NEWS WRAP

Omi-come on! 

• Vaccinating against the Omicron variant | President Biden continues pushing for more vaccinations, saying the spread of the Omicron variant is a “cause for concern, not a concern for panic.” In response, the Centers for Disease Control and Prevention updated their recommendations, stating anyone over 18 years “should” receive a booster shot. Almost 60 per cent of Americans are fully vaccinated. Several roadblocks to greater vaccination persist, including a recent Missouri Federal Court block of the Biden administration’s vaccine mandate for federal healthcare workers in 10 states. READ MORE HERE
   
• Oxford High School shooting | At Oxford High School in Detroit Michigan, a 15 year-old armed with a semiautomatic rifle shot 11 people, killing three teenage girls. The alleged gunman is in police custody while the community grieves and investigations commence. President Joe Biden expressed condolences for the victims as Michigan’s Governor, Gretchen Whitmer, and Democratic leaders renewed their calls for stronger gun laws and action on gun violence. READ MORE HERE
   
• Economic headwinds | Testifying before the Senate Banking Committee, Fed Chair Jerome Powell cautioned against calling inflation 'transitory' and said that Omicron may further disrupt supply chains and undermine economic growth. The Biden administration's efforts to improve supply chains have thus far included the recent release of an ‘action plan’ with US$17 billion through the Build Back Better legislation which Treasury Secretary Janet Yellen, at the same hearing, urged Congress to support. READ MORE HERE
   
• Chirp, chirp | Twitter CEO Jack Dorsey resigned from the company he founded 15 years ago. Dorsey’s resignation was long anticipated as the founder became increasingly engaged with his other technological projects, including ‘Square’. Like other social media platforms, Twitter faces increasing scrutiny and battles with regulators over concerns about misinformation and social harm. Dorsey was the first tech CEO to penalise President Trump’s use of social media, infamously banning the former president from the platform following the January 6 attack on the US Capitol. READ MORE HERE

ANALYSIS

Omicron is the least of the problems for global trade

Dr Stephen Kirchner
Director, International Economy, United States Studies Centre

The indefinite postponement of the World Trade Organization’s 12th Ministerial Conference in Geneva because of a new COVID-19 variant represents yet another setback for the multilateral trading system.

Logistics aside, the WTO faces fundamental questions about its future. In particular, it is far from clear whether the world’s two largest economies, the United States and China, are committed to greater global economic integration.

The delay to MC12 comes ahead of the 20th anniversary of China’s accession to the WTO on December 11. WTO membership was an important element of China’s integration into the world economy, as well as its domestic economic reform program.

But 20 years on, China’s role in the world economy is seen as increasingly problematic. At the 8th review of China’s trade policy by the WTO in October, 50 delegations, including Australia’s, lined up to criticise China’s state-led development model, adherence to WTO rules and use of coercive economic statecraft.

WTO accession in 2001 made permanent the access China had enjoyed to US markets since the 1980s, but removed the substantial implicit trade barrier represented by uncertainty around whether the US Congress would renew China’s most favoured nation status each year. More importantly, WTO accession saw China lower its trade barriers to the rest of the world, including the United States.

The “China shock” literature has highlighted the number of US manufacturing jobs lost to import competition from China in recent decades. However, a broader assessment of the economic impact of that shock shows that it has been a net positive for the US economy.

Had the US resisted China’s integration into the global economy, greater import competition would have almost certainly arisen from other developing economies. The China shock was not really specific to China, but part of a broader globalisation shock to manufacturing that benefited the US and world economies.

Greater US economic engagement with China was never expected to lead to top-down political liberalisation by the Chinese Communist Party, but it was expected to lead to bottom-up changes in Chinese society that would present long-run challenges to CCP rule.

Increased political and economic repression under Xi Jinping, including recent leftist “rectification” campaigns against successful Chinese firms and industries, are symptomatic of increased regime insecurity and counter-intuitively vindicate the view that China’s integration into the world economy would challenge the regime.

Former US president Donald Trump’s trade war and sanctions against China have also led the CCP to question the extent of economic interdependence with the US. Trump’s “America First” policies and President Joe Biden’s “foreign policy for the middle class” are mirrored in China by Xi’s advocacy of a concept of national security that embraces economic self-sufficiency, aspires to global technological leadership, engages in economic statecraft and seeks to diversify away from economic engagement with the US.

Far from calling out and disciplining China’s behaviour, Trump’s trade policies, largely maintained by the Biden administration, have encouraged China to double down on its state-led development model.

This is an excerpt of an article published in the Australian Financial Review.

BY THE NUMBERS

US$6 increase for Thanksgiving dinner

The time-honoured classic Thanksgiving meal cost American families an average of six dollars more last week than in 2020 due to the high US inflation rate. According to the American Farm Bureau, which tracks the prices of agricultural products, the price of a 16 pound Turkey increased by 24 per cent since last year's Thanksgiving while the price of a bag of fresh cranberries increased by 12 per cent. 

Catch more By the numbers analysis here

THE ALLIANCE AT 70 |  COMMENCING CONSULTATIONS

The following is an excerpt from the soon-to-be-released The Alliance at 70 from The Honourable Alexander Downer AC, Minister for Foreign Affairs (1996-2007) 

Commencing Consultations

For the Australian foreign minister, the defence minister and even the prime minister, ANZUS has a much more profound raison d’etre. In 1996 at the AUSMIN summit in Sydney – which was the first I attended as foreign minister – we signed the Sydney Declaration. For some reason, this has been largely forgotten but it was an attempt by the new Australian Government to articulate jointly with our American visitors what ANZUS meant to us in practice. That Sydney Declaration is as relevant today as it was 25 years ago. 

First and foremost, from Australia’s perspective, the ANZUS Treaty is designed to anchor the United States in the security architecture of what today we call the Indo-Pacific region. The deeper and the more permanent the US engagement in the region, the less likely the region is to fracture and the status quo be challenged, or even changed, by the use of force. 

Or put another way, the US presence in the region helps to underwrite a regional balance of power. Take away that balance and the region would become deeply unstable. 

The two key alliances that keep the United States anchored in our region are the Alliance with Australia in the south and the alliance with Japan in the north. Although the United States has other allies in the region, these two alliances are the most substantial and enduring. 

Secondly, the Alliance with the United States gives Australia access to the best of American military technology. This is frequently overlooked by critics of the Alliance. Although Australia is a rich country, its small population and its huge size present a number of challenges when structuring the defence force. 

Australia has no choice but to depend on the very best technology for its security and the security of its region. Australia simply doesn’t have the size or the capacity to develop that technology itself. The Alliance gives us that edge over other regional countries not in alliance with the United States. 

Thirdly, the Alliance gives us access to American intelligence. This is a huge advantage for Australia. We have access to information which almost no other country in the region has – even Japan. That gives our diplomacy a major advantage. The Americans also gain out of this relationship as Australian intelligence in its own neighbourhood is equal to none. 

Finally, Australia’s intimate Alliance, its access to American technology and intelligence and extensive bilateral diplomatic engagement, as well as economic links, enhances very substantially Australia’s status in the region. Given the United States’ huge power both militarily and economically, relations with the United States matter to every nation in the Indo-Pacific. 

VIDEO

A conversation with Molly Ball, author of Pelosi and TIME magazine national political correspondent

This time last year, the United States Studies Centre hosted a webinar event featuring award-winning political journalist Molly Ball, TIME Magazine’s national political correspondent and author of the recent biography Pelosi. She was joined in conversation with Dr Charles Edel, Senior Fellow at the United States Studies Centre and Dr John Lee, Non-Resident Senior Fellow at the United States Studies Centre.

Catch more analysis on the United States on the USSC YouTube channel.

THE WEEK IN TWEETS

#HappyHanukkah