China wants to join the TPP. What does that mean for Canada?

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China’s surprise request to join Canada and ten other nations in the Trans-Pacific Partnership (TPP) is probably a political maneuver that should be ignored until the country shows its intentions are genuine, trade experts said.

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On Sept. 16, China submitted a formal proposal to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trading bloc deal that comprises 500 million consumers in countries that account for 13.5 per cent of the global economy. The biggest economies in the group are Japan, Canada, and Australia — close allies of the United States that have found themselves sucked into the growing rivalry between Washington and Beijing over the past few years. That means there is more to calculate than how much the addition of the world’s second-biggest economy to the TPP would increase exports.

“It’s my view that at this time, this is not a serious overture by China,” said Meredith Lilly, who advised former prime minister Stephen Harper on trade policy and international affairs. “It’s much more likely that China made this announcement now because of broader geostrategic events.”

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Not so long ago, Canada would have welcomed China’s entry into the TPP. One of Prime Minister Justin Trudeau’s early priorities after his 2015 election was negotiating a free-trade agreement with China. In 2016, though, those talks fell apart and the Trudeau government officially abandoned the idea in 2020. By then, Beijing had imprisoned two Canadian citizens in apparent retaliation for Canada’s arrest of Huawei Technologies Co. Ltd. executive Meng Wanzhou at the end of 2018 in response to a U.S. extradition request.

By all accounts, relations between Beijing and Ottawa have rarely been worse. The ongoing detention of Michael Spavor and Michael Kovrig has caused anti-China sentiment to fester, stoking demands for retaliation. On the campaign trail, Erin O’Toole’s Conservative Party took a hard stance against China, committing to disentangle Canada’s economy from a market that has become an important destination for exports, but also a source of relatively inexpensive goods.

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The TPP’s membership rules dictate that a new entrant must engage in bilateral talks with each of the eleven founding members to gain entry. Given the public’s current mood, it’s unlikely whoever is in power in Ottawa after the Sept. 20 election would dare to be seen doing China any favours.

“The next prime minister (who) says, ‘Yes, we’re going to accept China,’ will be committing political suicide,” said Patrick Leblond, a senior fellow at the Centre for International Governance Innovation, a think-tank.

Leblond agreed with Lilly that President Xi Jinping’s bid to join the TPP was probably meant to destabilize the U.S. and its allies. China had been signalling an interest in becoming a member for months, but the announcement of the official request came a day after the U.S., the United Kingdom, and Australia formally entered a security alliance that was widely viewed as a thinly veiled attempt to check China’s growing power. By pursuing TPP membership, China likely is attempting to show that it can “play nice,” and isn’t the threat that the U.S. says it is, Leblond said.

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To be sure, it might be a while before the federal government feels like it has to respond to China’s request. Canada, which was among the last to join the TPP, is more of a peripheral member than a leader, said Lilly. The U.S. was originally the driving force behind the trade agreement, but former president Donald Trump opted to pull out. That left Japan as the biggest economy in the group, and it became the de facto leader after holding the TPP together in the aftermath of the U.S.’s departure.

Japan’s economy minister said last week that the country would consult TPP members on how to respond to China’s pitch. “Japan believes that it’s necessary to determine whether China, which submitted a request to join the TPP-11, is ready to meet its extremely high standards,” Yasutoshi Nishimura told reporters on Sept. 17.

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Given the lengthy process to join the TPP under even normal circumstances, it’s possible enough time could pass to allow Canada and China to get back on better terms, said Carlo Dade, director of trade and investment at the Canada West Foundation, a think-tank.

Canadian exports to China have grown despite the diplomatic tensions. If Beijing’s pursuit of the TPP turns out to be genuine, its entry could be an economic benefit to Canada, said Dade. China, which has demonstrated a tendency to settle geopolitical scores by punishing exporters, would have to adhere to the rules outlined by the TPP, which go beyond tariff reductions. Some of the non-traditional areas the agreement covers include gender parity, environmental standards, and data governance.

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The Regional Comprehensive Economic Partnership  (RCEP), which concluded in November 2020, gave China access to 14 other countries in the Indo-Pacific. Many of the TPP countries overlap with RCEP, including Australian and Japan, however Canada is not a member of the latter. China could therefore use its membership in the RCEP to add weight behind the sincerity of its TPP bid when courting the likes of Canada.

Not a serious overture

“We trade for a living,” Dade said. “Trade is three-times more important for us than it is for the Americans and twice as important than for the Aussies. So if we’re a global trader, having China agree to stronger rules is a win.”

Still, few are counting on such a win anytime soon. The U.S. and its allies have made clear that they now view China as a strategic rival, if not an outright threat. Geopolitical considerations will trump economic ones for the foreseeable future.

“It’s important to think about the timing of China’s announcement and what the potential motivations are underlying the current timing,” said Lilly. “It’s also relevant that there is this growing sentiment among Western countries to counter China’s rise and increasing aggression.”

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Email: bbharti@postmedia.com