China’s strong-footed progress towards joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) marks a significant step that holds great potential for global trade dynamics and regional cooperation.
By submitting the necessary documents for accession, China demonstrates its commitment to aligning with the high standards of the trade bloc.
China’s membership would bring substantial benefits to all members and inject new momentum into trade and investment liberalization in the Asia-Pacific region.
Along with the increased institutional strength and credibility already mentioned, this would incentivise many more potential applicants, both inside and outside the Asia-Pacific region.
A larger and more global market would be a considerable boost for the CPTPP, given the lack of clarity from the new US administration on whether it will return to the Trans-Pacific Partnership (TPP).
The significance of China’s accession goes beyond strict trade interests. At a time of creeping protectionist sentiments and looming threats to rule-based commerce, trade activities by CPTPP members help defend the principles of global free trade and rule-based commerce, something which has been the mission of CPTPP ever since the inception of its predecessor, the TPP.
It is high time for the countries that have taken the lead in promoting the values of global free trade and rule-based commerce to act collectively in their defence, lest they face critical setback.
CPTPP is a huge agreement. Its members account for 13 per cent of global GDP, 15 per cent of global trade, with a population of 500 million people located in the growing and increasingly rich Asia-Pacific region. It is also a high-level agreement that not only reduces trade tariffs for goods, but also sets new rules in areas such as services, investment, intellectual property, digital trade and state-owned enterprises. Totalling 30 chapters, it is based on commitments to very high levels of liberalization, inhibition of government interference and protection of business interests, making it a union well-suited for this century.
Wang Shouwen, the Vice Minister of the Ministry of Commerce (MOFCOM), announced this significant step during the Asia-Pacific Economic Cooperation China CEO Forum in Beijing. He emphasized China’s willingness and capability to join CPTPP and highlighted the extensive research and evaluation conducted on more than 2,300 articles of the agreement. China has additionally recognized the essential changes, adjustments to legal frameworks, and steps needed for its participation to align with the high standards of CPTPP.
China’s accession to CPTPP is expected to bring substantial benefits to all members of the trade bloc and inject new momentum into trade and investment liberalization in the Asia-Pacific region.
With 99 percent of merchandise trade under the CPTPP framework set to be at zero tariffs, China’s commitment to high-level opening-up is evident. Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation, pointed out that China’s efforts to join the trade bloc demonstrate its commitment to international trade and the potential positive outcomes it could have for other members of CPTPP.
CPTPP originated as the Trans-Pacific Partnership (TPP), which was a key component of the Obama administration’s “Pivot to Asia” strategy aimed at establishing an economic counterweight to China’s regional influence. However, the US withdrew from TPP in 2017 under the Trump administration, leading to the formation of CPTPP. Japan took the lead in negotiations, and the agreement was signed in March 2018, coming into force in December of the same year. CPTPP includes provisions related to anti-corruption, government procurement, adherence by state-owned enterprises (SOEs) to market principles, transparency, due process, and commercial data flows across borders with minimal state interference.
At present, CPTPP comprises 12 member countries. In March, the United Kingdom became a member after leaving the European Union. If China’s membership is approved, it would greatly expand the trade scope of CPTPP and bring about positive benefits for all members. Huo Jianguo, Vice President of the China Institute for World Trade Organization Studies, highlighted that China’s inclusion in CPTPP would not only help in its economic revival but also strengthen its dedication to extensive international trade.
China has been actively opening its doors to foreign investment, particularly in the manufacturing industry, and is gradually expanding its efforts to open up the services sector. Wang Shouwen affirmed China’s dedication to high-level opening-up and outlined several measures to achieve it. These measures include reducing the negative list of foreign investment access, establishing more free trade pilot zones, and creating a nationwide negative list for cross-border services trade. Foreign investors have shown increased interest in China, as reflected in the visits of several executives from global multinational companies, such as Apple, Tesla, JPMorgan Chase & Co, and Microsoft.
The Chinese Ministry of Commerce reported a significant increase in foreign direct investment (FDI) from countries like France, the UK, and Canada, with FDI from France surging by 429.7 percent year-on-year in the first five months of the year. Strengthening reforms to streamline the government, delegate power, and improve government services is crucial to ensure ongoing support for foreign investment and provide equal treatment for foreign-funded enterprises.
If successful, China will be a non-founding member to join CPTPP, clearly signalling that it is an outward-looking and free-trading nation. Not only that, by having China as a member, CPTPP would go from being an Asia-Pacific-focused regional framework to one that is global in nature.
