Trans-Pacific Partnership

Trade blocs should promote co-operation, not competition

PUBLISHED : Thursday, 15 November, 2012, 12:00am
UPDATED : Thursday, 15 November, 2012, 2:35am

American leadership of a fledgling trans-Pacific free-trade zone that excludes China has prompted Beijing to join negotiations to create a 16-nation east Asian free-trade bloc that does not include the US. They both include members of the Association of Southeast Asian nations (Asean), peripheral nations like Australia, and Japan, whose full commitment is problematic because of the power of its farm lobby.

Having joined the Trans-Pacific Partnership, which already included Singapore, Vietnam, Australia and New Zealand, the US seized on it as its main regional trade initiative and linked it to non-tariff issues such as government procurement, the operations of state-owned enterprises, intellectual property rights and complementary regulations - all points of friction with China. Without ruling China out, these conditions made it unlikely Beijing would join.

In a coded rebuff at last year's Asia-Pacific Economic Co-operation summit, President Hu Jintao said nations should work to establish a balanced, inclusive and win-win multilateral trading regime. Hence the move to create the new trade bloc - the Regional Comprehensive Economic Partnership, consisting of the 10 members of Asean, plus China, India and South Korea as well as Japan, Australia and Zealand.

The American vision includes the other North American nations, Canada and Mexico. It is only natural, after a decade of preoccupation with terrorism, the Middle East and then the financial crisis, that the US wants to tap into regional markets as part of its pivot back towards Asia. But the exclusion of China does not take account of its legitimate interest in military and trade arrangements in the Pacific. It is also regionally divisive. It is only natural that China should use a multilateral platform to oppose it. Regrettably, it will result in overlapping involving the friends of both countries.

The US and China should focus on speeding up market reforms that reflect the principles of free-trade groups and reduce obstacles to co-operation.