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Analysts on China’s bid to join CPTPP, strategic competition with U.S.

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Chinese President Xi Jinping on Jan. 30, 2015. China applied for CPTPP membership, an 11-nation trade agreement that was formed in 2018, after the U.S. pulled out of the Trans-Pacific Partnership.

Getty Images China will likely fail in its bid to join the Comprehensive and Progressive Trans-Pacific Partnership — but its move to highlighted the lack of U.S. economic policy in Asia-Pacific, said analysts.| AFP | Getty Images

China will likely fail in its bid to join the Comprehensive and Progressive Trans-Pacific Partnership — but its move to submit an application highlighted the lack of U.S. economic policy in Asia-Pacific, said analysts.

CPTPP is an 11-nation mega trade pact formed in 2018 after Donald Trump pulled the U.S. out of the Trans-Pacific Partnership a year earlier.

President Barack Obama had negotiated the TPP to deepen U.S. economic engagement in Asia-Pacific and counter China’s growing influence in the region.

Before China can become a member, all 11 signatories to the CPTPP have to agree. Australia, Brunei Canada Chile Japan Malaysia Malaysia New Zealand Peru Singapore Vietnam and Chile make up the CPTPP.

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Beijing’s strained diplomatic relations with some member countries would hurt its chances, said analysts. They also said that China may have difficulty meeting demands of the trade pact for equal playing fields in all aspects of its economy.

China is not the only one that’s applied to join the CPTPP; the U.K. and Taiwan have done the same.

U.S. allies in CPTPP

Japan has an existing territorial dispute with China in the East China Sea, while Australia has been at the receiving end of import tariffs imposed by China.

Canada and Mexico might stand in China’s path through the United States-Mexico–Canada Agreement (USMCA). The trade deal contains a “poison pill” provision requiring any of the three members to consult the others if it wishes to pursue a trade deal with a “non-market country.”

Analysts believe the clause may have been intended to target China. USMCA, which was signed by Trump’s administration, replaces NAFTA.

Meeting CPTPP standards

In addition to political hurdles, China may have difficulties meeting CPTPP provisions that promote cross-border data flows, labor and environmental protection, as well as restrictions on state-owned companies, said analysts.

Businesses from the U.S. and the European Union are among those that have complained about China’s unfair trade practices, such as subsidizing state firms, the lack of intellectual property protection and forced technology transfer.

China’s admission to the trade pact will require it to comply with rules regarding state firms, labour and environment regulations. This would represent a significant departure from China’s current position.

According to Capital Economics economists, China’s entry to the trade pact will require it to comply with rules regarding state-owned firms as well as labour and environmental regulations. This would represent a significant departure from China’s current position.

“It’s hard to see how the push for self-sufficiency can be squared with the CPTPP’s demands for a level playing field,” they added.

Other trade experts said it won’t be that difficult for China to meet requirements in the mega trade pact.

That’s because CPTPP is less ambitious than its predecessor TPP and has “ample exceptions and wide loopholes” that would help China comply with the more challenging provisions, said Stephen Olson, senior research fellow at Hinrich Foundation, a nonprofit focused on trade issues.

Olsen said that China had already shown its great skill at bending, evading and nullifying other trade rules, even in cases when the stated exceptions were insufficient.

‘Smart diplomacy’

Regardless of its success, analysts said China’s CPTPP bid highlighted the country’s expanding economic clout in Asia-Pacific, while the U.S. has largely focused on security issues in the region.

That’s especially so when China’s application followed the formation of a new security partnership among Australia, the U.K. and the U.S. — referred to as AUKUS, analysts said.

Analysts from Eurasia Group said that this move was smart diplomacy after the AUKUS security alliance announcement. It turns diplomatic attention on trade and investment in the Asia-Pacific where the US has not made much progress countering China’s economic heft.

The one truth is, however, that America is now reacting to China’s demands and letting them decide the direction of Asia’s events is not clear.

William Reinsch

Center for Strategic and International Studies

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