By Chris Devonshire-Ellis
Both China and the UK have made official applications to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The grouping is essentially an Asia-Pacific trade alliance, and includes Japan, Brunei, Malaysia, Singapore and Vietnam in Asia, Australia and New Zealand, Canada, and Mexico in North America together with Chile and Peru in South America.
China lodged its application to join with New Zealand last week, with the Kiwis responsible for processing such requests. The UK submitted its application in June. That application has been accepted, with the CPTPP members discussing whether the UK meets the high liberalization standards of the agreement in areas such as tariffs and investment regulations in a procedure likely to take about 12 months. A unanimous agreement is required. As things stand at present, a UK acceptance into the CPTPP trade bloc is likely, given high British manufacturing standards, adherence to international laws and the quality of its domestic market. The UK would become, after Japan, the second largest member of the CPTPP.
It remains to be seen how the Chinese application will proceed. Beijing will have undertaken preparatory work and does not like being rebuffed – the fact it made the application indicates that Beijing feels it has a good chance of success. However, the China CPTPP issue is more complex than that of the UK’s, given that Beijing’s current diplomatic relations with Australia are not good. Australia has also not yet ratified the Regional Comprehensive Economic Partnership (RCEP) free trade agreement, which also includes China. However, that deal, which also includes fellow CPTPP states Japan and the four ASEAN nations Brunei, Malaysia, Singapore, and Vietnam, only requires three-fifths of the total 15 signatories. China may not need Australia’s ratification for RCEP to commence, but it will for the CPTPP.
An Australia-China rapprochement may therefore be in the cards – although the Aukus submarine deal has upset Beijing, as has Australia’s engagement with the Five Eyes network, the reality is that the Aukus submarines are nuclear powered, not nuclear armed. Much has been made of the deal, but Beijing will not be viewing it as too serious a security matter. With Australian-China trade ties being damaged, the political landscape could change in Australia by Q2 2022 as South Australia holds federal elections. That may usher in a more conciliatory position towards Beijing.
If it does, then the prospects of the UK and China being part of the same trade bloc increase. That may well suit Liz Truss, the new UK Foreign Secretary as she looks to get UK trade back on track after a frankly dreadful UK trade and export record for much of the past decade. Getting access to China via a trade bloc mechanism and joint and several responsibilities may prove a better way of managing a China trade relationship than on a pure bilateral basis, which is more politically fraught and comes with intense US pressures. CPTPP could offer a way out with Beijing and London having to report into and answer to a collaborative CPTPP bloc as opposed to individual negotiations.
Trade and investment lines have also been drawn between London and Beijing into off limit areas such as nuclear technologies, and communications. That paves the way for trade to commence free of these politically charged investments. Here, London has plenty to offer China in assisting Chinese manufacturers in upgrading their production standards, QC, and overall compliance. China has been keen to adopt best practices and especially within green commerce. The UK has much-needed experience that would help develop Britain’s green industries and assist those in China. This is especially relevant given the upcoming Cop26 meeting in Glasgow, which can be expected to see a more united UK-China stance develop in the face of other pressures, most notably from the EU and United States.
Unlikely as it may seem today, the CPTPP may be a catalyst for improvements in UK-China ties. Whether or not that happens is not entirely in their hands, but once the Aukus news has died down to a more pragmatic view, Cop26 may see the beginning of a new route to UK-China relations – and pave the way to a timely, more easily managed bilateral trade relationship via CPTPP.