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China May Join US-led Trans-Pacific Partnership Talks

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Pacific Money

China May Join US-led Trans-Pacific Partnership Talks

On Thursday Beijing said it is studying the possibility of joining the Trans-Pacific Partnership free trade talks.

China is studying the possibility of joining the U.S.-led Trans-Pacific Partnership negotiations Reuters reported on Thursday, citing a statement from China’s Commerce Ministry.

“We will analyze the pros and cons as well as the possibility of joining the TPP, based on careful research and according to principles of equality and mutual benefit,” Reuters quoted a commerce official as saying in a press release posted on the Commerce Ministry’s website on Thursday.

The Reuters report added that the press release had said the Commerce Ministry has been actively soliciting the opinion of various government agencies and industries about the wisdom of joining the free trade negotiations.

“"And we also hope to exchange information and materials with TPP members on the negotiations," the Commerce Ministry spokesperson added.

TPP talks have been ongoing for some time with eleven countries currently participating: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Last month the parties approved Japan’s entry into the talks after Prime Minister Shinzo Abe announced Tokyo’s interest in joining. It is expected to participate in the next TPP negotiating round

The agreement seeks to create a high-standard comprehensive free trade zone among its member nations that includes the elimination of tariffs and other barriers to free trade in goods and services as well as investment flows, while also not neglecting the “sensitivities and the unique challenges faced by developing country members.” In agreeing to allow Japan to join the talks, for example, the two sides agreed to include non-tariff measures often used by Tokyo to protect its automobile and other industries.

The U.S. and others have billed the TPP as a 21 Century trade agreement due to its efforts to go beyond traditional areas for free trade agreements (FTA) to cover issues like regulatory coherence and ensuring that small- and medium-sized enterprises in member states reap the full benefits of the free trade zone.

The TPP is widely seen as the economic foundation of the U.S. pivot or rebalance to Asia. Although the TPP seeks to be a “living agreement”—meaning that other countries can join at any time and other areas of trade can be added to the agreement in the future—the high standards of free trade were thought to be too large of a barrier for China to overcome in the foreseeable future. In addition, countries that join the TPP during or after the negotiations have to accept all the terms that have already been agreed upon prior to their entry.

As such, China has been championing the Association of Southeast Asian Nations’ Regional Comprehensive Economic Partnership (RCEP), a free trade pact that envisions more members but less strident terms. RCEP negotiations, which began earlier this month, include the 10 ASEAN member nations and the six countries that already maintain FTAs with the regional organization— Australia, China, India, Japan, the Republic of Korea and New Zealand.

China is also pursuing free trade agreements with South Korea bilaterally, and South Korea and Japan on a trilateral basis.

Beijing’s announcement that it is interested in joining the TPP follows recent signals that the new administration will seek to drastically reduce the state’s role in the Chinese economy in the years ahead.

The parties to the TPP agreements hope to finish the negotiations by the end of this year, a goal that is widely seen as being overly ambitious.

The next round of TPP negotiations, which will be the 18th round, will be held in Malaysia from July 15th-25th. Japan is expected to participate in this round for the first time.