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Trade

China begins TPP groundwork as UK moves closer to entry

Beijing reportedly reaches out to New Zealand and Singapore on trade bloc membership

A foreman works at a container terminal of Qingdao port. (cnsphoto via Reuters)

TOKYO/BEIJING/LONDON -- Wednesday's decision to begin talks on having the U.K. join the Trans-Pacific Partnership has refocused attention on the 11-member trade agreement's expansion plans, as China puts out unofficial feelers about getting on board.

The group's top decision-making body agreed in a virtual meeting to set up a working group to review whether London meets the necessary standards in areas such as tariffs and investment rules, which could take nearly a year. Unanimous agreement from countries that have ratified the deal is needed to admit new members.

This step toward expanding the pact opens the door for other interested economies, such as South Korea, Taiwan, Thailand and particularly China, which sees the agreement as a potential avenue to broaden its sphere of economic influence.

London's participation would not make a huge difference in absolute terms to the scale of the agreement, boosting members' share of global gross domestic product to 16% from 12.8%. But the symbolic value would be significant if a European nation entered an Asia-oriented agreement that has been called a "gold standard" for its high degree of free trade.

TTP "membership is a huge opportunity for Britain," International Trade Secretary Liz Truss said Wednesday. "It will help shift our economic center of gravity away from Europe towards faster-growing parts of the world."

The U.K. in February became the first country to formally request to join the TPP, formally known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, after it took effect in December 2018. The deal sets high standards for liberalization in tariffs, electronic commerce, investment and other areas.

The pact's 11 founding member countries have begun moving to expand their ranks. (Photo by Naoyuki Toyama)

Though the original TPP was envisioned partly as a counterweight to China, Beijing has shown interest in signing on.

China has reached out unofficially to New Zealand and Singapore, and has reportedly also contacted Australia, though relations between the two are tense now. China is also said to be examining Vietnam as a case study.

These countries are already China's partner in the world's largest trade bloc, the Regional Comprehensive Economic Partnership, which includes Australia, China, Japan, New Zealand, South Korea and 10 Southeast Asian nations.

There are a number of barriers to China joining the TPP, including requirements for reform of state-owned enterprises and free cross-border data flows.

But in a forum held this past winter by a Beijing-based think tank, it was noted that the TPP allows exceptions to its rules for purposes such as national security. China could use these to lower its hurdles to speedy accession, while also potentially taking some of the bite out of the high liberalization standards that the agreement was designed for. China's unofficial contacts with TPP members likely aimed to determine whether this was a feasible route to joining.

International sentiment has turned more heavily against China since last fall, when President Xi Jinping said the country "will favorably consider joining" the deal.

U.S. President Joe Biden's administration has taken a tougher line on China's treatment of its Uyghur Muslim minority and its pressure on Taiwan, and Japan and Europe have moved in step with Washington. Some have argued that Beijing should focus on its own Belt and Road initiative to avoid becoming isolated.

As for the U.S. itself reentering the fold after previous President Donald Trump pulled out of the original TPP, Tokyo sees little chance of Biden reversing course anytime soon, given his administration's focus on domestic issues.

Participating in the TPP has been a centerpiece of London's plans to boost trade beyond Europe after its exit from the European Union.

The U.K. already has bilateral economic agreements with seven TPP members, including Japan and Vietnam. One of the main benefits to joining the pact would be greater flexibility in building supply chains spanning multiple countries.

The TPP's 11 members are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

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