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CPTPP, New Opportunity for China in Future Free Trade

Wednesday,Jan 09, 2019

Executive Summary

 

With the approval of the governments of Japan, Australia, Mexico, Singapore, New Zealand and Canada, the Comprehensive and Progressive Trans-Pacific Trade Partnership Agreement (CPTPP) came into effect just over a week ago on December 30th of last year. This ushered in the formal establishment of a multilateral trading system which accounts for 13.2% of the global economy and 15% of total worldwide trade volume. Connecting markets boasting an overall population of over 500 million, this is the largest free trade agreement in the Asia-Pacific region.

 

The first meeting discussing the accession of new members into the trade agreement will be held on January 19th, where the process for nations such as Colombia, Indonesia, South Korea, Thailand and the UK who have all expressed their interest in joining CPTPP, will be set out. As a trade agreement, CPTPP not only serves to reduce or remove costs in trading but also puts forward new and higher trading standards in the areas of services, labor, environment and intellectual property. Therefore, as a framework for a more stringent trading system than that provided by WTO rules, CPTPP member countries are more open to each other, with lower tariff levels, stronger protection of intellectual property rights, and greater promotion of services trade.

 

China has, for a long time, adhered to and supported free trade, and actively promoted the deepening of economic globalization. Yet the decision for China to join CPTPP or not, should be determined according to its national interests and national economic policy. Therefore, as the situation progresses, China should examine and compare the advantages and disadvantages in joining the CPTPP before formulating response policies.

 

This report argues that If China were to join the CPTPP, this would be in accordance with China’s national policy of promoting greater economic openness, as well as being consistent with the “going global” development path of Chinese industry and enterprises. China’s accession to the CPTPP could also prove conducive to providing a long-term settlement mechanism for Sino-US trade disputes, as well as helping advance international cooperation of the “Belt and Road” initiative.

 

Furthermore, based on extensive research, CCG suggests that China should seize the opportunity and continue to move forward with the RCEP negotiations, where China-Japan-ROK can hold discussions on producing an FTA and work to promote wider free trade with other (countries or regions). CCG also recommends greater promotion of cross-border exchanges and cooperation between think tanks and academic institutions between China and other CPTPP member countries. In addition, there should be further publicizing of the CPTPP via domestic Chinese media channels, providing information to the Chinese public on the trade pact and its advantages. In sum, the report maintains that it is a propitious time for the Chinese government to begin negotiation regarding its potential accession to the trade pact.