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We can mitigate exclusionary pressure on Chinabrought by TPP through launching a free trade area treaty with third parties,of which one of the most effective is the Sino-Japan-Korea FTA.
Reporter: Yang Boya
Reporter:Japan is going through negotiation to join TPP. How possible do you think canJapan win the negotiation and finally join TPP?
LiXiangyang: It is highly possible that Japan finally joins TPP. The TPP is aturn in Japanese politics showing that Japan’s future diplomatic policy will bebased on the America-Japan alliance. However, Japan cannot leave China ineconomy, and therefore, many officials and scholars believe that joining the Sino-Japan-Koreafree trade area does not contradict with joining the TPP. For Japan, theidealistic result is to both a member of Sino-Japan-Korea free trade area andTPP, and thus, it can use its membership in Sino-Japan-Korea free trade area asbargaining chip to negotiate with the United States since currently the TPP isled by the United States.
At thesame time, Japanese know clearly that TPP enhances China’s willingness to pushforward construction of Sino-Japan-Korea free trade area, and thus can use itsjoining TPP as bargaining chip to ask for higher charge to China in negotiationin Sino-Japan-Korea free trade area. This is a strategic choice for Japanbecause it is hardly possible to initiate Sino-Japan-Korea free trade area negotiationwhile giving up joining the TPP. On he contrary, more people prefer to givepriority to joining the TPP in Japan. Though Japan may first initiateSino-Japan-Korea free trade area at the end of this year, it is hard to imagine“it finishes Sino-Japan-Korea free trade area before negotiating TPP”, whichseems hard to accept for Japan, and a more possible result is that Japan firstfinishes TPP negotiation.
Reporter: There have already existed effective bilateral free tradetreaties between the United States and South Korea, and if Japan joins TPP, itwill produce certain influence upon Sino-Japan-Korea free trade areaconstruction. What do you think can China do to face such a situation?
LiXiangyang: It is a highly contradictory issue. Many people including somegovernment officials in China propose that China join TPP and they believe thatChina will surely become a member of TPP. For this, I think that they fail toclearly see the motive of the United States for drawing TPP clauses, which isto say that they long ignore strategic goal of the United States. Many peoplefail to see that the United States has a clear goal which is to “return toAsia-Pacific area” in order to contain China’s peaceful rise.
Whenconflicts between newly rising great powers and chief powers cannot be solvedthrough wars, a very important way is to peacefully compete for right of makingregulations. For the United States, the ideal state is to take China in a rulesystem that the United States itself makes, and TPP is a most typical instance.Even though the United States may not achieve such goal, it will try todisorganize China led rule system. Though currently China is unable to “makenew rules” worldwide, developments of ASEAN 10+1 free trade area, 10+3 freetrade area, etc. are China-led new rule systems. It is reflected in Japan’sstanding stated last year when Japan decided to join TPP negotiation -- “Japan’sjoining TPP means Asian rule making shifts from China led system to America andJapan alliance.”
Also,there are some other views holding that China should first join TPP, and thento “disturb” and obstacle TPP negotiation progress, yet the United States hasalready taken such situation into consideration -- China can accept thepreconditions of TPP, and thus join TPP; or else, China is not allowed to joinnegotiation and is excluded. It is impossible to “join negotiation first, andthen disorganize it”. Therefore, China doesn’t have a card to play if it wantsto “disorganize” TPP.
Then howcan we deal with TPP? I think what we can do is try to reduce negative impactof strategic exclusiveness that TPP brings to China. If China can settle downSino-Japan-Korea free trade area treaty, we can to some extent ease, if notbreak down the impact brought by TPP. That is to say, we can establish asituation of coexist of “TPP not including China” and “Sino-Japan-Korea freetrade area not including the United States” in Asia. However, if such situationhappens, game between China and the United States will become more complex inthe future because it covers two biggest economy bodies in the world.
The secondway to deal with TPP is to enhance cooperation with other regions, such ascooperation with south Asia. To carry on the “bridge head strategy to open tosouthwest” that China designs for Yunnan province, Yunnan establishes positiverelation with Bangladesh, Burma, India, etc. The design of “bridge head” Yunnanprovince to become a free trade area seems hard to be achieved in a short term,yet to enhance cooperation helps to create a mechanism to future institutionalcooperation. Another way is to promote economic cooperation among ShanghaiCooperation Organization in the Northwest region, which China has longendeavored to do. However, there is a problem -- Russia’s opposition, becauseRussia strongly opposes to change Shanghai Cooperation Organization to a freetrade area, yet other middle Asian countries hope to enhance cooperation withChina and to construct free trade area, and therefore, development in northwestregion is possible.
The thirdregion is in northeast, referring to “sub region cooperation” among China,Mongolia, Russia, even North Korea. At the beginning of this year, Tumen Riverregion (Hunchun) cooperation model area has won recognition nationwide. If “subregion cooperation” can really be achieved, it will have huge impact on Japanand South Korea, because if “sub region cooperation” among four countries is successfullylaunched, it will first attract capital from South Korea.
SouthKorea has no way to solve Korean Peninsula issue, and bilateral cooperation inKeumgang Mountain is always interrupted for lack of external binding.Therefore, if South Korea joins the cooperation between China, Mongolia, Russiaand North Korea, it will help a lot in stabilizing Korean Peninsula situation andimproving south-north relationship. Once South Korea joins the cooperation,economy profits will force Japan to join as well, and therefore, it may be awonderful go for China. However, the biggest obstacle is still Russia. Inprinciple, Russia avoids signing any free trade area treaty with China becauseit worries that Chinese economy is so strong that it may threaten Russia’seconomy safety.
From theabove three ways, we can see that apart from Sino-Japan-Korea free trade area,there is also sub region cooperation that China can consider. Also, there iscross-region cooperation, for example, negotiations with Gulf CooperationCouncil and countries such like Australia are also on the way. In a word, wecan soothe exclusiveness pressure brought by TPP through launching free tradearea treaty with the third party, one of which the most effective ones isSino-Japan-Korea free trade area.
Reporter:At the fifth Sino-Japan-Korea summit meeting, the three countries have achievedconsensus that they will start Sino-Japan-Korea free trade area negotiationthis year. How confident are you of the start of negotiation? What results doyou think can such negotiation yield?
LiXiangyang: There are uncertainties in negotiation. There have been ten yearssince proposition of Sino-Japan-Korea free trade area, and research has alreadyproved that it can yield huge economic profits. The reason that the negotiationcannot start is mainly due to obstacles of non-economy fields. Whetherobstacles in non-economy fields between China and Japan will deteriorate inshort term is highly uncertain. Lately, there is the Diaoyu Island issuebetween China and Japan, and Japan and the United States’ involvement inHuangyan Island issue between China and the Philippines in East China Searegion. Whether such issues will result in short term deterioration inpolitical and diplomatic fields between China and Japan, and thus influencesSino-Japan-Korea free trade area negotiation is uncertain. However, in the longrun, the fact that the three countries announce to start negotiation in thisyear is in itself a positive signal, and whether negotiation can be settleddown depends on some uncontrollable non-economy factors.
Reporter:How do you evaluate current establishment achieved by TPP? Has it reached thegoal of becoming “unexceptional, comprehensive and high free trade area”?
LiXiangyang: To begin with, we need to notice that the increase of TPP membersfrom four countries to nine countries is basically led by the United States.The so-called “high-quality FTA of 21st century” has indeed beenachieved in TPP’s contents, yet the effect of it being a so-called “openregionalism” is somehow downsized because the majority of the twenty somebilateral free trade treaties that nine members of TPP had will be kept, whichis to say that many treaties including original rules will be kept, while onthe other hand, what the United States needs will be continuously added inTPP.
Forexample, competition policy including status of national owned enterprises,decision mechanism, etc. has already been focus of negotiation since the end oflast year. The United States totally copies the conflict solve mechanism ofNAFTA to TPP. Unlike WTO mechanism -- national governments conductprosecutions, and expert group will hold discussion to solve conflicts, anyenterprise or individual can directly charge the government in NAFTA.
Forexample, an enterprise of Canada wants to open a factory in Five Lakes region,and if it thinks that American federal government hasn’t well protected FiveLakes, it can directly sue American federal government. Such things areunimaginable under WTO conflict solve mechanism, as well as hard to accepted inother countries, because it involves transfer of sovereignty. From theseexamples, we see that the increase of members from four to five can in fact be comparedto “shell merger” in China’s stock market. In the end, the “shell” resourcesare not important, but it is the enterprise which is on the market that needsnew capital, needs to extend new businesses, and to change members of its boardof directors. Though the name is the same, the actual function has already beenchanged.
Reporter:In Asian-Pacific region, the APEC, 10+3, 10+1 plus TPP have resulted in “Spaghettibowl phenomenon”. How do you think of this problem?
LiXiangyang: Undoubtedly, such problem exists. I have mentioned that theAmerican-led TPP itself cannot solve “Spaghetti bowl phenomenon” because themajority of previous twenty some bilateral free trade treaties, original rulesand some exceptional articles will be kept. Since “Spaghetti bowl phenomenon”inside TPP is hard to overcome, it is even harder to overcome it in the wholeAsian-Pacific region. For example, there exist double regulations in APEC,which are “APEC members in TPP” and “non-TPP APEC members”. Once TPP comes truein the future, “APEC members in TPP” will not care about liberalization issuewhich “non-TPP APEC members” care because TPP enjoys higher liberalization thanAPEC, and therefore the final result is that APEC is without foundations.
What kindof situation ASEAN 10+1 can maintain after appearance of TPP is what ASEANworries most about. Previously, ASEAN wants to become leader, pilot, orpresiding country of east Asia through 10+1 mode because ASEAN has alreadysigned bilateral free trade treaties with many countries, for example Japan,South Korea and China, etc., and therefore, ASEAN does not want to sign freetrade treaties with such countries again. However, once TPP mode succeeds,whether the leader, pilot or presiding country status of ASEAN can maintain isa new problem. ASEAN may be marginalized, yet the final result depends ondevelopment of Sino-Japan-Korea free trade area negotiation. Once thenegotiation yields substantive progress, ASEAN will be totallymarginalized.
Reporter:Therefore, there are big uncertainties in development of Sino-Japan-Korea freetrade area and construction of free trade areas in the whole Asian-Pacificregion. Is it right?
LiXiangyang: Yes. Future relationship between main powers in Asian-Pacific areawill be reorganized because of TPP, especially the relationship among China,the United States, and Japan. In the future few years, the relationship will beaffected by TPP, Sino-Japan-Korea free trade area, even Asian regionalintegration, and conditions of the three parties decide that the result of suchgame will be highly uncertain.
Introduction of Li Xiangyang：
Dean ofAsian-Pacific Research Prostitute, the Chinese Academy of Social Science
