Taiwan’s long road to CPTPP membership
(MENAFN- Caribbean News Global) By Riley Walters
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) recently made the headlines, with China and Taiwan having officially submitted applications (see here and here) to join the trade agreement. While not the first countries to apply for membership in the CPTPP, their candidacies have certainly caught the attention of business and geopolitical analysts around the world. It will now be up to the CPTPP members to assess the request of each candidate. The road to joining the CPTPP will not be easy for China or Taiwan: the process could take years before substantial progress is made, as political considerations will weigh heavily on the decision-making of each CPTPP member.
What is CPTPP?
In addition to having a terribly long name, the CPTPP is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and the Vietnam. The agreement covers a wide range of topics, including, but not limited to, trade, investment, government procurement, electronic commerce and data storage, and environmental and health measures. The combined economies of these 11 members account for 13 percent of global GDP and 14 percent of global exports of goods and services.
The United States was a party to the initial negotiations for the trade agreement, but President Donald Trump formally withdrew the United States shortly after taking office in 2017. The agreement entered into force almost two years later. that of December 2018. While the agreement is in force, not all CPTPP members have ratified the agreement in their own national legal frameworks: Brunei, Chile and Malaysia, although members of the CPTPP, do not are not technically a party to the agreement until they ratify it. This is an important point, because only parties in the CPTPP can vote on whether or not to accept new members.
China and Taiwan both want to join
On September 16, China formally applied for membership in the CPTPP; six days later, Taiwan also submitted its own request. The timing of the two submissions is more than a coincidence. Taiwanese officials have been talking about their desire to join the trade deal for years, but it’s only since late last year that Beijing has shown any interest in joining. At the Asia-Pacific Economic Cooperation (APEC) Forum, Xi Jinping (習近平) said China would consider joining the CPTPP, which surprised many given that China had just finished negotiations for another major Asian trade agreement, the Economic Partnership (RCEP). The timing of the two countries to join the CPTPP is reminiscent of their joining the World Trade Organization (WTO) around the same time in the early 2000s. Eventually, both joined the WTO as separate members. .
A complicated relationship
China’s request to join CPTPP complicates matters for CPTPP members. The deal, while not always explicit, was widely seen as a counterweight to China’s growing economic presence in the Asia-Pacific region. This concern has grown as countries talk more about diversifying supply chains and building economic resilience. For most CPTPP members, China is already either their first or second trading partner. At the same time, it’s only natural for countries with large trade flows to want to solidify the relationship through trade deals – think the United States-Mexico-Canada trade deal (formerly known as North American Free Trade Agreement).
But while it is sometimes assumed that more trade and better diplomatic relations go hand in hand, Beijing’s growing military presence and belligerence in the region have started to turn opinions against China. In countries like Japan and Canada, negative public sentiment towards China is at an all time high. For members of the Association of Southeast Asian Nations (ASEAN), while China is seen as the region’s most influential economic power, nearly three-quarters of members say this is concerning. Almost two-thirds of ASEAN members have little or no confidence that China will do the right thing for global peace, security, prosperity and governance.
The respective political relations of China and Taiwan with each member of the CPTPP make the possibility of joining the CPTPP more complicated. Although the two countries have already concluded trade agreements with various CPTPP members (Taiwan has free trade agreements with Singapore and New Zealand, and China has trade agreements with all CPTPP members, at the except Canada and Mexico), this will not necessarily facilitate their accession processes. CPTPP members had mixed reactions to submissions from China and Taiwan: for example, Japan was most vehement in inviting Taiwan to join the CPTPP, while Malaysia welcomed China’s membership.
The membership process
To join the CPTPP, China and Taiwan must first go through a few steps. Before even submitting their candidacies, the two countries should have discussed with the 11 members of the CPTPP their interest in joining. However, now that both have formally submitted their applications for membership, it will be up to the CPTPP Commission to decide within a “reasonable period of time” whether or not to accept either country’s application. Since China submitted its request before Taiwan, it’s fair to assume that it can review China’s first. But a “reasonable time” is not a time limit and can take some time. As a reference, it was around four months between the time the UK applied for membership and the time the Commission decided to start membership negotiations.
After accepting an application, the Commission will then set up membership working groups for China and Taiwan. The Membership Working Group is expected to work with the budding economy on their compliance with the existing CPTPP agreement. Ultimately, the Commission will decide whether or not to accept the budding economy. The Peterson Institute for International Economics produced a good graphic depicting the membership process, as shown below:
All decisions made by the Commission or the Membership Working Group are taken by consensus among the eight parties to the CPTPP. However, throughout this process, CPTPP members intend to “reaffirm the importance of maintaining solidarity between CPTPP signatories” and “[include] all Signatories of the CPTPP in the decision-making process… Decisions on matters relating to membership will be taken by the Parties taking fully into account the views expressed by these Signatories. Essentially, this means that while Brunei, Chile and Malaysia will not have a say in whether China or Taiwan can join the CPTPP or not, their views are still likely to be considered.
China and Taiwan must join the deal already negotiated by CPTPP members. Members like Japan have said they are unwilling to relax the rules for China’s membership, which means that while some CPTPP members were able to benefit from an exemption from parts of the CPTPP when its first negotiation, China will not have this chance. And it is questionable whether China can make the changes necessary to enter the CPTPP now: for example, while the CPTPP deal recognizes that SOEs can play an important role for some of its members, the heavy interventions on Chinese markets by central and local governments go beyond what is acceptable under CPTPP rules. Beijing will find it difficult to adhere to the more liberal provisions of the CPTPP, such as those related to opening up e-commerce and storing data. China’s labor and environmental commitments are also cause for concern.
Taiwan’s membership of the CPTPP would be significant. National Development Council Minister Kung Ming-hsin (龔明鑫) said he expects Taiwan’s economy to grow by 2% if he joins CPTPP, but would lose half a percent if he doesn’t. While Taiwan is a more open economy than China, which means it wouldn’t take as many changes for Taiwan to comply with the CPTPP deal, there are still a few outstanding issues that need to be addressed. For Japan, Taiwan’s biggest supporter to enter CPTPP, this will solve the problem of importing food from the Fukushima region of Japan. (The United States has just lifted all restrictions on imports from that region to Japan.) Other than that, Taiwan’s membership would be relatively easier than China’s.
The proposals by China and Taiwan to join the CPTPP could cause discord among its members as they debate who should join. But MEPs must not forget the spirit of the agreement set out in its preamble. CPTPP members strive to establish a free trade agreement that strengthens their ties and cooperation. The agreement aims to build on the rights established in the WTO, while recognizing the cultural differences and diversity among its members. Finally, its members are working to broaden the deal by encouraging other economies to join.
Taiwan continues to be a beacon for democratic values and economic freedom in the region, but when Taiwan’s bid to join the CPTPP was announced, China’s Foreign Ministry strongly opposed. If China becomes a party to the CPTPP before Taiwan, it will surely block Taiwan’s membership. This goes against the spirit of the CPTPP and should prevail over China’s accession.
The main point: Neither China nor Taiwan’s membership in the CPTPP is guaranteed. The process could take years, as it will be undermined by political considerations and technical negotiations. But given the spirit of the free trade agreement and the relative ease with which Taiwan could join, its candidacy should take priority over China’s.
Riley Walters is a non-resident principal investigator at the Global Taiwan Institute and deputy director of the Japan Chair at the Hudson Institute.
Source: World Institute of Taiwan
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