China steps up efforts to join trade pact created to exclude it

China is pushing ahead with behind-the-scenes talks to join a major trade deal that originally aimed to exclude Beijing and cement US economic power and trade ties in the Asia-Pacific region.

Officials from Australia, Malaysia, New Zealand and possibly other nations have held technical talks with Chinese counterparts on details of the Comprehensive and Progressive Trans-Pacific Partnership. That's according to officials from four member countries with knowledge of the discussions, who asked not to be named as they weren't authorized to comment on the talks.

China announced in February it had held informal talks with some of the members, but didn't release details. It's not clear how far China has progressed in preparing an application, but the people see Beijing as seriously interested in joining, with multiple officials pointing to comments last year from President Xi Jinping as an indication of intent.

China "would not have made a statement about joining TPP if they had not already studied this menu and said, 'actually, we're happy with that,'" said Deborah Elms, founder and executive director of the Asian Trade Centre in Singapore.

The Trans-Pacific Partnership was envisioned by the US as an economic bloc to balance China's growing power, with then-President Barack Obama saying in 2016 that the US, not China, should write the regional rules of trade. His successor Donald Trump pulled out of the deal in 2017, with Japan leading the revised and renamed pact to a successful conclusion the following year.

Beijing has "done a lot of preliminary work and made some informal contacts," Commerce Minister Wang Wentao said in early March. "We're stepping up efforts in this area." The ministry did not respond to a request for more information on the progress of talks.

Many of the CPTPP nations are heavily dependent on trade with China, but China's increasingly poor image in some nations may make it harder to agree on entry. Concerns over labor practices, state-owned companies and its economic confrontation with America also loom as potential roadblocks for entry.

If it does join, China would become the largest economy in the partnership and further cement its position at the center of trade and investment in the region. Beijing already helped lead a separate regional trade deal known as RCEP to a successful conclusion last year, but joining the CPTPP would require it to make additional concessions and gain the agreement of all 11 members -- including Australia, Canada and Japan, US allies with which it has increasingly difficult relations.

Any application by Beijing is likely far off, as the members are currently working through the U.K.'s application and China is still examining the requirements. Various Chinese government departments, think-tanks and academics are analyzing the text to figure out what needs to be done to join, and studying the attitudes of member nations, according to some of the foreign officials.

Some of those officials doubted that China could meet the deal's requirements, particularly provisions on labor, procurement, state-owned enterprises, subsidies, e-commerce and cross-border data transfer.

The treaty calls on members to have laws and practices protecting rights included in the International Labour Organization's 1998 declaration, which guarantees freedom of association and collective bargaining, the end of forced or child labor, and elimination of employment discrimination. China doesn't allow free trade unions and has been accused of using forced labor.

The dominant position of China's state-owned enterprises in the economy will also be hard to square with the deal, although some current CPTPP members also have substantial state involvement in their economies.

No concessions

Joining the CPTPP requires the consent of current members, who say there won't be any concessions for new members. According to an official from one member country, the deal isn't an a la carte menu from which China can pick and choose, but a full-course meal that the 11 members have prepared together. Even if China can delay parts of the menu, ultimately it must eat the whole meal, the official said.

That clarity may work in China's favor, according to the Asian Trade Centre's Elms, as there's little of the uncertainty that usually surrounds a negotiation.

"China has the text, they know what the rules are, they know what the commitments are," she said.

However Japan, currently the largest economy in the deal and this year's CPTPP chair, appears to have little appetite for a swift Chinese push to join. Before it considers a potential Chinese application, Japan believes talks should be concluded on a trilateral free-trade deal with South Korea and China that builds on the Regional Comprehensive Economic Partnership, according to two officials.

National barriers

Those trilateral talks haven't made much progress in recent years amid historical disputes between Japan and South Korea. In addition, Japan wants to see how China implements its promises under RCEP before looking at any new trade deals, according to a senior official with knowledge of Tokyo's position.

A further complication is Taiwan, which says it has held talks with all the CPTPP members and will officially apply when the timing and conditions are right. Taiwanese Foreign Minister Joseph Wu said last month that he hoped China's efforts to join the deal wouldn't prevent Taiwan from joining too.

China opposes Taiwanese participation in any international organization or agreement. Taiwan is also trying to advance trade deals with the US and Japan, which could affect attitudes toward the CPTPP.

US position

Even though the US isn't a member of the deal, its position will be a key factor in any Chinese application. Many CPTPP members are allies or friends of the US and still hope it will return to the deal eventually. They may decide to delay a decision on China to see if the US changes course again under the Biden administration.

At least some in China don't believe entry needs to be an adversarial process, with the head of the US Chamber of Commerce in China recently saying both sides should join the deal. That's similar to what a retired senior Chinese official proposed.

"We hope that China can be admitted to TPP and the US should return to TPP," former trade negotiator and Vice Commerce Minister Long Yongtu said at the recent Boao Forum. "Of course, this is difficult, but we hope the US and China will make the effort."

Long knows how difficult any discussions might be: He led the final negotiations that brought China into the World Trade Organization two decades ago, after almost 15 years of talks.

Disclaimer: This article first appeared on bloomberg.com, and is published by special syndication arrangement