Rising Protectionism presents challenges and threats for Australia

“President Trump’s shift to focus on trade may have un-intended consequences,” warns UNSW Business School’s Tim Harcourt. “The president has vowed to boost American manufacturing by cutting the U.S. trade deficit and updating NAFTA. However, protectionist policies have a habit of not working out, and today’s Productivity Commission report should caution us all.”

US President Trump is turning his focus to trade this week, and the U.S. administration has released an 18-page report about its goals for updating the decades-old North American Free Trade Agreement with Canada and Mexico.

Tim Harcourt is the JW Nevile Fellow of Economics UNSW Business School. He says “now, more than ever, what we don’t want to see is protectionism. We need cooperative trade to boost the world economy.”

Tim Harcourt says “the penny has finally dropped. The high priests of free market fundamentalism, the Productivity Commission has now seen the downside of unfettered free trade. But it took Donald Trump’s protectionist rhetoric to do it.”

According to Tim Harcourt, there is a revolution in free trade thinking at the Productivity Commission as witnessed in their new report released today, ‘Rising Protectionism – challenges threats and opportunities for Australia’.

“The Productivity Commission has realised that trade needs to work for all and social institutions – like minimum wages, trade union rights, education and training and labour market adjustment programmes- need to include free trade,” he adds. “The Productivity Commission now realises that we need a ‘social compact’ to ensure that the benefits of trade flow to everyone in the community.”

U.S. administration officials are to meet later today with economic officials from China, a nation the president has accused of dumping steel on the global market to hurt U.S. steelmakers, and he has threatened to throw up barriers to free trade.

Tim Harcourt was previously chief economist at Austrade. As a trade specialist at UNSW he has studied the international trade landscape for many years.

“It’s no surprise that Donald Trump got traction in the USA with declining real wages, blue collar unemployment and a lack of a social compact that makes trade - and immigration - the scape goat for economic decline,” he concludes.

For further comment call Tim Harcourt on 02 9385 3816, 0408 485 479, or Email tim.harcourt@unsw.edu.au.