Will China end its deep freeze on Australia to join CPTPP?
China’s request to join the Comprehensive and Progressive Free Trade Agreement for the Trans-Pacific Partnership is on hold unless its trade minister, Wang Wentao, agrees to meet with his Australian counterpart, Dan Tehan.
Tehan was careful not to present this as an ultimatum. When Chinese officials told Foreign and Trade Ministry officials that they were planning to apply, they were told it was “just the practical reality – that as part of the accession process, we need to be able to apply. sit down at ministerial level to work on it ”.
“It is not a condition,” he told the National Press Club last month. “These are ultimately decisions that always end at ministerial level. There has never been a free trade agreement that has been purely negotiated at the official level.
But the consequence is the same: Australia will veto China’s bid unless China waives its ban on ministerial-level meetings with Australia.
The government also expects that if and when Wang meets Tehan, he will be prepared to explain that China is removing its series of informal barriers to Australian exports, which are illegal under basic World Trade Organization rules. prohibiting discrimination against individual business partners.
Again, this was not mentioned as a condition. Tehan says that for any new candidate, he should be confidence that “the candidate would respect, implement and uphold the high standards of the agreement and has a track record of meeting its commitments under the WTO and existing trade agreements to which it is a party.”
The hard line Tehan took on the Chinese bid is not shared by all Australian officials.
Joining the CPTPP is a multi-step process. First, all members must agree to initiate the membership process, then a committee made up of representatives of all members negotiates the terms to their individual satisfaction, with unanimity again required.
Some economic advisers believe Australia should give the green light to start China’s accession process and then negotiate the terms of membership, which could include removing all informal barriers and ministerial meetings.
Their reasoning is that the issues that should be negotiated for China’s entry into the CPTPP are precisely the core issues that China creates for the global trading community: subsidies to state-owned enterprises, protection of intellectual property, barriers. digital commerce and labor rights.
Without a settlement on these issues, the United States is unlikely to re-engage in the WTO and move forward with reform. China’s bid to join the CPTPP provides a unique opportunity to tackle these issues without the added complication of the rivalry between China and the United States.
If Australia stops the accession process right away, this opportunity will be lost.
However, there is considerable anger within the Australian government over China’s economic coercion campaign which is seen as a violation of WTO requirements and the signed China-Australia Free Trade Agreement. in 2015.
China does not formally acknowledge that it has imposed barriers on Australian exports – that would expose it to an Australian counterattack at the WTO.
Beijing has a long history of using trade coercion and generally maintains the fiction that its boycotts of particular nations are simply the spontaneous result of Chinese businesses and consumers harmed by foreign insults. This was his stance in his campaigns against South Korea after authorizing the installation of a US missile defense system and against Norway after awarding the Nobel Peace Prize to jailed government critic Liu Xiabao.
The Chinese embassy in Canberra has not been the closest to taking responsibility for its campaign. set of ’14 grievances’ against Australia last year, as well as the declaration by an anonymous embassy official that “China is angry. If you make China the enemy, China will be the enemy ”.
There was not the slightest trace of this feeling in the extraordinary submission Australia’s ongoing parliamentary inquiry into whether membership in the CPTPP should be expanded. The survey was launched at the end of 2020 in view of the interest in membership expressed by the United Kingdom, China, Taiwan, South Korea and Thailand.
The Chinese communication claimed that the implementation of the China-Australia Free Trade Agreement had “led to the rapid development of our bilateral economic and trade relations” and had created “favorable conditions to depend on, expand and improve our relations. bilateral economic affairs ”. The Australia-China trade statistics he cited were all from 2019, before China’s coercive campaign began. Figures for 2020 would have shown that, under the weight of discriminatory boycotts from China, non-iron ore exports plunged 25%.
The need for China to get Australia’s assent before its request to join the CPTPP could be processed has led some to question whether it was acting in good faith or whether it was simply using the process to dig a rift between Australia and CPTPP members who would benefit from China’s membership, including Malaysia and Singapore.
However, China’s intention has been expressed several times over the past year, including by President Xi Jinping, who told the 2020 APEC Leaders Summit that China “would look favorably upon” to join us.
A spokesperson for the Ministry of Commerce, Shu jute, says China will offer other CPTPP members “unprecedented market access” if it is allowed to join and is ready to meet the demands of the pact. “China has conducted a comprehensive assessment of the rules of the pact and has sorted out potential reform measures and revisions to laws and regulations that it may need to make to join the CPTPP,” she said.
The CPTPP replaces the Trans-Pacific Partnership launched in 2008 by the United States as an economic component of President Barack Obama’s “pivot to Asia”, but rejected by President Donald Trump on his first day in office. The TPP was originally intended to include provisions that would be difficult for China to comply with, but would consolidate the primacy of the United States as a standards body in Asia-Pacific trade.
However, a series of less developed countries, including Vietnam, Brunei and Peru, have crossed the bar to become members of the CPTPP, and some academic commentators believe China would be in a position to do so as well.
UNSW Weihan Zhou and Henry Gao from Singapore Management University say the CPTPP’s requirements for state-owned enterprises are less onerous than China’s specific requirements designed for its WTO membership.
China has accepted the right to cross-border data transfer and the ban on data localization rules under the Regional Comprehensive Economic Partnership, the ASEAN-led trade deal signed last November. The CPTPP contains provisions prohibiting the forcible transfer of source codes, but includes exemptions for financial services and government procurement, which are the most sensitive areas for China.
The most difficult provision for China to comply with would be the requirement that it pass laws to incorporate the rights enshrined in the declaration of the International Labor Organization. These include prohibitions on forced labor and the rights to collective bargaining and freedom of association in independent trade unions.
China would simply deny using forced labor in its camps in Xinjiang, but granting the right to form independent unions would be anathema to the Chinese Communist Party, which resists any independent organization. Collective bargaining would also be seen as a threat. Breaking the monopoly of the state labor movement may have been a difficult reform for Vietnam, but it is impossible to envision in Xi’s China.
If Wang persists with China’s deep freeze on ministerial-level contacts with Australia, the problem will never arise.