Thinking the unthinkable about China's CPTPP application

September 25, 2021 | 06:35 pm PT
Pham Quang Vinh Former Vietnamese ambassador to the U.S.
​​China's attempt to be part of the CPTPP, which has left a door open for the U.S. to be back, is as intriguing as it is surprising.

What will it mean for the great power rivalry that it portends? And why not think the unthinkable?

I was taken aback at the news that China has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

China is coming and the U.S. is somewhere far away.

China's application has come at a time that the U.S. under President Joe Biden's administration had shown no signs of returning to the fold. And we all know that CPTPP is a new form that has 11 members waiting for the U.S. to return.

Initially, the TPP, predecessor to the CPTPP, was framed as the centerpiece of the U.S.’s strategic pivot to the Asia-Pacific region and it had become an influential geoeconomic and geostrategic pact led by America.

In this context, how should we understand the new development?

On the surface, it seems that China faces three major difficulties.

First, CPTPP signatories would check it carefully as they would not be sure if China can fully meet the high standards in the deal that are strictly regulated, because it is already engaging in contrary actions like heavily subsidizing state-owned enterprises and deterring e-commerce transparency.

Second, some key members of the pact have tense relationships with China on specific issues, including Australia, Canada, and Japan. If just one of them rejects it, China's request will not be successful.

Third, the U.S. will not just "stand by and watch" and will launch a lobbying campaign to ask allies and partners not to accept Beijing.

For sure, China knows all this. Why is it making this effort then?

The answer could be that it has plans for the short-term while playing the long game.

In the short run, Beijing may aim to take advantage of the great power rivalry to build a "better image" of China as a country in favor of trade, bringing huge economic benefits for partners. In fact, China announced its CPTPP application just one day after the U.S unveiled a new security partnership with Australia and the U.K. (AUKUS).

It is also possible that China wishes to prevent Taiwan from joining the CPTPP and even the U.S.’s return to the pact.

In addition, Beijing’s move could deepen the separation between the deal's members with the U.S. as they would not want to take sides in the strategic competition. Countries in CPTPP may be more divided in the consultation process as they protect their respective interests in their relationships with China. The initial reactions indicate that such division is inevitable. Some welcomed the move, some raised conditions and some have not publicized their opinions yet.

In the long term, China will use the CPTPP to achieve a leading position in the Asia Pacific region, completely sidelining the U.S.

Representatives of members of Trans-Pacific Partnership (TPP) trade deal wave as they pose for an official picture after the signing agreement ceremony in Santiago, Chile March 8, 2018. Photo by Reuters.

Representatives of members of Trans-Pacific Partnership (TPP) trade deal wave as they pose for an official picture after the signing agreement ceremony in Santiago, Chile, March 8, 2018. Photo by Reuters

Personally, I will not be surprised if China expresses its willingness to wait for approval to join the CPTPP because it waited for 15 years to join the World Trade Organization (WTO).

That duration could be shorter these days given the fact that China has become the world's second largest economy and other economies need it. It has become apparent, especially during Covid-19, that cooperation with China is crucial for many countries to recover and live with the pandemic.

At the same time, China has also shown that it can meet high standards in multilateral agreements given the successful conclusion of the EU – China Comprehensive Agreement on Investment (CAI) in 2020. In fact, it would be possible for Beijing to get a "waiting period" to fully satisfy certain standards.

When China becomes a member of CPTPP, it will lead the whole region with its economic strength, supported by its role in the Regional Comprehensive Economic Partnership (RCEP). China's GDP is over $14 trillion which is higher than that of the CPTPP (around $13.5 trillion).

This would, in effect, mean a dissolution of all of the initial targets of the signatories.

First, countries in the CPTPP would have to stay with or drop the 20 items which were temporarily "frozen" to wait for the U.S. to come back. Among these are standards for state-owned enterprises, workers' rights, government procurement and e-commerce.

With them (as planned earlier), countries in Asia could increase exports to and access advanced technologies from the U.S.

These two benefits are crucial for sustainable development of the supply chain in the Asia – Pacific region.

Secondly, if China's in without the U.S., the whole CPTPP would be Asia-centric and would not be able to foster the trade flow between the two sides of the Pacific. Unlike the U.S., China is export-oriented too. More advantages would accrue to China, effectively disadvantaging CPTPP members in competition with the export powerhouse.

Furthermore, it is unavoidable that CPTPP members will rely more heavily on China's supply chain. This leads to the question: What are the value additions in this mechanism? Beijing could gain a huge advantage both in economic and geo-strategic spheres in the Asia – Pacific region.

So I'd like to raise another question: could China create another substantive reversal for the TPP as the U.S. has done several times?

In considering this, we should look not only at the options of related countries, but also that the U.S. is likely to seriously put re-joining the TPP back on its agenda because it is a matter of national interest and geo-strategic competition in the long run.

As for CPTPP members, they need to carefully re-examine their goals and interests in the pact’s original give-and-take package, in return for having accepted the high standards insisted on by the U.S. They should also consider what their likely benefits will be in terms of competitive advantages, market diversification and reducing dependency on one source.

This is a very critical issue for Vietnam as a member of the CPTPP and RCEP. It requires the nation to be very cautious in reviewing its relationships with all partners to ensure its interest, independence and autonomy.

Remarkably, back in 2015, when countries were going to conclude the TPP, I used to say that it was a historic miracle for members and for Vietnam in particular.

It was huge because it had set unprecedentedly high standards that are crucial for sustainable development in the future.

Vietnam had strongly demonstrated then its determination in the deal for the country's future. By transforming its role from an associate to taking part in negotiation and coming to the final stage, Hanoi went beyond its contemporary legal and policy framework.

Looking ahead, I'd like to imagine this: what if the CPTPP has both China and the U.S. as full members? There is no reason for members to deny listening to China's request, but they would remember, at the same time, to leave the door open for the U.S. to come back, because the U.S., its economy and market are uniquely critical for the pact's members. In fact, both the U.S. and China are crucial partners of the pact’s members.

In this case, CPTPP members would need to strictly keep to basic standards of the deal without giving in to short term interests or gains. Only then would the grouping be able to keep its permanent vitality.

*Pham Quang Vinh is former Vietnamese ambassador to the U.S. The opinions expressed are his own.

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