Trans-Pacific Partnership: Free trade deal faces uncertain future after Donald Trump vows to withdraw

With Donald Trump's announcement that he intends to withdraw the US from the world's largest trade deal, experts are divided over whether it can survive at all.

The Trans-Pacific Partnership is a 12-country free trade agreement that includes Australia.

While Japan's prime minister Shinzo Abe has said a TPP without the US is meaningless, the question is whether the remaining countries could keep the agreement alive.

Tim Harcourt, an economist with the University of NSW's business school and former chief economist of the Australian Trade Commission, said there was an appetite among some members to keep the TPP.

"It could [survive] if all 11 signed up, and in some ways it would get rid of some of the nasties that are typically not meant to be in free trade agreements, so it may actually be a better agreement," he said.

"Small, open economies like Vietnam, or Peru, Chile — those types of economies do very well out of these free trade agreements.

"It's probably Japan and the US who are the least keen of all the economies."

Mr Harcourt said even without the US, the remaining countries could still clinch a deal.

"They've got to get it all though their own parliaments and they'd all have to agree to it without the US," he said.

"So I imagine for a country like Vietnam that was given quite good concessions in American textiles, it won't be as attractive for them, but it's quite possible."

According to Mr Harcourt, a US withdrawal could backfire.

"It might be possible that China sets up something equivalent to the TPP with China pretty much at the helm, and that would not be a good outcome for the US."

Japan and US central to agreement

But some experts argue a TPP without the US is impractical because the agreement was centred on the US and Japan.

"As for aiming to bring it into effect without the United States, at the 12-nation meeting there was no such discussion," Japan's Prime Minister Shinzo Abe said.

"The TPP is meaningless without the United States.

"It is for the same reason that the re-negotiation is impossible, this would disturb the fundamental balance of benefits."

Alan Oxley, chair of the APEC study centre at RMIT University, said Japan had long been uncomfortable without a free trade agreement with the US.

"They're two of the biggest traders in the world," Mr Oxley said.

"Abe pioneered Japanese engagement in this.

"That's really the most important thing about this agreement because the standards that will be set in managing trade between Japan and the US, two very advanced economies, will be the standards which will then be the bases for all parties in the TPP.

"Ultimately, the long-term hope was that it would expand to cover all APEC economies, including China, in the long run."

But Mr Harcourt said for Japan, there was more at stake in the TPP than just trade.

"The reason for the TPP from a Japanese point of view was that they wanted to show China that they had economic leadership of the Pacific," he said.

"For Japan, it wasn't so much the economic benefits of the TPP, although they would have taken them.

"I think Japan was more interested in showing China that Japan and the US are economic leaders of the Asia-Pacific."

PIMCO warns Trump's protectionism risks leading to recession even as Wall St reaches record highs

With optimistic investors pushing Wall Street to fresh record highs again overnight, the world's largest bond trader PIMCO has warned President-elect Donald Trump's protectionist policies could risk leading to a recession.

Overnight, all four major US indices closed at record highs for the first time since December 1999 on the back of promises made by Mr Trump for tax cuts, infrastructure spending and a reduction in regulation.

However, research from PIMCO noted that wage and inflation pressures would be exacerbated if Mr Trump curbed trade and immigration, as his campaign platform promised.

"Under that scenario, the Fed eventually would likely need to raise rates more aggressively than in a scenario without fiscal stimulus and cosh-push inflation through protectionism, which could push the economy into recession in 2019 or 2020," PIMCO warned.

Mr Trump has already vowed to pull out of the world's largest trade deal, the Trans-Pacific Partnership on his first day in office, with potential adverse consequences for other signatories such as Australia.

"Trading partners could impose countervailing tariffs or retaliate in other ways; China, for instance, could sell its holdings of US Treasuries," wrote Libby Cantrill, head of public policy for PIMCO in a research note.

"In market terms, right tail risks, which could result from supportive economic policies, have increased. But left tail risks, which could result from policy missteps, may be just as fat, if not fatter."

When Mr Trump assumes the presidency, he will have broad powers to act without congressional approval in trade and immigration policy.

Mr Trump would also have broad powers over foreign assets and terms of trade, if his administration determines national security is in jeopardy, PIMCO said.

The paper noted that investors are eyeing Mr Trump's cabinet-level appointments for clues to how policy will play out.

"Many advisors who are currently leading the Trump transition on trade seem to share the protectionist views that President-elect Trump advocated on the campaign trail," Ms Cantrill wrote.

Former Goldman Sachs executive Steven Mnuchin is considered a frontrunner for the role of treasury secretary, while billionaire investor Wilbur Ross Jr is being considered for commerce secretary.

Earlier, Mr Trump had tweeted, "Great meetings will take place today at Trump Tower concerning the formation of the people who will run our government for the next eight years," clearly expecting to serve two terms as president.

Australian workers urged to 'go home' as overtime hours rack up

If you find yourself checking emails outside office hours, or taking late-night phone calls from the boss, then you are one of a cohort of workers racking up huge amounts in unpaid overtime, according to new research.

The Australia Institute has released the findings of its new study and is promoting a national Go Home On Time Day to urge employees to strike a healthier work-life balance.

The study found the average full-time Australian worker did 5.1 hours in unpaid overtime each week — or 264 hours per year.

"Workers donate $116 billion worth of hours to their bosses, every year," the Australia Institute said.

The director of the institute's Centre for Future Work, Jim Stanford, said this equated to a sizeable portion of people's time.

"It adds up over the year to 14 per cent of all the time you get paid for," he said.

"So you think Australians go to work, get paid and then do another 14 per cent without payment — it's a lot."

Mr Stanford said there was a cultural problem in Australia where many workers were expected to be accessible and able to complete their work no matter how long it took.

In addition to weekly overtime, the Australia Institute surveyed 891 workers and found many were not taking enough holiday leave.

Respondents cited various work-related pressures as inhibiting their leave, including being too busy, being reluctant to ask, or being worried it would affect their job security or promotion chances.

"We don't want to see a nation of empty beaches, unblackened sausages and grandparents waiting too long between visits," Mr Stanford said.

"We do want to see refreshed workers who have had the chance to spend some quality time with their families."

Mr Stanford said casual or part-time workers who were not entitled to paid annual leave were particularly susceptible to working overtime.

"That's where the fear that you'll be out the door if you don't impress the boss is that much stronger," he said.

"You've got unemployment and especially high levels of underemployment, all of this part-time and casual work, that is very much contributing to this willingness ... of Australia to put in extra hours without getting paid for it."

Chinese company plans $400 million theme park for Queensland's Gold Coast

A Chinese entertainment company wants to spend almost $400 million building a theme park to compete in the already crowded Gold Coast market.

The Songcheng Performing Arts Development Company operates six theme parks in China and has announced it wants to enter the Australia tourism market.

The chief executive of Gold Coast Tourism, Martin Winter, said talks had been held with company executives.

"This particular company is very serious," he said.

"They're a very big player in the market — they've got a great track record of delivering fabulous theme parks."

The Gold Coast already has a number of major theme parks, including Sea World, Movie World and Dreamworld.

Dreamworld remains closed four weeks after a ride malfunction killed four people.

Never a bad time to talk entertainment: Tate

Gold Coast Mayor Tom Tate said he would welcome a new player.

"I don't think it's ever a bad time to start talking about enhancing our tourism infrastructure," he said.

"This theme park will be something different — it is one of those ones that is focusing on culture."

In a statement to the Shenzhen Stock Exchange, Songcheng said the theme park would have an "Australian Indigenous Cultural Village", a "wild Australia" component and a "mysterious oriental area".

Mr Winter said the theme park would have to attract more than just Chinese visitors.

"It definitely will cater to Chinese tourists, but there's no business model that can be run on that alone, so it will be equally attractive to Australians," he said.

The Gold Coast attracts 340,000 Chinese visitors a year and there are four Chinese airlines that fly direct to south-east Queensland.

Next year a fifth airline, Air China, will begin direct flights from Beijing to Brisbane.

Councillor Tate said he would meet with executives from Songcheng next month and a development application could be completed by midway through next year.

Interest rates have hit bottom, bond markets suggest

Donald Trump rode to victory in the US presidential election by pledging to "make America great again".

"We are going to fix our inner-cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We are going to rebuild our infrastructure," he said in claiming victory two weeks ago.

While he is still only President in waiting, statements like that have had an immediate effect, with more than a trillion dollars wiped off the value of the global bond market.

"The 30-year rally in bonds is over. That was a golden period. One of the longest rallies we have seen in any asset class," said Justin Braitling, the chief investment officer with Watermark Funds Management.

The prospect of a debt-fuelled, inflation-generating, infrastructure spending spree, along with big cuts to US tax rates, have raised the likelihood that interest rates are on the way up.

"If inflation is going up and interest rates are going up around the world, we will be affected. We're an island, but not financially," explained Hans Kunnen, senior economist with St George Bank.

Bonds are a type of IOU used by governments and companies to borrow money to fund their activities.

The Australian Government currently has $421 billion in bonds, or loans, outstanding - in the United States it is $21 trillion.

"The bond market is absolutely huge, it's about double the size of the global share market," said Elizabeth Moran, who's a director at bond trading house, FIIG Securities.

"It's really worth learning about [the bond market] because, even if you never invest, there's such big movements of money and funds that it's really important to know what's going on."

Bonds are also known as fixed interest or coupon securities because the dollar amount of the interest is fixed when the bond is issued.

For example if a bond is worth $1,000 and the coupon, or interest, is $100, that is 10 per cent.

But if the price of the bond when it is traded on the secondary market goes down to say $500, that $100 coupon payment is now 20 per cent.

Or to put that another way, an organisation wanting to borrow that initial $1,000 would now have to pay $200 in interest.

Bond rates set the price of money

The reason movements in the bond market affect ordinary people living in the suburbs and towns of Australia, and around the world, is that bond interest rates affect the cost of money for all of us.

Banks here borrow in the bond market to fund, among other things, their fixed-rate home loans.

Since the US election, the cost of fixed-rate home loans has started to rise as bond interest rates have gone up.

"Over time that will flow through to your standard variable rate, it will flow through to your car loan, it will flow through to credit cards, potentially," explained Mr Kunnen.

"All interest rates are in one way or another connected."

However, Elizabeth Moran said big increases in interest rates are still a long way off.

She pointed to Westpac issuing more than a billion dollars of bonds in the US since the election, with huge demand from investors, which led to a lower interest rate than Westpac was planning for.

"They can still issue debt into the US at very low rates, they'll continue to do so, so there won't be the same pressure on their balance sheet here to raise rates," she tipped.

Ms Moran added that the economy will also have a big impact on where interest rates are heading.

"Where is the growth going to come in our own economy? Certainly tourism if the dollar stays lower, maybe education, but we don't see any booming growth prospects in Australia," she forecast.

Shares may be out of favour relative to term deposits

But it seems the interest rate cycle is turning and that will have an impact on the share market, where prices have been bid up to unsustainable levels in recent years by investors demanding big dividends to make up for low interest rates.

"It depends on the thinking of each individual investor, what are they after, what's their tolerance for risk. Some people like shares, others don't," said Mr Kunnen.

"But if term deposits are rising there is the potential for less demand for shares."

One group breathing a huge sigh of relief from the election of Donald Trump is retirees.

After nearly a decade of seeing their incomes smashed by low interest rates, they will be hoping that at long last a pay rise is on the way.