Demystifying the TPP; Abbott’s labo(u)r man in Washington; life after SBY. By Hamish McDonald .

Tony Abbott and the Trans-Pacific Partnership

Jakarta’s popular governor Joko Widodo, the frontrunner to succeed SBY as Indonesia’s president.
Credit: Enny Nuraheni (REUTERS PICTURES)

We have a significant policy switch in external affairs from the Abbott government, to do with the Trans-Pacific Partnership, the 12-nation free-trade deal that is central to the Coalition’s vision of trade-based economic growth.

Like Brahmins chanting the Vedas in Sanskrit to mystified lower castes, the proponents of the TPP  wrap it in mystery. Trust us, say the trade ministers: it will be  “modern”, “cutting edge”, “high quality” and “a new type of trade agreement”.  From a little thing started by Singapore, New Zealand and Chile, the TPP has grown into something very big. The United States took it over in 2008 as a lever to open markets for its post-industrial sectors − pharmaceuticals, biotech, information technology, entertainment and services − and make their customers pay more through tighter copyright rules and penalties. Then it became the economic leg of Barack Obama’s “Pivot to Asia”. And since Japan joined negotiations, it’s become identical to the “third arrow” of market-opening reform that everyone’s waiting for Prime Minister Shinzo Abe to fire at his stagnating nation (after massive doses of monetary and fiscal stimulus).

The Rudd government liked the TPP, and joined up in 2008 ahead of the Americans. But it baulked at one proposal: so-called Investor-State Dispute Settlement, by which foreign investors could take grievances against host governments to arbitrators, whose decisions are enforceable and not appealable. Big Tobacco’s use of a similar feature, in a bilateral free-trade agreement with Hong Kong, to try to roll back cigarette plain packaging made it a no-no for Labor.

Now, in the wake of a closed-door briefing to “cleared advisers” in Washington by US trade representative Richard Froman’s staff, word emerges that Trade Minister Andrew Robb has dropped total rejection of Investor-State Dispute Settlement in the TPP. This was no doubt a concession thrown into the bargaining mix at the TPP ministerial session in Singapore earlier this week, to win better access for Australian farm products like sugar into the TPP group’s biggest markets. Until it has clarified what kind of disputes are covered and what might be excluded, it’s bound to set off alarms in Australia’s many interest groups opposed to the TPP, about what the Abbott mantra on  being “open for business” might entail.

Beazley takes Abbott govt’s TPP case to the US unions  

Not that the TPP seems to be going anywhere soon. Obama hasn’t seriously tried to sell it to the American public. His priority is saving the Democrats’ Senate majority in November’s mid-term elections. Campaign contributors in Silicon Valley and Hollywood might be cheering the TPP, but the blue-collar unions needed for election legwork are not thrilled by Vietnam, Malaysia and other low-cost countries getting more access to the American market. Congress is divided: key committee staffers turned up in Singapore as virtual parallel negotiators alongside Froman.

One who’s  stepped up in this vacuum is none other than Australian ambassador Kim Beazley, who recently hosted Richard Trumka, president of the American Federation of Labour and Congress of Industrial Organisations, to try to moderate the opposition of America’s biggest union federation to the TPP and to a bill in Congress that would give Obama “fast-track” authority to clinch a TPP deal and a matching one with Europe.

“Rich” Trumka was not immediately persuaded. But the exercise reminds us that horses are needed for courses. For the next three years at least (and longer if Hillary Clinton beats the divided Republicans), the White House will be Democrat-occupied. Obama’s second term is differently nuanced from the first, with even more focus on domestic economics and, with the State Department under John Kerry, the foreign priorities are the Middle East and global warming. The administration wants a quiet Asia.

From this perspective, Tony Abbott is part of a quartet of leaders among normally helpful allies who’ve become seen as awkward friends. Canada’s Stephen Harper is desperately pushing a pipeline to take high-pollution tar-sands oil from Alberta to refineries on the Texas coast, no longer needed by a US full of its own fracked oil and gas. Israel’s Benjamin Netanyahu is not exactly supporting the Obama-Kerry pushes on Palestinian statehood and Iran. The two alliance anchors in the Pacific are meanwhile stuffing up relations with two big nations needed in the “Pivot”: Japan’s Abe with South Korea (over his war revisionism), and Abbott with Indonesia. Abbott is also remembered for attacking Vice-President Joe Biden over climate change in a bilateral forum.

Having an ex-Labor leader as ambassador is turning out useful for the Coalition government. But what happens when Beazley leaves in November? Alexander Downer has been knocked back for the Washington post, allegedly for being too close to the Republicans. (Real reason: his directorship with the Chinese telecom company Huawei makes him unacceptable.) John Howard could have it if he wants it. Word in Washington is that former treasurer Peter Costello is the leading candidate.

Post-SBY relations likely to be trickier

If Abbott thinks it is going to be easier with a new president in Indonesia, he should think again. He and Foreign Minister Julie Bishop have probably blown it with Indonesia’s Susilo Bambang Yudhoyono over the refugee turn-backs and their clumsy handing of the Snowden spy leaks. But the post-SBY president could be harder to mollify.

Frontrunner “Jokowi” (Joko Widodo, the wildly popular Governor of Jakarta) would come attached to Megawati Sukarnoputri’s Nationalist Party, either as leader or her deputy. Second in popularity is Prabowo Subianto, the former son-in-law of the late president Suharto and the Kopassus (Special Forces) officer who led a vicious counterinsurgency operation in East Timor, and attempted a coup against army leaders. In the last days of Suharto’s rule, he also made threats to ethnic Chinese businessmen while some of his troops abducted and tortured student activists (for which he was dismissed from the army). Prabowo and his family have spent a rumoured $500 million rebuilding his image and a political party, and he has worked hard at mastering his notorious quick temper and reassuring Chinese-Indonesians. Old perceptions linger, and, no doubt quite unnecessarily, Jokowi’s supporters have augmented his personal security in the run-up to this year’s elections (which start on April 9 for the parliament, and July 9 for the presidency).

Whether Jokowi or Prabowo wins, Abbott and Bishop will need to play their “Jakarta, not Geneva” game more deftly. Prabowo shows every sign of wanting to recentralise power in the presidency and in Jakarta (from the regions). Jokowi shows little interest in the world outside, and would be pressured by Mega to include some of the old-style military-intelligence authoritarians who clustered around her when she was president in 2001-04. SBY might be as good as it gets.

This article was first published in the print edition of The Saturday Paper on Feb 28, 2014 as "Open for business behind closed doors". Subscribe here.

Hamish McDonald
is The Saturday Paper’s world editor.  

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