IGI | INSIDE GLOBAL ISSUES
Working Paper No. 201602
January 16, 2016
China’s Possible Strategy towards
the Trans-Pacific Partnership Agreement
Li Chunding John Whalley
Abstract: The Trans-Pacific Partnership (TPP) Agreement has concluded, but still faces the challenge of ratification in each of the 12 member countries. China is the world’s second largest economy, but is out of TPP, which has provoked a lot of debate in China on the best strategy in light of TPP. This paper analyzes China’s possible strategy towards the TPP agreement. We make three points relevant. The first one is that security of market access should be China’s main concern in any free trade agreement negotiation but the TPP does not include. The second one is that present TPP agreement is somewhat less than the high-standard and ambitious agreement as claimed. We suggest four strategies for China. The first is to promote the development of China’s remaining regional and bilateral FTAs. The second is instead to negotiate a bilateral FTA with the US. The third is to promote deep domestic reform and opening via an enlargement of coverage of TPP. The last is negotiating to entering TPP as soon as possible so that terms of entering do not worsen.
Keywords: Trans-Pacific Partnership, China, Free Trade Agreement
1. Introduction
The Trans-Pacific Partnership (TPP), also known as the Trans-Pacific Strategic Economic Partnership Agreement (TPPA), has announced the conclusion of negotiations and reached a five-year along-awaited agreement on October 5, 2015. TPP is the world’s biggest regional free trade agreement (excess the EU), with all 12 members together encompassing around 40% of world GDP. The summary document of TPP issued by the United States Trade Representative (USTR) on October 5 suggests that a declared high-standard, ambitious, comprehensive and balanced agreement has been born and TPP aims to promote economic growth, support the creation and retention of jobs, enhance innovation, raise living standard, reduce poverty, promote transparency, and enhance labor and environmental protections. We argue and view TPP largely as yet another agreement which largely restates WTO disciplines, with only a few new contents in E-commence, Competition Policy and State-owned Enterprises.
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2. Developments and Contents of TPP Agreement
TPP is a multilateral free trade agreement (FTA) that aims to further liberalize the economies in the Asia-Pacific region. Current member countries include Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, Vietnam, Japan, Canada and Mexico, a total of twelve countries. Although all involved countries are members of the Asia-Pacific Economic Cooperation (APEC), the TPP is not an APEC initiative. Instead, it is considered to be a step towards the proposed Free Trade Area of the Asia Pacific (FTAAP). The country member difference between TPP and APEC are shown in Figure 1.
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3. TPP is Not a Threat to China
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4. China’s Strategy
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5. Concluding Remarks
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