McCain: US withdrawal from TPP ‘major strategic mistake’

Senator McCain made the comments last night when delivering a guest lecture in Sydney, at the US Studies Centre at the University of Sydney, before an audience of 500 guests including former Australian Prime Ministers Bob Hawke and John Howard.

Senator McCain said, “Yes, America has its problems - and I realise there is much to criticize”.

He said he recognised, for example, how damaging America’s withdrawal from the TPP was.

“To be sure, America’s economic engagement in this region was always bigger than TPP, and that remains true today,” he said.

“But we must always talk straight with each other, my friends: The fact that both American presidential candidates last year opposed TPP, and America’s subsequent withdrawal from it, was a major strategic mistake.

“I know Australia is now talking with Japan and others about moving forward with TPP despite America’s withdrawal.

“I would strongly encourage that.

“The case for an open, rules-based, regional economic architecture is just as compelling today as it ever was.

“So I would urge you to keep at it and hopefully, someday in the future, under different circumstances, America will decide to join you.”

Senator McCain said he realised some of President Trump’s actions and statements had unsettled America’s friends, like Australia, but it also had unsettled many Americans.

He said there was a real debate underway about what kind of role America should play in the world “and frankly, I do not know how this debate will play out”.

“What I do believe - and I do not think I am exaggerating here - is that the future of the world will turn, to a large extent, on how this debate in America is resolved,” he said.

“That is why I and others are fighting so hard to ensure that America stands by our allies and remains an active, principled leader in the world and we cannot do it alone.

“We need your help, my friends.

“Now more than ever, we Americans are counting on Australia and our other allies to stick with us - to encourage us to stay true to who we are at our best - and to remind us always just how much is at stake.”

US farm groups supported the TPP but withdrawing from the 12-nation trade deal was one of the first acts of new President Donald Trump after being inaugurated earlier this year.

The National Farmers’ Federation has described the TPP as being a potentially transformational free trade deal for Australian agriculture, even without the US.

Australian farmers have also welcomed recent moves by Australian Trade Minister Steve Ciobo to engage with the other 10 nations to strike a new revamped deal, despite the US loss.

Former Australian Trade Minister Andrew Robb said withdrawing from the TPP would cost the US “enormously” and had meant shooting themselves in the foot on potential economic gains for farmers and agriculture.

He said the US withdrawal was “deeply regretful but its politics in the raw to be honest”.

“The irony is that the US would have been the biggest beneficiary of the TPP so it just shows you much politics is in this, rather than economic reality,” he said.

“It is a twenty-first century deal and it is the best quality trade agreement that’s ever been struck and being a twenty-first century deal it’s the first time e-commerce rules have been written and established.

“Clearly the US would have been the biggest beneficiary but everyone else would have done very well out of it too.

“To get one set of trading rules across 40pc of world production would have very materially reduced the cost and simplicity of trading between all of those countries and all of that would have increased output and income.”

Mr Robb said the US withdrawal from the TPP was political symbolism aimed at “a certain group” of voters.

“There’s always been people who think instinctively trade is a zero sum game and if we get something, someone else loses, but of course when you look at the evidence, it just doesn’t stack up, that line of thinking,” he said.

Mr Robb said China and other countries in the Asian region like Vietnam were “growing like there’s no tomorrow” because they’re liberalising and opening up their economies.

But he said in contrast, America and Europe were “going protectionist” despite 80 per cent of the world’s economic growth coming out of Asia.

“All the evidence says, if you liberalise you grow,” he said.

“Liberalisation works but there’s always a group in the community, and they’re the ones that voted for Trump, that are looking for a scape goat.

“Many of them are certainly disadvantaged – but trade is not the scapegoat that they think it is.

“Trump used it as an excuse to get into office and saw it as a worthwhile price to pay, to get the leadership of the country - but there’s no doubt it’s going to cost America enormously.”

Mr Robb said the TPP should be left on the “top shelf” for now while Australia sought to conclude other trade deals, like bi-lateral ones, to help build relationships with other countries which then make it easier to move towards a regional agreement.

“I do feel that you can’t unscramble the egg – suggestions of putting another country in the TPP instead of the US, it’s just impossible,” he said.

“It took eight years to negotiate and there are so many strands - it’s like taking 70pc of the omelette out.

“I think the best thing to do is leave it on the top shelf for now and who knows what will happen in three or four years, things change, and Trump still has.to get a second term for instance so you just don’t know.”