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China and Korea join TPP negotiations in Chile

Asia / 14-03-17 / by
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China and South Korea are to join this week’s trade talks with Trans-Pacific Partnership (TPP) members in Chile, in the absence of a serious US presence.

The attendance of two of Asia’s manufacturing and exporting superpowers is evidence of a growing regional consensus that a Pacific Rim trade agreement must be established, even without Donald Trump’s America. While the US will send a local ambassador to represent it at the discussions on March 14 and 15, it has formally withdrawn from the TPP.

China’s presence can also be viewed as further evidence that the US retreat has emboldened Beijing to move swiftly to increase its influence over regional trade. China’s foreign ministry has confirmed that Yin Hengmin, special ambassador on Latin American affairs, will attend at the invitation of the Chilean government.

A spokesperson says: “China hopes this meeting will contribute to the Asia Pacific free trade zone, the building of open economies and the integration of Asia Pacific economies. China’s position on TPP remains unchanged.”

Neither China nor South Korea were members of the erstwhile 12-nation TPP. After the US’ withdrawal, the 11 remaining members agreed to convene in Vina del Mar to assess the chances of pursuing a US-free TPP.

If the agreement is kept alive, the US may be persuaded to join under a future administration, experts say. However, the Trump administration’s anti-globalist rhetoric makes any future US participation seem fanciful, at this point.

Former deputy US trade representative Wendy Cutler told GTR last week that there is a possibility for the US to revisit TPP membership further down the line, but that “as each month go by and other countries in the region turn to other countries, it’s going to be more difficult to revive”.

However, the Asia Society Policy Institute (ASPI), of which Cutler is the managing director, has urged the remaining TPP nations to pursue an agreement in the US’ absence.

“The commission affirms that policy makers should, in light of the US withdrawal, advance the TPP’s high standards in the Asia-Pacific region,” an ASPI report read. While it encourages the US to reconsider its position on the TPP, it recommends carrying it forward to conclusion, but also including its standards in other deals such as the Regional Comprehensive Economic Partnership (RCEP).

 

China backs RCEP

The RCEP is the agreement China is currently pushing most strongly. Despite being ostensibly led by Asean, China’s involvement frequently leads it to be branded as a rival to the TPP.

RCEP has been billed “TPP-lite”. It doesn’t have the same labour protections as the TPP, nor the same focus on intellectual property protection. These make it undoubtedly more agreeable to Chinese policy.

In the US’ absence, China will hope to finalise RCEP by the end of the year, but its presence at TPP discussions is hardly surprising and is an indication of how swiftly it is moving to fill the void left by the US.

In January, various high-ranking government ministers lined up to open the door to China’s participation in the TPP. “Losing the United States from the TPP is a big loss, there is no question about that. But we are not about to walk away… certainly there is potential for China to join the TPP,” said Malcolm Turnbull, the Australian Prime Minister.

Also on the agenda in Chile will be the Free Trade Area for the Asia Pacific (FTAAP), a monster agreement that is considered to be the end game for free trade agreements in Asia and would include all members of the Asia Pacific Co-operation (Apec), which currently includes the US, China, and Russia.

Again, this agreement viewed as something that is way down the track. “We think it’s premature to consider FTAAP given where RCEP is now and given the uncertainty of the fate of the TPP without the US. It’s difficult to say, if RCEP can’t be concluded, for FTAAP to be concluded, which would be expanded to include countries like Russia and others which have restrictive trade policies in place,” Cutler says.

Most analysts, however, agree that the initiative is now with China.

“If you think of how Obama framed the TPP, as the last chance for the US to pivot towards Asia and to have influence over trade in those countries, balancing the Chinese influence in that region. From the moment you have Trump not ratifying the TPP, China exerting influence, it showed that without the TPP there is no pivot to Asia for the US,” Andrés Delgado Casteleiro, a trade policy expert at the Max Planck Insitute in Luxembourg, tells GTR.

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