The year 2022 is shaping up to be consequential for the members of one of the world’s most recent and most consequential trade pacts. Japan, Australia, Mexico, and others will need to make decisions on whether to lay out the welcome mat for China and Taiwan by starting accession negotiations for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.
The U.S. decision to withdraw from the original version of the deal, the TPP, in 2017 left the remaining members with post-traumatic stress. But 11 countries rallied and moved on without Washington, which is without a formal role as a crucial accession process moves forward. As in most other multi-country trade agreements, CPTPP decisions on whether new members can join are taken by consensus of existing members that have brought the agreement into force. In essence, any individual member of the agreement can block the will of the others. Ideally, it never gets to that point as the parties work to find common ground.
To date, CPTPP countries have worked well together. They finalized a high-standard agreement that looked moribund after the U.S. departure, agreed on detailed accession procedures for new candidates in 2019, and initiated formal negotiations for the United Kingdom to join the agreement earlier this year.
This unity will be tested by China’s Sept. 16 application to join the CPTPP, followed by Taiwan’s request six days later. The political and economic stakes and pressures on CPTPP members are high. Beijing has been quick to pressure individual members to accept its application and reject Taiwan’s request. A government spokesperson at China’s Taiwan Affairs Office couldn’t have been clearer when stating, “We oppose the Taiwan region participating in any trade agreements of an official nature or signing any trade agreements of an official nature.” Taiwan in fact already has concluded free trade agreements with two CPTPP members—Singapore and New Zealand—and is a member of both the World Trade Organization and the Asia-Pacific Economic Cooperation forum.
There are two basic schools of thought emerging among the CPTPP parties on China’s application: the “advocates” and the “skeptics.” The advocates, which include Singapore and Malaysia, are positive about China’s potential accession to the CPTPP. They believe that welcoming China into CPTPP, like China’s accession to the World Trade Organization 20 years ago, will spur further reforms and market opening in China, with external pressure forcing tough domestic decisions. In their view, Chinese accession would give a boost to the so-called reformers in China who recognize that the long-term health of the Chinese economy hinges on structural reforms and market opening. The advocates also see Beijing’s embrace of the CPTPP rules as an opportunity to de-escalate trade tensions between the United States and China, which have had serious spill-over effects in the region. Finally, they recognize that their economic fates are largely tied to China as the soon-to-be largest economy in the world. They welcome the new market-access opportunities, as well as the transparency, predictability, and WTO-plus disciplines that go hand-in-hand with CPTPP accession.
The skeptics, which include Japan and Australia, are far from convinced that Beijing is ready to meet the high standards embodied in the CPTPP. They point to the sizable gaps between the CPTPP rules and China’s current economic regime in such areas as the behavior of state-owned enterprises, restrictions on the use and storage of data, worker rights, and environmental protection, and economic coercion over geopolitical tensions, among others. Moreover, they get little comfort from the direction the Chinese economy is headed—toward more state intervention and a tighter control of the private sector, which raises serious questions about whether China would adhere to CPTPP norms. In their view, the China the world negotiated with during its accession to the WTO is very different from today’s China, where reformers are dwindling and those remaining are reluctant to speak up in fear of backlash from the authorities. Moreover, the skeptics are wary that even if China were to put in place laws, regulations, decrees, and ordinances that appeared on paper to be aligned with CPTPP rules, Beijing would find ways to circumvent or even blatantly ignore its obligations as it sees fit.