Taiwan should join Australia in trans-Pacific trade bloc, Canberra told

Including self-ruled island in CPTPP trade bloc would help Australia diversify supply chains away from mainland China after extended period of conflict
Current state of Australia’s trading partners and activities ‘is so backward that it is embarrassing’, one expert says

Taiwan

Su-Lin Tanin Singapore

Published: 6:00am, 24 Jun 2021

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Australian businesses and industry groups with connections to Taiwan are trying to coax Canberra into advocating for Taiwan’s membership into a large trans-Pacific trade block, spurred on by Britain becoming the first new country to begin talks to join the pact since its inception in 2018.

Various Australia-based groups have submitted letters to a new Australian parliamentary inquiry looking into the merits of expanding the membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which currently comprises 11 countries with a combined half a billion people.

The groups say Taiwan’s commitments to rule of law, human rights and intellectual property standards match those of the CPTPP, and they contend that the self-ruled island’s inclusion would create more diverse supply chains for the group, which Australia is a part of.

“Maintaining an expansive trading relation is essential for diversifying risk, and inducing a predictable environment is crucial to mitigate risk,” said Michael Yeh, a Sydney hotel developer and commissioner of the Overseas Community Affairs Council, Republic of China (Taiwan). “The former is intuitive, and Taiwan and many other potential candidates may benefit the CPTPP in this [respect]; the latter requires rule of law and willingness to comply, and this may be where Taiwan distinguishes itself from the rest.

“Taiwan’s past record has shown that it has upheld its commitments in both bilateral and multilateral agreements.”

Helping Taiwan develop more options for trade diversification will only strengthen the liberal international order, to which both Australia and Taiwan belong

William Lin, Taiwanese Association of Australia

Yeh’s colleague, Janet Lin, associate adviser to the council and director of the World Taiwanese Chamber of Commerce in Australia, said exporters were missing out on direct trade opportunities with Taiwan as Australia’s bilateral free-trade agreement with China excluded Taiwan.

Bringing Taiwan into the multilateral CPTPP will circumvent this, Lin said.

The Taiwanese Association of South Australia said Taiwan’s admission could help bring Australia a new wine market, as well as more export opportunities for meat, wheat and dairy products. Australia’s wine market has been crippled by Chinese anti-dumping duties of between 116.2 per cent and 218.4 per cent, and Australia has lodged a complaint against the duties with the World Trade Organization.

“Strategically, helping Taiwan develop more options for trade diversification will only strengthen the liberal international order, to which both Australia and Taiwan belong,” said William Lin, president of the Taiwanese Association of Australia’s Melbourne chapter.

“Helping Taiwan’s inclusion in the CPTPP will, thus, expand Taiwan’s economic and strategic autonomy and improve the cohesion and interoperability between the Western-led liberal international order’s key allies and partners.”

China-Australia relations: what’s happened over the past year, and what’s the outlook?

While China was not directly mentioned in the first hearing of the parliamentary inquiry on Friday, the inquiry’s chairman, Queensland Liberal MP Ted O’Brien, who was supportive of having a trading relationship with Taiwan to diversify Australia’s trade mix, asked the Australian trade department whether prior trade performance should impact how Australia assesses new applicants.

China, alongside Colombia, Indonesia, the Philippines, South Korea, Thailand and Taiwan, has showed interest in joining the CPTPP, the trade department acknowledged at the hearing.

China and Australia have been locked in a political and trade conflict for more than a year. During that time, China has imposed unofficial bans on some Australian exports, including wine and coal.

“Would the previous performance, let’s say, of a prospective member’s compliance with other agreements be taken into consideration,” O’Brien asked.

O’Brien also inquired how prospective members with state-owned enterprises would demonstrate their commitment to the CPTPP’s high trading standards based on market and commercial decisions.

“In the event that a prospective member does have considerable state-owned enterprises, how would other CPTPP members, including Australia, go about judging their demonstration of commitment,” he asked.

The Australian trade department said a key sign of commitment towards those standards would be for countries to prove they have legislation and regulations in place that are consistent with the rules in the CPTPP, or at least be in the process of implementing new legislation to reflect the rules in the CPTPP.

CPTPP members would also need to be assured that economies with membership aspirations have shown they are committed to standards of its other trade deals.

The United States, which withdrew from an earlier planned trans-Pacific trade pact under then-president Donald Trump four years ago, has not laid out any firm plans to return to the CPTPP since President Joe Biden took office. However, spurred by supply-chain disruptions, some US lawmakers said this week that it was in America’s interests to engage with Asian allies on a multilateral trade agreement.

Other submissions to the Australian parliamentary inquiry also advocated for the expansion of membership to increase freer global trade and diversification.

Melbourne RMIT University professor of international business Gabriele Suder said in a submission that the CPTPP and another regional trade pact, the Regional Comprehensive Economic Partnership (RCEP), could offset global losses resulting from the US-China trade war.

“CPTPP allows access to previously more limited markets, through its depth of integrational provisions,” Suder said.

The current state of [Australia’s] trading partners and trading activities is so backward that it is embarrassing, to say the least

Shumi Akhtar, business professor

University of Sydney Business School Professor Shumi Akhtar said that expanding the CPTPP was in Australia’s best interests after the year of conflict with China.

“Our current predicament is the legacy of past governments’ lack of attention to developing a smart and sustainable trade strategy for Australia to advance. The current state of our trading partners and trading activities is so backward that it is embarrassing, to say the least, given the numerous resources and riches that Australia is blessed with,” Akhtar said.

Former Australian prime minister Tony Abbott also put forward a submission that supported the expansion of the CPTPP, both for economic and political reasons.

The inclusion of Britain in the CPTPP would mean that four of the “Five Eyes” countries would be joined more closely in an economic and security relationship.

Membership in the CPTPP is considered by Britain to be crucial to its post-Brexit trade pivot away from Europe, as CPTPP membership would remove 95 per cent of tariffs with other member countries.