Dodwell's blog on SOM2 Qingdao - Post 3

May 22, 2014


I intended today to move on from FTAAP and TPP antics to other Qingdao themes, but forgive me for a couple more thoughts.
First, since yesterday’s blog, I have seen the Trade Ministerial statement, and it is telling that specific references to a deadline for creating an FTAAP, and to a Feasibility Study, have been expunged. Setback for China here, though there is a commitment for officials to tie up a deal within 2014 – so China should still be able to claim a meaningful FTAAP “deliverable” under its 20-14 chairmanship.
Second, there have been hints of some progress between China and the US and the stalled negotiations to update the Information Technology Agreement which was signed in 1994, and so covers no technology items developed in the past two decades. The US has clearly been using China’s refusal to agree on the list of technology items to be included in a new ITA as an suggestion that Beijing is still reluctant to commit wholeheartedly to the “next generation” liberalization issues that sit at the heart of the TPP, and in the Geneva-based Trade in Services negotiations. If Beijing were indeed able to reach an agreement on a new ITA, this would do much to improve China’s perceived credentials credibly to join a TPP or a TiSA negotiation. Progress here might signal potential for developments elsewhere.
Finally, the FT published a fascinating article by its Beijing correspondent today (attached) on the obscure “Conference on interaction and confidence-building measures in Asia” being held in Shanghai and being attended by Putin from Russia, the President of Iran, and a dozen other heads of state. The meeting is a good example of China’s broader effort to breathe life into moribund agreements that are neither led, nor shaped by the US and the post-World War 2 western powers. As one commentator noted: “As a permanent member of the UN Security Council , China is supportive of existing international organizations but China is neither the founder nor the leader of any of these… Now China would like to find institutions where it can play a more critical role and where it can focus more on its own rights, interests and expectations.”
The point arising here is that since the 2008 global financial crash, China has been put under pressure to participate in the rescue and recovery, but clearly feels uncomfortable being pressured to sign up in retrospect to other peoples’ agreements. This has implications for a TPP and a TiSA: implicitly, China is seeking to be able to join these clubs before deals are finalized so it has chance to play a role in determining their shape. The challenge to the post-World War 2 “policy hegemonism” of the western powers led by the US is becoming clear. While the transition is going to be uncomfortable, in particular for the western economies used to policy leadership, I find myself sympathetic to the Beijing view. China is by some measures already the world’s largest economy. With so much “skin in the game”, it surely has a right to be at the table as major new international agreements are negotiated and agreed. To force agreements through without China’s presence and participation is to risk their future failure if we value China as a responsible contributor to global economic growth and stability. With such thoughts in mind (please browse the FT article too), the arm-wrestling over the TPP and a future FTAAP is more significant than many realise.

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