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Objective attitude needed toward TPP

Author  :  Zhang Jianping     Source  :    Chinese Social Sciences Today     2014-07-04

The Trans-Pacific Partnership (TPP) trade agreement has received extensive media coverage recently as China and its neighbors eye closer regional economic integration. Ahead of the G7 summit in Brussels on June 4, the US, Japan and Vietnam discussed the agreement that is poised to have a lasting impact on China’s strategy for Asia-Pacific regional economic cooperation. Chinese scholars have various understandings about the TPP, which differs from general regional trade agreements in terms of its goals and its limited release of negotiation information. The agreement tests China’s strategy towards Asia-Pacific regional economic integration.

The TPP aims to establish an advanced economic integration agreement in the Asia-Pacific region. Current negotiators include Singapore, Brunel, Chile, Peru, the US, New Zealand, Australia, Vietnam, Malaysia, Mexico, Canada and Japan. South Korea, which has bilateral free-trade agreements with most TPP negotiation members, has decided to join in TPP negotiations.

Dealing with issues such as multinational trade, investment and even domestic laws and regulations through a regional economic integration agreement can only result in inevitable contradictions and conflicts between negotiation sides. To date, the TPP has fulfilled around 75 percent of the agreement. It still has a long way to go, including non-tariff issues such as intellectual property, environmental protection, labor standards and competitive policy.

Disputes between Japan and the US pose a big obstacle to advancing the TPP. Resolving these and other divergences between developing countries, such as Malaysia and Vietnam, and developed countries, such as the US, pose an ongoing challenge.

In their studies of the TPP, Chinese scholars have adopted various views on the agreement and clarified common misunderstandings.

Firstly, some scholars consider the TPP is a conspiracy orchestrated by the US to rein in China. However, they overestimate the intelligence and capacity of the US, and must reflect on their own inferiority complex.

Secondly, some scholars believe the TPP represents the highest standard of development in the Asia-Pacific region and is a benchmark of Asia-Pacific integration. Their views were proven wrong, however, by China-South Korea Free Trade Area negotiations in May 2012 and China-Japan-South Korea Free Trade Area and Regional Comprehensive Economic Partnership (RCEP) negotiations in November 2012.

Thirdly, some hold that China needs to bide its time and participate in TPP negotiations when future conditions are most favorable. However, such a passive approach of sitting on the sidelines is undesirable in advancing East Asia and the Asia-Pacific region’s integration.

Fourthly, some claim that China ought to hinder TPP negotiations at every step because the US regulates China through the agreement. In fact, China currently cannot join in the TPP and is unable to directly affect its negotiation process. Meanwhile, some East Asian countries acknowledge and accept the TPP, which means it represents the development trend to a certain extent.

Fifthly, the TPP has begun to increase its influence since 2011. Many scholars influenced by the conspiracy theory are keen to discuss how to combat the TPP. Some claim the China-Japan-South Korea Free Trade Area (CJKFTA) is beneficial to combating the TPP, while others propose using the RCEP as a tool for combating the TPP. The CJKFTA, RCEP and TPP are actually mutually complementary, however, with symbiotic, not conflicting, relations.

Sixthly, great powers are usually credited as dominant countries in every multilateral free trade agreement. For example, the US is believed to dominate the TPP. Compared with European countries, Asian countries care more about who will dominate the negotiation process. In future, the establishment of multilateral free-trade agreements should dilute dominant rights and emphasize equal negotiation and cooperative dialogue between different economic entities

Overall, none of the six aforementioned ideas are objective or realistic. China shouldn’t be oppose the TPP because many of its neighboring countries are involved in TPP negotiations.

China has officially changed its attitude towards the TPP. A spokesperson for the Chinese Ministry of Commerce pointed out that China will actively research the TPP’s impact on its economy and explore the possibility of joining in the TPP in future.

However, China is objectively far from joining the TPP. In a short time, China is not qualified to join the TPP due to its rigid country-of-origin rules. In future it is feasible for China to seek integration between the RCEP and TPP, both of which will provide China with a proper opportunity to carry out reform and adjustment. A transparent dialogue mechanism is very important for China, the US and other TPP members to jointly advance the future Asia-Pacific integration strategy. TPP members should consider a more transparent information exchange mechanism of free-trade area negotiation. As a good beginning, a symposium on sharing information in regional trade agreements was held for the first time at the meeting for Asia-Pacific Economic Cooperation (APEC) trade ministers in 2014 in Qingdao, Shandong Province.

China needs to adopt an objective attitude towards the TPP. It should respect the TPP as an important way to push forward liberalization and facilitation of trade investment in the Asia-Pacific region. The most important task currently for China is to impact the China-Japan-South Korea free-trade area with China-South Korea free-trade area as a lever, assisting the Association of Southeast Asian Nations to establish a cooperative platform for RCEP integration. In future, there will be a TPP and RCEP parallel process towards integration in the Asia-Pacific region, eventually forming an Asia-Pacific free-trade area. At the 2014 meeting of APEC trade ministers, participants agreed to carry out research into the roadmap of developing an Asia-Pacific free-trade area.

 

 

The author is a research fellow at the Institute of International Economic Research under the National Development and Reform Commission.

 

 

The Chinese link: http://sscp.cssn.cn/xkpd/pl_20172/201406/t20140606_1199147.html

 

 

Translated by Yu Hui

Revised by Tom Fearon

Editor: Chen Meina

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