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Beijing’s TPP riddle
February 25, 2016, 6:24 am

"Without this agreement, competitors that don't share our values, like China, will write the rules of the global economy," Obama said about the TPP last year [Xinhua]

“Without this agreement, competitors that don’t share our values, like China, will write the rules of the global economy,” Obama said about the TPP last year [Xinhua]

Though all negotiating members have signed the TPP, it will need to be ratified by each member country, which could take a couple of years because their legislatures will minutely scrutinize it before doing so.

The implementation of the TPP will have major implications for the Asia-Pacific region, many of which are particularly significant for China. All TPP member countries are also members of Asia-Pacific Economic Cooperation, and some other APEC members, such as the Philippines, Thailand, the Republic of Korea and Colombia, have expressed interest in joining the TPP.

If the majority of APEC members decide to sign the agreement, the TPP could isolate the remaining members, particularly China, because most APEC members will come under common trade rules of the TPP and the APEC members will do business according to these rules. And as an APEC member, but not a TPP member, China might have problems in doing business with TPP members, because the US-led trade partnership will have many different rules and standards.

The TPP is moving on to trade standards that are higher than those in the World Trade Organization and most FTAs across the world. Its implementation will also require members to change their domestic policies in a number of fields. These include quality standards, intellectual property rules, government procurement laws, and laws relating to labor, investment and the environment.

While there are challenges, the TPP also gives many countries the opportunity to reform their existing policies. Joining the TPP could give China the opportunity to change many of its domestic rules and move to more market-oriented trade and business systems?similar to the opportunity China had in 2001 while joining the WTO. In this regard, the TPP can help usher in the second phase of domestic reforms in China.

But the TPP has another dimension that might be a greater challenge for China. It comprises the US and several of its political allies and partners. The US played the leading role in the TPP negotiations with the Barack Obama administration making it a top priority. The trade agreement is consistent with the Obama administration’s strategic emphasis on the US becoming a major actor in the Asia-Pacific region. Indeed, the US has made it clear that by pushing the TPP it wants to ensure that it is able to write the rules of trade in Asia-Pacific, which makes joining the TPP an uncomfortable proposition for China.

Apart from being a US-led agreement, the TPP also includes several members with whom China has difficult political relations and territorial disputes in the East China Sea and the South China Sea such as Japan, Vietnam, Brunei and Malaysia. This makes the TPP an even greater political challenge for China.

What then are the options for China? One possibility is quick conclusion of the Regional Comprehensive Economic Partnership negotiations that include China, Japan, the Republic of Korea, India, Australia and New Zealand and member states of the Association of Southeast Asian Nations. But the RCEP might not be as ambitious as the TPP. Many RCEP members, who are members of the TPP, might see more economic gains from the TPP, which could make the RCEP insignificant in the long term.

Perhaps a better option for China would be to press for convergence of the RCEP with the TPP and push for a Free Trade Area for the Asia-Pacific, which it has already proposed. But the FTAAP must be as ambitious as the TPP to make it a credible alternative. Otherwise, more regional economies will choose the US-led TPP leading to strategic complications for China.

 

This article first appeared in China Daily.

The views expressed in this article are the author's own and do not necessarily reflect the publisher's editorial policy.

6 Responses to Beijing’s TPP riddle

  1. Anne Teoh Reply

    February 25, 2016 at 8:46 am

    There’re too many treaties, all unnecessary except in raising the costs of trade and businesses. Let the businesspeople do their buying and selling in a free market… throw the whole cost accruing treaties out. Even Abe doesn’t look happy or confident in this picture and Obama is certainly pushing.

  2. clare Reply

    March 16, 2016 at 5:52 am

    US thinks using ‘sabotage-TIPP’it can defeat BRICS trade &union !US wants to separate BRICS countries from each other in order to create weakness &chaos beyond them!

  3. John Moss Reply

    March 18, 2016 at 11:07 pm

    Amitendu Palit you are a deluded US muppet, TPPA won’t last one year,who would ever want to be under US control….the only glue holding TPPA etc together is US stand-over threats if countries like New Zealand don’t join, lucky with the signing of New Zealand’s AIIB agreement comes with full military protection from China….there is no way any US Proxy lead FTA will ever defeat the BRICS because the US has full control of its FTA’s they make the rules (Pathetic)

  4. Katherine Reply

    April 20, 2016 at 10:12 am

    If China joins the TPP, they will sell the whole world down the drain. And it will contradict everything that BRICS stands for. The only thing standing between Global Corporate Fascism and Multi -cultural Nation Sate Sovereignty, seems to be Russia. Instead of joining the TTIP Europe should align themselves with Russia, as should the UK, Canada, Australia an New Zealand. The TPP is not “free trade,” it is Corporate Fascist hegemony where the Corporations have the same rights as government, pay no taxes and can sue any government should their health regulations, environmental laws and minimum wage laws interfere in their profit margins.

  5. Peter Jennings Reply

    May 23, 2016 at 12:17 pm

    It seems the author of this piece hasn’t fully understood just what TTIP is and what it really means for the worlds population. The author is under the impression that TTIP would be good for China!
    Given that the US/UK/EU have been waging aggressive war on most of the planet, should we really be signing anything that these warmongers put before us? They are merely corporate prostitutes, condemned by their own actions over the last half a century.

    The TTIP is a straight jacket or a nato led embargo, take your pick. The ultimate decision will be decided by corrupt and spineless politicians who themselves cannot even read the TTIP proposals without first having to jetison all recording devices, pens, paper, etc. They then gain access for 15mins to read a proposal that is thousands of pages long.

  6. Adhyansh Jadli Reply

    November 29, 2019 at 5:25 pm

    Thank you so much for such a nice and informative article.

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