Outgoing Australian ambassador to the United States and former Federal Treasurer Joe Hockey has slammed US President Donald Trump’s “baffling” global economic and trade policies as isolationist and unsustainable in the long term.
Hockey also come out swinging against the New York businessman’s lack of global leadership, warning that walking away from trade leadership roles would cost America a “a very significant price”.
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Tariffs are not the solution
In a speech to the Missouri-based Westminster College on Thursday, Hockey said: “Tariffs should only be used as a very short term tool to force a change in the behaviour of recalcitrant World Trade Organisation members.”
If tariffs and quotas were being used to “punish bad behaviour,” then the way back to rejoining the world economy should be “crystal clear”.
“President Trump is deploying all the tools he can to get a fairer global trading system for the United States. I understand the reasons for his frustrations. Australia supports both free and fair trade.
“But these types of measures are not a sustainable long term solution.
“Through tariffs and quotas, big government becomes bigger.”
He indicated that Trump’s grounds for initiating the tit-for-tat tariffs with China, that US was being “ripped off” by its global trading partners, were illegitimate.
“I have heard suggestions – and perhaps you have heard them too – that to “win” in trade with another country, you need to sell more to them than you buy from them – that is, that you should have a trade surplus. I disagree,” Hockey said.
Protectionists’ arguments in favour of tariffs was akin to making one’s own food and sewing one’s own clothes instead of working for their employer, the US ambassador said.
“Trust me, most of us don’t want that. It doesn’t make sense.”
America can’t walk away from trade leadership
Hockey also criticised America for refusing to display leadership in or backing away from a number of key geopolitical trade agreements, such as the Trans Pacific Partnership, the Regional Comprehensive Economic Partnership, and the Asian Infrastructure and Investment Bank.
“Ladies and gentlemen, if you abdicate leadership, you rarely get it back,” he said.
“So the US must not allow itself to walk away from its trade leadership role in the world, otherwise it will inevitably pay a very significant price.
“Its role is crucial because it’s American values that matter.”
Hockey also delivered a stark warning about the implications of US turning its back on free trade, arguing that free trade created “deeper and more meaningful relationships with other countries”.
“It brings our nations, with differing cultures, closer together. Plentiful trade is a facilitator of peace.
“History proves that economic isolationism is a precursor for war,” warned Hockey.
Isolating a country from trade and commerce from other nations is a political tool that ought to be employed “very cautiously”, he added.
“If a nation becomes economically isolated then history proves it can end up accelerating domestic nationalism fuelling outward facing aggression.”
The US is ultimately hurting itself
The US would be making a mistake if it thought it could continue to be the world’s most innovative nation if it kept to itself.
“Like every market leader, it will be beaten if it thinks it can do it all on its own.”
And at the end of the day, it’s the American people that lose, Hockey said.
“Let’s be really clear. Tariffs are taxes imposed by governments on their own people. Quotas are access limits, placed by governments on their own people.
“If citizens of other countries don’t have the same restrictions, they win.”
Free trade must continue to be a crucial part of America’s “modern... success story,” said Hockey.
“Free trade is a big win for America.”
Hockey has enjoyed a close relationship with US President Donald Trump, having played golf several times with the American leader.
His posting as Australia’s ambassador to the United States ends in January, when he will be replaced by Liberal senator Arthur Sinodinos.
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