Australia has a great chance to engage in trade diplomacy with China, and it must take it
- China was excluded from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership’s predecessor when negotiations ended in 2016
- If Beijing is serious now about gaining access to the region-wide trade initiative then Canberra would be foolish not to engage, says Tony Walker
Beijing has said it wants to engage CPTPP members on technical issues.
Australia would have nothing to lose by encouraging China to explore opportunities provided by a trade agreement from which China was excluded when the TPP was concluded in 2016.
The new Biden administration in the US has indicated it will study the possibility of returning to the CPTPP. However, given domestic pressures from both left and right over threats to American jobs posed by free trade initiatives, it is hard to envisage the administration moving quickly.
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In the meantime, Canberra should not await Washington’s approval to engage China on an expansion of the CPTPP, if that is possible.
It is conceivable Beijing is saying it wants to engage as a device to further unsettle the US and its allies in Asia. But there are also reasons to believe it would suit China to join the CPTPP club.
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RCEP countries account for about 30 per cent of global GDP, the North American Free Trade Agreement (Nafta) 28 per cent and the EU 15 per cent. CPTPP countries represent 13 per cent. These are approximate numbers.
At this point it might be useful to define differences between the CPTPP and the RCEP. These are part of an “alphabet soup” of regional trading initiatives, including an omnibus Free Trade Agreement of Asia-Pacific (FTAAP) that China has promoted over the years.
The FTAAP has been relegated to the back-burner for the time being.
The essential difference between the massive RCEP and the smaller CPTPP is that the latter aims for the virtual elimination of tariffs – up to 99 per cent – among its signatories. The RCEP, on the other hand, imposes less stringent standards on its participants on tariffs, and on labour and environmental standards.
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CPTPP signatories include Australia, Canada, Brunei, Japan, Malaysia, New Zealand, Singapore, Vietnam, Mexico, Chile and Peru. As originally envisaged, the TPP, with America’s participation, would have constituted the world’s biggest trade pact. It would have accounted for 40 per cent of global GDP.
In the often-used words of Chinese diplomacy, this should be a “win-win” for Australian diplomacy if China’s proclaimed desire to engage in the CPTPP is something more than a diplomatic ruse.
Beijing itself has not hidden one of its principal motivations for wanting to join the CPTPP. This is to enable better relations with an incoming American administration.
In commentary on China’s motivations, the state-owned CCTV’s English language news channel, CGTN, said: “With the incoming Biden administration now on the horizon, China has decided the ‘strategic time’ is now right to actively consider joining the CPTPP.”
It is also noteworthy that the CPTPP is attracting interest beyond the region.
In other words, trade diplomacy is continuing to tilt towards the Indo-Pacific region. This is something the Australian government should exploit in the national interest.
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Surging iron ore prices might have disguised the economic fallout for Australia in the latest trade figures, but this will not last. Australian exporters of coal, wine, timber, lobsters, beef, wool, barley and other commodities are paying a price for Canberra’s poor management of the China relationship.
Beijing is far from blameless in all of this, of course. A possible off-ramp, though, may well lie in some creative trade diplomacy offered by a possible reset in US relations.
Australia needs to define a role for itself that separates it from what is happening between Beijing and Washington. Smart trade diplomacy, in contrast to a plodding, joined-at-the-hip-to-the-US approach, is required.
China’s interest in engaging on a broader trade front may well provide such an opportunity.
Tony Walker is vice-chancellor’s fellow at La Trobe University. This article first appeared in The Conversation.