Our man in Buenos Aires

Scott Morrison’s G20 meetings will be important but undramatic.

Scott Morrison arrives in Buenos Aires this week for the G20 summit, whose global importance is easy to overrate. Picture: AAP

Buenos Aires is the most important G20 summit meeting in a decade, since it was first convened at summit level to address the global financial crisis. On the gathering this weekend in the Argentine capital hangs the fate of global trade, worldwide action against climate change and the very system of the liberal international order, especially a rules-based ­liberal international order.

Er, well, perhaps not.

The above is a version of the ­orthodoxy of those who regard things such as the G20 as terribly important and think Donald Trump represents a threat to the world. But the reality is less dramatic and more complex.

Scott Morrison will do very well if he gets a one-on-one meeting with Trump, which now seems likely. He will have a series of useful but completely undramatic meetings with European leaders from Theresa May to Emmanuel Macron and Angela Merkel. Nothing wrong with being ­undramatic. Drama is seldom useful in international relations.

Morrison won’t have a formal, one-on-one meeting with China’s President, Xi Jinping. That’s a pity and a sign of the continuing limits of the Australia-China relationship. None of this reflects badly on Morrison. He has done well in foreign policy. Morrison’s chief objective for the meeting, to avoid escalating trade retaliations between Beijing and Washington, is one he cannot influence much, especially given he won’t even have a meeting with Xi.

There is a great deal of flummery and flim-flam and pointless bloviating about the G20. Its global importance is easy to overrate. As an institution, it gets very little media coverage in the US. It is important to Australia because it gives us a seat at the top table. It is less important to the great powers.

Most such international bodies — the Asia Pacific Economic Co-operation forum, the East Asia Summit, G20 — are important as institutions mainly when they address a crisis, such as the G20 responding to the global financial crisis a decade ago, or the APEC summit at the height of the East Timor crisis a decade before that. In quieter times, their significance is the ­bilateral meetings they occasion.

Thus the headline event at this G20 will be the Trump-Xi dinner. Unless the dinner changes things, Trump will automatically increase his 10 per cent tariff on about $340 billion worth of Chinese exports to the US to 25 per cent in January. He also plans new tariffs on a remaining $370-odd billion of Chinese exports. These tariffs will lead to lower growth in China and they will have a cost in the US. Lower growth and trade also will affect Australia. That is why Morrison is prioritising the dispute.

Morrison’s take on Trump’s trade actions, which he outlined in an interview with me and repeated on arrival in Buenos Aires, is that Trump wants more and freer trade but wants it on a fairer footing than now. That is a generous interpretation but it squares with the facts. Trump’s tough rhetoric with Canada and Mexico did not lead to permanent US trade barriers but to a slightly better deal for the US than the previous North American Free Trade Agreement provisions. Similarly, despite much bluster, Trump went ahead with the trade deal with South Korea.

Not only is Morrison’s publicly benign interpretation of Trump consistent with the facts, it is a very smart line for an Australian PM to take. Trump is unpredictable, dynamic, plastic, fluid. Working out the interplay between Trump’s words and his administration’s actions is challenging. Soothing Trump by publicly seeing the best in him is common sense, especially for an Australian PM.

Nonetheless, Morrison is not central to the Trump-Xi dynamic. That is no criticism of Morrison. No third party will be central to the Trump-Xi dynamic. When elephants dance, the grass gets trampled.

The institution of the G20 will not have a huge influence either. But the G20 is making one very big contribution. It is because of the G20 that the Trump-Xi meeting is happening at all.

What might we get from that meeting? We certainly won’t get a complete solution to all the US’s problems with Beijing. Australian policymakers acknowledge Wash­ington’s complaints about Beijing are justified. However, Canberra wishes the US would find some other way to address them than tariffs.

It is the case, however, that no previous action by any US president had any effect. The Chinese are scared of Trump. No one in the world was scared of Barack Obama. So Trump, notwithstanding the severe limits of his general political support at home, has much more leverage than Obama did. And the sense that Beijing has been gaming the system in trade is bipartisan in the US.

For all that, there is still the prospect of a partial deal between Trump and Xi. Trump will package any agreement, no matter how limited, as a great triumph. Trump is very good at that.

But the US complaint about Beijing runs to the nature of the Chinese economic system. Beijing steals intellectual property, eng­ages in relentless cyber intrusions, forces US companies to give up intellectual property as a condition of operating in China, uses a wide variety of non-tariff barriers to exclude US and other imports, rigidly controls foreign investment, and subsidises many of its export industries, often exporting goods at prices below the cost of their production — that is, dumping.

Beijing cannot fix all that in one meeting. It shows no interest in fixing it at all. Australian agencies are clear in private that Chinese state cyber intrusions and IP theft are unabated, though now better disguised. Nonetheless, partly because Beijing controls its big firms much more closely than any Western nation does, it can, if it wants, buy a lot more US goods. Trump might at least put further tariffs on pause in exchange for such concessions.

The US national security establishment wants to disentangle the US from Chinese supply chains in sensitive hi-tech and national security-related technologies. There is a drum beat and momentum to this movement which looks unlikely to be halted. But there may be some relief from tariff escalation.

Trump has cancelled his ­bilateral meeting with Russia’s Vladimir Putin. US special prosecutor Robert Mueller, as usual on the eve of a Trump foreign journey, has charged another Trump associate, this time Trump’s former lawyer, Michael Cohen.

Typically, he has not charged Cohen with a substantial offence but rather with perjury. It is an extremely ropey and dangerous syndrome that these special prose­cutors seem never to make the case about the alleged crimes they were set up to investigate but only to produce process offences, generally arising out of perjury traps.

Nonetheless, Mueller’s antics probably played a role in Trump cancelling the Putin meeting, though Trump’s ostensible reason was Russian naval aggression against Ukraine. In this rare case, Mueller may have even done Trump a favour. No discernible good has come out of any meeting that Trump has held with Putin.

There is a big question over whether the G20 will, unlike APEC, be able to agree on a joint communique. These communiques are supremely unimportant. I challenge a single reader to honestly recall anything about any Commonwealth, APEC or G20 communique of the past five years without the aid of Google. The ridiculous growth targets that then treasurer Joe Hockey got G20 leaders to notionally sign up to at the Brisbane G20 had no effect on the physical universe beyond the consumption of the paper on which they were written. One nanosecond after agreement, they were forgotten.

A communique is a big deal if you can’t issue one. At APEC, the US and China could not agree on language concerning the World Trade Organisation. Morrison has said he accepts that many of the US criticisms of the WTO are justified, though he doesn’t single out China the way Washington does. What US Vice-President Mike Pence wanted in the Port Moresby communique was language that would make it harder for Beijing to continue to benefit from the developing nation status it enjoys in the WTO, and greater transparency about limiting trade-distorting subsidies to state-owned enterprises. The Chinese wouldn’t accept this.

Officials, or sherpas as they are known, from all the key G20 countries have been working for weeks on drafts of the Buenos Aires communique. The drafts went through many iterations but on arrival officials had to throw all those drafts away. It is still deeply unclear whether the Chinese and the Americans can agree on a statement about the WTO.

Getting some commitment to WTO reform is a central objective for Canberra. If the US continues to block appointments to the appellate panels of the WTO, the whole organisation will grind to a halt next year some time. That would be a real global cost to Trump’s trade actions.

The other contentious area for the communique is climate change. But don’t be consoled if some mother of all platitudes manages to emerge on this. The deep differences between European governments and the Trump administration on climate change won’t be materially affected by a communique.

Most of Morrison’s meetings will be with European leaders. This is part of the G20’s real value to Australia. But don’t be misled for a single second into believing anything Morrison and May might say about a future Australia-Britain free trade agreement. Theoretically, London can start negotiating FTAs from the moment it leaves the EU at the end of next March. In reality, we have no idea whether May’s Brexit deal will pass the House of Commons on December 11. If it does pass, Britain is committed to staying inside the EU customs union, and applying EU tariffs, for several more years of a transition period. An FTA can thus have meaning only after the transition ends. But Britain can’t leave the customs union unless the EU agrees.

Given that in the transition period Britain will have to observe all EU rules and tariffs and submit to the European Court of Justice, the EU is unlikely ever to let Britain leave, which would mean there could never be an FTA of any consequence between Australia and Britain. It took Britain two years to negotiate its transition period surrender. With no leverage at all in the transition period, it will get nothing from the EU.

And all of that is only in the unlikely event that the Commons passes May’s Brexit. May is engaging in a classic EU-style make-believe by pretending that one day the transition period will end and Britain will be able to do FTAs. Morrison should not embarrass May. But he has to be careful to avoid embarrassing himself by engaging explicitly in May’s patent make-believe.

Morrison will also talk to EU leaders about an Australia-EU FTA. That will also be many years away and depends on what happens with Brexit. So while this kind of talk is useful in its way, it’s not very useful.

Morrison’s most important discussion with a European will be with Macron about submarines. He and Macron need to inject political leadership into getting a strategic agreement sorted out and signed at the very latest by next month, or it risks falling into the crusher of Australian politics and our blighted nation could yet destroy another submarine option.

This Buenos Aires summit is important, but less important than you may think.