Monday, November 14, 2011

US-Australia strategic and economic alliance vis-a-vis China : shifting goalposts in world trade and arms race

US and Australia's message to China : Do what you're told but don't follow what we do.
Obama has brought American imperialism to a higher level, expanding across the Pacific despite its economic woes. 
The blame game is on : currency manipulation pretext is an old trick used by politicians disregarding innocent poor and middle class enjoying cheap Chinese goods.  
US trade deficit could easily be resolved by exporting more high technology to China, if they are serious to match words with deeds.  Can Americans trust the Chinese and Iranians the way like you trust the Israelis to take ownership of strategic know-how? 
Why would Australia want to have a part of this conspiracy?


QUOTE :

Barack Obama's visit to Australia carries an invitation. It's an invitation to take America's side in its rivalry with China.
In one vital way, Australia has already chosen. Julia Gillard has intensified the strategic and military alliance with the US emphatically, and more deeply than the Australian public has yet grasped.
In another way, Australia is only partially and gingerly taking America's side. The US President comes to Australia fresh from his latest argument with the Chinese over trade and currency. His visit to Canberra will carry an implicit invitation, and perhaps even an explicit one in closed-door talks, to take America's side more fully here, too. It's an invitation Australia should politely, but firmly, refuse.
The strategic and military deals are already made. Gillard has presided over two major decisions in recent months.
Australia and the US have written a new clause into the ANZUS treaty giving cyber attacks the same weight as bombing raids and invasions. That revision to the treaty, a world first, happened in September. And Australia and the US have agreed to give the US a significant new military presence in northern Australia, the details to be announced during Obama's visit next week.
As the Herald revealed last week, Obama and Gillard will announce that the US will begin rotating marines through an Australian base in Darwin, in a permanent new military presence.
Australians, generally speaking, like Americans and favour the alliance. The alliance has had majority public support since it was signed 60 years ago, even during the darkest days of the invasions of Vietnam and Iraq.
But two new polls suggest the public has little appetite for intensifying it. The Herald-Nielsen poll reported in today's paper asked whether respondents thought the US-Australia alliance relationship was too close, not close enough, or about right. The answer is that 71 per cent of adults think it's about right; 24 per cent say it is too close; a scant 3 per cent say it is not close enough.
Another survey by Essential Media presented Australians with a list of nine countries and asked the same question. The country that topped the list as the one Australians would like to draw closer to was China at 35 per cent. The US was eighth at 18 per cent.
So why is the Gillard government clutching Uncle Sam ever tighter to the national breast? The reason is straightforward. China's recent conduct has disturbed all the capitals of the Asia-Pacific. It has revived maritime territorial claims it had earlier left dormant.
But the US trade and currency agenda with China is another matter altogether. The wise and far-sighted US policy for the past couple of decades was to work hard to bring China into the global rules-based system. Rather than having a rising giant outside the system breaking the rules, Washington wanted China in the system, playing by the rules.
It worked. China signed up to, among other things, the World Trade Organisation. But now the Obama administration is seeking to shift the ground rules, moving the goalposts.
A bizarre contrast presented itself in Hawaii at the APEC gathering at the weekend - the Chinese President, Hu Jintao, argued world trade agreements should be based on the global WTO system, while the US president recruited other countries, including Australia, for his little regional trade sub-group, the Trans-Pacific Partnership.
The WTO's latest round of negotiations is moribund and the US should be reviving it. Instead, it is rounding up the TPP countries that take all of 6 per cent of US exports. It's insignificant as a trade bloc.
It's a posse to get China, which is not a member. "It's all about China," says an American trade expert, Bruce Stokes, of the German Marshall Fund in Washington. "The White House is hoping that if this thing gets big enough, China will one day want to join. The hidden agenda is that they will only admit it if China accepts a high standard of policing for its state-owned enterprises."
Australia signed up to the TPP in the Bush years; it's a done deal. But Canberra should not sign up to the next US agenda item, which is to threaten China over its managed currency, accusing China of currency manipulation to win unfair export advantage.
The global rules-based system in no way bans countries from pegging or managing exchange rates. Indeed, the US was the centrepiece of the global fixed exchange rate system until the early 1970s.
And the US has not stopped manipulating its currency; it's just got subtler. One of the aims of the US Federal Reserve in flooding the world with $US1.8 trillion in US dollars in the past three years is to devalue the currency. It's devaluation by hyperliquidity.
Beijing has allowed the renminbi to appreciate by 30 per cent in recent years against the US dollar. This has solved none of America's problems. The US campaign against China's currency policy is misguided. Australia has remained aloof so far and should remain so, even under the hypnotic power of the high-beam smile of a US president in person.
In strategic and military matters and trade and currency matters alike, the world has a deep interest in keeping China in the global rules-based system. If the Americans occasionally lose sight of this in the economic realm, Australia should not abet its lapses. We are an ally, not an accomplice.
Peter Hartcher is Sydney Morning Herald international editor.
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