China’s bid to join the tran-Pacific trade deal faces a number of hurdles, both within its borders and from foreign rivals – but it nonetheless exposes a significant gap in the US strategy for the Indo-Pacific, Sam Sachdeva writes
More than 15 years after negotiations first began, and over three years after it was finally signed (albeit with a new name), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is still offering up geopolitical intrigue beyond that of most trade deals.
The news this month that China has formally applied to join the 11-member pact sets up a fascinating period of discussions within the grouping, which includes New Zealand, and across the regional order more widely.
At face value, it appears a tall ask for Beijing to meet the requirements of the CPTPP on delicate issues like labour and environmental standards, the free flow of data across borders, and liberalisation of state-owned enterprises.
The far less ambitious Regional Comprehensive Economic Partnership (RCEP) agreement, which the country did sign up to, is in that regard an unreliable barometer.
However, some have suggested that various carve-outs and exceptions within the text of the CPTPP agreement, along with Beijing’s subtle approach to enforcing informal rules of play, makes its accession less unlikely than it may seem.
But the already complicated political issues around China’s possible entry were further heightened by Taiwan announcing its own bid for membership.
Taiwan and China, in the same club?
Taiwan is certainly not holding back in making its case for entry, with a 20-page overview of its preparatory work shared with Newsroom covering its efforts to align domestic laws with CPTPP requirements and public engagement within its borders.
The news attracted a predictably fierce response from Beijing, with a foreign ministry spokesman describing Taiwan as “an inalienable part of China’s territory” and adding: “We firmly oppose Taiwan's accession to any agreement or organisation of official nature.”
There is some precedent for China and Taiwan sharing membership of the same trade club: the pair joined the World Trade Organisation within a month of each other in the early 2000s.
But with the former’s reunification push stronger than ever under Xi Jinping, it is highly unlikely to say the least that Beijing would be as relaxed about Taiwan sitting alongside it in the CPTPP.
Given the pact’s members each hold an effective veto over new entrants, Taiwan would need to enter before or alongside China to ensure it was not blocked from taking part.
Of course, China could have its own issues winning unanimous approval to sign up, given the frosty state of its relationship with Australia (although some have argued that in fact gives Canberra a degree of leverage to seek concessions and improve affairs).
There is a gaping hole in the US vision for the Indo-Pacific, which remains focused on security and military dimensions to the near-exclusion of economic considerations.
Beyond the simple matter of whether or not it does join the CPTPP, China’s application also puts a spotlight on the United States’ absence from the deal, and from trade discussions more generally.
Even the so-called special relationship between the US and the UK does not seem to be enough for Boris Johnson to secure his coveted trade deal.
The British Prime Minister last week conceded US President Joe Biden had “a lot of fish to fry”, despite having suggested – under Donald Trump’s presidency – that his country would be at the front of the queue for trade talks.
While Trump may be gone from office, his ‘America First’ sentiment lives on when it comes to trade (and to some degree pre-dated his rise to power).
According to polling from Gallup earlier this year, nearly a third of Americans view foreign trade as a threat to the US economy – almost twice as many as in 2020 – while just 63 percent hold positive views on trade.
That may still constitute a majority in favour of building economic ties, but with a noisy minority in opposition and the spectre of Trump hanging over the Democrats, it is little surprise Biden is hardly racing to put pen to paper on any new trade deals.
Yet that leaves a gaping hole in the US vision for the Indo-Pacific, which remains focused on security and military dimensions to the near-exclusion of economic considerations.
Aukus, the much-trumpeted trilateral alliance between the US, UK and Australia, serves as a perfect example, with its centrepiece of nuclear-powered submarines for Canberra and the promise of more to come in areas like cyber capability and quantum technology.
That is not to say such topics are unimportant, but they do sideline countries like New Zealand without any realistic prospects of acquiring such firepower (leaving aside the issue of desire).
In the meantime, Kiwi exporters’ reliance on the Chinese market is reaching new records even as the Government warns them of the need for greater diversification.
Businesses will not voluntarily forego revenue for the sake of geopolitical manoeuvring, so if American concerns about economic coercion by Beijing are more than empty words, the US needs to follow through by offering exporters a compelling reason to focus their attention on markets other than China.
In fairness, some within the Biden administration clearly recognise the problem. During a conference in July, the president’s Asia tzar (and long-time friend of New Zealand) Kurt Campbell said the US was keen to play a more active economic role in the region and urged Kiwis to stay patient.
But patience is not an inexhaustible commodity, and without some indication of a move beyond rhetoric to action, there is even less reason for nations like New Zealand to divert from the middle ground they are walking in US-China tensions.
