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TPP or ASEAN+N:a Regional Perspective
Stephen Yan-Leung CheungChair, Hong Kong Committee for Pacific Economic Cooperation4 October, 2012Taipei
Overview
Part I: Asia and the ASEAN track Part II: Asia and the TPP track Part III: Case study on Impacts
Asia and the ASEAN TrackPart I:
Regional Strategy in the 21st Century
Actively involved in the Asian economic integration Implementing FTA strategy Deepening economic reforms Maintaining stable regional environment
China’s FTA Map
Region Implemented FTAs
Asia-Pacific Asia-Pacific Trade Agreement
East Asia CEPA (Hong Kong, Macao)
China-ASEAN (CAPTA)
China-Singapore
South Asia China-Pakistan
Latin America China-Chile
China-Peru
China-Costa Rica
Oceania China-New Zealand
Source: Ministry of Commerce of the People’s Republic of China
ASEAN+N Partnership
Rapid development over past decades Wide-ranged and multi-faceted
Goods, Service, 2-way investment, Energy, Transport, Culture…
Multi-level cooperation mechanism China-ASEAN summit, Foreign Ministers Meeting, Senior Officials Consultations,
Joint Cooperation Committee…
Open and inclusive partnership
Rapid development: trade between China and ASEAN
2007 2008 2009 2010 2011
Import &Export
1 billion USD 202.508 231.117 213.011 292.776 362.854
Year-over-year growth rate (%)
25.9% 14.0% -7.8% 37.5% 23.9%
Export 1 billion USD 94.139 114.142 106.297 138.207 170.083
Year-over-year growth rate (%)
32.0% 20.9% -6.9% 30.1% 23.1%
Import 1 billion USD 108.369 116.974 106.714 154.569 192.771
Year-over-year growth rate (%)
21.0% 7.9% -8.8% 44.8% 24.7%
Source: Ministry of Commerce of the People’s Republic of China
Future of the ASEAN Track
ASEAN+1 ASEAN+3 ASEAN+6 ASEAN+6+2 ( Russia, U.S.) …… FTAAP
Asia and the TPP TrackPart II:
TPP : 21st Century and High-Standard Agreement
Covering a wider range of topics than established FTAs Open to newcomer: including accession clause (which is very unusual
for a FTA) Geographically, a real trans-pacific FTA Binding agreements With U.S. engaged
Potential Benefits for Major Players
Increasing market access, competiveness and profitability Increasing market size Easier capital/investment flows Uniform rules and standards Rule-making Stimulating reform
TPP Negotiation is still UP IN THE AIR
Too ambitious may not be feasible No clear guideline for how to integrate the various
established regional and bilateral agreements into TPP framework
Bargaining costs roar as more countries join in the negotiation
Gains for Major Players
Petri (2011) Kim (2011) Wan Lu (2011) Kawai & Wignaraja(2007)
Nation TPP9 TPP13 CJK ASEAN+3
TPP9 FTAAP ASEAN+3
ASEAN+6
TPP(1) TPP(2) TPP(3) ASEAN+3
ASEAN+6
USA 0.03 0.06 0.01 0.01 0.67 0.03 0.00 -0.01 0.05 -0.03 0.06 -0.03 -0.06
China -0.03 -0.08 0.11 0.42 0.01 2.24 1.81 1.83 -0.06 -0.15 -0.31 1.26 1.33
Japan -0.01 0.54 0.44 0.64 0.00 0.74 0.59 0.60 -0.05 0.17 0.34 1.54 1.59
Korea -0.02 0.71 1.16 1.52 -0.01 2.99 2.70 2.76 -0.05 -0.16 -0.35 6.19 6.43
Source: Shen Mingshui, “A cost benefits analysis of the Trans-Pacific Partnership Agreement (TPP): a Chinese perspective”, Journal of Contemporary Asia-Pacific Studies, 2012.
Income Effect under Different Scenarios
Negotiation covering sensitive areas and issues
Environmental protection, Intellectual property rights, Labor, Financial service, Institutions, Telecommunication, …
Reforms of State-Owned Enterprise (SOE) Convertibility of the capital account
Will the TPP Negotiation Prevail?
Japan and Korea have strong interest, but both hesitate China would NOT Join the Negotiation in the Short and
Medium Term TPP and ASEAN will coexist, with U.S. leading the
former, China actively engaging in the latter
Part III: Potential Impacts on China
Trade diversion Weakening China’s influence around Asia-Pacific “Spaghetti bowl phenomenon” increases trade costs (complex rules
of origin) Impeding structural reform
Possible Policy Responses of China
Expanding domestic demand Product differentiation Concluding bilateral or multilateral FTAs
China-Japan-Korea FTA China-Korea FTA …
Consolidating China-ASEAN “Greater China FTA” Increasing overseas direct investment (ODI)
Thank You!