China in the TPP
The evolution of the Trans- Pacific Partnership ( TPP) regional trade deal has been full of twists and turns. The signing of the deal, a hard- earned achievement, seems nearly to have been nullified with the US’ decision to pull out of the TPP. The other 11 member nations, nevertheless, have yet to give up on the trade deal, and there’s a lot of indication that China’s participation and inclusion in the TPP would be welcome.
Australia was the first member nation of the regional trade bloc to extend an olive branch to China, with Australian Trade Minister Steve Ciobo stating that there’s scope for China and Indonesia to join the TPP. New Zealand also said that it hoped to save the trade pact by expanding it to include China and other countries. At the recently concluded two- day meeting in Chile, 15 Pacific- rim countries including China and the remaining TPP countries committed to free trade, a move that has been taken to signify that plans to include China in the TPP are inching closer to reality.
There have been considerable arguments over whether China should join the trade deal. However, China is light years away from TPP inclu- sion, judging from varied aspects that include the future outlook for TPP negotiations, the procedures required for the trade pact’s expansion, the acceptability of the deal’s terms on China’s part as well as the complexity of moving forward with trade negotiations. It is therefore pointless and un
necessary for arguments to pivot around whether or not China should join the deal.
First, the trade pact’s future remains elusive. According to the original deal agreed on by the 12 member nations, the TPP won’t take effect unless it is ratified by at least six member nations that account for over 85 percent of the combined GDP of all the 12 signatory countries. The US, however, represents roughly 60 percent of the total GDP, which means that the US’ withdrawal makes it impossible for the original agreement to come into force. The other member countries will need to decide whether the original agreement should remain unchanged. The evolution of the TPP will face the quandary of new trade negotiations. It’s still unclear when a consensus could be reached, which leaves an unknown future for the multinational trade bloc. In light of this, there is a long way to go before China becomes a member of the TPP. Second, China
has not been officially invited to join the TPP, nor has the country applied for membership. If China decides to join the deal, it would need to be decided exactly how TPP membership would work and whether the country could accept all the original terms or restart negotiations. Either scenario will presumably bring up plenty of uncertainty. China will face a very long road before its TPP membership could be finalized, especially given that there are no signs of the start of any related talks yet.
Third, the existing TPP terms are not suitable for China. The current agreement was reached in the absence of China’s involvement, and many terms do not meet China’s demand, nor do they reflect China’s need for new global economic and trade rules. The
TPP is known as a high- standard 21st century free trade agreement, and its openness and rules don’t suit China’s stage of development.
Fourth, a renegotiation on the TPP is not an easy thing. Given the mismatch between the current agreement and China’s demands, a renegotiation is inevitable. Even if the existing terms could be used as a basis, negotiation between the various economies won’t be easy. Except for Canada, Mexico, Chile and Peru, all TPP members are included in the Chinaled Regional Comprehensive Economic Partnership ( RCEP). Meanwhile, China and Canada have held talks about a free trade agreement. Therefore, the TPP without the US is not that attractive to China in terms of short- term economic interests. But the new standards and new rules set by the TPP may be an external driving force for China’s long- term economic development. In addition, if China could take the lead in the development of both the TPP and RCEP, it would be easier to achieve the Free Trade Area of the Asia- Pacific, which is conducive to enhancing China’s global influence. Nevertheless, it must be pointed out that this is just a future vision, and that TPP membership is still quite far away.