–Donald Trump sets up test for Malcolm Turnbull over China

February 24, 2018

China has responded furiously to the American effort to assert shipping rights near Chinese military bases, most recently when the missile destroyer USS Hopper sailed within 12 nautical miles of Scarborough Shoal on January 17. In an unusual move, the Chinese foreign ministry revealed the operation when the US had kept it secret.

Mr Turnbull made no comment on sending an Australian ship to join a similar exercise, amid reports his government is considering the option.

The tension over China’s military build-up was a key issue in the meetings at the White House on Saturday, where Mr Turnbull and Mr Trump held private talks followed by a working lunch with senior military and national security officials.

“The relationship we have with Australia is a terrific relationship and probably stronger now than ever before,” Mr Trump told reporters as he sat with Mr Turnbull in the Oval Office.

The meeting came hours after Mr Trump’s top economic official, Treasury Secretary Steven Mnuchin, announced tough new measures against North Korea to halt ship-to-ship transfers on the high seas that dodge existing sanctions.

After previously warning of direct conflict with the Kim Jong-un regime, Mr Trump spoke of a “very rough” outcome that would be “very, very unfortunate for the world” if the sanctions did not stop North Korea’s nuclear expansion.

Mr Mnuchin told reporters that Mr Turnbull was “very supportive” of the new sanctions.

In a conflicting signal, the US President used the press conference to support freedom-of-navigation exercises against China while at the same time declaring Chinese president Xi Jinping was “quite extraordinary” but also attacking the country on its trade policies.

Prime Minister Malcolm Turnbull speaks with reporters in Washington.

Prime Minister Malcolm Turnbull speaks with reporters in Washington.

“I have to say we’ve developed a great relationship with China, other than the fact they’ve been killing us on trade for the last long period of time – killing us, absolutely killing the United States on trade,” he said.

Mr Turnbull, however, emphasised the economic opportunities from China’s rise.

In a key announcement to show the strength of the bilateral relationship, Mr Trump said one of the US Navy’s next vessels would be named USS Canberra. It will be a littoral combat ship, designed for operations close to shore. The first USS Canberra was a cruiser built during World War II.

One of Mr Turnbull’s biggest challenges in his visit to Washington has been to persuade the US president to soften his opposition to the vast Trans Pacific Partnership, a trade deal that would deepen trade between the US and others while excluding China.

Mr Trump restated his dislike for the TPP but hinted that he could be persuaded to sign up if the terms were changed.

“The TPP was a very bad deal for the United States, it would have cost us a tremendous amount of jobs, it would have been bad,” he said.

“But there is a possibility that we’d go in, but they would be offering us a much better deal. I would certainly do that.”

Businessmen Anthony Pratt, Ian Narev, Leigh Clifford, Kerry Stokes and Greg Norman arrive for a joint press conference by Malcolm Turnbull and Donald Trump.

Businessmen Anthony Pratt, Ian Narev, Leigh Clifford, Kerry Stokes and Greg Norman arrive for a joint press conference by Malcolm Turnbull and Donald Trump.

Photo: Alex Ellinghausen

In the audience for the White House press conference were Australian business leaders including Qantas chairman Leigh Clifford, Seven West Media chairman Kerry Stokes, Commonwealth Bank chief Ian Narev and Business Council of Australia chief Jennifer Westacott.

With a domestic political debate raging over whether to cut company taxes, Mr Turnbull seized on Mr Trump’s sweeping cuts to press for similar reform in Australia.

That message gained support from members of the delegation including Business Council of Australia president Grant King, who called for an end to the political impasse at home over company tax cuts estimated to cost $65 billion over a decade.

Fortescue Metals Group executive chairman Andrew Forrest said Australia would fall behind other nations if it did not cut the company tax rate to compete with the US and others.

Rio Tinto chief executive Jean-Sébastien Jacques said a lower tax rate was “absolutely essential” to bringing more investment to Australia, given that his companies and others must compare the rate of return on projects between countries.

Melania Trump with Lucy Turnbull.

Melania Trump with Lucy Turnbull.

Photo: Alex Ellinghausen

Wesfarmers chairman Michael Chaney, another member of the delegation, said projects would not go ahead and jobs would not be created if the company rate remained at 30 cents in the dollar rather than the 25 cent rate the government advocates.

“The lamentable thing, I think, is this is not being embraced by all sides of politics in Australia – people are playing political games.

“And people will lose investment, and it will lose jobs over time, if the corporate tax rate for large companies remains at 30 per cent.”

Mr Turnbull emerged from a meeting with the US Treasury Secretary on Thursday to cite US government estimates that 70 per cent of the benefits of a company tax cut went to workers.

Mr Mnuchin confirmed that estimate when asked by Australian journalists yesterday. He added the benefit was “mostly” in wage growth.

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