China may have ‘missed the boat’ on TPP trade ne­go­ti­a­tions

China Daily (Hong Kong) - - BUSINESS - By LI JI­ABAO li­ji­abao@chi­nadaily.com.cn

China may have missed the chance to join the Trans-Pa­cific Part­ner­ship as ne­go­tia­tors are close to end­ing the talks and may close the door to a new­comer to avoid any de­lays, ex­perts said on Fri­day.

Mean­while, the na­tion is be­ing urged to make a pro­posal dur­ing the 2014 Meet­ing of the Asia-Pa­cific Eco­nomic Co­op­er­a­tion fo­rum. That is, to es­tab­lish an Asia- Pa­cific free trade agree­ment in­te­grat­ing the ad­vanced TPP and the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship, which cov­ers de­vel­op­ing economies.

“When it’s ready, China should join the TPP ne­go­ti­a­tions. But it’s surely too late now,” Masahiro Kawai, dean and the chief ex­ec­u­tive of­fi­cer of the Asian De­vel­op­ment Bank In­sti­tute, told the Eco­nomic In­te­gra­tion of the Asi­aPa­cific Re­gion Out­look: RCEP & TPP In­ter­na­tional Fo­rum.

East Asia is con­sid­ered the most dy­namic area in terms of global eco­nomic growth. In ad­di­tion to the United Statesled TPP, which cov­ers 12 coun­tries, the RCEP is in progress cov­er­ing 16 economies.

Some coun­tries are in­volved with ne­go­ti­a­tions for both pacts. For ex­am­ple, South Korea ex­pressed in­ter­est in the TPP af­ter Ja­pan joined the TPP ne­go­ti­a­tions in July.

US Trade Rep­re­sen­ta­tive Michael Fro­man said on Nov 29 that the US wel­comed South Korea’s ex­pres­sion of in­ter­est in join­ing the TPP, but he added that the pos­si­ble en­try of any new coun­try would be ex­pected to oc­cur af­ter the ne­go­ti­a­tions among the cur­rent mem­bers con­cluded.

“China’s en­try into the TPP de­pends on whether the US re­ally wel­comes China,” said Chen Dem­ing, chair­man of the As­so­ci­a­tion for Re­la­tions Across the Tai­wan Straits and for­mer com­merce min­is­ter.

“South Korea can be part of the TPP. As for China, the is­sue will be very, very dif­fi­cult,” said Peter A. Petri, a re­searcher at the In­ter­na­tional Busi­ness School of Bran­deis Univer­sity in the US.

He added that the TPP is likely to be com­pleted early next year.

“In the com­ing pe­riod, global trade and in­vest­ment rules will be first forged in re­gions. Th­ese rules will be for­mu­lated to high stan­dards and fa­vor de­vel­oped economies.

“The rules then will be ex­panded into mul­ti­lat­eral ones,” Chen said.

“China should try to join in all the pos­si­ble re­gional or mul­ti­lat­eral trade agree­ments at an early stage, which will in turn push for­ward do­mes­tic re­forms and help our coun­try flour­ish in the com­ing decades.

“We will be at a dis­ad­van­ta­geous po­si­tion if we are forced to ac­cept the com­pleted pacts dur­ing their ex­pan­sion into mul­ti­lat­eral ones,” he added.

Chen said that China does have an op­por­tu­nity, as the 2014 APEC meet­ing is go­ing to be held in Bei­jing. It was held in Shang­hai in 2001.

“China should ac­tively put for­ward the pro­posal to build up an Asia-Pa­cific FTA dur­ing the meet­ing and ef­fec­tively ad­vance the eco­nomic in­te­gra­tion in the Asia-Pa­cific re­gion, mak­ing use of the TPP and the RCEP,” Chen said.

The TPP will bring about ben­e­fits of $300 bil­lion a year and the RCEP will pro­duce ben­e­fits of $600 bil­lion a year, but a pact cov­er­ing all the Asi­aPa­cific economies, in­clud­ing the 21 mem­bers of the APEC, will yield ben­e­fits of $2 tril­lion a year, said Petri.

East Asian economies es­tab­lished 26 free trade pacts in the past two decades, ac­count­ing for 30 per­cent of the world’s to­tal.

Eighty per­cent of th­ese pacts were for­mu­lated in the past decade, ac­cord­ing to Zhang Shao­gang, min­is­ter-coun­selor of the Depart­ment of In­ter­na­tional Trade and Eco­nomic Af­fairs at the Min­istry of Com­merce.

“Var­i­ous free trade pacts im­proved the in­te­gra­tion of eco­nomic and value chains in the re­gion, but also caused some prob­lems for the par­tic­i­pants.

“The con­struc­tion of the TPP and RCEP will pro­vide the foun­da­tion for merg­ing the FTAs in the Asia-Pa­cific re­gion,” Zhang said.

“We never be­lieved that the tracks of the TPP and RCEP were mu­tu­ally ex­clu­sive. They re­flect dif­fer­ent ap­peals of economies at dif­fer­ent de­vel­op­ment phases, and they can be ad­vanced in par­al­lel and have pos­i­tive in­ter­ac­tions,” he added.

“When con­di­tions are ripe, we will join [the TPP] or be in­vited into it,” said Pei Changhong, di­rec­tor of the In­sti­tute of Eco­nom­ics at the Chi­nese Academy of So­cial Sciences.

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