ECONOMY

Taiwan follows China with bid to join transpacific trade pact

Asia-Pacific economy updates

Taiwan has applied to join a major transpacific trade pact just after a week after China filed its own membership bid, pitting the two adversaries against each other in a race to join.

The formal request by Taiwan to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will force other members of the pact into a delicate political balancing act.

“We submitted the formal application this afternoon,” an official in Taiwan’s presidential office told the Financial Times on Wednesday.

A senior Taiwanese trade policy official confirmed that the application had been sent to New Zealand’s Ministry of Foreign Affairs and Trade, which handles CPTPP membership requests.

The almost simultaneous requests by China and Taiwan create more rivalry at a time of high tension between the two. Beijing claims Taiwan as part of its territory and threatens to invade it if Taiwan refuses unification indefinitely.

The Chinese government frequently pressures third countries as well as international organisations, non-governmental bodies and commercial enterprises to help isolate Taipei and deny it any participation in international affairs in its own right.

Trade experts in Taiwan and Japan said that although the membership of both China and Taiwan in the World Trade Organization was a precedent for having both countries participate in a trade agreement, China’s power and political assertiveness was now much greater, making a CPTPP deal for both more politically complex.

China and Taiwan joined the WTO within a month of each other in 2001 and 2002.

In recent years, China has frequently used its economic power to ‘punish’ other countries, including Australia and South Korea, for political decisions it disliked, with sudden bans on some imports from those countries or a suspension of Chinese tourism.

The rival bids to join CPTPP from Beijing and Taipei will raise concerns among the trade group’s members that a failure to agree to China’s accession quickly or a decision to allow Taiwan in first could trigger more economic coercion from Beijing.

The CPTPP was originally designed by the US to limit Beijing’s growing influence in the region, and revived on Japan’s initiative after the US dropped out. Under its rules all existing members have a veto over new members.

Ahead of the application from Taiwan, Charles Finny, a former New Zealand diplomat and trade negotiator, expected that Beijing’s sudden move to join CPTPP would probably spur Taipei into action.

“Taiwan has to be a member before or at the same time as China. I can’t see the Taiwanese taking the risk that China would be in a position it could veto any application from Taiwan,” said Finny, who has negotiated free trade deals with both Beijing and Taipei.

Trade experts have also previously noted that Taiwan has shown it meets the necessary standards through its free trade deals with Singapore and New Zealand, which are CPTPP founding members.

Taiwan has wanted to join CPTPP for years, and completed most of the legal preparations needed to deregulate the country’s markets to meet the pact’s standards. However, Taipei had been taking its time with the formal application as it had not finished informal consultations with the club’s members.

Japan, which has the rotating chairmanship of CPTPP this year, has been urging Taipei to wrap up its preparatory talks and apply before the chairmanship passes to Singapore in January.

A Japanese diplomat involved with the issue told the FT this month that Tokyo feared that Taipei would lose any chance of joining the regional trade grouping once China was a member.

China’s formal move to join CPTPP last week took its members and Taiwan by surprise. Although Beijing had previously publicly expressed its interest in joining the trade club and started lobbying some members for support over the past two months, it has not conducted detailed consultations.

The dominant role of state-owned enterprises in China’s economy, in particular, is seen as a hurdle to the country’s accession to the CPTPP.

New Zealand’s foreign affairs and trade ministry did not immediately respond to a request for comment.

Taiwan’s government is expected to announce its move later on Wednesday, once it has notified the 11 other CPTPP members of its application.

Additional reporting by Kana Inagaki in Tokyo

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