Pacific Money

China Asks to Join the Trade in Services Agreement Talks

Beijing also takes steps to allay fears it is pursuing a “Trojan Horse Option.”

Last month, Pacific Money considered the possible Chinese relationship with two multi-national trade agreements, the Trans-Pacific Partnership (TPP) and the Trade in Services Agreement (TiSA), both of which lie outside the bounds of the World Trade Organization.

As noted, there is some concern that China’s actions during the Information Technology Agreement (ITA) earlier this year – when Beijing scuppered the talks by asking for too many products to be exempt from the agreement – might serve as a warning for the TiSA and TPP talks. In other words, letting China join may be an equivalent of opening up the city gates to a giant wooden horse, left as a gift by the Greeks.

Such fears may have been at least partially allayed this week when China agreed to compromise on its ITA exclusion list, paving the way for the talks to resume sometime in the next few weeks, possibly by the end of October. Of course, we still cannot be sure whether the Chinese compromise is sufficient enough to allow the talks to get earnestly underway, but presumably Beijing is aware of what would be considered reasonable by the other negotiating partners.

In what could be further good news, depending on Beijing’s ultimate intentions, alongside its announcement on the ITA compromise, Beijing also formally requested to join the Trade in Services Agreement (TiSA) negotiations.

Obama may not have made it to Bali, but China took the opportunity to assure other negotiating partners, as well as the U.S. officials present in Indonesia, that it would not be attempting the “Trojan Horse Option” pondered by Pacific Money in September. As of the time of writing, the United States has still not presented China’s request to join the TiSA talks to the other members. Whether or not the existing members decided to take China at its word remains to be seen, so some of the optimism that has met the announcement should probably tempered for the time being.

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It is therefore still unclear as to whether or not China will be accepted in the talks. If it is admitted, then it will be the only “BRICS” (Brazil, Russia, India, China and South Africa) group nation to be involved in the TiSA deal so far. Whilst the absence of Brazil and Russia may not be overly significant, India’s lack of interest is surprising to many, considering the country’s strengths in certain services areas.