China must convince Canada and Australia before trade pact negotiations can begin

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Chinese Trade Updates

China’s membership in a U.S.-inspired trans-Pacific trade group appeals to conservative nationalists in the country eager to embarrass President Joe Biden, as well as liberals who see it as a way to force difficult domestic economic reforms.

But Beijing will first have to win the support of member countries – including Australia and Canada – that it has alienated itself in recent years.

Chinese officials and analysts say Beijing’s official bid to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, the successor to a pact established but subsequently abandoned by the United States, demonstrates commitment. President Xi Jinping for tough economic and financial reforms in the second-largest economy.

Beijing officially asked to join the CPTPP on Thursday, less than 24 hours after the United States, Australia and the United Kingdom announced a new military partnership, Aukus, aimed at countering China’s military rise. Chinese officials and analysts insisted there was “no connection” between the two announcements.

“We believe that China’s accession to the CPTPP would help promote economic integration in the Asia-Pacific region and facilitate post-Covid economic recovery, trade development and investment,” said Zhao Lijian, spokesperson. word of the Chinese Ministry of Foreign Affairs.

“China is working for economic cooperation and regional integration. What the United States and Australia are pushing is wars and destruction.

Zhu Feng, an expert in international relations at Nanjing University, called the decision a “very important signal” and “to broaden the policy of reform and opening up.”

“CPTPP is a [trade group] with relatively high thresholds, ”he said. “Since China wants to join, then China must be determined to meet its demands.

“The United States has complained about China on trade. Today, China shows its willingness to strengthen its political orientation and its desire to integrate into the international community.

Xi and his advisers want state-owned enterprises to retain their dominance over strategic industries, and are in the midst of a long campaign to reduce the power of the private sector groups that dominate China’s internet economy.

But they also want them to compete on their own with Western multinationals, a goal that would be reinforced by the CPTPP’s relatively strict rules on industrial subsidies and state-owned enterprises.

“Is this a serious signal that China wants to resume reforming its economy – or just demagoguery?” I find it hard to believe this is all demagoguery, ”said Stephen Jacobi, a former New Zealand trade negotiator.

“Maybe, just maybe, this is an attempt on their part to try to figure out how they can reform their SOE sector. . . The behavior of their state-owned enterprises will be severely constrained by the CPTPP. “

But several Japanese ministers were quick to point out other areas that could be barriers to China’s entry, such as the CPTPP’s strict rules on intellectual property, data flow and labor. “Is China really in a state where it can join? Taro Aso, finance minister, asked on Friday.

Canberra and Ottawa officials are also wary of China’s request, as they believe Beijing has violated its World Trade Organization commitments by resorting to trade retaliation during diplomatic disputes.

The three main CPTPP members are filing complaints against China with the World Trade Organization: Japan for steel, Canada for canola and Australia for wine.

Chinese officials have been angered by Australia’s call last year for a full investigation into the Covid-19 pandemic, as well as Canada’s 2018 detention of a Chinese telecommunications executive pending his possible extradition to the United States for fraud.

In response to the latter, the Chinese government detained two Canadian nationals, including a former diplomat.

Dan Tehan, Australian Minister of Commerce, said China’s “track record of compliance” with other trade agreements would affect its application to the CPTPP. “CPTPP parties want to be sure that a candidate for membership will fully implement its commitments in good faith,” he added.

Rex Patrick, an independent Australian senator, argued that China should “behave properly” before entering the CPTPP, and stop “imposing trade sanctions here, there and everywhere.”

“You cannot make any false claims about some of our products, such as the fact that we are selling wine in Chinese markets below the market price,” Patrick told the Financial Times. “Clearly we weren’t doing this.”

But the fallout from these and other disputes means China may even struggle to reach the CPTPP’s starting line, as members must first agree to start talks with the candidates.

It took four months for member countries to agree to launch membership negotiations with the UK, which formally applied for membership in the CPTPP in February.

“In considering the question of [China] market access alone, many will wonder if things are really going to be okay, ”another Japanese government official said. “These questions will be deeper than those envisaged for the UK.”

Tom Mitchell in Singapore, Emma Zhou in Beijing, Edward White in Seoul, Anthony Klan in Sydney and Kana Inagaki and Robin Harding in Tokyo

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