Article shared in the Australian Financial Review AFR on November 4, 2020 – written by Andrew Tillett.
A Joe Biden victory promises to draw a line under the turmoil in international affairs that has been a hallmark under Donald Trump’s presidency but would nevertheless mean some changes – including uncomfortable ones – for Australia.
A blue wave where the Democrats capture the White House, Senate and retain the House of Representatives is likely to spur global markets because of the sense the volatility of the Trump years are over and a unified government will end legislative gridlock. That will be good for Australia. As part of the economic recovery, Biden has pledged to spend $US2 trillion on clean energy, while Congressional Democrats have passed a $1.5 trillion infrastructure bill. That presents opportunities for Australian super funds and infrastructure firms like Macquarie and Transurban. However, businesses’ campaign to cut the company tax rate in Australia could be blunted with Biden promising to lift corporate taxes on US firms.
Joe Biden has promised to rejoin the Paris climate change pact as a priority in a declaration of how serious he takes global warming and signalled a need to “transition” away from oil and gas. Coupled with Europe’s insistence on making emissions reduction part of a free trade agreement and UK PM Boris Johnson telling Scott Morrison he wants “bold action” on climate ahead of the postponed Glasgow summit, Australia now faces a pincer movement. Without the cover of Trump, it will be increasingly hard for Australia, often criticised as a global laggard on tackling emissions, to avoid increasing its targets or committing to a net zero emissions goal by 2050.
The World Trade Organisation has been hamstrung by the Trump administration’s veto on appointing judges to its arbitration panel. Biden is much more likely to seek reform of the body (as does Australia) than blow it up as part of a commitment to multilateralism. But that doesn’t necessarily mean a revival of free trade. While Biden championed the Trans-Pacific Partnership as vice president, he has said he has sought to renegotiate the pact as a prelude for the US rejoining. He is likely to face domestic protectionist sentiment and has promised to tax companies that shift jobs offshore.
The Morrison government’s bid to make big tech companies such as Google and Facebook to pay news media outlets for content might run into opposition from a Biden administration. The US has already signalled its interest in the legislation, while European efforts to tax the American tech firms was shelved because of anger from Trump. Biden’s running mate Kamala Harris is a senator from northern California and has close ties to Silicon Valley, with executives flooding her campaign with donations. As a former attorney-general for California, she was criticised for being too hands-off when it came to regulating the tech giants.
There has been a bipartisan hardening in attitudes towards China in the US but under a Democrat White House there is likely to be a shift in emphasis. Biden is likely to be much more forthright on issues such as human rights in Xinjiang and Hong Kong. That will significantly add weight to protests from Australia. But in other areas Biden might be less confrontational as he seeks cooperation on issues such as climate change. There is a risk that Australia, which has paid an economic price by standing up to China, could be left isolated.
Biden has pledged to revive America’s alliances after Trump belittled and berated long-standing partners in Asia and Europe. The US-Australia alliance is in comparatively strong shape but the US is likely to push for Australia to play a bigger role in the Indo-Pacific and deepen military cooperation, particularly as it looks to breath new lift into its pivot to Asia. The US will continue to press Australia to conduct freedom of navigation exercises within 12 nautical miles of contested islands in the South China Sea – that pressure may get harder to resist if Biden succeeds in coordinating other countries to withstand China.
Biden, who has a long interest in foreign affairs, is likely to see America engage more with multilateral organisations like the United Nations, World Health Organisation and WTO. That will be welcome to Canberra’s foreign policy establishment. While Morrison warned darkly against “negative globalism” last year, an audit by the Department of Foreign Affairs and Trade found it was in Australia’s interest to seek reform of multilateral bodies from within rather than leave. A re-engaged America will provide a much-needed boost to those efforts, especially with concerns that China has been allowed to capture many of those bodies.
A Biden election victory will provide a fillip to progressives in Australia and will be a reminder that elections are won in the centre ground, not by polarising voters and appealing to the fringes on both the left and right.