Many international agreements have been signed between countries to promote trade liberalization amid the growth of global integration. The Trans-Pacific Partnership (TPP), a proposed regional free-trade agreement currently being negotiated by 12 Asia-Pacific countries, has had an important impact by creating a counterbalance in the region.

US strategic intention for TPP

The TPP’s roots can be traced back to a free-trade agreement proposed by Chile and New Zealand. When Brunei, Chile, New Zealand and Singapore created agreements in finance and investment in 2008, the US expressed its intention to join them and subsequently participated in negotiations. Japan announced its intention to join TPP negotiations in November 2011.
The Trans-Pacific Strategic Economic Partnership Agreement at first didn’t attract worldwide attention. It only had an important impact on economic integration in the Asia-Pacific region after the US became involved and it was formally renamed the TPP.
The TPP aims to broaden trade between Asia-Pacific countries. The TPP’s main objectives are promoting bilateral and multilateral trade cooperation while reducing and eliminating trade barriers.
US involvement in the TPP is significant economically and politically. Economically, it prevents the US economy being excluded from the Asia-Pacific region. Politically, the TPP can be used as a springboard for the US to play a stronger role in the Asia-Pacific economy.

TPP’s problems and prospects
The TPP has drawn much attention for its wide range of areas covered and its expanded membership. However, there remain constraints and uncertainty on the path of its development.
Scholars claim the TPP, as a “new and super” trade agreement, is a thumbnail of a multilateral trade system similar to the World Trade Organization. However, most of the areas rich in potential in the TPP defy reality and lack feasibility. Complex characteristics of lower tariffs, excluded sensitive fields in East Asia agreements, and the common lack of passion for signing free-trade agreements in regional countries have posed major barriers in TPP progress.

The TPP faces two paths. The first is to promote economic integration of the Asia-Pacific region. The second is to form two big trade blocs with the US and China as the core respectively, due to Washington’s exclusionary attitude towards Beijing. In the process of the TPP’s development, cooperation and interaction between countries can improve bilateral and multilateral relations. But if China is excluded, the TPP’s impact will be limited. Whether China joins the TPP or not has become the most important political issue within the agreement. 

TPP impact on Asia-Pacific integration
In the 21st century, increasing national strength and economic growth have influenced the Asia-Pacific region’s growth pattern and drawn wedges between some countries.

Achieving balance in the Asia-Pacific
National interests dominate international relations. A country needs to adapt to international political and economic frameworks via its own power and strive for resources. Specialized social division of labor cannot be achieved between countries. All countries compete with each other based on maintaining independence. The result of competition and formation of patterns depend on discourse in the international community and international forces. With the accelerating process of economic integration, requirements for resources sharing and reduced trade costs in the Asia-Pacific region are increasingly strong. International rules and corresponding safeguard mechanisms established based on the regional pattern can promote the standardization and rationalization of business transaction. The TPP aims to regulate all countries' actions in the region beyond a national scope.
No agreement has been reached in the TPP. The ultimate purpose of the TPP is to promote structural balance through members’ stability brought about by the rules, systems and procedures within the agreement framework. There is interaction between the TPP and its members. The formulation and implementation of the agreement depend on all participants’ constant practice. Meanwhile, the regulations in the agreement influence participants’ behaviors and preferences, forming new behavioral norms in the Asia-Pacific region. However, whether the TPP can achieve its expected goals depends on not only rules but also the implementation of the measures. Once formed, the TPP will be sustainable and then a self-reinforcement mechanism will be derived. All participants will pursue common interests through coordination and cooperation under the mechanism.
Creating a regional counterbalance
TPP members are restricted and counterbalanced between each other to protect small countries from becoming commodity dumping grounds and political helpers of major powers. Formulation and implementation of each international agreement restrict and counterbalance all participants. They regulate members’ behaviors and expand the whole interest gains within the agreement framework. The TPP offers a new option unique from other complex agreements in the Asia-Pacific region. Asia-Pacific countries are interrelated and there is competition and containment between each other. This has made the situation increasingly complicated. In fact, if the existing agreements abide by the same rules or only one agreement is reached in a region, activities including trade will become simpler.
Impact of China’s economic interests
Although China has not participated in TPP negotiations, its international agreement framework is influencing the formation of the Asia-Pacific’s new order and gradually changing the situation of US dominance in the Asia-Pacific international agreements, forming mutual constraint and counterbalance. For example, the Regional Comprehensive Economic Partnership (RCEP) initiated by 10 ASEAN member states invited countries including China to make a free-trade agreement covering a single market of 16 countries.

China’s coping strategy
Faced with the rise of the TPP, China needs to actively participate in international cooperation and intervene in the formulation of the framework and planning, promoting Asia’s strategic level.
Firstly, it must overcome geographic restrictions and strengthen cooperation with countries outside the Asia-Pacific. Multilateral cooperative mechanisms are favorable for China’s international exchanges. When its influence in the Asia-Pacific is contained by the US, China should explore bilateral or multilateral cooperative mechanisms in other regions, especially regions that the US has less influence on. The “Silk Road Economic Belt” proposed by Chinese President Xi Jinping at Nazarbayev University in Kazakhstan is the first concrete idea for the process of intercontinental economic cooperation integration.

Secondly, the China-Japan-South Korea free-trade agreement should be enhanced. The agreement rivals the TPP. If the trilateral deal is reached, the area will become the third-biggest economic trade zone behind the North American Free-Trade Agreement (NAFTA) and European Union (EU). Once the China-Japan-South Korea free-trade zone is established it is expected to account for 20.5 percent of global trade compared to NAFTA (25.8 percent) and the EU (25.2 percent). This will offset the TPP’s impact on China to some extent and promote China’s discourse right in the world.
Thirdly, China must strive for a win-win result. During TPP negotiations, China should strengthen all-round cooperation for mutual benefit rather than settle for an agreement that favors one party at the disadvantage of another.
Fourthly, China should cultivate export enterprises with Chinese characteristics and reduce the substitution rate of export products. Only by promoting their own capacity and competitiveness can Chinese enterprises achieve competitive advantages in international trade.
Fifthly, China must capitalize on the situation and promote comprehensive international competitiveness. China’s diplomatic strategy and development program should be made based on its own strength. The core issue for China’s rise is dealing with relations between the government and the market, making the market play a decisive role in resources allocation, and giving better play to the market. It is therefore fundamental for China to improve innovative capacity and develop its economy, enhance the ability of governmental macroeconomic regulation, and control and achieve its own long-term stable growth.

The author is vice dean of the Business School of Jilin University.

Translated by Yu Hui
Revised by Tom Fearon