I had the pleasure of attending yesterday’s CEDA function: Trade Travel and Diplomacy as a guest of BusinessSA. The keynote speaker was His Excellency the Honorable Alexander Downer AC.
His focus was on Brexit and Trump and what this means for Australia and trade.
The first point he makes is that the election of Donald Trump as US President and the UK referendum (Brexit) to leave the European Union were not an indication of a decline in support for globalisation but a signal that the electorate expects better performance from its respective governments and supporting institutions.
Brexit isn’t about the UK wanting to withdraw from the world but primarily dissatisfaction with the economic dividend provided by EU membership. The UK had always been a reluctant participant when it joined in 1973 – 16 years after the then European Economic Community was formed in 1957) and even then, it retained its own currency. They saw benefits in working with France and Germany who were growing strongly at the time. The UK’s membership was driven by economics; not social goals or a desire to have a common border.
The two main factors driving the Brexit vote was:
- The perception of failure of the Euro currency system – the Euro was associated with the decline in the southern EU countries and the cost to the northern EU countries in bailing them out
- The EU’s “irregular” handling of immigration ie the perception is that it has been a shambles
It is not about a perception that there is greater inequality in the UK – the data doesn’t bear this out.
The implications for Australia?:
- The bad news – Australia has lost from the EU, its most like-minded nation which means we need to invest in more bi-lateral relationships with such countries as Germany and France and at a time when the EU will be less “internationalistic”
- The good news – the UK is more interested in Australia and other Asian countries, so there is the opportunity to establish a free trade agreement with the UK with the consequent benefits of greater exports and cheaper imports
[Richard Leather, Senior Trade Commissioner to Western Europe, highlighted that the Australian Government is engaging with members of the EU through the submarine project (France) and through the Patrol Boat and Frigate procurements where the shortlisted tenderers are all European].
On Trump; pretty much the same story as Brexit – his rise has more to do with dissatisfaction with the performance of government and its institutions rather than a desire to become isolationist. However, Brexit and Trump’s emergence do have implications for globalisation.
Image: His Excellency the Honorable Alexander Downer AC