CPTPP puts pressure on China, but options remain open

By Wang Cong Source:Global Times Published: 2019/1/1 21:03:39

Nation could consider joining new agreement: analysts

Representatives from CPTPP member countries hold hands after the signing ceremony of the CPTPP in Chile on March 8, 2018. Photo: IC

A new trade pact among 11 Asian-Pacific economies that went into effect over the weekend could put pressure on China's push for regional free trade agreements (FTAs), as the interest of potential regional partners in new trade deals is likely to fade, Chinese analysts said on Tuesday.

After nearly two years of negotiations following the withdrawal of the US from the original Trans-Pacific Partnership (TPP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially kicked off on Sunday.

Seven of its members, including Australia, Canada, Japan and Singapore, have ratified the pact, with the remaining four, including Chile and Peru, expected to follow suit shortly.

The milestone deal will see significant reductions to tariffs among the member economies, which have a combined GDP of $13.5 trillion, representing 13.4 percent of the global total and making the deal one of the largest in the world, media reports said.

"Given its massive scale and its launch at a time when sentiment is rising globally against free trade, the CPTPP is certainly a game changer," Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations in Beijing, told the Global Times on Tuesday.

Although the CPTPP went forward without the US, which had tried to use the trade pact to single out China as part of its containment strategy, it still exerts pressure on China as it pushes for regional trade pacts, particularly the Regional Comprehensive Economic Partnership (RECP), Chen noted.

Changing times

"As many countries are in both the CPTPP and the RECP, the two FTAs are competitive. Now that these countries have the CPTPP, their enthusiasm for the RECP is actually declining," Chen said.

The RECP was first proposed by the 10 member states of the Association of Southeast Asian Nations (ASEAN), and it was later joined by six other countries in the region, including China, Australian, India and Japan. If realized, the RECP, covering 3.4 billion people and with a combined GDP of $49.5 trillion, could become one of the largest FTAs in the world.

China has been an enthusiastic promoter of the RECP, with Beijing officials repeatedly calling for the completion of negotiations. Other countries also appeared to be committed to the deal as recently as mid-November, when the RECP leaders said in a joint declaration following a summit in Singapore that they were still committed to completing the pact.

But with the CPTPP in force, potential RECP members that are not in the CPTPP - such as China - are at a disadvantage, said Huo Jianguo, vice chairman of the China Society for World Trade Organization Studies.

"RECP negotiations could also face pressure," Huo told the Global Times on Tuesday.

However, there are several options for China as it reassesses the path forward in its push for regional trade deals to expand its export markets. One of the options is to join the CPTPP, analysts pointed out.

"I don't see why we cannot consider this option," Chen said, adding while the TPP was considered to be aimed at China because of the US' strategy, the CPTPP is an open trade agreement that has more to do with labor and environmental standards and market access, rather than political motives.

"China has already made big progress in these areas and is taking more measures to improve. If we meet their standards, I don't think the CPTPP countries will turn the massive Chinese market away," Chen noted.

Newspaper headline: CPTPP pressures China in trade pacts

Posted in: ECONOMY

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