China flirts with joining the TPP
By Frank Ching
January 1, 2014, 12:15 am TWN
For the first time since it came into existence in 1995, the World Trade Organization last month finally achieved a breakthrough, reaching a series of agreements to streamline trade that are expected to boost the world economy by up to a trillion U.S. dollars a year.
Even so, progress in the Doha Round of talks has been frustratingly slow and countries will continue to move on their own to reach regional free trade agreements, such as ongoing talks spearheaded by the United States to set up a Trans-Pacific Partnership.
While the original goal was to reach an agreement by the end of 2013, the 12 countries involved, which account for up to 40 percent of global GDP, announced Dec. 10 after a meeting in Singapore that they will meet again in January. No new deadline was announced.
In late November, South Korea indicated interest in joining the TPP talks and it is now holding preliminary discussions, even though Acting Deputy U.S. Trade Representative Wendy Cutler said the negotiations were already in the “end game” and it would be very difficult for any country to join the discussions. Now, China is also indicating interest. Foreign Minister Wang Yi, while outlining diplomatic priorities for 2014, said that economic diplomacy would be a major focus of Chinese diplomacy in the new year and that “China will face the member states of the Trans-Pacific Partnership talks with an open attitude, as well as other regional or cross-region FTA initiatives.”
China is very much involved in regional FTA talks, including bilateral discussions with South Korea, trilateral talks with South Korea and Japan as well as the Regional Comprehensive Economic Partnership, or RCEP, talks involving the 10 ASEAN states as well as Australia, India, Japan, Korea, and New Zealand which, when concluded, will involve 3 billion people with a combined GDP of US$17 trillion.
TPP and RCEP have been seen as rival trading blocs, especially as China was not in the TPP and the United States was not in RCEP. However, some countries are involved in both.
South Korea was hesitant to join the TPP because it was seen as an anti-China bloc even though the Korea Institute for International Economic Policy, a government-funded think tank, estimated that membership in the TPP would increase Korean GDP by 2.6 percent over a 10-year period.
If both China and South Korea join the TPP, that grouping will account for more than 50 percent of the global economy.