China officially applies to join CPTPP trade pact

BEIJING • China has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the country's commerce ministry said.

The regional trade pact was signed by 11 nations in 2018.

Chinese Commerce Minister Wang Wentao submitted the application to New Zealand's Trade Minister Damien O'Connor in a written letter, the Chinese ministry said in a statement yesterday.

New Zealand is the depository of the free trade agreement signed between member countries Singapore, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand and Vietnam.

The deal, which was signed by the 11 countries in Chilean capital Santiago, represents about US$13.5 trillion (S$18.17 trillion) or 13.4 per cent of the world's gross domestic product, making it one of the world's largest trade deals.

The United States, notably, is not a member, having withdrawn from the CPTPP's predecessor, the Trans-Pacific Partnership, in 2017 when then President Donald Trump said the deal would be a "potential disaster" for the US.

The pact was originally conceived by his predecessor Barack Obama as an economic bloc to balance China's growing power, but the apparent irony has not stopped Beijing from taking gradual steps towards participating in the multilateral trade deal.

Earlier this month, Chinese diplomats lobbied the Australian government for its support to join the CPTPP, despite the two nations being in a worsening geopolitical dispute that has spilled over into economic reprisals.

The world's second-largest economy had also reportedly reached out to other members Malaysia and New Zealand for technical talks on details of the CPTPP.

Analysts say China stands to benefit from joining the trade pact.

A recent report by the Peterson Institute for International Economics, a US-based think-tank, estimated that China's participation in the CPTPP could lead to US$298 billion in additional income gains in the country by 2030.

The total value of trade between China and other CPTPP members would also increase by over 50 per cent, the report said.

Some of the pact's requirements, however, could pose significant barriers to China's membership.

The deal requires, for instance, that member countries do not provide unfair support to their state-owned enterprises, unless they provide public services. China's help for its vast state-owned sector has been a key point of contention with its trade partners.

Chinese analysts say countries can use this as an opportunity to force through domestic reforms.

"The direction of CPTPP is the same as the direction of our reforms. This is the most important reason (why China should join)," said Dr Tu Xinquan, dean of the China Institute for World Trade Organisation Studies at the University of International Business and Economics in Beijing.

Should China's application prove successful, it would become the largest economy in the partnership and further strengthen its position for trade and investment in the region.

REUTERS, BLOOMBERG