CANBERRA, Australia—There has been no sign of a speedy resolution to U.S.-China trade tensions in recent meetings with American officials, Australia’s top finance minister said, despite President Trump’s more-conciliatory tone at last weekend’s Group of 20 summit.
Mr. Trump and China’s President Xi Jinping managed to get trade talks back on track last weekend, bolstering hopes of a break in trade hostilities between the world’s two biggest economies.
Australia’s Treasurer Josh Frydenberg, however, said on Friday he had seen no sign during meetings with counterparts or recent separate talks with U.S. officials that a resolution was on the horizon. “These issues aren’t going away anytime soon,” Mr. Frydenberg said in an interview with The Wall Street Journal.
The global nature of trade means the bilateral spat is dealing a blow to economic growth world-wide. In April, the International Monetary Fund reduced its global growth forecast for 2019 to 3.3%—growth was 3.6% last year—and said trade tensions could weigh on it further.
China’s demand has been the biggest driver of global expansion. The trade tensions risk exacerbating the Chinese economy’s slowdown, with the collateral damage likely to include Australian mining giants who would be hard-hit by any slip in China’s demand for Australian resources such as copper and iron ore.
Mr. Frydenberg met recently with U.S. Treasury Secretary Steven Mnuchin to gauge political resolve in Washington on a range of issues including trade and urge a de-escalation in global tensions. Australia is a supporter of trade liberalization. Last year, it joined 12 other members of the World Trade Organization in supporting proposed changes to the world trade umpire, which Mr. Trump has called “the worst organization ever created.”
Australia’s Prime Minister Scott Morrison used a recent trade-focused speech to indirectly criticize Mr. Trump’s negotiating style as a “a narrow, transactional approach” where longstanding alliance relationships were being wound back to “nothing more than the sum of our deals.”
While Canberra understands U.S. frustrations with the multilateral trading system, Mr. Frydenberg said the answer is in reforming rather than dismantling the dispute process or withdrawing altogether from the WTO. An appellate body at the WTO that handles trade disputes could become dysfunctional by the end of the year because the U.S. has blocked the appointment of new judges.
“While the World Trade Organization is not the flavor of the month, it can be re-equipped to deal with some of the issues,” said Mr. Frydenberg.
Australia’s resource-reliant economy is one of the world’s most China-dependent. Mr. Morrison’s conservative government has been anxiously watching for progress in trade talks amid concerns that any fallout could worsen already anemic growth and prematurely end a record 28-year growth streak.
The country’s independent central bank lowered its official cash rate to a record low of 1.0% from 1.25% on Tuesday, delivering the first back-to-back cut since 2012. Reserve Bank of Australia Gov. Philip Lowe has kept open the prospect of even further cuts should the economy fail to rebound.
The low level of interest rates has some economists discussing the potential for the central bank to adopt unorthodox monetary policy to revive an economy growing at its weakest pace since the global financial crisis. The central bank is leaning on Canberra to support its efforts with infrastructure spending and fiscal stimulus.
Mr. Frydenberg said while growth has slowed, the economy remains one of the fastest-growing in the developed world. A US$111 billion, decadelong package of tax cuts passed Thursday would help, he added.
“The fundamentals of the Australian economy remain sound, we have a triple-A sovereign credit rating, and a budget coming back into surplus for the first time in a decade,” he said.
Write to James Glynn at james.glynn@wsj.com and Rob Taylor at rob.taylor@wsj.com
https://www.wsj.com/articles/behind-summit-smiles-australia-says-u-s-china-trade-tensions-still-fester-11562320574
2019-07-05 09:56:00Z
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