When senior officials from the United States and China meet this week in Washington for a new round of their Strategic and Economic Dialogue, the U.S. has an excellent opportunity to overcome a deeply divisive economic issue complicating relations with Beijing by welcoming China’s participation in the Trans-Pacific Partnership (TPP).
At the time President Obama declared his strong support for creating this new Asia Pacific trade bloc in November 2011, the administration envisioned it as a way of countering China’s economic rise as part of the U.S. “pivot to Asia.”
Obama and U.S. officials coupled their advocacy of the TPP with a warning that the U.S. was “growing increasingly impatient and frustrated with…Chinese economic policy and the evolution of the U.S.-China economic relationship.” They called on China to “play by the rules” and criticized it for “gaming the system.”
In the words of David Pilling, a leading columnist for the Financial Times, the U.S. vision for the TPP amounted to an “anyone-but-China club” which had the “unstated aim” of creating a trade area “that excludes the world’s second biggest economy.” As a “comprehensive high-level agreement” among the 12 countries now in negotiations, the TPP would cover about 40 percent of global output and about one-third of world trade.
Not surprisingly, many Chinese commentators initially saw the TPP as an instrument for containing China. Beijing reacted to the U.S. announcement in the fall of 2011 by accelerating its own efforts to build a new free trade pact called the “Regional Comprehensive Economic Partnership” among the 10 ASEAN countries plus five countries that have current free trade agreements with ASEAN — South Korea, Japan, India, Australia, and New Zealand. China also pushed ahead on negotiations to reach a trilateral trade agreement with Japan and South Korea as well as a bilateral agreement with Seoul.
The risk of the United States and China moving toward competitive Asian trade blocspeaked in March 2013, when the U.S. persuaded Japan to join the TPP negotiations at a time of mounting conflict with China over disputed island territories in the East China Sea. Prime Minister Shinzo Abe declared that joining the TPP would strengthen Japan’s “security” and emphasized the shared “values of freedom, democracy, basic human rights and the rule of law” among TPP members.
Abe failed to mention that the U.S. previously invited Vietnam and Malaysia to join the TPP negotiations, though their governments infringe human rights and curtail democracy as well as rely heavily on the state subsidies, controlled prices and state-owned enterprises that are antithetical to the purposes of the new trade agreement.
In late May, during the run-up to the summit between President Obama and President Xi Jinping, China broke the vicious cycle leading toward separate Asian trade blocs when the Ministry of Commerce announced it would study whether to participate in the TPP negotiations.
According to the Ministry, China “will analyze the pros and cons as well as the possibility of joining the TPP, based on careful research and according to principles of equality and mutual benefit. And we also hope to exchange information and materials with TPP members on the negotiations.”
China’s recently declared interest in the TPP reflects its desire to improve relations with the United States, reduce government involvement in the private sector and help shape the rules of the Trans-Pacific Partnership. If China seeks membership in the TPP after the regional free trade agreement is completed, it would have to accept all the terms that were previously negotiated.
By inviting China to join the negotiations for the TPP at the Strategic and Economic Dialogue, the United States would strengthen the likelihood of the U.S. benefiting both from China’s long-term economic growth and its support for international institutions on which the U.S. relies. As Professor John Ikenberry of Princeton University puts it:
The “United States cannot thwart China’s rise, but it can help ensure that China’s power is exercised within the rules and institutions that the United States and its partners have crafted … that can protect the interests of all states in the more crowded world of the future.”
Most importantly, including China in the TPP would advance crucial objectives of American economic policy — obtaining greater access to the Chinese market for U.S. goods and services, significantly reducing the Chinese government’s role in the private sector, protecting intellectual property, and fostering greater foreign investment in both China and the United States.
This week’s Strategic and Economic Dialogue is an opportune time to make it manifestly clear the United States welcomes Beijing’s participation in the Trans-Pacific Partnership and, in so doing, resolve an issue that has hurt U.S. relations with China for far too long.