Fears That China Will Beat Taiwan to CPTPP Membership

On 16 September, China formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), "without fanfare". This has made Taiwan fear that its own application will be affected, and it has become one of the hot issues in China-Taiwan relations, which seem to have been heating up steadily over the past several months.

Many are also watching the stance of the United States. Joe Biden has signaled that he wants to limit the spread of China's influence, having given up the Afghanistan chess piece earlier in order to devote his budget fully to the Asia-Pacific theater.

This article follows the latest developments on the issue, and goes back over trade agreements in the Asia-Pacific region, China's attempts to expand its influence to replace America in the region, and the positions of various countries toward this, especially Taiwan.

On 16 September 2021, China's Commerce Minister "Wang Wentao" submitted a letter formally applying to join the CPTPP to New Zealand's Trade Minister "Damien O'Connor".

China's state-run Global Times said this reinforces China's "trade leadership" and makes the "US feel increasingly isolated".

The United States has not yet reacted, and so far the "Joe Biden" administration has no clear trade policy for the region.

The CPTPP is a trade agreement that includes reducing barriers in services and investment, allowing the movement of skilled labor, and protecting the environment and basic labor rights.

The CPTPP has 11 signatory countries, including Australia, Canada, Japan, Mexico and New Zealand, signed in 2018. It is an important agreement because its member economies account for 13.4% of world GDP.

The CPTPP evolved from the Trans-Pacific Partnership (TPP), an agreement that the United States under former President "Barack Obama" spearheaded to counterbalance China's trade influence.

However, in 2017 under Donald Trump the US withdrew, claiming it was to stop Americans losing jobs to foreign competition. The remaining 11 negotiating countries had to go ahead and adjust the agreement themselves, removing the provisions that favored the US, though most of the rest of the content remained the same.

China joining the CPTPP would benefit China's economy, in addition to its earlier participation in the Regional Comprehensive Economic Partnership (RCEP). RCEP's members are the 10 ASEAN nations plus China, South Korea, Japan, Australia and New Zealand, and it was signed in 2020.

RCEP is the first trade agreement with China, South Korea and Japan as members together, and analysts also see RCEP as making Asia-Pacific countries more dependent on China and boosting China's role as a rule-setter on the regional stage.

China has been lobbying countries such as Australia to consider accepting China as a CPTPP member, trying to point out the growth potential for both economies from cooperating.

However, this is still to be watched, because relations between China and Australia have deteriorated from a trade war between the two sides.

Moreover, last week there was news that Australia joined hands with Britain and the US to form the AUKUS alliance to deliver nuclear submarines to counterbalance China.

"Wang Mei-hua", Taiwan's Minister of Economic Affairs, said that China's application was "without fanfare" and believes the other CPTPP members will find it hard to accept China.

She believes many Chinese policies contradict free-market principles and lack transparency, such as "unreasonable" import bans, and that China may not meet many CPTPP standards, which are high for China.

However, a leading Taiwanese think tank urged the government to hurry and apply for membership before China, fearing that if China becomes a member first, it will block Taiwan from joining.

It also said the government should not hold out hope of joining RCEP, believing China would certainly object.

Under the CPTPP's criteria for admitting new members, "unanimous" approval from existing members is required.

In practice, a country wishing to join usually has to approach existing members one by one and discuss obstacles before being accepted as a member.

Applying to join the CPTPP is not easy for China. Analysts in China themselves see domestic reforms as being as difficult as those for China's World Trade Organization accession in 2001.

China would have to reduce state control of the economy, raise labor rights and trade unions, cut subsidies to state-owned enterprises, allow data to "flow freely", and open the economy to competition from foreign companies.

In addition, several countries have reasons to oppose China. Besides the deteriorating relationship with Australia, Japan has also announced it will support Taiwan's application for membership.

Mexico and Canada may be bound by the United States-Mexico-Canada Agreement (USMCA), which states that if any one country negotiates trade with a non-market economy, the other members can terminate the agreement unilaterally (meaning the US is ready to cancel the deal if both countries strike trade deals with China).

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Although China's bid to join the CPTPP is seen on one side as a point of conflict with Taiwan, it is actually far more complex than that.

If China succeeds in joining the CPTPP, it would make the CPTPP a trade agreement covering more than 25% of the world's population and more than 30% of the world's economic value, making it the most influential trade agreement, taking in one of the largest markets.

It would also be a good opportunity for China to extend its economic influence in place of America in the Asia-Pacific region, where the Biden administration still has no clear stance.

At the same time, adjusting to CPTPP standards would be a major challenge for China, whether in intellectual property protection, labor rights, trade competition, or environmental protection, where China has always had problems. It will be a long time before we see whether China can truly adapt.

Thailand is one of the countries that has expressed interest in joining the CPTPP. It still needs to assess the benefits and impacts carefully, and must watch China's move closely.