This is a guest post from law professor Jaime Tijmes
Trans-Pacific Partnership (TPP) negotiations concluded in October 2015.[1] United States President Obama heralded the TPP as a renegotiation of NAFTA:
…TPP representing a renegotiation of NAFTA… (available at https://web.archive.org/web/20191217063334/https://ustr.gov/tpp/)
As President Obama has made clear, past trade deals—including the North American Free Trade Agreement, or NAFTA—haven’t always lived up to the hype. That’s why he has called for renegotiating NAFTA to better address labor and environmental issues. Because TPP includes Canada and Mexico and improves substantially on NAFTA’s shortcomings, it delivers on that promise. TPP learns from past trade agreements, including NAFTA, by upgrading existing standards and setting new high standards that reflect today’s economic realities. (https://ustr.gov/sites/default/files/TPP-Upgrading-the-North-American-Free-Trade-Agreement-NAFTA-Fact-Sheet.pdf)
It seems fair to say that the implicit purpose of TPP was answering a real or perceived increase in China’s influence in the Asia Pacific, as part of the Obama Administration’s East Asian foreign policy[2] (“Pivot to Asia”).
Very soon after US President Trump took office, the US informed that it did not intend to become a party to the TPP.[3] Instead of pursuing the TPP, the Trump Administration chose to renegotiate NAFTA, which eventually became the United States-Mexico-Canada Agreement (USMCA). Due to the US decision not to pursue the TPP, the remaining 11 TPP parties signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, also known as TPP-11), which in essence incorporates most TPP provisions by reference pursuant to art. 1 CPTPP.
The CPTPP entered into force regarding Australia, Canada, Japan, Mexico, New Zealand and Singapore on 30 December 2018. It has taken over two years for the CPTPP to enter into force regarding Peru on 21 September 2021.[4] Entry into force is still pending regarding the remaining four parties: Brunei Darussalam, Chile, Malaysia, and Viet Nam. Thus, it seems fair to say that the CPTPP has resulted less attractive than originally envisaged. A few days ago, for instance, Chile expressed its interest in joining AANZFTA (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Viet Nam and the Philippines; and New Zealand and Australia);[5] so far, it is unclear if this means that the Chilean Government is tacitly giving up CPTPP due to domestic political pressures.
It was somewhat startling when the UK applied for accession pursuant to art. 5 CPTPP on 30 January 2021[6], that is, almost exactly a year after Brexit on 31 January 2020. So far, the CPTPP Commission has commenced the accession process and has established an Accession Working Group.[7]
On 16 September 2021, China applied for CPTPP membership.[8] However, it seems doubtful if China’s application will be fruitful. CPTPP parties would have to reach consensus for allowing China to join. But that the main hurdle lies elsewhere: in the USMCA. Art. 32.10 USMCA provides that a USMCA party that intends to commence free trade agreement negotiations with a non-market country, shall inform the other parties at least 3 months prior to commencing negotiations (article 32.10.2). Before signing the agreement, the party shall provide the other parties with an opportunity to review the full text of the agreement (article 32.10.4). Entry by a party into a free trade agreement with a non-market country will allow the other parties to terminate the USMCA on six months’ notice (article 32.10.5, analogously to a withdrawal pursuant to article 34.6), enter into negotiations (article 32.10.7) and eventually replace it with a bilateral agreement (article 32.10.5) based on the text of the USMCA (article 32.10.6). Quite obviously, these rules aim at China. Since the CPTPP entered into force on 30 December 2018 regarding Canada and Mexico[9], article 32.10 USMCA will be applicable to China’s request to join the CPTPP. It seems unlikely that Canada and Mexico would chose the CPTPP with China if it means terminating, renegotiating or replacing the USMCA. Thus, China’s accession to the CPPTP will at the end of the day most probably hinge on the US.
The Chinese Government is most certainly aware of this. At first glance, China’s application for CPTPP membership may have been a surprising move considering the TPP implicit purpose of deterring China. Yet it makes sense: irrespective of the application’s result, and precisely because of the TPP’s implicit purpose, China’s application for CPTPP membership looks like a political move to underscore US passivity and lack of leadership, while also possibly putting a wedge between USMCA parties. Canadian and Mexican trade flows are notably more concentrated on the USA than the other way around; therefore, it would arguably make sense for Canada and Mexico to liberalize their trade with China.
Finally, UK and China applications to join the CPTPP may invigorate the political pressure on Brunei Darussalam, Chile, Malaysia, and Viet Nam regarding the CPTPP’s entry into force. It may also assuage (right-wing and left-wing) anti-globalization critics: after all, if the UK and the China (two States that supposedly promote national sovereignty) want to join the CPTPP, it can’t be that bad, after all.
[1] http://www.sice.oas.org/tpd/tpp/tpp_e.asp
[2] https://obamawhitehouse.archives.gov/the-press-office/2015/11/16/fact-sheet-advancing-rebalance-asia-and-pacific
[3] https://ustr.gov/sites/default/files/files/Press/Releases/1-30-17%20USTR%20Letter%20to%20TPP%20Depositary.pdf
[4] http://www.sice.oas.org/tpd/tpp/tpp_e.asp
[5] https://www.subrei.gob.cl/sala-de-prensa/noticias/detalle-noticias/2021/09/15/ministros-de-asean-australia-y-nueva-zelanda-dan-la-bienvenida-al-interés-de-chile-de-incorporarse-al-aanzfta
[6] https://www.gov.uk/government/news/uk-applies-to-join-huge-pacific-free-trade-area-cptpp
[7] https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/decision_cptpp_uk_request-decision_ptpgp_ru.aspx?lang=eng
[8] http://www.mofcom.gov.cn/article/news/202109/20210903199707.shtml
[9] http://www.sice.oas.org/Trade/TPP/CPTPP/English/CPTPP_Index_e.asp
