Not invited to the party
In another paper, “Selected Issues in TPP Negotiations and Implications for China”, published as part of the book, Regional Cooperation and Free Trade Agreements in Asia, Professor Gao argued that China might have to institute new rules in its existing and new trade agreements to counteract the Trans-Pacific Partnership (TPP) which excludes it.
In 2013, US President Barack Obama said that China was excluded from the TPP as the United States would have a stronger hand in trade negotiations with China if it could ink a trade deal with all the other countries in Asia.
While China could ignore the TPP or seek to join it, both avenues are fraught with perils, Professor Gao explains. If China buries its head in the sand, the US will use the TPP to enhance its economic ties to Asia Pacific countries, and make rules on key issues such as e-commerce and government procurement without China’s involvement. The US could then push for global acceptance of the rules through the WTO, where it would be hard for China to resist.
If China wanted to join the TPP, existing TPP members must reach a consensus to admit a new member, and the US wields considerable clout in the partnership. This means China might have to pay heavy dues for a place at the table, as was the case for its admittance into the WTO.
“Or it could also take the middle ground,” says Professor Gao, “and the third option is for China to make its own set of rules in its existing and new free trade agreements. This is, in my view, the best option for China as it could enable it to prevent the dominance of the US approach. The difficulty, however, is that China’s capacity in rule-making seems to be lacking.”
Toeing the line
Regardless of how China’s trade approach evolves, it is in the best interest of other countries, especially small ones such as Singapore, and international organisations to ensure that China plays by existing rules, Professor Gao points out.
While the proliferation of Regional Trade Agreements (RTAs) have threatened the WTO’s relevance, it could regain some power by offering its dispute settlement system as a forum to resolve conflicts over the agreements. Professor Gao elaborates on this topic in a paper he co-authored with Professor Chin Leng Lim from the University of Hong Kong that was published in the Journal of International Economic Law.
“How China acts affects smaller countries like Singapore, which relies on international trade organisations,” he says.
“If China takes a disruptive approach in the WTO, for instance by simply opposing everything the US says, or if it abandons the WTO and creates its own system, it would be disastrous especially for smaller countries like Singapore.”
Asian Scientist Magazine is a media partner of the Singapore Management University Office of Research.
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Copyright: SMU Office of Research. Read the original article here; Photo: Cyril Ng.
Disclaimer: This article does not necessarily reflect the views of AsianScientist or its staff.
