 Hi I'm Shiro Armstrong from the Crawford School of Public Policy here at the ANU and I'm joined today by Professor Mari Pangestu who is an ANU graduate, former Indonesian Trade Minister and current honorary professor of the Crawford School at ANU. So welcome Mari. Now we're talking on the sidelines of the ANU Crawford Leadership Forum. We've just had a panel on the trading system. What are the main issues in the global trading arena? I think the clear and present danger is the collapse of the world trading system as we know it today. I mean the US which had for 70 years been the supporter and the leader taking the leadership on this is now actually the biggest threat you know as I think we all talked about earlier and and it's not just the US threatening to destroy the system but the way it is doing unilateral protectionism and how China or other countries respond to it is also a key integral part of how the world trading system seems to be spiraling downward because you are seeing countries like Australia asking for exemptions from the tariffs, potential retaliation and tit-for-tat and bilateral dealings with it rather than using the rules-based trading system especially the dispute settlement mechanism and I think if we if we went that route and we actually ended up with a trade war the effect on trade the effect on growth of prosperity poverty reduction is is really going to be under threat and and this is something that we really should avoid. So what should countries like Indonesia or Australia do in this situation? Doing nothing is not an option this is what I kept on saying even though obviously at the moment it seems like countries just because of the unpredictability of the nature of Trump's and the US actions we are a little bit sort of struggling with how to respond and so far the response has been a combination of asking for exemptions and trying to make it bilateral deals which as I mentioned earlier is really not going to help us with the with maintaining the open and rules-based trading system which has benefited not just us Australia Asia but also the world and the US not to mention so I think our role our choice is really not not to do nothing but to continue this process now how should we continue the process of an open rules-based trading system and on top of that given that we know that the kind of the underlying pressure from for anti-globalization for protectionism is coming from this unequal distribution of benefits from trade we also need to pay attention at the same time to have the complementary policies on structural adjustment whether it's safety nets whether it's the transition for sectors and regions which are affected by globalization or technological change for that matter also needs to be combined with the policies of continued openness now continued openness means that we have to have a shared vision of continued openness which is also equitable as well as that countries that are a bit more advanced or have more should be able to give more right to the lesser developed countries or countries which are not in a position to give more so it means that there has to be a coalition of willing open countries which will pursue this public good which we can call an open and rules-based and equitable trading system and give more and and continue the processes of opening up whether it's multilateral whether it's regional as well as doing unilateral reforms so when I say multilateral I think we have to work very hard to support and continue to maintain the world trading system the multilateral world trading system the WTO especially the dispute settlement mechanism which we know the US is really disregarding and even with the their veto on nomination of appellate judges to the dispute settlement appellate body they are actually effectively making it ineffective and maybe incapacitating it in in by next year yeah so this is I think number one priority apart from all the reforms that we need to do within the WTO so there has to be a collective leadership probably coming from China Japan and EU as the major big countries and middle powers and friendlies as as Craig used the term like Australia like Indonesia and ASEAN and Korea and I think some of the Latin American countries so the this coalition of like-minded countries with a shared vision should continue to pursue on the multilateral side on the regional side obviously we have CP CP TPP or TPP 11 as one of the mega regionals that that can continue the process of opening up and one that involves ASEAN Indonesia and Australia is all obviously RCP I think completion of the negotiations of RCP will send a very very important and clear signal that this part of the world this region intends to continue the process of opening up whatever the US does and finally of course unilateral reforms and structure reforms which we will need to do to continue growth and development and while we are doing this it's kind of like a minus US world but at the same time the US is the US it is still a major country and it's a big minus right so we still need to find ways to engage the US whether it's through a pack whether it's through other mechanisms we need to continue to engage the US you mentioned the RCP agreement the regional comprehensive economic partnership agreement how important is that and what are the prospects for getting that completed anytime soon I think it's important I mean when we had TPP 11 12 and RCP they were about equal in size but now with TPP 11 actually RCP is bigger economically yeah it's half the world's population is 30% of GDP 30% of world trade so whatever we do I think will have an impact not just for our region but also for globally yeah and I think the prospects hopefully are relatively positive that we can complete substantial part of the negotiations this year so even if you had the framework and the principles of agreement in place this year that would still continue to send an important signal so substantial progress is is the minimum we hope for the maximum we hope for is the completion of the negotiations and as far as I know there's a high level of commitment from our president to complete the RCP negotiations and solidifying the ASEAN position within the RCP negotiations and then hopefully you'll find kind of a middle ground landing zone between the high level of ambition from Australia Japan and and from the lower ambition of India so we have to come to to some level of landing zone which is not the end of the story you know we should look at this as a process and in the in the near future you can continue to improve these commitments going forward so you continue the process of opening up a living agreement yeah living agreement so you mentioned doing nothing is not an option what happens if we do nothing and the system unravels what is that going to look like in 12 months time well if it actually unravels you have a trade war and you have the collapse of the WTO then I think we are in really really bad situation I think a lot of scenarios and modeling have been done to show that you're going to end up probably worse than the situation like the Great Recession in the 1930s I think there was a estimation by the WTO if you went back to the level of tariffs and level of protection before the multilateral trading system world trade would go down by 60% and the world economy would contract by minus 2.4 percent and then if you actually had a US-China trade war that would really compound the situation you'd have all countries looking inward again and beg a neighbor kind of policies and that would be very disastrous especially for small open economies like Australia like Indonesia and for developing countries you know you're asking developing countries with hundreds and millions of people still in poverty being you know continuing to be impoverished well with your three prong plan of multilateral regional and unilateral hopefully we can avoid that that outcome thank you very much Mari Pungas do