Should China Join the TPP Negotiations?

Recently, debates about whether China should join the

Ding Yifan

A Financial Times commentary regarded the US moves around TTP as designed to have an Asia Pacific club that excludes China and doubted such an attempt would be successful. Some media in the US expressed the view that the US never had any idea to exclude China and that the US would welcome China’s participation in the negotiation. The Spokesman of the Chinese Commerce Ministry responded positively, claiming that China would positively consider any proposal inviting China to TPP negotiation.

As a matter of fact, China has taken part in many regional free trade arrangements and signed bilateral free trade agreements with a fair number of countries. It is also actively pushing for negotiation on a free trade area with Japan and Korea. Is there anything special with so many partial free trade arrangements?

Americans have been quite keen on regional free trade since they believe the current global trade framework (World Trade Organization) benefits only emerging markets such as China and since they have lost interest in multilateral free trade negotiation in the protracted Doha Round. Actually, the Doha Round has not been concluded yet because European and North American countries refuse to compromise on agricultural subsidy. So long as the developed countries show some more flexibility in the Doha Round so as to safeguard the overall interest of global economic growth, continuation of the global multilateral free trade framework will benefit all countries.

Against the backdrop of international financial crisis, trade protectionism seems to have regained momentum. In recent years, various non-tariff barriers have quickly increased, posing a huge challenge to global economic recovery. If all countries in this world go to find their own regional free trade arrangement and give up the global free trade framework, won’t the final result be larger trade blocs that undermine global economic liberalization?

In the Great Depression of 1930s, all countries adopted beggar-thy-neighbor policy, a seemingly self-protective effort that in the end led to trade wars and real wars. Since then, free trade policy has had a deeper meaning. It is not only the source of economic prosperity according to classic economics but also an effective means to avoid war.

The creation of multiple regional free trade areas cannot possibly and should not replace the global multilateral free trade framework. Developed countries in North America and Europe were champions of global free trade negotiation and founders of the WTO system. Now they are active participants in regional free trade area negotiations. Have they lost confidence in multilateral free trade negotiation or in their own competitiveness?

China supports the global free trade negotiation and multilateral free trade framework. China now is also actively promoting the establishment of free trade areas with some countries because the global negotiation is stagnated. Internal debates have focused on whether membership in the TPP will benefit reform and opening-up in China. If joining regional groups such as TPP can help Chinese enterprises to be more competitive and compliant, then China should taken an active part in the negotiation. Before accession to the WTO, there were also many discussions and concerns in China. The experience of the past decade and more proves that economic openness benefits China a lot. In this connection, we will not be scared by TPP negotiation. However, China supports more the global multilateral free trade negotiation framework. It is believed that all free trade areas should be open-ended and the establishment of no free trade area should contradict the global multilateral free trade framework.

Ding Yifan, Deputy Director, Research Institute of World Development, China Development Research Center (DRC).