The Asia-Pacific region, known for its economic vitality and promising development potential, is attracting global attention amidst the prevalence of trade protectionism and stagnant free trade. Anchored in the region, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) brings new hope in bolstering regional supply chain security, encouraging interregional trade cooperation, and advancing global economic and trade exchanges.
The CPTPP, originally known as the Trans-Pacific Partnership (TPP), is currently widely regarded as the world’s best Free Trade Agreement (FTA). On January 23, 2017, US President Donald Trump, shortly after taking office, signed an executive order formally announcing the US withdrawal from the TPP. Despite this setback, the remaining 11 members (Singapore, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, and Vietnam) continued to hold consultations and negotiations, resulting in the formation of the CPTPP. By retaining more than 95% of the TPP content, the CPTPP upholds the values of transparency and mutual benefit, providing a glimmer of hope in an otherwise turbulent scenario.
Tough entrance voucher
The CPTPP agreement adheres to the “three zeros” standard of 99% zero tariffs, zero subsidies, and zero barriers. This approach helps to reduce tariffs on trade in goods, services, and investments across all participating countries. Stricter regulations have been proposed for the CPTPP, which surpass those of the World Trade Organization and other free trade agreements. Moreover, brand new rules on e-commerce, government procurement, transparency, and anti-corruption have been established.
Becoming a member of the CPTPP is a challenging process that involves five steps and twenty procedures. In short, the applicant country must announce an application first, and then establish a working group in the CPTPP Committee for membership. Only after these initial steps can the applicant country enter subsequent negotiation processes. The applicant country must consult with each member country and obtain a unanimous agreement. Finally, all CPTPP members are required to report that they have completed the legal process of accepting applicants.
On February 1, 2021, the UK officially applied to join the CPTPP and began negotiations on June 2. The UK did not declare the end of discussions on the substantive content of its CPTPP membership until March 30, 2023, a process that took more than two years, despite having bilateral FTAs with more than 80% of CPTPP members. Given the fact that the UK’s trade system is mature, and its market is well-established, it encountered opposition throughout the discussions from allies like Japan and Canada.
Vying between brothers
The formal acceptance of the UK’s application is expected during the CPTPP member states’ conference in July. However, the CPTPP committee will need to address the applications from two rival brothers, China, and Taiwan. China submitted its application to join the CPTPP on September 16, 2021, and the following day Taiwan submitted a formal application by the name of the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu, according to the application timetable.
In the past few years, China has signed and put into effect bilateral or regional FTAs with most members of the CPTPP. In contrast, Taiwan has only signed bilateral FTAs with New Zealand and Singapore. However, Taiwan has an advantage in being able to update its internal regulations regarding trade and commerce, along with the competitive edge it holds in the advanced supply chain of the semiconductor industry. In addition, there is still a significant gap between China’s economic trading norms and the high standards set by the CPTPP, particularly in the areas of state-run businesses, liberalization of network services, and industrial subsidies.
Both China and Taiwan have tried hard to set up an accession working group at July’s summit. Nevertheless, their aspirations are incompatible: China does not want Taiwan to join the CPTPP before itself, as Taiwan’s participation would be advantaged by the CPTPP’s one-vote veto system in the accession negotiations. Conversely, Taiwan would have to lift not only its current economic and trade restrictions specific to China but also apply the CPTPP’s stringent standards of openness to the entirety of China if it joined the agreement after China, and this could lead Taiwan to a delicate situation.
Hidden agendas under table
In terms of market size, China enjoys a clear advantage over Taiwan. China’s GDP in 2022 surpassed the aggregated GDP of all 11 current CPTPP members. Furthermore, if China joined the agreement, it would provide a significant open market for existing members, increasing their share to 28% of the world economy and nearly tripling the number of consumers in member countries. This move would effectively double the total economy and trade. In addition, China’s history of signing FTAs with many countries puts it in a stronger position for the CPTPP accession process. Considering all these advantages, China is proceeding with the correct procedures to become a member of the CPTPP by engaging in formal talks based on equality and mutual trust.
Taiwan, on the other hand, has been engaging in informal dialogues with nations affected by trade disputes with China. In early 2022, Taiwan’s administration opened its doors to imports of Fukushima nuclear-contaminated food from Japan in exchange for Japan’s support for Taiwan’s entry into the CPTPP, despite facing opposition from many locals. In December of the same year, President Tsai Ing-wen personally expressed her appreciation to the Japanese government during a visit to Taiwan by Mitsuo Ohashi, the head of the Japan–Taiwan Exchange Association. In April of the following year, when the Canadian Federal House of Representatives visited Taiwan, Tsai welcomed them and reiterated her hope that Canada would support Taiwan’s entry into the CPTPP to promote greater growth and prosperity.
Taiwan is also actively seeking to make headway in the media and opinion arena. In October of 2021, Taiwan’s representative to Australia, Yii-Lih Charng, attended an Australian Federal Parliament hearing, urging Australian legislators to lend their support to Taiwan’s entry into the CPTPP. In January of the following year, a civil society group,Community Affairs Council of the Republic of China in Sydney launched the ‘All Taiwanese in Australia support CPTPP’ campaign, garnering support from 30 legislators, including Senator Kimberly Kitching, Chair of the Senate Foreign Affairs, Defense and Trade Committee, who pledged to facilitate Taiwan’s CPTPP accession. On March 29, Taiwan took proactive measures, engaging in the launch of an “All-Party Parliamentary Group on Taiwan” in the New Zealand Parliament, which achieved endorsements from 20 cross-party legislators and pro-Taiwan media supporting Taiwan’s accession to the CPTPP.
It is worth noting that, Taiwan’s approach is politically provocative and puts Australia and New Zealand at risk, although there may be some short-term negative impact on China’s accession to the CPTPP, it cannot undermine the fact that China is Australia’s and New Zealand’s largest trading partner. A broader and deeper free trade agreement with China would significantly boost their economies. Mature politicians should know how to make decisions based on vague political promises and tangible advantages. New Zealand has welcomed China’s membership in the CPTPP from the beginning and updated its FTA to a higher level last year, while Australian Prime Minister Albanese made his government’s position clear at the APEC meeting last year, stating that Taiwan is not a ‘recognized nation-states’ and therefore does not qualify for CPTPP membership.
Aim for Win-Win
The handling of China and Taiwan’s applications remains uncertain as the CPTPP summit approaches in July. However, one thing is clear: the global economy and trade have been affected by the three-year-long pandemic, the Russia-Ukraine conflict, and inflation in developed countries. Despite this, the overall trend toward globalization has not changed, and free trade is still a crucial way to promote regional economic development and achieve shared prosperity. The TPCPP’s emphasis on high standards, openness, and collaboration will serve as a guiding light through these turbulent times.