The latest trade figures for Australia are exceptionally good. So why no celebration? Alan Austin examines the outcomes and their meaning.
THE COLLAPSE in the value of goods exported from the United States last year is one major factor sending the once-great American economy plummeting down virtually all global rankings. The most conspicuous loser from the ill-advised trade wars U.S. President Donald Trump started in 2018 has been the United States. Australia is among the winners.
We now have final trade figures for 2019 from the United Nations agency, Comtrade, for most developed countries. These show total exports from the USA actually fell in calendar 2019 over 2018 by US$21 billion (AU$29.6 billion) or 1.26%. Exports increased in Australia by a thumping US$13.6 billion (A$19.1 billion) or 5.39%.
This is a particularly strong result for Australia for several reasons. Firstly, as the green graph above reveals, most of the rest of the world found it difficult to increase exports in 2019. Of the 40 major developed OECD and G20 economies for which we have data, only 11 managed an improvement on 2018.
This is Australia’s fourth straight year of increasing exports. The previous year, 2018, saw a creditable rise of 9.81%. That followed 2017 which yielded an exceptional 21.4% lift. So Australia’s increase in exports from 2016 to 2019 is an impressive 40.5%.
This is the best outcome in the developed world, well ahead of Greece and Slovenia in second and third places, and streets ahead of the rest. The three-year growth of 40.5% is more than double the average of 18.2. (See silver chart, below).
Winners and losers from Trump’s trade wars
The outcomes shown in the above graphs are to the end of 2019 — before the coronavirus emerged. They reflect global conditions prior to the pandemic’s impact on economies, and on human suffering.
One major development influencing the global economy in the last two years has been the trade wars Donald Trump initiated when he placed tariffs on metals in June 2018 and thereafter imposed further tariffs on targeted trade partners. This provoked retaliatory action and has led China to replace goods once imported from the USA with goods sourced elsewhere. Particularly affected are American farmers whose bankruptcies, foreclosures and suicides have spiked alarmingly.
From the Comtrade data, it appears the winners from the trade wars are Australia, Turkey, India and a good number of European countries. Losers include the USA, Chile, Canada and Mexico in the Americas, along with Germany, Japan, Israel and South Korea. (Note: China is not shown as 2019 export data is not yet available.)
Trade with China
Comtrade shows the breakdown of imports and exports between all countries for all years. So we can track the shifts in China’s imports from various countries. (China’s 2019 import data is available.) As expected during Trump’s trade war, China has reduced imports from the USA dramatically. The value in 2019 actually fell below the 2016 level. This only happened with eight of China’s 42 major developed trading partners. Most of those were not major suppliers, as was the USA.
In contrast, China’s imports from Australia increased by 28.7% over those three years. The average increase over the three years for all 42 source countries for China’s imports was 19.6%.
Much worse to come for the USA
With the pandemic raging out of control across the Americas, further serious disruptions to exports are virtually certain. Already, monthly exports from the USA in 2020 have collapsed disastrously.
In March, exports fell 10.8% from March 2019. In April, they fell 27.8% from the April before. And in May, exports collapsed 32.1% from the previous May to reach the lowest monthly level since November 2009.
Thus, Trump’s trade wars, together with his mishandling of the pandemic, have now wiped out all export growth since the Global Financial Crisis 11 years ago.
Why no celebration in Australia?
Now here is a curious thing. Coalition spokespersons on economic matters are constantly spruiking their “success” in jobs and economic growth. And over the last 12 months or so, they have also bragged about their amazing budget surplus. Unfortunately for most Australians, there are no grounds for satisfaction in any of these areas over the last six years. Australia has tumbled down the global tables on all of them. There was never a surplus.
So why do the Coalition and its enablers in the mainstream media not boast about record exports and world-beating trade outcomes?
This may be why. The trade data, along with company profits, reveal that the corporate sector is enjoying phenomenal boom times and extraordinary increases in wealth and incomes.
That being the case, the last three years have provided the opportunity for Treasury to generate record tax revenues, record surpluses and the resources for vital social services, liveable pensions and benefits, fair wage increases, adequate minimum wages and urgently-needed infrastructure.
With all-time record exports and corporate profits, Treasury should also have repaid much of the debt stacked on during the Global Financial Crisis. It hasn’t.
As reported more fully here, Australia has actually had the greatest debt expansion of all developed countries in recent years.
A boom for whom?
In other well-managed developed economies with buoyant exports, funding for community services has expanded, spending on infrastructure has increased while surpluses have been generated and debt repaid.
If Australia is leading the world in export growth, then where is all this wealth ending up? As shown in multiple publications, the large foreign mining companies and other big exporters seldom pay anywhere near the tax they should. There are no other mechanisms for retaining the vast wealth in Australia. So most of the wealth gets shunted straight offshore into tax havens or to make mega-rich foreigners richer still.
Is this why the Coalition is so coy about its current world-beating export results?
Alan Austin’s defamation matter is nearly over. You can read an update HERE and help out by contributing to the crowd-funding campaign HERE. Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @AlanAustin001.
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