Head of Economics at the University of Western Australia’s Business School, Professor Peter Robertson says Australia would not be impacted economically if US President-elect Donald Trump withdraws his nation from the 12-country Trans-Pacific Partnership (TPP).
Mr Trump's pledged to pull out of the pact in his first day in office - January 20 - via a video address on Monday.
Professor Robertson told SBS News it would still be "business as usual" for Australia if Trump does go ahead with his plan to leave the TPP.
His assessment was predominantly based on the existing Australia-US Free Trade Agreement - which came into force in 2005 - that ensured direct trade and access to the US market for Australian products.
Countries without a direct trade pact with the US would be negatively impacted without the TPP, Prof Robertson said.
“Australia has free-trade agreements with the USA ,and there are not many sectors that we don’t have free trade with the USA already. So with us and the USA, not much is going to change," he said.
“I suppose the big winners with the TPP were countries from South America and south-east Asia – in that it gave them access to the US.
“But (should the US pull out) there’s nothing stopping a TPP member such as Japan forming a bilateral agreement with the US.”
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Professor Robertson said Trump sent out mixed messages during the US presidential campaign - signalling a “protectionist” agenda, while also claiming to be “pro trade”.
Despite these messages, Professor Robertson said Trump “understands” economics, and would look to forge trade deals that would benefit the US.
“Trump regularly says that he’s pro-trade and that the US has had bad deals. He’s trying to signal to business that he’s going to make a protectionist economy, but he’s also signalling to those who have lost their jobs in the manufacturing 'rust belt' that he’s going to change the world,” he said.
“So if he is to scrap the TPP, he’s going to immediately start looking for other agreements which he would then put his own spin on.”
'Flawed' TPP
A “flawed animal” used as a “political device” rather than an economically beneficial pact, was the best way to describe the TPP, according to Prof Robertson.
He said the agreement was partly about trade, but also about China - the country "which was left out of the TPP".
“It was part of the whole balancing Asia strategy that the Obama government got into under Secretary Clinton," he said.
"They said ‘we need to push back against China and affirm our alliances with the western pacific countries’. So the TPP was designed as a political way to ask countries ‘which club are you in?'"
“It was about the 'political club' mentality, more than trade. It’s more about political grand standing."
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Professor Robertson outlined the flaws with such a system, where tariffs - the taxes imposed on imports or exports - are different between TPP members and countries outside the pact.
“Suppose we (Australia) have a 20 per cent tariff with the US and Japan, and we tax them both equally – we would mostly buy cars from Japan because it’s cheaper. If we take away the tariff for both of those countries, we have gains from trade," he said.
"But if we take away just the trade barriers with the USA, what would happen is we stop buying the cars from Japan, and only buy from the US.
“You can imagine from a global efficiency point of view, that’s the worst outcome than if we have tariffs against both countries because we would be buying from the higher cost manufacturer. The general rule is if you’re going to have trade negotiations, they have to be applied equally to all countries.”
