The 33rd China-New Zealand Economic and Trade Joint Committee meeting was held virtually on May 30, 2024. During the meeting, China’s Vice Minister of Commerce and Deputy International Trade Representative Wang Shouwen expressed hopes that New Zealand would play an active role in supporting China’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, New Zealand Broadcasting Corporation quoted experts on June 6 saying that New Zealand does not control whether China can join the CPTPP. Despite geopolitical tensions, the New Zealand government tends to support both China and Taiwan joining the CPTPP.

The CPTPP is a high-standard trade agreement that aims to facilitate free trade and strengthen economic ties among member countries in the Asia-Pacific region. It evolved from the Trans-Pacific Partnership (TPP) after the United States’ withdrawal in 2017, and currently includes 11 member countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The agreement covers a wide range of areas including tariff reductions, trade in services, investment, intellectual property, and e-commerce. 

By setting high standards and promoting transparency and regulatory coherence, the CPTPP seeks to create a more integrated and competitive regional economy. Joining the CPTPP offers member countries significant economic benefits, such as increased market access, enhanced foreign direct investment, and stronger economic growth. This makes it a highly attractive objective for countries like China and Taiwan, which are eager to expand their economic influence and opportunities in the region.

Why China and Taiwan Hope to Join the CPTPP

After the successful accession of the UK to the CPTPP, China, Taiwan, and other countries have expressed their intention to join. Although the CPTPP appears to be thriving, member countries still long for the US to join, as it would greatly enhance the economic scale and impact of the agreement. According to data from the UK Office for National Statistics, after the UK joined the CPTPP, it is expected to bring about a 0.8% increase in UK GDP by 2024.

Several successful examples illustrate the economic benefits of joining the CPTPP. For instance, Chile and Peru, prior to joining the CPTPP, underwent comprehensive economic reforms, improving regulatory transparency and enhancing market access for foreign companies. According to a World Bank report, foreign direct investment (FDI) in Chile increased by about 15% after joining the CPTPP, demonstrating the potential of the CPTPP to promote economic growth. Similarly, Peru experienced a significant boost in trade and investment, contributing to its economic stability and growth.

As a founding member of the CPTPP, Singapore has further consolidated its position as a global trade hub through the agreement. According to data from Singapore’s Ministry of Trade and Industry, CPTPP member countries account for 23% of Singapore’s total trade volume, highlighting the agreement’s importance to Singapore’s economy. The Asia-Pacific Economic Cooperation (APEC) noted that trade volume between CPTPP member countries increased by about 10% in the two years following the agreement’s entry into force, further proving the CPTPP’s potential to promote regional economic integration and growth.

These successful cases illustrate that joining the CPTPP can bring significant economic benefits to member countries, provided they meet the high standards of the agreement. For China and Taiwan, the potential benefits are compelling. China seeks to expand its economic influence and secure new markets for its goods and services, particularly as its domestic economic growth slows. According to World Bank data, China’s GDP growth rate in 2023 was only 2.3%, far below the average growth rate of 6% over the past decade. By joining the CPTPP, China hopes to rejuvenate its economy through increased trade and investment.

Taiwan, on the other hand, aims to enhance its foreign trade capabilities, particularly in the IT and semiconductor industries. Taiwan’s semiconductor exports in 2022 reached $150 billion, accounting for 15% of the global market, according to data from Taiwan’s Ministry of Economic Affairs. Joining the CPTPP would not only bolster Taiwan’s economic standing but also help stabilize the regional semiconductor supply chain, easing geopolitical tensions.

These data and case studies provide valuable references for China and Taiwan, showing that if they can successfully join the CPTPP, they will gain more opportunities and benefits in the global economy. The potential economic gains, coupled with the strategic importance of being part of a high-standard trade agreement, make the pursuit of CPTPP membership a priority for both China and Taiwan.

Challenges and Opportunities for China Joining the CPTPP

Despite New Zealand’s support for China and Taiwan joining the CPTPP from an economic perspective, China’s advantages in joining the CPTPP are gradually diminishing. According to World Bank data, China’s GDP growth rate in 2023 was only 2.3%, far below the average growth rate of 6% over the past decade. Additionally, China’s domestic demand market continues to slump, posing challenges to its economic growth.

China’s subsidy policy for export enterprises enables Chinese products to enter international markets at low prices, which is difficult for CPTPP member countries to accept. According to an OECD report, China’s total subsidies to its export enterprises reached about $150 billion in 2022. These subsidies give Chinese products a price advantage in international markets, but they have also caused dissatisfaction in other countries, as this competition is seen as unfair.

Furthermore, China’s policies protect its domestic consumer market, hindering foreign companies from entering the Chinese market. For instance, a report by the European Chamber of Commerce highlighted that many foreign companies face complex approval procedures and high costs when entering the Chinese market, making it difficult for them to compete in China.

Although CPTPP member countries have diplomatic relations with China and have signed tariff agreements, their bilateral economic relations are not reciprocal. Member countries commonly complain that after signing tariff agreements with China, more low-priced Chinese products flood into their domestic markets, impacting local industries. According to data from the Australian Business Council, Australia’s exports to China increased by only 5% after signing a tariff agreement with China, while China’s exports to Australia increased by 25%, indicating an imbalanced trade relationship.

However, despite these challenges, joining the CPTPP presents significant opportunities for China. The CPTPP could provide China with access to new markets and help to diversify its trade partnerships. This is particularly important as China faces increasing trade tensions with major economies such as the United States. By adhering to the high standards of the CPTPP, China could enhance its global trade reputation and attract more foreign investment, which is crucial for sustaining long-term economic growth.

Moreover, China’s inclusion in the CPTPP could foster regional economic integration and strengthen its economic ties with other Asia-Pacific countries. This integration could lead to more collaborative efforts in addressing regional economic challenges and promoting sustainable development. Additionally, China’s participation in the CPTPP would signal its commitment to multilateral trade frameworks, potentially easing geopolitical tensions and fostering a more stable regional economic environment.

In summary, while China faces significant challenges in meeting the high standards and reciprocal trade expectations of the CPTPP, the potential opportunities for economic diversification, increased foreign investment, and enhanced regional integration provide compelling reasons for its continued pursuit of membership. Successfully navigating these challenges will require substantial economic reforms and a commitment to fair trade practices, but the rewards could be substantial for China’s long-term economic strategy.

Challenges and Opportunities for Taiwan’s CPTPP Application

Taiwan is actively seeking to join the CPTPP due to its significant foreign trade capabilities, particularly in the IT and semiconductor industries. These industries provide Taiwan with a competitive advantage in international trade. According to data from Taiwan’s Ministry of Economic Affairs, Taiwan’s semiconductor exports in 2022 reached $150 billion, accounting for 15% of the global market. This substantial market share underscores Taiwan’s critical role in the global semiconductor supply chain.

Taiwan’s entry into the CPTPP could pressure the semiconductor industries of some countries, such as Singapore, Vietnam, and Malaysia. However, it could also ease geopolitical tensions in the semiconductor supply chain. According to a report by the International Semiconductor Industry Association (SEMI), Taiwan’s semiconductor production capacity accounts for 21% of the global share, and its inclusion in the CPTPP would help stabilize the regional semiconductor supply. This stabilization is crucial for maintaining the integrity and reliability of the global technology infrastructure.

Taiwan’s domestic consumer market, especially sectors such as agriculture, forestry, fishery, and animal husbandry, opposes the entry of foreign agricultural products. In the past, importing American turkey meat sparked large-scale farmer protests, highlighting the instability of Taiwan’s domestic food market. According to data from the Taiwan Council of Agriculture, the import of American turkey meat in 2021 reached 12,000 tons, causing strong backlash from local poultry farmers. These protests indicate significant resistance to foreign competition within Taiwan’s domestic industries.

One of the most significant challenges Taiwan faces in joining the CPTPP is domestic political opposition. Taiwan’s political landscape is deeply divided, with the parliament dominated by opposition parties, including the Kuomintang (KMT) and the Taiwan People’s Party (TPP). These parties often oppose the policies of the ruling Democratic Progressive Party (DPP), creating a legislative deadlock. The DPP’s trade protection policies, aimed at safeguarding local industries from foreign competition, face significant resistance in parliament. This opposition makes it difficult for the DPP to secure the necessary parliamentary authorization for reforms required to meet CPTPP standards.

Furthermore, the DPP’s push for CPTPP membership could ignite larger social movements. Historically, trade liberalization efforts have led to widespread protests, particularly from sectors that fear adverse impacts from increased foreign competition. For instance, the controversy over importing American turkey meat illustrated how trade policies can become flashpoints for public dissent. These protests can escalate into broader social movements, putting additional pressure on the government.

The political instability in Taiwan is another critical factor. According to data from the Taiwan Public Opinion Research Center, nearly 60% of the public supports joining the CPTPP, indicating a strong base of public support. However, the deep-seated political divisions and the potential for significant opposition from powerful interest groups pose substantial hurdles. The DPP needs to navigate these complex dynamics carefully, balancing the demands of international trade liberalization with domestic political realities.

In addition to internal political challenges, Taiwan must also contend with external political pressures. China’s opposition to Taiwan’s participation in international agreements, based on its One-China policy, adds another layer of complexity. Taiwan’s government must, therefore, craft a diplomatic strategy that not only addresses internal political challenges but also mitigates external geopolitical risks.

Overall, the political obstacles to Taiwan’s CPTPP membership are multifaceted, involving legislative gridlock, potential social unrest, and complex diplomatic considerations. Successfully overcoming these challenges will require strategic political maneuvering, broad-based consensus-building, and effective communication with both domestic and international stakeholders.

The Impact of the US Absence from the CPTPP

The CPTPP member countries have consistently expressed a strong desire for the US to rejoin the agreement. The US’s participation would bring significant market potential and economic benefits, considerably boosting the CPTPP’s economic clout. According to a report by the United States International Trade Commission, if the US were to rejoin the CPTPP, the economic volume covered by the agreement would increase from the current $13.5 trillion to about $25 trillion, significantly enhancing the agreement’s influence and reach.

However, the political landscape in the US poses significant challenges to this potential re-entry. Former President Trump, who withdrew from the Trans-Pacific Partnership (TPP) after taking office, is a strong contender in the upcoming November election, and his policy orientation suggests that the US is unlikely to rejoin the CPTPP. This scenario leaves member countries still lacking a substantial economic power that could drive economic integration and growth within the pact. The current administration has shown limited interest in reversing this decision, leaving the CPTPP to operate without one of its originally envisioned key players.

In the absence of the US, CPTPP member countries must find alternative ways to enhance the agreement’s impact and economic benefits. For instance, Australia and Japan have strengthened bilateral cooperation to promote regional trade and investment, thereby boosting the overall economic vitality of the CPTPP. These countries are focusing on diversifying trade partnerships and enhancing economic ties within the region to mitigate the impact of the US absence. This strategy includes signing new bilateral agreements, reducing trade barriers among existing CPTPP members, and promoting investment in emerging markets within the region.

Furthermore, initiatives like the Regional Comprehensive Economic Partnership (RCEP), which includes many CPTPP members as well as China, serve as complementary frameworks for economic integration in the Asia-Pacific. These initiatives can help bridge gaps left by the absence of the US and ensure that regional trade continues to flourish. By leveraging these platforms, CPTPP members aim to maintain momentum towards economic integration and stability.

While the absence of the US from the CPTPP presents challenges, it also offers opportunities for member countries to take a more proactive role in shaping the region’s economic landscape. They can innovate and collaborate more deeply, potentially setting new standards for trade agreements globally. This environment encourages members to become more self-reliant and to seek new markets and partnerships, fostering a more diversified and resilient regional economy.

By focusing on these strategies, CPTPP members can work towards building a robust and dynamic trade agreement that promotes regional economic growth and integration, even without the direct involvement of the US.

Conclusion

Joining the CPTPP represents an important strategic goal for both China and Taiwan, but achieving this goal requires navigating complex challenges. Both countries must balance international political pressure, internal political dynamics, and economic resilience to achieve their long-term objectives in international economic cooperation. Geopolitical tensions and domestic political obstacles present significant hurdles that must be carefully managed.

Throughout this process, countries must demonstrate increased flexibility and cooperation to jointly promote regional economic prosperity and stability. The expansion and development of the CPTPP will continue to present both challenges and opportunities. As more countries express their intention to join, the CPTPP will need to continuously raise its standards and requirements to ensure that new members can truly contribute to regional economic cooperation and development.

For Taiwan, successful accession to the CPTPP will require significant effort and strategic positioning. Taiwan must address both external pressures and internal political divisions to pave the way for membership. Overcoming these challenges will provide Taiwan with an important platform to enhance its international influence and economic strength. Taiwan’s competitive advantages, especially in the IT and semiconductor industries, could make it a valuable member of the CPTPP, contributing to the agreement’s overall success.

China, on the other hand, faces its own set of challenges, including meeting the high standards of the CPTPP and addressing concerns from existing member countries about fair competition and market access. China’s economic policies and practices will need to align more closely with CPTPP principles to gain acceptance from current members.

The effective operation of international cooperation and multilateral trade mechanisms will become increasingly important in this context. Countries need to work together to promote the prosperity and stability of global trade. This cooperation is crucial for overcoming the political and economic barriers that might otherwise hinder the expansion and success of the CPTPP.

In conclusion, while the path to joining the CPTPP is fraught with challenges, the potential benefits for both China and Taiwan make it a goal worth pursuing. Through strategic reforms, enhanced cooperation, and a commitment to high standards, both countries can position themselves to gain significant economic and geopolitical advantages from CPTPP membership.