How to respond to China’s bid to join the CPTPP
29 Sep 2021|

Overshadowed by the excitement around AUKUS was a perhaps more significant development in strategic relations that came just the next day: China formally applied to become a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.

Countries should always remain open to establishing collegial relations. In June 2020, Chinese Premier Li Keqiang declared that Beijing had a ‘positive and open attitude’ towards joining the CPTPP, but whether China’s application is serious or is intended as a ploy, either to show up the US or to block Taiwan’s own bid, it should be considered seriously by all CPTPP members and must not be dismissed out of hand. However, neither Taiwan’s nor any other country’s application should be delayed pending progress elsewhere.

In deciding to commence the accession process for the United Kingdom, the CPTPP Commission took note of Britain’s ‘history as a supporter of the rules-based trading system, its experience with high-standard trade and investment rules’ and its ‘affirmation of its intention to comply with the obligations of the CPTPP’.

China’s history is not supportive of the rules-based trading system and Beijing’s common practice is to disregard its previously made commitments. Despite the commitments China made when it joined the World Trade Organization, state control has spread into almost every corner of the Chinese economy and beyond.

China has also demonstrated a disregard for commitments it has made to others, including by treaty and including to CPTPP members. It would be folly to ignore the evidence of China’s approach to commitments it has made around the world. CPTPP members should not walk into the same trap twice. Instead, they should require much more than just an affirmation of intent from China before accepting reciprocal obligations.

In 2020, China launched a unilateral and politically motivated trade assault against Australia, a CPTPP member. Despite the China–Australia Free Trade Agreement, China’s government has refused any effort to resolve the dispute through direct communication with the Australian government at the ministerial level for 18 months. This strong record of disregard for resolving trade disputes must be considered in assessing the authenticity of China’s affirmations of its intention to comply with CPTPP obligations.

Similarly, China has repeatedly declared that its ratified treaty, the Sino-British Joint Declaration on Hong Kong, is irrelevant. It has utterly disregarded its commitments under the treaty and regularly threatens those who suggest that it should comply with its treaty obligations.

China also disregards its obligations under the United Nations Universal Declaration of Human Rights and similarly threatens those who suggest it should comply with those obligations.

China has demonstrated a willingness to use the limits on enforcement powers under its trade agreements to create asymmetric power relationships. For instance, in breach of ChAFTA, it used unofficial instructions to halt imports of Australian coal to punish the Australian government for seeking an inquiry into the origins of the Covid-19 pandemic.

Australia complained to the WTO over several other trade sanctions, but the process requires an extended investigation period which may only result in Australia being permitted to retaliate by imposing similar restrictions. The system is premised upon the assumption that members intend to comply and that defecting is an aberration. There is no basis for believing that assumption applies to China.

The CPTPP is largely an agreement to treat companies equally, regardless of the country they come from. Importantly, it is intended to be a ‘high quality’ agreement. So, for instance, while Article 2.4 focuses on the elimination of customs duties, China has recently demonstrated a willingness to use informal trade restrictions, such as unofficial instructions to simply not process goods coming from Australia. Such moves would certainly be against the spirit of the CPTPP.

How, then, should CPTPP members respond to China’s formal application to join the group?

CPTPP members should consider their positions very carefully and not rush their response. They should invite Chinese representatives to testify in support of the application, but they should also invite those with experience of China’s history of compliance with obligations arising from treaties and other agreements to give evidence. Consideration should be given as to how any assurances from China that it will comply with CPTPP obligations could be relied upon.

Members should be confident that any agreement with China is consistent with the spirit of the CPTPP. There is little point in an agreement that, through country-specific exemptions, fails to bring about the fair, rules-based trading regime envisioned.

Members should seek to resolve these issues by opening an extended consultation process with China and its trading partners examining how China will rebuild the trust required to commence the formal accession process. Members should feel no pressure to rush this process. The CPTPP instructs members to respond in a ‘reasonable amount of time’. In this case, a reasonable amount of time should be proportional to progress and China’s effort.

Trust should not be conferred in a single discrete moment but sustained in a continuous process. Having so thoroughly abused trust in the recent past, China needs a path back. That relies on extensive and ongoing transparency, confirmation and accountability.

Because of the depth of China’s breach of confidence, such a mechanism should not end once the formal accession process begins, or even upon China becoming a member of the CPTPP. Special provisions should apply that require heightened transparency and compliance verifications, and a more rapid and compelling mechanism to ensure that compliance.

In light of China’s hostage diplomacy, CPTPP members should be careful to ensure that there is no suggestion that its recent abusive actions can be valued as bargaining chips to trade away. Ceasing those actions cannot buy goodwill. China is already obliged not to engage in hostage diplomacy and ending such practices should be a non-negotiable pre-condition before any formal accession process can begin.

CPTPP members should insist on these extraordinary processes because China’s actions have been extraordinary. Ensuring China complies with high-quality fair-trade rules was, after all, a major part of the point of the CPTPP. Allowing China to join the CPTPP and enjoy all the benefits of membership while continuing to ignore its obligations would be a historic mistake.