China, US can play positive-sum game on CPTPP
Author: Cai Penghong, Shanghai Institutes of International Studies
China’s request to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) is sparking national and international discussions. People are wondering about Beijing’s motives, the obstacles China must overcome before its ascension, and the entry requirements it must meet to become a member.
China is serious about joining the CPTPP. Its application is the consequence of a long-standing political position. In 2013, Chinese President Xi Jinping consulted then-US President Barack Obama on the Trans-Pacific Partnership (TPP) during a visit to the United States. Despite some critics warning then that the characteristics of the TPP were pitfalls that China should avoid, the Chinese Ministry of Commerce and the Ministry of Foreign Affairs then hinted that China was positively considering joining the TPP.
The United States has not responded positively to this enthusiasm. The TPP was a centerpiece of America’s geopolitical strategy in Asia-Pacific, and it was natural for the United States to take a skeptical stance on including China in the early stages of the negotiations. An early research report produced by Peter Petri and others, and presented by a US State Department staff member at a one-and-a-half track conference at the Peterson International Economics Institute in Washington, was evidence of this Position: China was to be considered among the last contenders for entry into the TPP when the Asian track, which included China, combined with the TPP track.
Despite this, China has never stopped seeking FTAs with other countries, as stated in Xi’s 2014 Regional Economic Strategy, the “19th Communist Party of China Central Committee Political Bureau Group Study Calling for accelerated implementation of the free trade area strategy. ‘. China’s application for membership in the CPTPP is another important milestone in the context of China’s FTA policy. This is not a surprise but rather the result of Xi’s decision to actively consider joining the TPP and its successor the CPTPP over the past decade.
China still faces some challenges when it comes to CPTPP core articles. One is the issue of forced labor and how China should deal with the labor clause (CPTPP Article 19.2), which demands the elimination of all forms of forced or compulsory labor. As a signatory to the International Labor Organization, China needs to accept the basic principles of labor rights, whether or not it has signed other international conventions. China’s labor policies do not allow forced labor. We hear stories of rights violations, such as cases of child labor in some factories. But central and provincial government policy prohibits it.
The second thorny issue China needs to resolve concerns digital provisions, in particular the ban on forced disclosure of source code (Article 14.17). The issue can be analyzed at two levels: at the level of government policy and at the level of business operations.
The Chinese government, like some signatories, has already passed cybersecurity laws that in principle meet international standards. CPTPP’s rules on source code are for the most part consistent with business operations in industries such as banking, health information management, animation, and gaming. After China released source code regulations a few years ago, international banking organizations have invested in China and are staying there.
For example, JPMorgan is still operating and was approved in 2021 to fully own its securities companies in China. China should pay attention to complaints filed by foreign investors, as the forced disclosure of the source code not only amounts to protectionism, but is also a stumbling block to China’s accession to the CPTPP.
The Internet is perhaps another vulnerable point. China may need time to fully open the Internet window, which it started 25 years ago. But some CPTPP members, like Vietnam, are already inconsistent in their application of relevant rules, requiring international tech companies to operate in accordance with restrictive cybersecurity laws.
The biggest obstacle for China is the United States. The United States will continue to leverage its geopolitical influence as it renegotiates membership in the CPTPP. If the United States returns, the current 11 CPTPP members may find it difficult to oppose the U.S. revision of the CPTPP articles. If the Biden administration wishes to renegotiate the CPTPP, members are likely to welcome a return from the United States, despite some hesitation and complaints from some members.
There is a risk that the United States will overlook China and see its candidacy as competing for hegemony in the Asia-Pacific region, despite Xi Jinping’s assertion that China is not seeking hegemony. China wants its relations with the United States to return to normal, but reconciliation will not be easy. President Biden could take the opportunity of the annual Asia-Pacific Economic Cooperation (APEC) leaders meeting in New Zealand in November to welcome China’s CPTPP request and express the United States’ interest in the CPTPP.
If a positive-sum game is played by the two superpowers, China will achieve the ascension of the CPTPP and peaceful competition and cooperation could also result. Otherwise, the landscape of the region will remain difficult.
Cai Penghong is a senior researcher at the Shanghai Institutes of International Studies.