Last week, it was reported that China is once again exploring the possibility of joining an Asia-Pacific trade pact once lead by the United States.
But experts see no realistic path for China to join what is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – often referred to as TPP-11 following the US withdrawal – several core principles of which are at odds with key Chinese policies.
Meanwhile, some still have a cautious expectation that the US will eventually rejoin the trade regime, which is now spearheaded by Tokyo in Washington’s absence. One option is that a future US administration could sign on after Trump has left office, but Japan is also exploring possibilities for the near-term.
“The Trump administration cannot jump into the TPP,” Yasu Ota, who has covered trade for Japan’s Nikkei Shimbun for more than 30 years, told Asia Times. But, he added, “something different but with the same function [as the TPP] could be possible.”
Japanese officials, Ota said, have been discussing the possibility of creating a framework similar to the TPP, but more palatable from a domestic US political perspective.
When China first announced the Belt and Road Initiative in 2013, several months after Japan joined US-led negotiations for the TPP, it was widely seen as a response to the Obama administration’s “pivot to Asia.”
At the time, the TPP was the lynchpin of the US policy shift but has since been cast aside by the Trump administration, while the BRI continues in fits and starts in a quest to transform trade routes with infrastructure investment, expanding China’s economic influence in the process.
The news that officials in Beijing are currently looking into the possibility of joining the TPP-11 is not earth-shattering considering they have expressed interest in the past. But it does suggest that the Trump administration’s trade war, and the recently renegotiated North American Free Trade Agreement, have prompted a renewed sense of urgency in Beijing to avoid being left out of new trade deals.
“Yes, broadly the trade war is part of the story,” Wang Yong, a professor at Peking University’s School of International Studies told Asia Times. “It gives more incentive for China to think once again about the [TPP-11],” he added, in the context of the Trump administration’s successful conclusion of a deal with Canada and Mexico.
The new Nafta, which has been dubbed the US-Mexico-Canada Agreement, was in some ways a step in the direction of the TPP for the Trump administration. It not only includes rules similar to many of the TPP-11’s key provisions but also included an article directed at China, which grants the US freedom to renege on the deal if any party to the USMCA enters into a trade agreement with a “non-market economy.”
Both the USMCA and the TPP-11 include articles dealing with the digital economy that require freedom of cross-border transfer of information and prohibit member countries from requiring the localization of data or the handing over of source code. All three of those rules are directly contradicted by China’s domestic internet security laws.
But Wang of Peking University disagrees with the insistence among many in Washington that the BRI and TPP-11 are competing platforms for expanding influence. “I think we can work together. The two are complementary,” he suggested.
Wang’s comments echoed the official line from Beijing that downplays the role of competition in these trade-related initiatives, stressing that they are mutually beneficial. He also added that trade pacts like the TPP-11, and even the Trump administration’s tariffs, help encourage China to reform.
At an event hosted by Washington DC-based think tank Center for Strategic and International Studies this week, attended by both Wang and Ota, there was a disagreement among panelists as to which initiative – the TPP-11 or the BRI – had more wind in its sails.
“Once [TPP-11] launches there will be a lot of countries on the outside looking at the investment that’s going to be flowing into countries like Vietnam and Malaysia, if Malaysia ratifies,” said Amy Searight, CSIS’s resident Southeast Asia expert, contending that there was more momentum behind the Japan-led trade pact than there was behind the BRI.
Searight, who expects the TPP-11 to be officially launched next year, added that “countries in Southeast Asia are going to be looking jealously at their neighbors, which is why [Indonesian] President Jokowi keeps telling his cabinet that he wants them to look seriously at joining.”
But other panelists saw the situation in a dramatically different light.
“The great momentum [for] business at the moment is [behind] the BRI because of the infrastructure projects,” said former Thai commerce minister Apiradi Tantraporn.
“We have the third international airport underway, we have the high-speed train, and a web of highways to support this project,” she said, stressing that “this Belt and Road Initiative is something that will support the economic integration in Asean”
“[The BRI] will have the short-term impact on the economies of the region,” according to Tantraporn.
For the long-term, whether the United States wants to be involved in writing trade rules remains in question. What is not in question is that, while China injects investment into trade-related projects, Japan is hoping the US will come back into the fold.