Abstract
Much ink has already been spilt on the Trans-Pacific Partnership (TPP), including some quality legal and geo-political analysis and high level economic enquiry but also far too many premature predictions of textual language or economic impact. This brief article does not attempt to predict or analyse the legal text, which at the time of writing had not been finalised, but rather highlights four potential flow-on effects a finalised and in-force TPP will have on trade relations in East Asia: (1) China’s response; (2) the impact on the ongoing negotiations of the Association of Southeast Asian Nations (ASEAN) aimed at deeper regional integration; (3) unilateral trade liberalization and good governance initiatives by aspiring entrants to the TPP; and (4) Taiwan’s status as an economic entity and participation in regional trade agreements. To this author, the flow-on effects will have a considerable impact on and go some way in re-shaping trade relations between and among East Asian nation states.
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- 1.
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- 2.
On the potential for the TPP to increase US influence in the region, see Salidjanova N, Koch-Weser I and Klanderman J (2015) China’s Economic Ties with ASEAN: A Country-by Country Analysis. U.S.-China Economic and Security Review Commission Staff Research Report, p. 4 (“Although TPP has many purposes, most of which are exclusively economic, it could also have an indirect bearing on the balance of power in the Asia region, in terms of solidifying U.S. partnerships in the face of China’s growing influence.”).
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Ermert M, Big trading blocs moving at breakneck pace to raise free trade standards. IP Watch, 22 May 2013 (quoting Nakagawa as stating “Japan’s move to join the TPP must have made them change their mind”).
- 5.
http://news.xinhuanet.com/english/china/2014-11/10/c_133778436.htm (last accessed 7 August 2015). The agreement is not yet in force.
- 6.
The RCEP is not expected to offer substantial market access opportunities for goods or services or to be a cutting edge ‘21st century’ agreement in addressing behind the border or other trade-related issues. For projected economic analysis of both the TPP and RCEP, see Petri PA (2012) Economics of TPP and RCEP Negotiations Draft Document, http://www.pecc.org/resources/doc_view/1942-economics-of-the-tpp-and-rcep-negotiations (last accessed 7 August 2015).
- 7.
On China-Japan relations, see Nagy (2013), p. 49.
- 8.
In regards to the BIT with the US, it has been reported that the framework agreement is completed but much remains to be done with regard to the ‘negative lists’, or reservations. China has not previously negotiated a trade or investment treaty using the negative list approach. See China “uncomfortable with” U.S. negative list for investment treaty talks: Lou. Xinhua English News, 20 April 2015, http://news.xinhuanet.com/english/2015-04/21/c_134167561.htm (last accessed 7 August 2015). For background information on investment treaties in Asia, see Chaisse (2015).
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See Solís M, China flexes its muscles at APEC with the revival of FTAAP. East Asian Forum, 23 November 2014, http://www.eastasiaforum.org/2014/11/23/china-flexes-its-muscles-at-apec-with-the-revival-of-ftaap/ (last accessed 7 August 2015); Salidjanova N, Koch-Weser I, Klanderman J (2015) China’s Economic Ties with ASEAN: A Country-by Country Analysis. U.S.-China Economic and Security Review Commission Staff Research Report, p. 9 (arguing that the FTAAP “could detract from U.S. efforts to complete TPP, as most key economies in the region would be involved in both negotiations”).
- 10.
See Rousseau R, The New Geography of Chinese Influence. Diplomatic Courier, 29 May 2014, http://www.diplomaticourier.com/news/regions/brics/2212-the-new-geography-of-chinese-influence (last accessed 7 August 2015).
- 11.
It should be noted, however, that China’s level of economic development exceeds that of some current parties to the TPP, most notably Vietnam.
- 12.
Yao K, China to study possibility of joining U.S.-led trade talks. Reuters, 30 May 2013, http://www.reuters.com/article/2013/05/30/us-trade-asiapacific-china-idUSBRE94T0X420130530 (last accessed 7 August 2015). See also Lei H (2013) Foreign Ministry Spokesperson Hong Lei’s Regular Press Conference on May 31, 2013. Chinese Ministry of Foreign Affairs, http://www.fmprc.gov.cn/eng/xwfw/s2510/t1046318.shtml (last accessed 7 August 2015); Ding Q and Boris J, ‘Positive’ Sign on Free Trade Pact. China Watch (Washington Post), 5 July 2013, http://chinawatch.washingtonpost.com/2013/07/positive_sign_on_free_trade_pact/ (last accessed 7 August 2015). But see Lim CL (2015) China and the Trans-Pacific Partnership. Social Science Japan 52, p. 15 (arguing China has signalled its intent to enter into an agreement with high standards).
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See Mercurio (2012), p. 23.
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- 15.
For information on the AEC, see http://www.asean.org/communities/asean-economic-community (last accessed 7 August 2015). It should be noted that the ASEAN Comprehensive Investment Agreement, which provides for a harmonized set of principles in relation to intra-ASEAN foreign investment, entered into force in 2012. See http://www.asean.org/images/2012/Economic/AIA/Agreement/ASEAN%20Comprehensive%20Investment%20Agreement%20%28ACIA%29% 202012.pdf (last accessed 7 August 2015).
- 16.
Singapore has negotiated 20 FTAs with a diverse range of developed and developing countries, including the US, Japan, Korea and China. See http://www.fta.gov.sg/sg_fta.asp (last accessed 11 August 2015).
- 17.
See https://ustr.gov/trade-agreements/other-agreements/malaysia-fta (last accessed 11 August 2015).
- 18.
See http://ec.europa.eu/trade/policy/countries-and-regions/countries/malaysia/ (last accessed 11 August 2015).
- 19.
Information on Vietnam and the WTO can be found at https://www.wto.org/english/thewto_e/countries_e/vietnam_e.htm (last accessed 11 August 2015).
- 20.
See http://dfat.gov.au/trade/agreements/tpp/news/Documents/Trans-Pacific-Partnership-Trade-Ministers-Report-to-Leaders.pdf (last accessed 11 August 2015) stating: “On services and investment, we are negotiating access to each other’s services and investment markets on a ‘negative list’ basis, which assumes access unless countries take an exception.”.
- 21.
On the GATS approach, see https://www.wto.org/english/Tratop_e/serv_e/guide1_e.htm (last accessed 11 August 2015). The EU has traditionally been one notable exception and maintained a preference for the positive list or hybrid-approach to scheduling, however its recent FTA with Canada does adopt a negative list approach.
- 22.
See Adlung R, Mamdouh H (2013) How to Design Trade Agreements in Services: Top Down or Bottom-Up? WTO Staff Working Paper ERSD-2013-08.
- 23.
- 24.
This approach provides for the preparation and publication of a non-binding list of existing measures not conforming to the market access and national treatment obligations. The list is identical in form to the reservations made in a negative list approach.
- 25.
As Annex I of a negative list approach applies to existing measures, it is necessary for countries to undergo a substantial amount of coordination and, preferably, a regulatory audit prior to negotiations. For more detailed information on preparing for services negotiations, see Sauvé P and Lacey S (2013) A handbook for negotiating preferential trade agreements: services liberalization, prepared for the United Nations Economic and Social Commission for Asia Pacific (UNESCAP) and Asia-Pacific Research and Training Network on Trade (ARTNeT). United Nations Publication, Thailand.
- 26.
See AEC Blueprint, signed November 2007, http://www.asean.org/archive/5187-10.pdf (last accessed 11 August 2015).
- 27.
See Mercurio (2014), p. 1558, 1559–1562.
- 28.
See Fifield A, South Korea asks to join Pacific trade deal: Washington says not so fast. The Washington Post, 15 April 2015, http://www.washingtonpost.com/world/asia_pacific/south-korea-asks-to-join-pacific-trade-deal-washington-says-not-so-fast/2015/04/15/85d7396a-e39e-11e4-ae0f-f8c46aa8c3a4_story.html (last accessed 11 August 2015); Lee J, Taiwan must join TPP and RECP in 2014: President Ma. The China Post, 10 January 2014, http://www.chinapost.com.tw/taiwan/national/national-news/2014/01/10/398005/Taiwan-must.htm (last accessed 11 August 2015).
- 29.
On the nature of the TPP as an open agreement, see the comments of then-acting US Trade Representative Demetrios Marantis in March 2013: “at a certain point, economies that are interested are going to either be part of TPP as we are finalizing it, but the idea is that if economies aren’t ready right now, that they’ll be able to join once it’s done and essentially accede to the TPP… The whole point of the agreement is to serve as a platform for regional integration in Asia”. Bracken L, Japan’s TPP Negotiating Team to Be Formed Outside Cabinet, Isolated From Protectionists. BNA International Trade Daily, 21 March 2013.
- 30.
See, eg, Palmer D and Behsudi A (2014) Taiwan’s man in D.C. pushes TPP membership. Politico Pro, http://www.politico.com/story/2014/08/taiwans-man-in-dc-pushes-tpp-membership-110111_Page2.html (last accessed 11 August 2015) discussing difficulties with Taiwan’s entry to the TPP, including systemic and specific trade issues.
- 31.
See Fifield A, South Korea asks to join Pacific trade deal: Washington says not so fast. The Washington Post, 15 April 2015, http://www.washingtonpost.com/world/asia_pacific/south-korea-asks-to-join-pacific-trade-deal-washington-says-not-so-fast/2015/04/15/85d7396a-e39e-11e4-ae0f-f8c46aa8c3a4_story.html (last accessed 11 August 2015); Lee J, Taiwan must join TPP and RECP in 2014: President Ma. The China Post, 10 January 2014, http://www.chinapost.com.tw/taiwan/national/national-news/2014/01/10/398005/Taiwan-must.htm (last accessed 11 August 2015); Palmer D and Behsudi A (2014) Taiwan’s man in D.C. pushes TPP membership. Politico Pro, http://www.politico.com/story/2014/08/taiwans-man-in-dc-pushes-tpp-membership-110111_ Page2.html (last accessed 11 August 2015). See also Mercurio (2014), p. 1563.
- 32.
The RCEP is based on ASEAN centrality and limited to countries which have a FTA with ASEAN. On ASEAN centrality, see Fukunaga (2015), p. 103.
- 33.
Blanchard B and Gold M, Taiwan rejected as founding member of Beijing-led multilateral bank. Reuters, 13 April 2015, http://uk.reuters.com/article/2015/04/13/asia-aiib-taiwan-idUKL4N0XA20L20150413 (last accessed 11 August 2015).
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Acknowledgement
Thanks to Stephen Nagy, Julien Chaisse, Bryan Druzin and CL Lim for commenting on draft versions of this article. All opinions and errors remain my own.
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Mercurio, B. (2016). The Flow-On Effect: How the TPP Will Re-Shape Trade Relations in East Asia. In: Bungenberg, M., Herrmann, C., Krajewski, M., Terhechte, J. (eds) European Yearbook of International Economic Law 2016. European Yearbook of International Economic Law, vol 7. Springer, Cham. https://doi.org/10.1007/978-3-319-29215-1_22
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