The rivalry with China is systemic and heft is needed to anchor market-orientated trade.
On 16 September 2021 China lodged an application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This immediately kicked-off a debate among trade watchers on the merits, as well as the benefits and risks of China joining the trade pact. In addition, the context included the irony that China might join the CPTPP before the pact’s chief architect, the United States.
The United States had originally devised the CPTPP’s predecessor, the Trans-Pacific Partnership, as a regional counter-balance to China’s state capitalism. The goal was to devise an agreement with vast economic weight – almost 40 per cent of global GDP with the United States included – and trans-regional geographic spread. Most crucially of all, the agreement would lock-in a liberal trading system in the Indo-Pacific.
However, with Donald Trump’s rise came the near downfall of this aim, after he pulled the United States out of the negotiations in 2018. While the remaining members, led by Japan, ultimately salvaged the agreement, renamed as the CPTTP, its final economic size was much diminished, representing just 14 per cent of global GDP.
More importantly, with Washington out, the CPTPP is missing a suitably large liberal market economy anchor, one that can hold ground against any future China accession. Trade negotiations are highly strategic situations in which nation’s seek to secure comparative advantages by shaping the rules of the game in ways that best suit their economy. Thus a China accession would likely result in attempts at watering down rules, or gaining exemptions for Beijing’s own economic model and preferences.
READ FULL ARTICLE HERE : Will the EU step up to secure rules-based Indo-Pacific trade? | The Interpreter (lowyinstitute.org)