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A federal parliamentary joint committee inquiry is examining the potential for new members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, and is assessing each individual case for accession against Australia’s national interests.
The CPTPP itself is a successor trade bloc of 11 members to the Trans-Pacific Partnership (TPP) that former US president Donald Trump abandoned in 2017. The agreement features market access commitments in trade in goods, services, investment, labour mobility and government procurement. It establishes rules that help create a transparent environment to do business in CPTPP markets. Australia has already benefited from the agreement with reductions in Japanese beef tariffs, as well as access for dairy products in Japan and Canada.
The agreement is now in force in most member states: Australia, Canada, Japan, Mexico, New Zealand, Singapore and Vietnam. Brunei, Chile, Malaysia and Peru are set to join after they complete their ratification processes.
The CPTPP agreement explicitly welcomes the accession of other states or separate customs territories. The Republic of China (Taiwan) is one of the several countries including Thailand, Indonesia and the UK that have expressed interest in acceding to the agreement.
Before US President Joe Biden’s inauguration, joining the CPTPP was expected by some to be one of his administration’s goals. However, there’s some speculation that Biden might prefer a return to the original TPP. Australia was opposed to the strong intellectual-property rights in the TPP and had them watered down in the CPTPP.
Whatever the US decides to do on multilateral trade policy, it’s in our national interest to support Taiwan’s accession to the CPTPP. Taiwan, one of the top 20 trading nations in the world and a vibrant democracy, believes that through accession, it will be able to contribute actively to the objectives of the CPTPP. It’s demonstrated this commitment by taking steps last year to achieve the necessary degree of compatibility to meet CPTPP aims and contribute to them in future. All current CPTPP members will need to agree to Taiwan’s accession.
The Australian government has already made the case that Taiwan substantially meets the economic criteria for serious consideration. Taiwan is an important trading partner for Australia—it’s our sixth largest. It was this mutual economic importance that made Taiwan a serious candidate for a free trade agreement two years ago.
Unfortunately, political considerations trumped economic viability and the proposal for an FTA with Taiwan was abandoned due to pressure from the People’s Republic of China. The FTA with Taiwan was being advanced because it was in Australia’s national interests to have closer economic relations with Taiwan. Retreating from the proposal in deference to another state’s national interest was done at the cost of our own.
But it remains in Australia’s national economic national interest to develop closer economic ties with Taiwan. Therefore, some appropriate means to secure this objective should be found. The proposed FTA would still be the most direct and effective way of achieving this, but if that’s not possible, Taiwan’s membership in the CPTPP should be considered as an appropriate multilateral vehicle for pursuing closer economic relations as well as enhancing Taiwan’s broader contributions to economic prosperity in the Indo-Pacific.
There are at least three layers to assessing the politico-strategic risks in endorsing Taiwan’s accession to the CPTPP: the nature of the CPTPP, the benefits of multilateral versus bilateral agreements and China’s nationalist approach to international economic rulemaking.
The CPTPP is less firmly rooted in doctrinal sovereignty as a basis for economic cooperation than an FTA would be. The language of the CPTPP agreement allows for non-state accession, for example on separate customs territories.
Since Taiwan is a full member of the World Trade Organization, if necessary, it could use this to accede to the CPTPP agreement consistent with article XXIV of the WTO pact. A similar point could be made of Taiwan’s membership in APEC, which it joined in 1991 along with China and Hong Kong.
Elements of these arrangements can be seen in the way all the current members of the CPTPP have formalised economic ties with Taipei through reciprocal trade offices. In Australia, Canada, Japan, the US and Vietnam, these are de facto embassies with ancillary consular arrangements that reflect these important trading ties.
And Taiwanese trade with China is so extensive and important that Taipei has virtually as many trade offices in China as there are members of the CPTPP.
The multilateral nature of the CPTPP offers the security of a collective, shared responsibility for any decision. This has been an important element for Canada in its arguments for supporting Taiwanese accession.
New Zealand, the depository state for the CPTPP agreement, notes it and other CPTPP signatories enjoy membership in a number of multilateral arrangements along with Taiwan, including APEC, the WTO and the Asian Development Bank.
New Zealand itself concluded a special trilateral trade agreement with Taiwan and Singapore in 2013. Unlike the Regional Comprehensive Economic Partnership, which Beijing was able to prevent Taiwan from joining, China is not currently a signatory to the CPTPP.
It’s in Australia’s national interest to strengthen international economic regimes to ensure they remain free, open and robust. Taiwan can help here through committing to promote issues relevant to the CPTPP’s values, rules and norms, and enhancing its role as a vehicle for economic collaboration and cooperation.
Beijing’s aggressive approach to economic and diplomatic relations in recent years has impacted heavily on Australia. And the free-trade agreement between the two countries hasn’t inhibited China from taking punitive economic action against Australia whenever it perceives a slight. Both these circumstances make a good argument for building a coalition of states with the same rules-based values through the CPTPP.
While China has expressed an interest in joining the CPTPP, we’re sceptical of its commitment to the economic reforms required for membership, especially around state-owned enterprises, industrial subsidies and forced labour.
China’s more pugilistic stance in the South China Sea and abuse of human rights in Hong Kong and Xinjiang have raised broader concerns regarding its willingness to act as a good international citizen.
Bolstering the economic coalition of states committed to maintaining a free and open Indo-Pacific is very much in Australia’s national interest. By supporting the inclusion of Taiwan in the CPTPP, Australia will be contributing to this broader regional objective while making an important economic relationship stronger.