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7 JULY
A tale of two pandemics
President Biden celebrated what he called “independence from a deadly virus” in his Fourth of July address this week. Despite missing his goal of having 70 per cent of American adults receive at least one vaccine dose by July 4 (falling short by only three per cent), the President remained upbeat about the future of America, as a thousand visitors celebrated Independence Day on the White House Lawns in a glimmer of returned normality. The White House event provided a start contrast with Australia, where many continue to face various stages of lockdown as a result of a recent surge in COVID cases (see this week's By the Numbers feature below to see a quantitative comparisons of the two countries).
The pandemic is one of a number of challenges leading to declining US foreign direct investment in Australia, according to the United States Studies Centre's Director of Trade and Investment Dr Stephen Kirchner. According to new research he released this week, Australia experienced the most significant outflow of US foreign direct investment in 15 years in 2020. While some aspects were exacerbated by the pandemic, Australian lawmakers should still consider revising a number of domestic policy settings that are unfriendly to foreign capital, Dr Kirchner said.
NEWS WRAP
Tax time for Trump Org
Trump Organization and CFO indicted | The Trump Organization was charged last week with ‘scheme to defraud’ as long-time financial officer, Allen Weisselberg, was indicted over 15 tax-related crimes, including grand larceny and tax fraud. Both The Trump Organization and Weisselberg have pled not guilty, with Trump denouncing the charges as a “political witch hunt”. READ MORE HERE
Biden Advisor on Canberra and Beijing | President Biden's top advisor on Asia, Kurt Campbell, said Australians should be “settling in for for the long haul in terms of tensions between China and Australia". Beijing, he posited is "exhibiting a harshness in their approach that appears unyielding". At the same time, Campbell highlighted that such challenges have helped further "a deepening, intensifying relationship between Canberra and Washington." READ MORE HERE
Taliban takeover? | The US and Afghanistan are disputing details of the July 2 US pullout from Bagram Air Base in Afghanistan, with Afghan authorities claiming the base's new Afghan commander was not notified ahead of the departure. Ahead of the Biden administration’s September 11 withdrawal target, the Taliban holds control over one-third of the country and some experts predict a wider Taliban takeover. READ MORE HERE
Jan 6 commission | After Republicans blocked Senate legislation last month, the House approved legislation to launch a new inquiry into the January 6 Capitol insurrection via a select committee. House Speaker Nancy Pelosi ruffled resistant Republicans by quickly appointing ousted Republican heavyweight and vociferous Trump critic Liz Cheney (R-WY) to the select committee. READ MORE HERE
Big Tech survives a big challenge | The Federal Trade Commission, led by well-known Big Tech critic Lina Khan, had its antitrust lawsuit against Facebook dismissed by a district court early last week. In a major win for Facebook, the decision throws doubt over six other House Judiciary Committee bills set to reign in the power of Big Tech firms and enhance corporate accountability. READ MORE HERE
Two hundred and forty-five years ago, we declared our independence from a distant king. Today, we’re closer than ever to declaring our independence from a deadly virus. That’s not to say the battle against Covid-19 is over. We’ve got a lot more work to do.
President Joe Biden
Fourth of July White House address | 4 July 2021
The United States has traditionally been Australia’s most important investment partner. The bilateral investment relationship was valued at just under $1.8 trillion in 2020. However, even before the pandemic, there were emerging signs of weakness in that relationship. US investment in Australia significantly underperformed in 2020, continuing a three-year trend.
More competitive US tax settings due to former President Trump’s tax reforms have been an important factor in this underperformance. The Biden administration will again revamp the US corporate tax system, with the G20 also agreeing to rewrite global tax rules. In this context, Australia will need to pay careful attention to the competitiveness of its own tax and other policy settings to maintain the interest of US and global investors.
For the OECD area, foreign direct investment (FDI) inflows fell 51 per cent in 2020. Australia’s experience was in line with this performance, with a 48 per cent decline in inbound FDI. However, US investment in Australia fell by even more, with an outflow of $12 billion, the first such outflow since 2005. The US share of the stock of FDI in Australia has declined for two straight years, while the US share of total foreign investment in Australia has been declining for three years.
Data from the US Bureau of Economic Analysis shows that since the passage of President Trump’s Tax Cuts and Jobs Act in 2017, Australia has underperformed peer economies and regions in attracting US FDI. Canada, Europe, the United Kingdom, New Zealand and the Asia-Pacific region ex-Australia all outperformed Australia in attracting US investment.
A number of factors explain the weakness in US investment in 2020 in particular. The pandemic saw significant repatriation flows, as global investors, including those in the United States, sold foreign assets to raise cash. The main outflow of US investment in Australia in 2020 was holdings of Australian debt securities and unwinding derivatives hedging those positions.
This is an excerpt from an article by Dr Stephen Kirchner published by The Mandarin and based on research in his latest report Australia-US bilateral investment in 2020: Taxing times. Click below to read the full article.
DID YOU USSC?
THE LATEST FROM USSC EXPERTS
ANALYSIS
Dealing with authoritarian regimes is oldest challenge in American history
Dr Charles Edel in The Hill.
NEW RESEARCH
Australia-US bilateral investment in 2020: Taxing times
Dr Stephen Kirchner with the United States Studies Centre
BY THE NUMBERS
Where do states stand on COVID deaths and vaccine rollouts?
Sarah Hamilton
Research Associate for Data Insights
The United States is certainly beating Australia on the COVID-19 vaccine rollout but by how much exactly?
Vaccine rates vary considerably between US states but to put Australia's numbers in perspective: ACT leads Australian state and territories in having the highest number of vaccine jabs per 1,000 of its total population (373). But even Mississippi, which ranks last among US states in having the lowest number of jabs per 1,000 people (646), still has a a rate nearly 1.7 times greater than ACT's. Vermont, which ranks first at 1362 jabs per 1,000 people, has a rate 3.6 times greater than ACT's.
In terms of death rates, Victoria leads Australian states and territories in having 0.1 COVID-19 deaths per 1000 people. US death rates range from 23.2 times Victoria's rate in New Jersey to 2.8 times Victoria's death rate in the state of Hawaii.
VIDEO
US Politics and Policy Series with special guest Annelise Neilson
Did you miss last month's episode of the US Politics and Policy Series? The webinar featured Sky News Australia political reporter and first dedicated Washington correspondent Annelise Neilson in conversation with hosts Professor Simon Jackman (CEO, USSC) and Professor Gordon Flake (CEO, Perth USAsia Centre)
The full event replay is now available to stream. Tune in HERE.
Catch this and other recent webinars on the USSC YouTube channel!
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University of Sydney NSW 2006
