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China to Tout Role in TPP, Japan Eyes Range of Scenarios

Thursday,Mar 16, 2017

From: Bloomberg BNA

 

Representatives from 15 nations are gathering in Chile March 14-15 to plot a new course for regional trade, and many are scouting out the opportunities for advancing multilateral trade deals at a time when protectionism is on the rise.

At the top of many countries’ agenda is talk of how to integrate the trade and economies of the Asia-Pacific region. Many still see the Trans-Pacific Partnership as a possibility in some form, even as a template for other agreements. But should that not come to pass, the seven members that are in both the TPP and the Regional Comprehensive Economic Partnership could move ahead by pushing RCEP, they said.

But the items on countries’ individual wish lists are varied, and in some cases telling. China, for one, will probably present itself as a replacement for the U.S. in the TPP, analysts and state media have said. That’s in keeping with the country’s increasingly global stance, evident in President Xi Jinping’s remarks at the World Economic Forum in Davos, Switzerland.

Other countries, specifically Japan, are saying not so fast. There are a range of scenarios to consider with what happens to the TPP — both with and without the U.S., one Japanese official said. And there is always the concern that China will become dominant in such a plurilateral pact, the official said.

Still others are taking a wait-and-see stance toward the talks, dubbed the High-Level Dialogue on Integration Initiatives in the Asia-Pacific Region.

New Zealand’s trade minister Todd McClay, for example, noted that the Chile talks would mark the first meeting of all the remaining 11 TPP signatories since President Donald Trump withdrew the U.S. from the 12-nation pact.

U.S. Role

And what about the U.S.? Well, the country has been invited to attend the two-day meeting and has even accepted. But there hasn’t been any official confirmation from Washington on who will represent the U.S., so the job is likely to fall to Carol Perez, U.S. ambassador to Chile since September, suggesting the U.S. will play a more passive role.

China Replacement for U.S.?

China is likely to advance its potential as a replacement for the U.S. in the TPP during the summit, analysts said. Beijing is keen to promote its influence on world trade to combat what it views as an increasingly hostile international trade environment, and it sees the TPP as an opportunity to do this.

Still, the Chinese government characterized the meeting as an exchange of views about the Asia-Pacific region, not a TPP summit.

“This meeting is a high-level meeting of the Pacific Alliance and Asia-Pacific countries on Asia-Pacific economic integration, where extensive exchange of views will be conducted on the next step of Asia-Pacific regional cooperation,” Foreign Ministry spokeswoman Hua Chunying said March 13 at the ministry’s regular media briefing. “It is not a TPP meeting, as is described by some media. China hopes this meeting will contribute to the [Free Trade Area of the Asia Pacific (FTAAP)] process, the open Asia-Pacific economy and Asia-Pacific regional economic integration.”

The government is sending Ambassador Yin Hengmin, special representative for Latin American Affairs, to the summit, Hua Chunying said.

But state media, which is normally a good barometer of government direction, and think tanks with connections to the authorities have spoken positively about China’s potential in the TPP in recent weeks.

A Global Times editorial on Feb. 16, written by Wang Huiyao, a counselor to the State Council, described the U.S. exit from the TPP as an “opportunity” for China and said that joining the trade deal “could serve as crucial economic leverage.”

According to a report released last month by the Center for China and Globalization, the country might want to seize an opportunity to “fill the position vacated by the United States at the TPP table.”

Japan, Canada Up Game

Vice Economy and Finance Minister Takao Ochi will represent Japan during the two-day summit, a government official told Bloomberg BNA March 9. In addition, the Ministry of Economy, Trade and Industry is sending Toshinao Nakagawa, vice parliamentary minister, to Chile.

The delegates are an upgrade from the earlier plan to dispatch senior administrative officials from the Ministry of Foreign Affairs, the Ministry of Economy, Trade and Industry and the Cabinet Office, but none at the ministerial level. Asked to explain the change, the official said the TPP’s importance as a pillar of the Asia-Pacific region’s trade platform would remain intact in the long run.

Some have speculated that the new delegates were appointed partly in response to the dispatch of Canada’s trade minister and other high-ranking officials to the meeting, which may overlap with other regional trade framework meetings including RCEP.

Canadian International Trade Minister Francois-Philippe Champagne will represent Canada at the meeting, spokeswoman Chantal Gagnon said March 8. The Canadian delegation’s focus will include supporting greater trade liberalization throughout the Asia-Pacific region, Gagnon told Bloomberg BNA in an email.

Champagne will be accompanied by Steve Verheul, Global Affairs Canada’s chief trade negotiator for the Canada-European Union free trade deal, and Christopher Berzins, the department’s director of policy, Joseph Pickerill, the trade minister’s director of communications, told Bloomberg BNA.

Pros, Cons of China in TPP

The Japanese official told Bloomberg BNA that there are a number of scenarios to be considered at the meeting.

“We need map out a wide array of assumptions ranging from one that TPP enters into force without the United States participation; another that keeps the U.S. seat vacant but always welcomes whenever the United States reconsiders its no-TPP position; and more scenarios, including annexing RCEP to TPP and admitting China and India and Korea,” said the official, who spoke on condition of anonymity.

Japan also will argue for the Asia-Pacific Economic Cooperation (APEC) forum’s relationship and engagement with TPP, he said. While Trump pulled the U.S. out of the TPP, he didn’t end the country’s participation in APEC, he noted.

But Japan also will stake out its position on China becoming a part of the TPP, the official said. Specifically, Japan plans to discuss with other TPP countries the merits and drawbacks of China’s participation in the pact, as well as the pros and cons of annexing the RCEP regime.

South Korea: Scope Out Atmosphere

South Korean Deputy Minister for Trade Negotiations Lee Sang-jin will be the country’s delegate to the TPP talks in Chile, he told Bloomberg BNA.

As Korea isn’t a member of the TPP talks, the country’s chief trade negotiator will attend to scope out the atmosphere among the remaining members following the U.S. withdrawal from the 12-nation trade pact.

Korea declared interest in joining the TPP in 2013, since it was the most high-level and modernized multilateral trade negotiation on offer. But Korea never fully committed, and it hasn’t taken a new stance since the U.S. withdrew from the TPP in January.

“There’s no agreement yet, so it’s very difficult to have some predictions on the future of the TPP,” Lee told Bloomberg BNA March 10. “First, I have to identify what’s going on. Then, depending on the situation and decisions by the TPP members, I will determine the position or how to proceed.”

Korea has yet to re-evaluate the effects of joining the partnership without U.S. membership, another official who spoke on the condition of anonymity told Bloomberg BNA.

Mexico: Searching for Partners

Economy Minister Ildefonso Guajardo will lead the Mexican delegation for the meeting, as it aggressively looks for additional trade partners in the face of a possible renegotiation of the North American Free Trade Agreement.

Following the U.S. election, the Mexican government said that it is looking at a range of options to take the place of the 12-country TPP agreement. In January, President Pena Nieto said Mexico would pursue bilateral agreements with TPP members New Zealand, Australia, Brunei, Malaysia, Singapore and Vietnam.

Mexican trade officials also are proposing to extend membership in the Pacific Alliance to other TPP members, according to Guajardo, who has said the Pacific Alliance plans to meet in March and has invited the other TPP members. Trade opportunities with China and South Korea are also being assessed, according to several former trade officials.

The TPP meetings are expected to be less politically contentious for Mexico than the NAFTA negotiations, where Foreign Minister Luis Videgaray, who is new to trade negotiations, is said to be taking the lead. That is despite Guajardo’s extensive negotiating experience in Mexico’s 40-plus trade agreements and participation in the first NAFTA agreement.

Peru: Build on Pacific Alliance

Peru’s government also sees the existing trading bloc in Latin America as the best option for strengthening trade ties with the Asia-Pacific region.

Peruvian President Pedro Kuczynski told foreign reporters March 10 that Peru would push for a stronger Pacific Alliance, which also includes Chile, Colombia and Mexico, at the meeting.

Kuczynski said the meeting shouldn’t be considered a TPP-plus meeting, but an opportunity to look at different ways to boost trade in the region. He said Peru was going to the meeting with the idea of strengthening the Pacific Alliance, formally in place since 2012, and using it as a way to establish new relations with Asia. Trade Minister Eduardo Ferreyros and Deputy Foreign Minster Nestor Popolizio will represent Peru at the meeting.

“We want to explore the possibility of agreements as a group,” Kuczynski said.

He said one option would be linking up the Pacific Alliance with the 10-nation Association of Southeast Asian Nations (ASEAN).

Kuczynski’s comment echoed a statement from the four Pacific Alliance presidents after a teleconference earlier the same day. The presidents stressed the “decision for the Pacific Alliance to be a platform for a union between Latin America and Asia under the format of strategic integration based on free trade.”

Singapore: TPP Still ‘Significant.’

Singapore expects “constructive discussions” in Chile on the TPP, a trade spokesman told Bloomberg BNA, signaling the micro-state’s interest in keeping a seat at the table of a trade deal that’s still “significant” after the U.S. exit.

Minister of State for Trade and Industry Koh Poh Koon will lead Singapore’s delegation at the summit, according to the Ministry of Trade & Industry. Previously the ministry said the TPP’s 11 remaining members have three options: continue TPP efforts with an option for the U.S. to rejoin; sign bilateral deals with Washington; or enact a “TPP-11.”

“This will mark the first opportunity since the U.S.’s official withdrawal from the Trans-Pacific Partnership for the remaining countries to gather together to take stock and assess the options going forward,” a trade ministry spokesman said by email March 8, echoing comments from New Zealand trade minister McClay. “The TPP remains a significant agreement that links major economies across the Pacific, and Singapore looks forward to constructive discussions with our partners.”

The Chile agenda will include “integration” of Pacific Rim nations, the spokesman said. Should TPP talks reach an impasse, Professor Kaewkamol Pitakdumrongkit predicted that renewed vigor on another Pacific trade accord, the Regional Comprehensive Economic Partnership.

Malaysia Treads Carefully

Malaysia would join a Pacific trade zone even without the U.S., a government spokesman told Bloomberg BNA as the country prepares for a summit in Chile to weigh such a proposed zone.

The Southeast Asian is dispatching its ambassador in Santiago, Mohamad Rameez Yahaya, to the gathering in Vina del Mar, said Syawal Hafriz, press secretary for Malaysian Trade Minister Mustapa Mohamed.

He said the TPP’s second life after the U.S. pullout also would hinge on the 11 member states’ talks through the APEC forums in Vietnam. “As mentioned by Minister Mustapa earlier, we remain open to any proposals related to TPP, whether forging bilateral agreements or forming a TPP minus-U.S. pact,” Syawal said in an email March 8.

Malaysia’s attention is stretched in many directions, from the North Korean assassination, to the 1MDB state investment fund corruption scandal. Now it also needs to tread carefully with China, said Jomo Kwame Sundaram, a former U.N. assistant secretary-general for economic development.

New Zealand, Australia

As for Australia and New Zealand, a spokeswoman for Australia’s trade minister Steven Ciobo confirmed to Bloomberg BNA that Ciobo will attend the meeting.

And New Zealand made clear that the TPP still has value, with or without U.S. participation, although the country would prefer the U.S. to remain.

In addition to discussing the fate of the TPP, McClay said he would hold discussions with members of the Pacific Alliance trade bloc and a number of other Asia-Pacific countries.

He said New Zealand would continue to push for ambitious regional trade deals, describing them as “key drivers of economic and job growth.”

 

From Bloomberg BNA,,2017-3-14

 

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