China Says it Wants to Join TPP, but would It Really Submit to Rules?

The Trans-Pacific Partnership multilateral free trade pact sets out rules for high levels of liberalization of trade and investment. If China wants to join the pact, it must accept the rules as a precondition.

At the Asia-Pacific Economic Cooperation forum, Chinese President Xi Jinping announced for the first time that China would positively consider joining the TPP.

Xi’s remarks came immediately after 15 countries, including Japan, China, South Korea and the Association of Southeast Asian Nations, signed a different free trade deal — the Regional Comprehensive Economic Partnership (RCEP). China apparently aims to take the initiative in the trade field in Asia.

Eleven countries, including Japan, Australia and Vietnam, have joined the TPP, with seven nations having already ratified it. For China to join the TPP, it would be necessary to obtain consent from the ratifying countries.

Is it really China’s intention to achieve a high level of liberalization? Member states must ascertain China’s real intentions.

Under the TPP, the tariff elimination rate for Japanese industrial products is almost 100%, exceeding the figure under the RCEP.

In its rules, the TPP prohibits in principle the provision of subsidies to state-owned enterprises, and strengthens regulations protecting intellectual property rights. There are provisions on electronic commerce that ban member nations from demanding that foreign companies reveal their source codes, which are essentially blueprints for their software.

On the other hand, China continues to grant subsidies and give preferential regulatory treatment to state-owned enterprises. It has refused to implement reforms, such as refraining from demands for the disclosure of source codes.

China has put into force an export control law that can ban exports to certain companies for security reasons. There are concerns about China applying the law in an arbitrary manner. It also has strengthened data protectionism so as to corral data to its own advantage.

As things stand, it would be difficult for China to participate in the TPP.

With the withdrawal of the United States, the TPP shelved 22 items, including the protection of pharmaceutical data, and some rules have been relaxed. Special exemptions on state-owned enterprises are applied to Vietnam on the grounds that it is a developing country.

There is a possibility that China thought that it could join the TPP now, using the case of Vietnam as a model. As a new member is required to agree to even the 22 shelved items, special exemptions are not automatically allowed.

If China were to apply for TPP membership, it would be necessary for the current member nations to build a consensus to make China abide by the rules. It is urgent to coordinate with Britain, which has also expressed its intention to join the TPP.

The TPP is a framework promoted by the administration of former U.S. President Barack Obama early on as a means to establish an encircling net around China. The significance of bringing the United States back into the TPP framework has dramatically increased. Japan needs to persistently urge the United States to return to the TPP pact.

(From The Yomiuri Shimbun, Dec. 3, 2020)