TPP a test for Beijing's new 'big nation' diplomacy

In March this year, a US foreign trade official publicly said that the US will not on its own initiative invite China to take part in discussions on the Trans-Pacific Partnership (TPP), adding Beijing must express a willingness and satisfy conditions if it wishes to join the trade bloc. However, Francisco Sanchez, undersecretary for international trade at the US Department of Commerce, recently stated that the US welcomes the involvement of China in the TPP under certain conditions and that President Barack Obama may offer a formal invitation at his upcoming meeting with China's president, Xi Jinping.

The TPP originated from the multi-party free-trade mechanism between Singapore, New Zealand, Brunei and Chile in 2005. Following the high-profile entry of the US in 2009, it has added the strategic significance of countering the economic and military emergence of China and strengthening the US-led alliance among Asia-Pacific nations. After former secretary of state Hillary Clinton put forth the concept of the "Pacific century" in Foreign Policy magazine in October 2011, US officials have proclaimed many times that TPP is an economic cornerstone of the return of the US to Asia.

Obama once commented that China will sooner or later set the rules of the game for economic and trade interaction in the Asia-Pacific should the US fail to do so. Since the US started to push the TPP actively after the Asia-Pacific Economic Cooperation forum in Hawaii in November 2011, this is the first sign that the US has made a show of goodwill to China with regards to the TPP.

Although the US has said the TPP is an open platform for Asia-Pacific nations, the strict conditions necessary for participation may not be palatable to all, even allies of the US. In February this year, when Japan's prime minister, Shinzo Abe, visited Washington, the US pledged not to ask Japan to implement zero tariffs comprehensively. In return for the exclusion from zero-tariff talks of five types of farm produce, including rice, wheat and cane sugar, Japan agreed to make concessions on auto tariffs and the opening of the country's insurance market. Success for Japan in joining the TPP will hinge on whether Australia, New Zealand and other nations agree to exclude the same categories of Japan's agricultural produce from zero-tariff talks.

The statement by Sanchez suggesting China may be welcomed to join the US-led TPP will test the "new era of big-nation diplomacy" advocated by the new administration in Beijing. Shen Danyang, spokesman for China's Ministry of Commerce, has said Beijing will seriously consider the benefits and costs for China of joining the TPP. The Chinese government, says Shen, hopes that any free-trade region under construction should follow the principles of mutual benefits, openness, tolerance, transparency and especially flexibility for economies at different stages in their development. The statement suggests that China will not accept all the preconditions for it to be involved in the TPP and will bring variables for China in fostering the RCEP (regional comprehensive economic partnership), or ASEAN+6 agreement.

Participation in the TPP is a critical opportunity for China to accelerate its economic transformation. Beijing is straddling the fence, not ruling out the possibility of participation. The point is that with China experiencing turmoil associated with economic transformation, the TPP is asking its member nations to move towards a zero-tariff mechanism gradually and membership talks cover issues in 24 categories, including the protection of intellectual property rights, competitive policy, investment, the environment, the labor force, and solutions to labor-management disputes. China is still at odds with TPP standards in such fields as industry, economy and foreign trade structure. It will be very difficult for Beijing to accept Western standards on agricultural produce, labor unions and the development of state enterprises for joining TPP, let alone the Western democratic values added by President Obama to the agenda of TPP membership talks.

As the world's second-largest economy, China in theory should not be excluded from the TPP. In the eyes of Beijing, the TPP is tailor-made for the US, with political calculations complicating its stringent membership conditions. The TPP talks promise to be a protracted process, even if China accepts the invitation to take part.

The participation of China in TPP, should it materialize, will be the optimal footnote for parsing the new type of "big-nation" relationship between China and the US. It is currently unlikely for Beijing to overhaul its political and economic system simply for the sake of joining the TPP. In the long term, Beijing will gradually adjust its economic and industrial structure and take part in global economic integration, since this is an inevitable trend and will bring benefits to its massive population.

June 4, 2013

Source: WantChinaTimes