WHY CHINA DOESN’T MIND BEING LEFT OUT OF PARTNERSHIP
Nation’s clout gives it sway in Trans- Pacific deal
Given the importance of the accord ... it might seem strange China, the world’s second- largest economy and biggest trading nation, has been excluded.
In case you hadn’t heard, the TransPacific Partnership is a really big deal — unless you’re China. The largest regional trade agreement in history involves the United States and 11 countries in the Asia Pacific and the Americas, which collectively represent about 40% of world GDP and a quarter of global exports.
More than five years in the making, the TPP, as it is commonly referred to, was finalized Monday, but it still needs the approval of lawmakers in member countries, including Congress.
Given the importance of the accord, which is designed to boost cross- border trade and investment among member countries and, ultimately, economic growth, it might seem strange China, the world’s second- largest economy and biggest trading nation, has been left out.
While a lot of the details of the deal are still secret, the TPP is clearly more than just a free trade agreement. In addition to slashing or eliminating 98% of tariffs on thousands of goods including dairy, beef, sugar, cars, tractors and chemicals, it establishes common rules and regulations for trade and investment across member countries as well as external tribunals to sort disputes.
TPP member states will include the U. S., Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. More countries are expected to join, but given the toughmembership rules, China is not expected to sign up any time soon. Perhaps never. Excluding China has been widely interpreted as an attempt by the U. S. to curtail Beijing’s growing political and economic might in the Asia Pacific region, and some experts have described it as a “terrible mistake.” But does Beijing really care? Possibly not asmuch as youmight think.
For starters, China doesn’t need to belong to the TPP to enjoy some of the perks that come with being amember.
Beijing already has free trade agreements with more than half of the TPP countries, and it can exploit those arrangements to minimize or avoid import duties that normally would apply to made- in- China products.
And China clearly doesn’t require the TPP to enhance its already sizable influence in the world. Beijing is a member of the World Trade Organization, has a permanent seat on the United Nations Security Council and is the driving force behind the Asia Infrastructure Investment Bank ( AIIB), which could potentially become a rival to the World Bank and Asia Development Bank once it gets going. The Chinaled AIIB, which has the support of dozens of countries, aims to fund infrastructure projects in the region and could help Beijing buy the support of its neighbors.
China, on track to become one of the world’s biggest overseas investors by 2020, is busy negotiating its own free- trade pact with 15 countries in the Asia Pacific region and is expected to become the world’s largest economy in the next decade.