It was good to see Prime Minister Jacinda Ardern participating in the Summit for Democracy recently. The summit was notable in that it included two representatives from one of the largest, freest and most democratic societies in our region, Taiwan.
It was good that President Biden agreed to Taiwan’s participation. Older democracies such as New Zealand and the United States need to support all societies that have moved from dictatorship or single party rule to democracy. As many have noted, our system of governance is under increasing pressure from autocracies who feel deeply threatened by it.
This Summit followed the hosting of APEC this year – an event that also includes Taiwan as a full member. If the WTO Ministerial had not been delayed, I am sure that Trade Minister Hon Damien O’Connor would have run into Taiwan’s Trade Minister John Deng. Taiwan is also a full member of the WTO.
I am sure that if they had met, one of the topics that the two Ministers would have discussed was Taiwan’s application to join the Comprehensive and Progressive Trans-Pacific Partnership.
Taiwan’s hand in applying for membership was forced when China applied to join the agreement. Given the political differences between the two jurisdictions, China’s application to join CPTPP posed significant risks for Taiwan. With APEC and the WTO Taiwan and China joined at the same time. Should China have been a member of these entities before Taiwan, Taiwan may still be waiting for membership. Like the WTO and APEC these entities operate on a consensus basis. Any one member, no matter how large or small, can veto a decision.
I have previously expressed some skepticism about the timing of China’s application to join CPTPP and nothing that I have seen since makes me think that China will be able to come close to meeting the SOE disciplines in the agreement. Strained relations with CPTPP members such as Australia are a further complication for China. But this should not stop the membership setting up a process to test China’s readiness for membership.
Long term having China inside CPTPP would be a good thing. But timing is everything. I just cannot see this happening anytime soon.
Politics aside, Taiwan’s application should be more straight forward. CPTPP was drafted with eventual membership of Taiwan and (Hong Kong) in mind. The accession provisions of Agreement makes specific reference to Separate Customs Territories. Both Hong Kong and Taiwan have this status under WTO law.
Taiwan has entered into two very high quality FTAs with CPTPP members – New Zealand and Singapore. Both these FTAs are similar to CPTPP in depth and scope. Taiwan has been a model FTA partner. Implementation was straightforward and Taiwanese officials have gone to great lengths to ensure that commitments have been implemented faithfully. But there are potential difficulties ahead even for Taiwan. Japan and Taiwan have unresolved bilateral trade differences. Taiwan’s CPTPP application will give Japan extra leverage. Agricultural trade liberalisation will also be interesting to watch. Australia is a very efficient rice producer.
I expect that when CPTPP members finally get to formally consider the Taiwan and Chinese CPTPP applications they will agree to establish working groups to determine the ability of the applicants to meet CPTPP commitments. Nothing seems to move fast in CPTPP.
The more straight forward application from the UK took many months to discuss formally and the working group established to consider that application has progressed more slowly than some were expecting. The UK’s was the first application to join CPTPP since the Agreement come into force so I think members were feeling their way.
I suspect that CPTPP members will want to have the UK accession agreed and out of the way before the process begins for China and Taiwan.
In recent days a new entrant has emerged – the Republic of Korea. This is very good news for CPTPP as critical mass is growing. ROK’s entry reinforces the point that separate working groups are needed to consider each potential accession. Over the weekend Ecuador also applied to join CPTPP.
I also wonder whether members will be waiting to see whether others in the region decide to apply. Thailand is often talked about as very interested in membership. And, of course, all eyes are on the Biden administration. Might the US apply to re-join the agreement after the mid-term elections? Should this be even a faint possibility, I can see the CPTPP membership seeking to delay any decisions on new applications other than that from the UK until such time as the US position becomes clear.
The chairing of CPTPP moves from Japan to Singapore in a few weeks. I would be surprised if much has been resolved other than UK membership before the baton is passed on – I think - to New Zealand in 2023. With the US mid-terms out of the way 2023 could be a very interesting year for trade policy in this region and globally.
Charles Finny is a former diplomat and trade and negotiator who participated in FTA negotiations with Singapore, China and Taiwan. He has served as New Zealand's deputy ambassador in Beijing and as director of the New Zealand Commerce and Industry Office in Taipei and is a consultant with Saunders Unsworth in Wellington. His views are his own.