Skip to main content

China on the Doorstep of the TPP

The signing of the Regional Comprehensive Economic Partnership (RCEP), a major Asian trade agreement, in November 2020, was remarkable because India decided not to take part in it while Japan was determined to strike a deal with China, despite the difficult political transition underway in Washington. Some questions arose at that time. Would the EU show as much autonomy from the United States on the Euro-Chinese economic negotiation front? Would India eventually join the RCEP? Would the United States return to the competing transpacific project? Would China also seek to join also the Trans-Pacific Partnership (TPP)?

TPP’s variable geometry

In December 2020 came the first reaction from the European Union, which signed the EU-China Comprehensive Agreement on Investments (CAI), ignoring a request from Joe Biden’s new presidency to stall the proceedings. On September 16th, 2021 the question regarding China was also answered when it officially requested to join the TPP.

The history of the TPP began in 2005, with a nucleus of four small nations: Singapore, New Zealand, Chile and Brunei. The entry of George Bush Jr.’s USA in 2008 and Shinzo Abe’s Japan in 2013 radically transformed the transpacific negotiations, which grew to a global scale to meet other mega-regional trade initiatives. The official signing of the TPP took place in 2016, on the decisive impetus of President Barack Obama, who, however, failed to obtain its ratification by Congress.

An unpredictable twist came in 2017 with US withdrawal, ordered by Donald Trump at the outset of his presidency. In an initial show of persistence, perhaps incentivised by the US goverment itself, Tokyo took the wheel of the transpacific agreement, guiding it towards the finish line in 2018, and renamed it as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Despite having been abandoned by the United States, the TPP survived, and has recently attracted the interest of further Asian nations — although the first official bid for membership after its ratification is geographically incongruous, coming from the United Kingdom. In June, Boris Johnson’s government kickstarted negotiations to enter the CPTPP, at whose doorstep now looms the bulky silhouette of China — the world’s largest trading power.

A mixed reception

The TPP has always been touted as an agreement which is open to any naton willing to abide by its rules; nevertheless, it is expected that any new membership request would be contingent on the unanimous consent of existing member states. Initial official reactions to China’s application were mixed. The openness of Singapore and Malaysia contrasted to the coldness of the Japanese government, which responded by stressing the high standards of the TPP. That is — besides the elimination of most customs dutes — the rules against state subsidies to industry, the protection of intellectual property, the free circulation of digital data, the liberalisation of public procurement, the rights of union organisation, etc. All these features are considered incompatible with the Chinese regime.

Trade Minister Dan Than stipulated a specific precondition from Australia: the reopening of bilateral negotiations between Canberra and Beijing, which were interrupted when China responded with tariffs and sanctions to Australian calls for a probe into the origins of the pandemic in China. According to some sources, Beijing would not have risked a formal request without prior assurances from TPP member governments. Other analysts think that China is happy to stir up an internal dilemma within the transpacific area, whose members do not want to antagonise either Washington or Beijing. The equation became even more complicated when, on September 22nd, Taiwan also put itself forward for candidacy. Japanese Foreign Minister Toshimitsu Motegi welcomed Taiwan as a very important partner with which we share fundamental values such as freedom, democracy, basic human rights […]. The Chinese government immediately reaffirmed the one-China policy, rejecting any international recognition of Taiwanese autonomy.

A liberist China

China’s entry into the TPP would further increase the overlap with the rival RCEP agreement. The Diplomat goes so far as to argue that many members of the transpacific area do not have a suffcient interest in accommodating Beijing, as they already enjoy trade arrangements with China through the RCEP. In reality, the dispute over mega-regional agreements has many aspects that are not strictly economic. So much so that, in the most widely accepted interpretation, China’s candidature for the TPP is seen as an immediate reaction to the AUKUS military agreement announced by the US, the UK and Australia. As Washington reaffirms its strategic presence in the Pacific, Beijing is highlighting the American absence from trade agreements in the area.

In the interpretation of the Chinese daily Global Times [September 17th], the Beijing government aims to cement China’s leadership role in global trade, while piling pressure on the US which is absent from the TPP. It is significant that China’s initial response to an American move in the rearmament process is of a liberist nature, and embodies the old Washington Consensus in aiming for trade liberalisation. The Chinese countermove, according to Le Figaro [September 18th], sends indeed the message: Do business, not war.

To the obstacle of standards, China counters with the classic argument of an external constriction functional to the Chinese line of reform and opening up. Beijing seems to take it for granted that entry into the TPP implies lengthy negotiations. In the Global Times they go so far as to speak of a ten-year period. This is a long time, consistent with the idea that entry into the TPP for China would be somewhat alike to its accession to the WTO, which it joined twenty years ago.

Waiting for Biden

At the beginning of the year, there was considerable pressure within the United States for the new Biden presidency to make a clean break with Trump’s trade policy. Bringing the United States back into the TPP was an explicit request from the major business associations and infuential think tanks of bipartisan tradition.

Back in June, this priority motivated a contribution to The Washington Post by Senators Tom Carper, a Democrat from Delaware, and John Cornyn, a Republican from Texas. China is seriously considering applying to the TPP, the two senators warned: Such a possibility would have been unthinkable just a few years ago, when the United States was leading the way in carefully crafting this trade agreement, in large part to counter China’s growing economic and geopolitical dominance in the Asia-Pacific region. President Biden should negotiate a return to the TPP because US trade leadership in the Asia-Pacific is an imperative for our country’s economy, national security and broader diplomatic efforts [The Washington Post, June 15th, 2021].

More recently, pressure from the business world has returned in the form of several letters to the White House, but the demand relating to TPP participation seems to have been shelved. replaced by a call to ease tariffs inherited from Trump and define a clear political stance regarding China. It seems that the big American groups have resigned themselves to the idea that Biden does not intend to make contentious international trade choices until he has succeded in consolidating, or at least preserving, his slim congressional majority in the midterm elections. Meanwhile, The Economist and many other liberal voices express bitter disappointment at the perceived continuity in trade agenda between Trump and Biden.

Kissinger’s options

Will China’s application to the TPP change Biden’s approach? For the United States, the answer is not limited to the binary of joining or not joining the CPTPP. Even if we stick to trade agreements alone, the White House has a large, multifaceted tactical arsenal of these. A clue can be found in the variety of positions held over the last decade by former Secretary of State Henry Kissinger, who can be considered as the ultimate embodiment of American strategic thinking.

Kissinger stated that his preference was for a Sino-American coexistence in an Asia-Pacific Community as we reported in our newspaper [Internationalist Bulletin, July 2009]. In 2012, in an essay in Foreign Affairs, Kissinger saw the transpacific negotiations as a potential step in the right direction. Obama has invited China to join the TPP. However, the terms of accession as presented by American briefers and commentators have sometimes seemed to require fundamental changes in China’s domestic structure. To the extent that is the case, the TPP could be regarded in Beijing as part of a strategy to isolate China [Foreign Affairs, March-April 2012]. As Beijing worked on alternative agreements (such as the recent RCEP) there was a risk that the Asia-Pacific could be divided into competing adversarial power blocs

In 2015, Kissinger sided with President Obama, along with former Secretries of State Madeleine Albright, Colin Powell, and James Baker, for a bipartisan call to Congress in favour of the TPP. In Obama’s words, those protagonists of American foreign policy agree that if we fail to get the TPP done, if we do not create the architecture for high-standards trade and commerce in this region, then that void will be filled by China, it will be filled by our economic competitors. They will make the rules, and those rules will not be at our advantage (November 13th, 2015].

TPP or phase two?

In 2016, in an interview with The Atlantic, Kissinger returned to argue against the idea of containing China. It is important for us to be present in Asia in political, economic, and social ways. We cannot talk about equilibrium in Asia unless we establish some of the preconditions for it, like [the] TPP. But it should also be open to China. And it should be understood that China can be part of it so that whatever economic contest we have with China will be within a framework of a cooperative option [The Atlantic, November 2016]. Kissinger advocated an open transpacific initiative, yet he maintained his endorsement of Trump, who rejected the very same option. Indeed, in January 2020, Kissinger sat in the front row at the signing of the US-China phase one agreement, snatched up by the Trump presidency after drag ging China through years of tariff offensives, sanctions and betrayed truces.

Obviously this brief and partial review does not do justice to the complexity of Kissinger’s strategic thinking, but it helps us to contemplate the variety of forms, ways and times that Biden’s trade policy could take. If China is accepted into a TPP that will exclude the United States, it will be a resounding setback for America — though this does not seem a likely scenario. However, if one focuses only on the TPP test for Biden, they forget that a response to China could also come through direct US-China negotiations, thus continuing Trump’s bilateral approach.

Will we see a US-China phase two agreement as an alternative, in parallel with or prior to an eventual US return to the TPP? Given the huge variety of tactical options and entanglements with US election timing, Biden will not be able to evade the China test

Lotta Comunista, September 2021