Media  Global Economy  2021.10.14

Let Us Proceed with Taiwan’s Accession to the TPP as a Matter of Course

China has no authority to oppose it

The article was originally posted on RONZA on September 27, 2021

Trade Policy

On September 22, Taiwan submitted an application to join the TPP.

This happened immediately after China applied for membership of the trade bloc on September 16. Taiwan’s bid is interpreted as reflecting its fear that if China is admitted into the TPP ahead of it, it would not be able to join, since new applicants for membership need to be approved by existing members. It can also be interpreted as a political countermeasure amidst increasing pressure from China.

No Obstacles for Taiwan to Join the TPP

In my article on China’s TPP bid, I stated, “Taiwan is studying the TPP agreement hard. Negotiations with Taiwan will not take long. If Taiwan accepts the high-level agreement and China fails to do so, the latter could not save its honor.,” to support my argument that Taiwan’s participation in the TPP should be utilized in our relations with China as well (“Easy compromises must not be made as China applies for admission to the TPP,” RONZA, September 21, 2021).

Before I explain this, I would like to quote a passage from an article I wrote shortly after Trump won the 2016 presidential election, “Mr. Trump Will Destroy World Trade” (RONZA, November 16, 2016).

“I was invited to a TPP (Trans-Pacific Partnership) symposium held in Taiwan on November 10 and 11, and participated in presentation and discussion meetings. When I arrived at the hotel in Taipei on November 9, I saw on TV that Trump had declared his victory. I could hardly believe my eyes.

Taiwan’s Ministry of Health and Welfare had invited experts from foreign countries and held the symposium to discuss how Taiwan should respond to participating in the TPP with a focus on the fields of medical care and food safety.

On the day before the symposium began, the US got into difficulties regarding its participation in the TPP. However, the participants took part in heated discussions with the additional participation of jurisprudential researchers from Taiwan, taking the standpoint that because a similar treaty would be concluded in the future, Taiwan should hear the experts’ opinions on the TPP and the WTO.”

The Asahi Shimbun dated September 23 cited a Taiwanese official’s remark that “Taiwan has been promoting the development and establishment of relevant laws and regulations for the past 10 years,” which I think is true. Even when the symposium was held five years ago, both Taiwanese administrative officials and university law scholars had a deep understanding of the details of the TPP agreement. On September 23, Taiwan President Tsai Ing-wen tweeted in Japanese that “Perseverance prevails! Taiwan has been preparing to join this high-level trade agreement since I became president, and Taiwan is ready to accept all the rules.” In the five years since the symposium took place, Taiwan must have made meticulous preparations to join the TPP.

President Tsai’s tweet reporting Taiwan’s application to join the TPP

Around the time when Taiwan held the symposium, China seemed to have still been in the early stages of discussions about its entry into the TPP, focusing mainly on whether it would be a good idea to join it in the first place, and had not yet reached a higher level of discussions about how the domestic legal system should be modified in preparation for joining the trade group. Unlike China, Taiwan is expected to have little difficulty in complying with the various TPP rules.

In addition to the issue of whether the legal system of the applicant country is consistent with the TPP agreement, another issue that arises in accession negotiations is whether the applicant country can meet the market-opening demands from existing members. Indeed, the rice issue presented a major stumbling block to the negotiations for Taiwan’s accession to the WTO. Even today, this may be the biggest issue for Taiwan, but the U.S., which would likely demand the opening of Taiwan’s rice market, is currently out of the TPP, and even if the U.S. returns to it, Taiwan can use Japan’s TPP negotiation tactics (setting country-specific import quotas for the U.S. and Australia) as a reference. Considering that Australia’s exports to Japan have fallen short of the quotas set by Japan for imports from Australia, I think it is unlikely that Australia will put pressure on Taiwan to open its rice market.

A major newspapers pointed out that if Japan were to demand that Taiwan lift its ban on imports of agricultural products from its five prefectures, including Fukushima, it could pose a major problem for Taipei. However, the Taiwanese market is not a major destination for Japan’s agricultural exports. While the lifting of the export ban may have a symbolic significance for Japan, I do not believe that, in light of the huge benefits that Japan is anticipated to gain from Taiwan becoming a member of the TPP, Tokyo will bring up this issue in negotiations for Taiwan’s accession.

What to Do with Our Relations with China?

There is no problem with Taiwan joining the TPP itself. The problem is the opposition by the Chinese government, which views Taiwan as its own territory. On September 23, Beijing made it clear that it strongly opposed Taiwan’s participation in the TPP under the “one-China” principle that Taiwan was an inseparable part of China. However, it is up to the existing TPP members to decide whether or not to approve Taiwan’s entry, and China has no authority over the issue.

For China, there are a number of high hurdles to be surmounted before it joins the TPP, such as putting a legal system consistent with the TPP agreement in place and offering the improved market access required by other member countries. On top of these, there is also the question of whether China would ever be able to enter negotiations to join the TPP.

As I mentioned in my article dated September 21, the USMCA, a free trade agreement (FTA) among the U.S., Canada and Mexico, has a provision that virtually prohibits member countries from concluding an FTA with China. It is therefore difficult for Canada and Mexico, which are members of the TPP, to become FTA partners with China through the TPP. Meanwhile, Australia has filed a complaint to the WTO over China’s unilateral tariff hikes. The U.K., slated to become a TPP member in the near future, launched on September 15 a security framework called AUKUS together with Australia and the U.S. to counter China’s growing threat. Vietnam is also at loggerheads with China over the territorial issue. Malaysia, which is said to have welcomed China’s bid to join the TPP, has yet to ratify the trade deal and thus has no influence on accession negotiations.

Under these circumstances, if Taiwan commences accession negotiations with TPP nations and China is unable to do so, China will raise a strenuous objection.

China Has No Authority to Object

However, apart from the USMCA, it is China’s actions that have invited this situation. In addition to the measures taken against Australia, China suspended imports of fruits from Taiwan, namely pineapples in March and sugar apples and wax apples in September, claiming that pests were detected in those fruits. China has been using its large market as a means to put pressure on other countries. Unless China changes this attitude, it cannot be admitted to the TPP. China must also change its perception that it can join the TPP if it applies, and needs to work hard to earn the trust of TPP member countries.

If Beijing asks why China is not allowed to join, TPP member countries, including Japan, can simply explain the reason in a straightforward manner. In the negotiations for China’s and Taiwan’s accession to the WTO, even though the negotiations with Taiwan had practically been completed around 1996, Taiwan was not granted accession until China became a member in 2001 so that China would not lose face (Taiwan officially joined the WTO in January 2002, one month after China’s entry in December 2001). However, different from the WTO, which is a sub-organization of the United Nations, the TPP is a club-like organization of countries that share the common interest of promoting free trade. There is no need for TPP members to take heed of China.

A spokesman for the Chinese government said that China was “firmly opposed to Taiwan’s accession to any agreements or organizations that are of an official nature,” but Taiwan has, in terms of trade, already participated in the WTO and APEC, both of which are more official organizations than the club-like TPP. Separating Taiwan from China, we should proceed with negotiations for Taiwan’s accession to the TPP in an administrative manner without further ado.

Encourage the U.S. to join the TPP

At the same time, it should be noted that China has applied to join the TPP because the U.S. withdrew from it. In the U.S. there are strong forces that oppose free trade, but there are also those that believe that their country should take a tough stance against China. We need to encourage the U.S. to return to the TPP if it wants to compete with China. President Biden, who was the vice president of the Obama administration that initiated the TPP negotiations, would understand the significance of the TPP in terms of U.S.-China relations as well. In addition, the U.S. Congress has a great influence on trade issues. We should also talk about the importance of the TPP to Democratic Senate Majority Leader Chuck Schumer and others who are concerned about China’s rise. Revision may be made to the environmental and labour chapters of the TPP agreement as requested by the U.S., if the U.S. says that it is necessary for its return to the TPP.