big test of how to position Australia in the new world reality of a second Trump term when he attends the APEC meeting in Peru, and G20 leaders summit in Brazil this week.

The Prime Minister said he would put forward the case for a continuation of the global trading rules that were vitally important for a trading nation such as ours.

“We think we can play a role as a middle power … we’re trusted, our word matters,” Mr Albanese said.

The context is Donald Trump’s stated aim to use punitive tariffs against imports, most notably from China, to rebuild domestic manufacturing and pursue the US’s broader geopolitical ends.

Australia must always stand up for free markets and trade. But we must also tread carefully or risk being squashed between the great power rivalry of the US and China. China is hardly an honest broker on the rules-based order. Beijing has shown itself willing to use punitive and unilateral trade sanctions in a bid to coerce countries to bend to its geopolitical will. Opposition foreign affairs spokesman Simon Birmingham is right to observe that there are limits to Australia’s ability to deploy soft power. This is particularly so when it comes to China and US relations.

Mr Trump’s threat of 10-20 per cent tariffs on all imports, and additional 60-100 per cent tariffs on Chinese imports, poses a direct threat to China’s export-driven economy at a time when Beijing is struggling with a deep economic slowdown, a depressed real estate sector and weakened domestic consumer demand.

Chinese President Xi Jinping, who will be lauded in Peru and Brazil with state visits, is expected to use the APEC and G20 summits to rally support for fair trade across the world’s top economies and help shield China’s increasingly soft economy, despite Beijing’s own questionable trade practices. It is a further show of China’s diplomatic attempts to corral developing countries and marshal them against its US rival.

There was further evidence of this from the Chinese leadership at the COP29 climate meeting in Baku on Tuesday in demands by 77 developing nations for the developed world to provide $US1.3 trillion ($2 trillion) a year to compensate for climate change.

According to foreign policy analysts, Beijing’s aim is to position itself as a pragmatic, stable partner amid the uncertainties triggered by Mr Trump’s disruptions. They argue Mr Xi’s aim goes beyond building alternative trade networks to Western influence; he envisions a sanction-proof supply chain and financial network – a new global market immune to Western pressures that can fuel China’s ambitions independently.

Australia is exposed to economic, diplomatic and security risks however this plays out. Penny Wong’s decision in the United Nations to change our position to recognise the “permanent sovereignty” of Palestinians over the occupied territories, and of Arabs over the Golan Heights, is an unnecessary provocation that appears to be aimed at appeasing the UN and to improve Labor’s electoral prospects at home.

This is both a slight to our long-term democratic ally, Israel, and shortsighted given the flux in Middle East politics and where it is likely to go under Mr Trump. Also questionable is our determination to deepen our involvement in the UN climate change apparatus at a time when the global tide is running in the opposite direction in favour of energy security.

Increasingly, Australia is likely to be called upon to explain exactly where we stand. This is an uncomfortable position for the Albanese government that, to date, has tried to avoid taking hard diplomatic decisions on any front.