A new democratic framework can strengthen the CPTPP
TOKYO – As Japan sought a partner in its very first free trade agreement, it chose Singapore. When Prime Minister Goh Chok Tong came to Tokyo to meet with his counterpart Keizo Obuchi, they agreed to start talks on the matter. The general opinion at the time was that it was out of the question to open the Japanese agricultural market, but Tokyo nonetheless moved forward because trade with the city-state was limited.
The World Trade Organization, however, has demanded that free trade agreements cover âalmost allâ of trade to prevent the world’s fragmentation into economic blocs. If an agreement did not cover at least 90% of global trade, it would not be recognized as a free trade agreement.
Asked about the negotiations, Hitoshi Tanaka, then director of the foreign ministry’s economic affairs office, was unfazed. There is no need, he said, to dwell on concluding a “traditional” free trade agreement.
A new type of agreement aimed at an “economic partnership for a new era” would also be very useful, Tanaka said, adding that such an agreement could cover a wide range of issues, such as rules for simultaneous quotes on stocks. from both countries. markets, cooperation on competition and environmental policies, and easing visa requirements for tech workers, Tanaka said.
It turned out that the agreement finally signed in 2002 met the requirements of the WTO. But having a bold and groundbreaking Plan B in case that doesn’t leave a strong impression.
This lesson can also be applied to last month’s Chinese bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. While the discussion on this tends to focus on whether Beijing will be accepted, an equally revolutionary Plan B should be ready.
The CPTPP, originally the TPP, was negotiated with China in the lead, and not just to lock it away geographically. The agreement would limit market interference by state-owned enterprises and promote the rule of law and the free flow of data.
“The TPP was a loyalty test to demonstrate a rejection of state capitalism and an attachment to a liberal economy,” recalled a representative long involved in the negotiations.
The United States, which had taken the lead in the talks, withdrew from the deal in 2017 under then-President Donald Trump. It is ironic that China has moved to fill the void left by its absence.
Some say bringing the United States back into the fold is the solution, but experts are skeptical of what will happen. President Joe Biden pledged to pursue a “foreign policy for the middle class”, keeping an eye on Rust Belt voters who backed Trump. The chances of a president running for a second term rule this out are extremely low.
If China’s membership in the CPTPP spurred domestic reform there, that would be good. But the CPTPP allows countries to exclude security-related areas and, according to diplomatic sources, China is seeking waivers of core provisions of the agreement relating to SOE reform, labor disputes and disputes. cross-border data flows.
Japan, Australia and other members oppose such exemptions for fear that they violate the spirit of the treaty, but Beijing engages in a diplomatic offensive that raises fears that it will do so. finds.
Agreements are needed that extend beyond trade agreements, like the Quad, the security grouping of the United States, Japan, India and Australia that was formed as a counterweight to China. While it has mainly advanced in defense so far, the Quad could be used as a basis to build an economic arrangement that includes other countries. It is a good idea to develop an economic framework involving other countries on the basis of the Quad.
Beyond the group’s ongoing discussions on supply chains for strategically important goods, the Quad could also consider a far-reaching economic security agreement that covers, for example, export controls on goods of strategic importance. advanced technologies or research and development collaboration, Vice President Tetsuya Watanabe said at the press conference. Research institute in economics, commerce and industry.
The digital trade agreement with Asian countries proposed by the United States to ensure the free flow of data could be transformed into a digital supply chain agreement that also covers countermeasures against cyber attacks and places limits on the data collection by states.
Postwar trade agreements revolved around trade and investment. But with U.S.-Chinese tensions and the coronavirus pandemic increasing the supply risks of medical products, semiconductors and scarce resources, trade security is now also a major concern.
It is natural for countries sharing values ââto seek additional agreements in case of unforeseen circumstances. This contributes to the United States’ stable engagement and partnerships in Asia, which will be crucial to ensuring regional stability in Asia as China gains momentum.
Of course, there must be a persistent dialogue with China to allay any uncertainty. Agreements that encourage decoupling or protectionism should be avoided. What is needed are frameworks that not only offer real benefits, but also embody liberalism and democracy.
This would reflect the world that members seek to build and lend legitimacy to such arrangements, unifying the countries involved and preventing the opposition from becoming a goal in itself.
Bold, game-changing ideas need strong principles.