Interview: TPP without China would be "a failed agreement"
by Xinhua writers Gao Pan, Shi Yingshan
MAUI, the United States, July 31 (Xinhua) -- U.S. experts say that the Trans-Pacific Partnership (TPP) trade deal involving 12 countries in the Asia Pacific region would be "a failed agreement" without China's participation.
"China is the largest economy in Asia, we need it to be part of the TPP," Tami Overby, the U.S. Chamber of Commerce's senior vice president for Asia, told Xinhua in an interview on the sidelines of the four-day TPP ministerial meeting held here with the aim of substantially concluding the ambitious Asia-Pacific trade talks.
The TPP talks involve Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, covering about 40 percent of global economy. The TPP is central to the Obama administration's policy of advancing economic engagement in Asia and writing the rules for international trade and investment in the 21st century.
Overby dismissed the conception that the TPP was designed to contain China, noting that it's going to be "an open agreement." " The TPP, we hope, will be evolved into the FTAAP (Free Trade Area of the Asia Pacific), the framework of the Asia Pacific. So the TPP without China, in my view, will be a failed agreement," she said.
"Ultimately I think everyone realizes that TPP to be fully successful needs to have China as a member," Yukon Huang, a senior associate in the Asia Program of the Carnegie Endowment for International Peace, told Xinhua. "My observation is, from the American perspective, you want China to be part of this if you really want to broaden the high standards."
Overby believed China certainly could meet the high standards of the TPP "if a country like the Vietnam is able to agree and to meet those high standards." "It doesn't mean that every country has to immediately do everything day one. There are transition periods, phase in, there can even be capacity building, some assistance, to help the economy get there," she said. While the U.S. wants to conclude the TPP negotiations with current members "because of timing issues," U.S. senior officials, including President Barack Obama and National Security Advisor Susan Rice, have publicly said they welcome China to join the trade agreement, David Dollar, senior fellow with the Brookings Institution and former official of the World Bank and the U.S. Treasury Department, told Xinhua. "All the members of the TPP would like to see China to join. There would be big benefits," Dollar said, suggesting China could negotiate something separate with the U.S. and the whole group of TPP countries if it does not want to join the existing agreement.
Many countries, including China, have begun to study the implications of the TPP for their economies, "both potential advantages of being a member in the future and also the challenges they would face in terms of meeting the high standards," said Jeffrey Schott, a senior fellow and trade expert at the Peterson Institute for International Economics.
It's very interesting that some of the TPP obligations move in the same direction as China's domestic economic reform agenda announced at the third plenum of the 18th Communist Party of China Central Committee in late 2013, Schott told Xinhua.
"One thing that's attracting some attention in China is whether the TPP actually would complement and reinforce the ongoing process of economic reforms in China, consistent with the priorities set by the current Chinese leadership," he added.
China has an open attitude towards the TPP. Chinese Commerce Minister Gao Hucheng said in March that the country is open to all the free trade arrangements that are beneficial to the world's trade liberalization and regional economic integration, as long as they are open and transparent. He also mentioned that China has established information sharing mechanism with the United States regarding TPP negotiations, and the mechanism has been going well.
China's Vice Finance Minister Zhu Guangyao also said last October that a TPP agreement is incomplete without China. "For the TPP, frankly speaking, there have been internal debates within both the United States and the Chinese government. But now our position is clear. As China becomes more open, it's very important for us to be integrated into the global trade system with a high standard," he said.
While continuing studying the impact of these proposed new regional free trade deals, China has stepped up its efforts to accelerate its own free trade zone strategies in recent years as an important part of a new round of reform and opening-up.
China has established pilot free trade zones in Shanghai and other cities, concluded FTA negotiations with the Republic of Korea and Australia, intensified negotiations on a bilateral investment treaty with the United States and the European Union, and actively advanced negotiations on expanding the Information Technology Agreement (ITA) in the World Trade Organization (WTO), with the aim of promoting China's economic development and global trade liberalization that are beneficial to all countries.