News and Events

China, Latin America and the Changing Architecture of Trans-Pacific Engagement

14 June, 2013

Dr. Adrian Hearn, ARC Future Fellow in the Department of Sociology and Social Policy, hosted a high-level forum on the Trans-Pacific Partnership (TPP) and the Pacific Alliance on May 29th.  

Dr Adrian HearnThe forum was entitled, "China, Latin America and the Changing Architecture of Trans-Pacific Engagement."  Supported by  the Open Society Institute, the event brought together four ambassadors with key analysts from Latin America, the United States, and China.  The forum was hosted by the Inter-American Dialogue in Washington D.C. in collaboration with the Asia and the Americas Section of the Latin American Studies Association (LASA).  The event program is available here:

http://www.thedialogue.org/the_changing_architecture_of_trans-pacific_engagement

 

The TPP’s wide-ranging provisions on private enterprise, human rights, labour standards, and freedom of online data make it impossible in the foreseeable future for China to join the negotiations.  Several Chinese newspapers have therefore interpreted the TPP as an attempt to exclude China, while a prominent Chinese official has stated that the TPP is being used by the United States “as a part of its Asia Pacific Strategy to contain China.”  International dialogue on the TPP that includes Chinese voices, whether through official or informal channels, has been lacking.  Promoting such dialogue was the motivation for the forum.  A public press conference at event's conclusion features Dr. Hearn's summary of its main themes.  A video of the press conference is available here: 

http://www.thedialogue.org/page.cfm?pageID=32&pubID=3318

 

Following the event Dr. Hearn published a piece in the Australian Financial Review, the text of which is below:

China Changes Tack on Trade and the TPP

5 June 2013

China's announcement last Thursday that it will consider joining the Trans-Pacific Partnership (TPP) negotiations is an unexpected turning point after previous declarations the proposed United States-led trade bloc was trying to contain China's expansion.

If Japan's attempts to use the TPP to retain tariffs on Australian beef have brought headaches to Canberra, the TPP's wide-ranging provisions on trade, investment and governance have intensified Beijing's obsessions about sovereignty.

Not only could the agreement adversely affect China's exports to the US, but it could also consolidate US strategic alliances with Vietnam, the Philippines and potentially Taiwan.

International trade economist Jagdish Bhagwati has warned the Gillard government that the TPP is "almost certain to split Asia into two blocs", centred around the US pivot to Asia.

China's support for an alternative agreement, the Regional Comprehensive Economic Partnership (RCEP), is widely viewed as an attempt to hedge against the TPP.

The main difference between the RCEP and TPP is the latter's inclusion of non-trade "behind the border" issues like intellectual property, environmental and labour standards, and governance of state-owned enterprises (SOEs).

But this ambitious agenda, which TPP proponents call a "free trade agreement for the 21st century", sets the bar too high for China to join. The Beijing strategy.

China appears to have declared its interest for two reasons.

Since newcomers to the TPP table must accept the terms already agreed, China would benefit from participating early in setting the ground rules.

Joining the negotiations sooner rather than later would enable China to seek exemptions on governance of SOEs, protection of the auto sector, and other sensitive matters, just as Australia has exempted itself from subsidy restrictions that could undermine the Pharmaceutical Benefits Scheme.

The other reason is longer-term: Chinese trade officials have long fantasised about a bilateral free trade agreement with the US, and the TPP could provide a stepping stone.

President Xi Jinping will meet President Barack Obama this week in California, stopping first in Trinidad and Tobago, Costa Rica and Mexico. For all the hype about the significance of these visits, their purpose is unclear. Commentators have speculated about everything from Xi's desire to build a personal relationship with Obama to a secret visit to Venezuela, less than 15 kilometres west of Trinidad and Tobago.

One motivation for the stopovers is China's effort to win over a region that harbours 12 of the 22 nations that maintain diplomatic relations with Taiwan. Costa Rica, which switched recognition to the People's Republic of China in 2007, emerged from Xi's visit with a loan of $US900 million for infrastructure and energy projects. Was this an example for its neighbours?

Xi is keen to develop new alliances and transcend tensions over territorial claims.

China's TPP interest takes some heat out of concerns about a future regional split, and its accession would augment the number of nations party to both the TPP and the RCEP, which include Australia, New Zealand and Singapore.

These middlemen countries should seize the China move and mediate between the two nascent blocs.

Australia should continue to leverage its deepening relationships in Asia and the Americas to identify points of convergence that could underpin closer integration of the two regions.


The article can be viewed on the AFR website (login required):

http://www.afr.com/p/opinion/china_changes_tack_on_trade_and_CGSmBBSLmo5zdKB4lRFl2N