US economic policy drifting as China seeks to join mega Asian trade deal


China’s decision to formally seek to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the world’s largest Asian trade deal, presents the United States with a huge set of economic and diplomatic challenges. China’s accession to the CPTPP would deal a heavy blow to US economic policy and further strengthen Chinese leadership in the Indo-Pacific. Complicating matters further is Taiwan’s recent announcement that it also wants to join the CPTPP.

The CPTPP is what was left of the original agreement with 12 US-led countries, the Trans-Pacific Partnership (TPP), which was a priority under Presidents Bush and Obama, but which President TrumpDonald Trump Julian Castro overthrows Biden administration on refugee policy Overnight Energy & Environment – League of Conservation Voters – Climate summit chief says US must “show progress” on environment Five takeaways from the Arizona PLUS audit results withdrew the United States in its first week in power.

Since the APEC CEO Summit in November last year, China has shown interest in joining the CPTPP. Yet this apparent interest has been met with skepticism about China’s ability to undertake the economic reforms required to meet the high standards of the CPTPP, such as increased competition for state-owned enterprises, freer data flows through borders and restrictions on industrial subsidies from China.

Still, it’s increasingly clear that China’s request to join the CPTPP needs to be taken seriously and may come sooner than expected. On the one hand, China is the largest export market for nine of the current 11 CPTPP countries. Second, it may be less difficult than is commonly thought for China to meet many CPTPP standards. China could also rely on broad exceptions to the agreements to justify non-compliance. Where China has justified trade restrictions as being related to national security, there is also a very broad national security exception that China could rely on.

Second, for many developing countries such as Vietnam to join the agreement, full compliance with various rules had to be delayed as these governments embarked on domestic reforms. This sets a precedent for China to argue that when it is unable to meet CPTPP standards today, similar flexibilities should be extended to China and not delay its accession to the agreement.

A key question for many governments will be whether they can be convinced of China’s eventual compliance with the CPTPP. Asked about China’s membership in the CPTPP, the Australian Trade Minister stressed the need for China to prove that it is respecting trade agreements. This speaks not only of recent Chinese restrictions on Australian exports which are incompatible with the China-Australia FTA, but also of China’s well-documented ways of avoiding its WTO commitments.

The UK’s announcement earlier this year of its interest in joining the CPTPP likely accelerated China’s decision to join. In part, the UK’s membership in the CPTPP would be another bulwark and obstacle to China’s membership, and it is more difficult for CPTPP governments to seriously negotiate UK membership, and do not do the same for China. Taiwan’s request this week to also join the CPTPP will complicate the membership process, as China will oppose Taiwan’s membership as it conflicts with its one-China policy.

So now the United States faces a reversed scenario – as China prepares to join the CPTPP, it is left on the outside, still unsure how to show trade leadership in Indo. -Peaceful.

If China succeeds in joining the CPTPP, it will prevent the United States from joining the agreement. The United States then having to negotiate with China to join the CPTPP is an irony that would be too much to bear. Indeed, the re-engagement of the United States on trade in the Indo-Pacific region will force the United States to restart the process. However, after Trump’s withdrawal from the CPTPP, getting other governments to agree to make high-level trade commitments with the United States again will be a big step. Moreover, with China a party to the CPTPP, the economic impact on China of a new US-led trade deal that excludes China would be significantly diminished. Indeed, China’s accession to the CPTPP will in the foreseeable future reduce the effectiveness of US trade policy as a tool to achieve US strategic goals towards China.

As President BidenJoe BidenFighter escorts planes that entered restricted airspace at UN rally Julian Castro hits out at Biden administration over refugee policy FBI investigates alleged assault on Fort Bliss soldier in an Afghan refugee camp MORE As made clear in his address to the United Nations General Assembly this week, the United States must lead a group of countries to counter China’s strategic challenges. To do this, the United States will need to continually show itself, lead and demonstrate the consistency of its objectives. This will require a renewed economic engagement strategy for the Indo-Pacific. The United States no longer has the luxury of spending precious political capital to get other countries to join a major international economic initiative like the CPTPP and then decide to pull out because it contributes to good domestic politics. . Leaving the CPTPP has come at a cost, and China’s decision to join the CPTPP has raised the stakes even higher.

Joshua Meltzer is a Principal Investigator at the Brookings Institution.


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