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CPTPP members must be wary of China’s attempt to join trade pact

Nikkei Asia - 21 October 2021

CPTPP members must be wary of China’s attempt to join trade pact
By Kristen Hopewell

China announced last month that it had officially applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), one of the world’s mega-regional trade agreements.

Its 11 existing members — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam — must now decide whether to admit China.

Singapore and Malaysia have already signaled their support for China’s membership bid. However, given Beijing’s disregard for global trade rules and its weaponization of trade as an instrument of economic coercion against weaker states, CPTPP members should be highly wary of its attempt to join the free trade area.

Joining the trade pact would be a major symbolic and strategic victory for China. Originally conceived as the Trans-Pacific Partnership (TPP), the agreement was intended to be a cornerstone of the U.S. strategy for containing China’s growing influence in the Asia-Pacific region. When the Trump administration withdrew the U.S. from the TPP in 2017, its remaining members went ahead with the agreement, creating the CPTPP.

China now seeks to replace the U.S. as the economic behemoth at the center of the agreement. The Global Times, a state-run newspaper and mouthpiece for the Chinese Communist Party, characterized this as a landmark move that aims to "cement the country’s leadership in global trade" and leave the U.S. "increasingly isolated."

Membership in the pact would enhance China’s clout, cement its central position in regional and global supply chains, and bolster its growing economic dominance in the Asia-Pacific region and beyond.

China’s economic weight exceeds that of all the existing CPTPP members put together. It is the largest export market for the majority of CPTPP members, and these countries can be expected to come under substantial pressure to allow China to join the agreement.

For some CPTPP members, the prospect of boosting their exports by expanding their access to the massive Chinese market may provide a significant inducement to support its membership. But that would be shortsighted.

As the experiences of Canada, Australia and many others have shown, deeper trade and investment ties with China are a double-edged sword. Greater dependence on the Chinese market means greater vulnerability to an increasingly authoritarian and aggressive Chinese state.

A growing list of countries around the world have been targets of China’s trade aggression. Recently, for example, China blocked imports of Canadian pork, beef, soybeans and canola — and arbitrarily imprisoned two Canadian citizens — in retaliation for the country’s participation in the extradition of a Huawei executive to face fraud charges in the U.S. Beijing’s trade restrictions cost Canada $4 billion in lost exports.

China has similarly blocked imports from Australia in retaliation for its calls for an independent investigation into the origins of the COVID-19 pandemic as well as Canberra’s complaints about Chinese Communist Party interference in Australia’s domestic politics.

As the destination for nearly 40% of Australia’s exports, Beijing’s import curbs — targeting an extraordinarily broad list of agricultural and mining products, including coal, copper, timber, wine, beer, cotton, barley, beef, lamb, lobster, sugar, wheat and wool — have caused severe economic pain for Australia’s core export sectors.

Canada and Australia are far from alone. Beijing has used the threat and imposition of trade restrictions to punish over a dozen countries for various perceived affronts, including Japan, South Korea, New Zealand, Norway, Sweden, the Philippines, Taiwan, Mongolia and the United Kingdom. Although China’s actions flagrantly violate the rules and principles of the World Trade Organization, these rules have little bearing on its behavior.

Under President Xi Jinping, China’s approach to trade appears to be driven by the old maxim that the strong do what they will and the weak do what they must. Beijing has shown no compunction in using its economic might to bully other states.

Besides China, a number of other countries, including South Korea, Indonesia, Thailand and Taiwan, have expressed interest in joining the CPTPP. The United Kingdom’s accession process is already underway. Expanding membership in the agreement is an important way to broaden its scope. Moreover, since the WTO’s negotiation function is largely paralyzed, this also represents a crucial means to expand and strengthen global trade rules.

But CPTPP participants need to be confident that any new member will actually respect and abide by its rules. With its aggressive unilateral trade actions, using its market power to bully weaker states, Beijing has shown a blatant disregard for global trade rules. How could it possibly be trusted to abide by the CPTPP?

The logic behind trade agreements like the CPTPP is that trading relations between states should be governed by the rule of law rather than raw power. The fundamental requirement for membership in this or any other trade agreement must be that states agree to be bound by the rule of law in trade.

Until Beijing demonstrates a credible commitment to abiding by the rules and ceases to use its economic might as a tool of coercion against other states, allowing it to join the CPTPP would be a serious mistake.

 source: Nikkei Asia