In late 2009, U.S. President Barack Obama announced the United States’ intention to participate in the Trans Pacific Partnership (TPP) negotiations. The TPP has become the capstone of the U.S.’ rebalance to the Asia-Pacific and will be the largest free trade agreement (FTA) in the world. The TPP will set a new a standard for FTAs and consists of 11 member states. However, the world’s second largest economy, China, has not been a part of the negotiations. There have been voices calling for China’s inclusion and also exclusion. After the informal U.S.-China summit in Sunnylands, both leaders recognized the need for continued cooperation and economic integration. But is the time right for China to join the talks? Both the U.S. and China have goals and objectives that will prevent China from joining the TPP in the short term, but both countries should strive for further trade liberalization and economic integration.
The 17th round of TPP negotiations concluded in May and the 18th round in late July 2013. According to a Congressional Research Service (CRS) Report for Congress, “U.S. negotiators describe and envision the TPP as a comprehensive and high-standard FTA that aims to liberalize trade in nearly all goods and services and include commitments beyond those currently established in the World Trade Organization (WTO).” U.S. representatives intend for the rules being negotiated to be more rigorous than similar rules in the WTO. TPP negotiations include controversial rules that cover intellectual property rights, regulatory coherence, environmental standards, labor, and state-owned enterprises. If agreed upon and implemented, there will be majoring restructuring of economies by some member states.
The TPP is central to several strategic U.S. goals. Primarily, it is the manifestation of the Obama administration’s “rebalance” to the region and could undergird the existing security alliance structure in the Asia-Pacific. Also, the TPP allows the U.S. to play a major role in developing new rules on emerging trade issues, across the rapidly developing region.
After Tokyo announced it would join the TPP trade talks, Beijing indicated it would study the possibility of joining as well. Beijing is at an immediate disadvantage of joining simply because of how many negotiations have already occurred. Of the 29 chapters being negotiated, many have been agreed upon by the U.S. and other member states. Many of the TPP talks have occurred behind closed doors. Given the U.S. preference for quick completion, it would be unwise for China to attempt to join at this late stage of negotiations. China cannot make an accurate assessment of the immediate and potential wide-ranging impact of the TPP.
After the disastrous effects of “shock therapy” economic policies in the former Soviet Union (FSU) states, the Chinese Communist Party (CCP) decided that slow and gradual reform economic reform was the best bath for China. Once again, the TPP will be a high standard FTA. TPP negotiated issues such as regulatory coherence, state-owned enterprises, labor issues, and intellectual property would have a huge effect on the economy. Further, lowering trade barriers will expose nascent Chinese industries to global competition. However, these standards should be an economic goal for Chinese leadership.
After completing domestic reforms to join the WTO, China experienced enormous economic success. China has been active in creating and joining many FTA’s, but none will have the vertical and horizontal cross-cutting rules the TPP could have. However, domestic economic and trade liberalization will be necessary. China’s involvement in the TPP would similarly create many opportunities.
China does have political reasons not to join the TPP. First of all, many of the rules and regulations would benefit American companies. Also, many prominent voices in China perceive the TPP as an American effort to contain China’s rise. After the “shirtsleeve summit”, both U.S. and Chinese leaders recognized that cooperation is extremely necessary for the future of Sino-American relations. Some have even called for increased economic integration in order to create “mutually assured economic destruction.” Regardless, the U.S. should be transparent as possible with the TPP and invite China to observe the next round of talks. Furthermore, Chinese leaders should prime their economy to eventually join the TPP or similar trade agreement in the future.
This article was originally published in the 2013 special annual APEC CEO Summit Magazine. Published with permission.
Official White House Photo by Pete Souza.
a global affairs media network
The U.S., China, and the Trans Pacific Partnership
November 1, 2013
In late 2009, U.S. President Barack Obama announced the United States’ intention to participate in the Trans Pacific Partnership (TPP) negotiations. The TPP has become the capstone of the U.S.’ rebalance to the Asia-Pacific and will be the largest free trade agreement (FTA) in the world. The TPP will set a new a standard for FTAs and consists of 11 member states. However, the world’s second largest economy, China, has not been a part of the negotiations. There have been voices calling for China’s inclusion and also exclusion. After the informal U.S.-China summit in Sunnylands, both leaders recognized the need for continued cooperation and economic integration. But is the time right for China to join the talks? Both the U.S. and China have goals and objectives that will prevent China from joining the TPP in the short term, but both countries should strive for further trade liberalization and economic integration.
The 17th round of TPP negotiations concluded in May and the 18th round in late July 2013. According to a Congressional Research Service (CRS) Report for Congress, “U.S. negotiators describe and envision the TPP as a comprehensive and high-standard FTA that aims to liberalize trade in nearly all goods and services and include commitments beyond those currently established in the World Trade Organization (WTO).” U.S. representatives intend for the rules being negotiated to be more rigorous than similar rules in the WTO. TPP negotiations include controversial rules that cover intellectual property rights, regulatory coherence, environmental standards, labor, and state-owned enterprises. If agreed upon and implemented, there will be majoring restructuring of economies by some member states.
The TPP is central to several strategic U.S. goals. Primarily, it is the manifestation of the Obama administration’s “rebalance” to the region and could undergird the existing security alliance structure in the Asia-Pacific. Also, the TPP allows the U.S. to play a major role in developing new rules on emerging trade issues, across the rapidly developing region.
After Tokyo announced it would join the TPP trade talks, Beijing indicated it would study the possibility of joining as well. Beijing is at an immediate disadvantage of joining simply because of how many negotiations have already occurred. Of the 29 chapters being negotiated, many have been agreed upon by the U.S. and other member states. Many of the TPP talks have occurred behind closed doors. Given the U.S. preference for quick completion, it would be unwise for China to attempt to join at this late stage of negotiations. China cannot make an accurate assessment of the immediate and potential wide-ranging impact of the TPP.
After the disastrous effects of “shock therapy” economic policies in the former Soviet Union (FSU) states, the Chinese Communist Party (CCP) decided that slow and gradual reform economic reform was the best bath for China. Once again, the TPP will be a high standard FTA. TPP negotiated issues such as regulatory coherence, state-owned enterprises, labor issues, and intellectual property would have a huge effect on the economy. Further, lowering trade barriers will expose nascent Chinese industries to global competition. However, these standards should be an economic goal for Chinese leadership.
After completing domestic reforms to join the WTO, China experienced enormous economic success. China has been active in creating and joining many FTA’s, but none will have the vertical and horizontal cross-cutting rules the TPP could have. However, domestic economic and trade liberalization will be necessary. China’s involvement in the TPP would similarly create many opportunities.
China does have political reasons not to join the TPP. First of all, many of the rules and regulations would benefit American companies. Also, many prominent voices in China perceive the TPP as an American effort to contain China’s rise. After the “shirtsleeve summit”, both U.S. and Chinese leaders recognized that cooperation is extremely necessary for the future of Sino-American relations. Some have even called for increased economic integration in order to create “mutually assured economic destruction.” Regardless, the U.S. should be transparent as possible with the TPP and invite China to observe the next round of talks. Furthermore, Chinese leaders should prime their economy to eventually join the TPP or similar trade agreement in the future.
This article was originally published in the 2013 special annual APEC CEO Summit Magazine. Published with permission.
Official White House Photo by Pete Souza.
