Ciobo’s ‘economic ruin’ warning over Trump protectionism

Trade Minister Steve Ciobo is optimistic the Trans-Pacific Partnership trade pact will take effect by the end of the year.

Australian Trade Minister Steve Ciobo. Picture: AAP

Donald Trump’s sweeping tariffs on steel and aluminium products sparked a warning from Trade Minister Steve Ciobo that the fusing of protectionism and patriotism could lead to “economic ruin” as he signed the revamped Trans-Pacific Partnership.

The Australian can reveal the federal government has secured a side deal with Canada as part of the TPP-11 that delivers a big win for Australian cattle farmers, eliminating tariffs for the beef industry within five years.

The TPP-11 agreement, seen as a multinational repudiation of the Trump administration’s “America first” trade policy, comes amid confusion over the President’s tariff threat. Yesterday the White House confirmed Canada and Mexico would receive “temporary exemptions”.

Mr Ciobo is optimistic the Trans-Pacific Partnership trade pact will take effect by the end of the year after Australia signed on to the 11-country deal this morning.

The deal will eliminate 98 per cent of tariffs in a marketplace worth close to $US14 trillion.

Speaking at the signing ceremony in Chile, Mr Ciobo said the legislation to formalise the pact would be introduced to parliament this month ahead of a joint standing committee an inquiry into the TPP.

He expects Australia’s domestic processes to be settled by the end of September.

It comes as the US President signalled Australia may be exempt to a 25 per cent tariff on steel and 10 per cent tariff on aluminum imports.

The President singled out Australia, with praise for the “very close” relationship between the two countries after signalling he would be flexible with the detail of the penalties.

Senior Turnbull government ministers yesterday ramped up their push to secure country or company exemptions for Australian businesses. Foreign Minister Julie Bishop was due to speak with Secretary of State Rex Tillerson in the US overnight about tariff exemptions.

The American Australian Business Council also wrote to Mr Trump, with signatories including golfer Greg Norman, Dow Chemical boss Andrew Liveris and News Corporation chief executive Robert Thomson, urging the US President to protect Australia’s steel and aluminium industries and citing concerns over “national security and defence”.

While the tariffs had been ­expected to be signed off today, the deadline remained unclear last night as Mr Trump faced internal opposition, with 107 House ­Republicans writing to ask him to abandon the plan.

Reserve Bank governor Philip Lowe yesterday forecast a “very big shock” to the world economy if Mr Trump proceeded with tariffs of 25 per cent and 10 per cent on US steel and aluminium imports.

Yesterday sharemarkets across the globe responded to Mr Trump’s announcement of tariff exemptions for Canada and Mexico. The US, Hong Kong and Japan markets erased most losses.

China, a target of Mr Trump’s trade threats, yesterday hit back with Foreign Minister Wang Yi threatening “an appropriate and necessary response”.

“Some people in the United States believe China is overtaking the role of the US in international affairs; this is a fundamental ­strategic misjudgment,” Mr Wang said. “Especially given today’s globalisation, choosing a trade war is a mistake. The outcome will only be harmful.”

Writing in The Australian today, Mr Ciobo says protectionism is rising across the world.

“More concerning, it is being confused with patriotism. This is a dangerous trend that could lead to economic ruin,” Mr Ciobo says.

An analysis of TPP gains for the agriculture sector shows Australian farmers will have a strong advantage over US producers in key markets such as Japan and Vietnam for beef, dairy, wheat and seafood exports.

In Japan, Australian beef farmers will face a 9 per cent tariff, compared with 38 per cent for their US counterparts.

In the lucrative Canadian market, beef tariffs will be eliminated for Australia, down from 26.5 per cent within five years ­instead of 10 years, under a special carve-out deal.

The TPP-11 establishes Australia’s first free-trade agreements with Canada and Mexico, opening access to two of the world’s top-20 economies.

Earlier this year, US farmers raised concerns with Mr Trump over Australia’s closer trade ties with Japan, after the Australia-Japan free-trade agreement shielded Australian beef exports from a steep tariff hike in late July. Tokyo raised tariffs on frozen beef products to 50 per cent, a move the US would have avoided had the TPP been in place.

Vietnamese tariffs on Australian beef will be eliminated, while the US faces tariffs of 14 to 20 per cent, or 5 per cent on live cattle.

Tariffs on seafood exports to Japan and Vietnam will be ­eliminated for Australian suppliers, but remain for their US counterparts.

Mr Ciobo, who flagged other side deals with nations as part of the TPP-11, said Japan would open up its tendering process for Australian rice and Vietnam would allow Australian universities to provide online courses to Vietnamese students.

The fallout from the proposed Trump tariffs, which experts say could spark a trade war, could widen when the White House probe into China’s alleged theft of intellectual property is released.

The Financial Times reported the Trump administration could implement additional tariffs and investment restrictions.

Opposition Leader Bill Shorten warned Mr Trump’s tariffs could result in an increase in steel being dumped in Australia.

Mr Shorten has announced a Labor government would triple penalties for circumventing trade remedies, expand resources at the Anti-Dumping Commission and move all of the country’s trade remedy system under the control of the commission.

An Industry Department spokesman earlier this week said redirected trade in steel and other products as a result of tariffs would not necessarily qualify as an unfair trade practice like dumping.

Additional reporting: Joe Kelly, AAP