The geopolitics of China's CPTPP move

The geopolitics of China's CPTPP move

Representatives of nations pose for a picture after signing the rebranded 11-country Pacific trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in Santiago, Chile in 2018. Now, the UK, China and Taiwan wish to join. (Photo: AFP)
Representatives of nations pose for a picture after signing the rebranded 11-country Pacific trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in Santiago, Chile in 2018. Now, the UK, China and Taiwan wish to join. (Photo: AFP)

Nowhere is the intersection between geopolitics and geoeconomics more evident than the accession negotiations under the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). At issue are three new applications for accession by the United Kingdom, China, and Taiwan. While the UK's candidacy alters the geographic crux of what has been Asia-Pacific trade liberalisation, China's and Taiwan's entry efforts represent a proxy showdown between the United States-led global order and 75-year-old alliance system versus Beijing's geostrategic ambitions and objectives.

For China, applying for CPTPP membership is a shrewd move, a potential win-win but with an unthinkable risk for Beijing's strategic planners. Whether China gets in or not is less important to Beijing than if Taiwan accedes at all. In the 2020s, unlike the Asia-Pacific Economic Cooperation from 1989, it is hard to imagine China being in the same trade bloc as Taiwan, which Beijing considers a "renegade province" from the Chinese civil war that culminated with the communist revolution in 1949.

At the same time, Taiwan's accession without the same for China would be a huge strategic setback for Beijing. It would fundamentally undermine Beijing's "One China" policy, tarnish its global standing and prestige, embolden Taiwan's pro-independence movement, and deepen the global divide between China and the US. For its part, Washington has been stepping up its support for Taiwan in the face of China's threats and intimidation to forcefully unify the democratic and prosperous island state with mainland China.

CPTPP has thus become an arena of geopolitical jostling. China's overall strategy appears to be twofold in trying to gain accession for itself and to prevent Taiwan from getting in at the same time. If it somehow gets to join first in what will be a long deliberation process, currently chaired by Japan this year with Singapore and New Zealand in line for 2022-23, Beijing will be able to use its membership to thwart Taiwan's entry.

To be sure, the CPTPP membership -- Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam -- has come a long way from its origin two decades ago as a trade partnership among the four smallest economies of the mix. These four (Brunei, Chile, New Zealand, and Singapore) later joined what became the Trans-Pacific Partnership under former US President Barack Obama's leadership, incorporating US traditional allies and established trade partners, such as Australia, Canada, Japan, and Mexico.

While it became Barack Obama's economic strategy complementing the US' "pivot and rebalance" to Asia, the TPP also became an alternative "gold standard" trade liberalisation in view of the World Trade Organization's failed Doha Round. It was the "second-best" solution for the doomed multilateral trading system. As is infamously known, former US President Donald Trump promptly answered domestic anti-globalisation and anti-liberalisation voters by pulling its biggest member out of the TPP in 2017.

With Japan's leadership under then-prime minister Shinzo Abe government, salvaging what's left of TPP became CPTPP. The US' potential return under the new administration of President Joe Biden seems a remote possibility. Protectionist and anti-globalisation sentiments remain strong currents in the stream of American public opinion.

Washington is thus out of the two main and overlapping trade blocs that have emerged in the past half decade, the CPTPP and the 15-member Regional Comprehensive Economic Partnership (RCEP). While China is applying to join the former, it is a founding and largest member of the RCEP, which is centred around Asean alongside Australia, China, Japan, New Zealand, and South Korea. India opted out at the last moment owing to domestic vested interests and its rationalization of already having bilateral free-trade agreements with most RCEP economies.

Representing more of a streamlined freer-trade architecture between Asean and its major dialogue partners rather than a full-fledged trade liberalisation in a WTO fashion, RCEP pools together 30% of global trade and gross domestic product, with 40% of the world's population. While CPTPP is smaller with 15% of global trade and 13% of global GDP and just 6% of the world population as its market, the 11-member trade liberalisation platform is more comprehensive and substantial than RCEP.

CPTPP includes chapters on labour and state-owned enterprises, freedom of association and elimination of forced labour, digital requirements as well as a prohibition on the forced disclosure of source code. These rigorous behind-border liberalisation extends well beyond RCEP's scope.

Among Asean economies, Brunei and Singapore were two of the original four but it was a coup of sorts that Malaysia and Vietnam had their domestic acts together to join. Thailand missed out completely due to its domestic conflict and consequent policy inertia. Despite expressing its interest, the current Thai government is unlikely to have Thailand's house in order enough to sign on to CPTPP for the foreseeable future.

In view of this regional trade environment, China's CPTPP application will likely be opposed by Australia, Japan, and Vietnam due to thorny relations. China and Australia have locked horns in a trade and tariff war, whereas Beijing's ties with Tokyo and Hanoi are marked by distrust.

China therefore may simply be posturing. It first wants to show global leadership by applying to join where the US has quit. As Washington turns its back on multilateral trade liberalisation, Beijing wants to be seen as a promoter of free trade. Moreover, China's CPTPP application is likely designed to split the trade bloc.

Apart from Australia, Japan and Vietnam in the sceptical camp, China may want to leverage its deepening economic ties with the Community of Latin American and Caribbean States (CELAC) for CPTPP gains. CELAC includes Chile, Mexico and Peru, three Latin American economies and CPTPP members that are increasingly reliant on China for trade and investment. Beijing's lobbying to get into the CPTPP is likely to rely on these three CELAC members.

As a result of these CPTPP-related dynamics, the UK's application is a stand-alone in view of the country's having to find its own way after "Brexit". The United Kingdom may end up as a beneficiary of the China-Taiwan competition in CPTPP enlargement. The prospect of accepting China but not Taiwan is unlikely to appeal to the pro-democracy and anti-China camp among the 11 member economies. Yet taking in Taiwan without China is also unappealing because of the geopolitical tensions such a prospect would stoke. The pro-China Latin American countries are also unlikely to allow a Taiwanese entry without a mainland Chinese accession.

On purely geostrategic grounds, China and Taiwan would seem to cancel each other out unless both are accepted. The UK's CPTPP likelihood may be more promising because the 11-member grouping may not want to come out of this accession calculation looking exclusionary and closed. To stay open on trade liberalisation, the current CPTPP lot will come under pressure to admit at least one applicant, if not all three. Letting the UK into CPTPP would also allow the current members to proclaim that trade liberalisation can be multilateralised once again, not subject to maps and boundaries and not captured by geopolitical tensions and vested interests.

Thitinan Pongsudhirak

A PROFESSOR AT CHULALONGKORN UNIVERSITY

A professor and director of the Institute of Security and International Studies at Chulalongkorn University’s Faculty of Political Science, he earned a PhD from the London School of Economics with a top dissertation prize in 2002. Recognised for excellence in opinion writing from Society of Publishers in Asia, his views and articles have been published widely by local and international media.

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