Rival trade pacts could converge

Updated: 2013-05-15 11:07

By Chen Weihua in Washington (China Daily)

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Rival trade pacts could converge

Separate multiparty free-trade talks in Asia backed by China and the United States are generally seen as a rivalry between the world's two biggest economies, but some experts say the agreements could prove complementary and ultimately converge.

The latest round of US-led negotiations for the Trans-Pacific Partnership begins Wednesday in Peru. In April, Japan declared its hope of becoming the 12th country in the proposed regional free-trade zone.

Meanwhile, the 16-member Regional Comprehensive Economic Partnership, initiated by the Association of Southeast Asian Nations with the strong endorsement of China, ended its first round of talks on Monday in Brunei. RCEP participants have said they hope to conclude negotiations by the end of 2015. Their second meeting is expected to take place in September.

Together, the TPP and the RCEP would account for about half of the world's economic activity.

Shujiro Urata, an economist who teaches at Japan's Waseda University, said the two trade agreements now being negotiated should aim for complementarity, as both are potential pathways to an ultimate pact covering the entire Asia-Pacific.

"For RCEP to converge into TPP, it will take time, maybe five years, maybe 10 years," Urata said.

The Chinese view of the TPP has opened up, and those who regard it as an effort to contain China economically are "narrow-minded", said Zhang Jianping, a senior researcher at the Institute for International Economic Research, affiliated with the National Development and Research Commission. The NDRC is China's main economic planning agency.

"Since so many countries are participating, this shows it (the TPP) represents a future trend, so why should China oppose it?" Zhang said on Tuesday on the sidelines of a talk on Asia-Pacific economic integration at the Center for Strategic and International Studies in Washington.

Zhang isn't worried China will be left out of the TPP. "In the end, it will be China and the US, the two largest economies, that sit down together and talk," he said.

Recognizing the "high standards" that US officials have touted for the proposed trade bloc, Zhang said China should work to prepare policies on items under discussion, such as government procurement, intellectual-property rights and environmental protection.

Hiroyuki Ishige, chairman and CEO of the government-run Japan External Trade Organization, said China would need to enact many reforms and overcome numerous challenges in order to join the TPP.

"I think participating in the TPP could be like a second accession to the WTO for China," he said, referring to the Geneva-based World Trade Organization.

Zhang agrees with that view and said regional integration could help fuel economic reforms in China.

"It will be very hard to conduct reform in China without external momentum," he said.

In the 1990s, Premier Zhu Rongji leveraged China's ambition to join the WTO to push for domestic reforms, including the streamlining of government and State-owned enterprises and liberalization of the economy.

On Monday, Premier Li Keqiang, who took office in March, announced a new round of reforms designed to transform government functions by allowing market forces to play a greater role.

Although China would have a long way to go in meeting TPP requirements and it takes years for RCEP to conclude, Zhang believes that would be a worthwhile goal, as long as the country first concluded

a bilateral trade agreement with the Republic of Korea or a three-way pact with the ROK and Japan. Despite disputes with Tokyo over maritime territories, Beijing has remained steadfast in pursuing the trilateral agreement.

Zhang said he's puzzled why Vietnam, which is even further away than China from meeting TPP standards, is part of those negotiations.

Negotiators from the 11 nations in the proposed TPP have said their goal is to conclude the talks this year, but many analysts say that's unlikely given the daunting challenges involved.

US Senator Ben Cardin, a Democrat from Maryland, said during Tuesday's discussion that he would pose numerous questions regarding human rights and labor standards in several of the TPP member nations when the Senate reviews the proposed treaty.

Wendy Cutler, the assistant US trade representative for Japan, Korea and Asia Pacific Economic Cooperation affairs, acknowledged numerous challenges created by Japan's eventual accession to the TPP. (The invitation will be discussed during the 10-day negotiating round in Peru's capital, Lima.)

"We are excited about Japan joining the TPP, but we also recognize that this is the beginning of a process, and there is really hard work ahead of us, both with Japan in TPP negotiations as well as in our parallel bilateral negotiations on autos and other non-tariff measures," she said at the Tuesday discussion.

Japan's Prime Minister Shinzo Abe has been trying to use the TPP and other free-trade talks, including the one with China and the ROK, as political capital to advance economic reforms at home. However, his government faces strong opposition from politically powerful rice farmers over any trade-driven effort to open up Japan's agricultural sector to foreign competition.

The ROK, which has had a bilateral free-trade agreement with the US since March 2012, has expressed little interest in joining the TPP talks.