Experts predict conflicting policies over Asian trade pacts

Updated: 2013-06-19 11:23

By Joseph Boris in Washington (China Daily)

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Chinese President Xi Jinping's recent request that US President Barack Obama keep him updated on progress in talks over the Trans-Pacific Partnership was ambiguous - not necessarily a sign of China's willingness to join the huge proposed free-trade accord but not an expression of skepticism either.

Since the two leaders met in California nearly two weeks ago, observers of US-China relations have been wondering if Beijing might flesh out a Commerce Ministry spokesman's May 30 statement that the government is studying the possibility of joining the US and 11 other countries now negotiating the TPP.

"In a practical sense, it would be very difficult to incorporate China into the negotiations at this stage," said Matthew Goodman, who was a senior US adviser on Asia economic policy in Obama's first-term administration. "I don't think China, even if it expresses interest and seriously considers it, is going to be ready, willing and able to join."

In addition, the talks would be hard-pressed to absorb participation of the world's second-biggest economy, he told a Washington think tank audience on Tuesday.

Goodman and others on the panel compared and contrasted the TPP with the Regional Comprehensive Economic Partnership, a trade pact China and 15 other Asian countries began negotiating in May. Because China is absent from one set of talks but engaged in the other, some experts have predicted conflicting policies in international trade if the two agreements aren't eventually combined.

Further fueling confusion are complex and probably lengthy free-trade talks between the US and the European Union, which began on Monday; China's ongoing negotiations with Japan and the Republic of Korea toward a three-way trade agreement; and the question of whether China is welcome in the TPP. US officials have said Chinese participation would depend on all 12 parties, including new member Japan, being satisfied that Beijing could and would meet the proposed treaty's standards.

Prior to the ministry spokesman's remarks three weeks ago, Chinese officials had publicly expressed either skepticism about the TPP or rebuked it as a US-led effort to contain the country economically.

"It's not clear to me that the US wants China in [the] TPP, at least during the negotiating phase, because if the whole premise of this is asymmetric globalization, if China is in on the negotiation, it could sink because China's too big," said Arvind Subramanian, who researches trade issues at both the Center for Global Development and the conservative Peterson Institute for International Economics.

From a US perspective, China's entry "could undermine the fundamental logic" of the TPP, Subramanian said, suggesting that Washington might want Beijing to join once talks are finalized and standards in place.

He and Goodman, the former White House aide who's now a scholar at the Center for Strategic and International Studies, differed as to how the TPP may fit with broader US strategic aims in the Asia-Pacific region. But they and their two fellow panelists in Tuesday's discussion agreed that any hesitancy over Chinese participation in the pact, from the US or others, is more likely due to practical considerations than hostility.

It was pointed out that the Association of Southeast Asian Nations, under whose auspices the RCEP talks are proceeding and which includes three members- Brunei, Malaysia and Vietnam - also in the TPP, is generally seen by member governments as their central means of setting regional trade policies. Ten-member ASEAN was the world's only subregion to experience faster economic growth in 2012 than the previous year (5.5 percent from 4.7 percent), according to the Asian Development Bank.

As some European economies fight debt and recession, and the US and Japanese recoveries remain slow, the region's midsize countries see their future trade and investment tied to each other as well as to the giant Chinese economy, said Meredith Miller, who studies trade, economics and energy as director of the Washington office of the nonprofit National Bureau of Asian Research.

She said the RCEP is crucial to maintaining the regional "primacy" of ASEAN, whose members have pledged free movement of goods, services and labor, and preserving cohesive trade strategies in dealing with non-bloc powers China and India.

In contrast, Miller said the TPP "is an initiative that Southeast Asian economies are evaluating on more of an individual basis in terms of their own political and economic goals and, frankly, whether or not they have the political will to undertake the comprehensive commitments that are required" by the US-led pact.

Its members have said the TPP, whose 18th round of talks begins in July, will be finalized and ready for ratification by individual governments this year. But the treaty's complexity, and potential political fights over US trade policy in 2014 congressional elections, makes that timetable unrealistic, said Sourabh Gupta, a researcher on Asia-Pacific trade policy for consulting firm Samuels International Associates.

(China Daily USA 06/19/2013 page2)