China and Taiwan Both Seek to Join the CPTPP

INSIGHTi
China and Taiwan Both Seek to Join the
CPTPP
September 24, 2021
On September 16, China announced it had formal y submitted a request to join the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP), the trade-opening agreement formed
among 11 members of the Trans-Pacific Partnership (TPP) following U.S. withdrawal from the TPP in
2017. On September 22, Taiwan formal y submitted an application to join CPTPP, as a separate customs
territory, in a similar approach as it used to join the World Trade Organization (WTO) in 2002. China’s
ability to join CPTPP faces questions over its intent to comply with or accept CPTPP rules, while
Taiwan’s bid faces various political constraints. Both bids raise issues for the United States and Congress
regarding the United States’ trade leadership and economic role in Asia. China is also a member of the 15-
member Regional Comprehensive Economic Partnership Agreement (RCEP) concluded in 2020.
CPTPP
In 2016, after several years of negotiation originating under the George W. Bush Administration, the
Obama Administration signed the TPP together with 11 Asia-Pacific countries. The United States led the
negotiation of TPP provisions to eliminate tariff and nontariff barriers and establish enforceable rules on
digital trade, investment, government procurement, intel ectual property rights (IPR), state-owned
enterprises (SOEs), labor, and environment (see CRS analysis on TPP). The agreement was not submitted
to Congress for approval. President Trump withdrew the United States as a signatory in 2017, citing an
intention to focus on bilateral negotiations, among other issues.
The 11 remaining members created the CPTPP, a legal instrument that incorporates the TPP text, except
for certain administrative provisions (e.g., accession, entry into force, withdrawal), and suspends 22
substantive TPP trade commitments (e.g., IPR provisions on biologics). CPTPP countries also agreed to
certain additional country-specific exemptions; for example, a side letter grants Vietnam a five-year
exemption from dispute settlement regarding cross-border data flows.
The CPTPP entered into force among Australia, Canada, Japan, Mexico, New Zealand, and Singapore in
2018, for Vietnam in 2019, and for Peru in 2021. The remaining signatories (Brunei, Chile, and Malaysia)
have not ratified the agreement. In 2019, the parties established a CPTPP accession process. To date, the
United Kingdom, China, and Taiwan, have submitted accession requests, al in 2021.
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Next Steps and Prospects for Accession
CPTPP accession requires the unanimous consent of its members to begin market access negotiations (the
UK recently received such approval). If negotiations proceed, CPTPP parties determine whether an
applicant is qualified to join based on its market access offers and demonstrated ability to adhere to
CPTPP rules. Such approval for China may be difficult given global concerns about its trade practices,
economic coercion, and industrial policies. Officials from Australia have highlighted trade frictions with
China as a potential hurdle, and Japanese officials have questioned China’s ability to adhere to CPTPP
commitments. Taiwan’s economic policies may be more aligned with CPTPP criteria, but its participation
faces significant political chal enges.
The CPTPP contains provisions contrary to China’s current policies and practices. Such provisions
include limitations on SOE activity and subsidies, restrictions on requirements to localize data, and
requirements to open government procurement to foreign competition—provisions that China is unlikely
to meet without significant changes to its recent laws, including on data security and government
procurement standards. Taiwan’s application chal enges broader efforts by the Chinese government to
restrict Taiwan’s participation in international organizations and multilateral agreements. In the case of
the WTO, this political chal enge was overcome through contemporaneous consideration of both China
and Taiwan’s participation and consideration of Taiwan as a separate customs territory.
Potential Implications for U.S. Trade Policy
China’s formal accession request and potential CPTPP participation, alongside Taiwan’s, may have
implications for how countries view U.S. trade and economic leadership and U.S. influence in developing
new trade rules. The United States is not involved in any current major Asia-Pacific regional trade
agreements or negotiations. TPP proponents argued that the U.S. withdrawal from TPP ceded U.S.
leadership in developing new trade rules, particularly in areas where trade barriers are of increasing
concern and where comprehensive multilateral rules and disciplines do not currently exist (e.g., SOEs and
digital trade), though TPP critics questioned this premise. Some Members and observers have urged the
Biden Administration to join the CPTPP arguing this wil advance U.S. trade and economic engagement
in Asia and ensure U.S. priorities continue to shape regional trade rules.
The Biden Administration has stated it would not join the CPTPP in its current form. The Administration
reportedly may instead focus on a potential digital trade agreement among key U.S. trade partners in the
region, though it has not announced such plans to date.
Some trade policy experts caution that China’s economic influence could potential y persuade CPTPP
members to weaken the current agreement’s standards in exchange for greater access to China’s market.
Others suggest that China’s application, which China’s leaders claim is driven by a desire for more
substantive multilateral engagement on trade, may reflect a desire to fracture perceived containment
strategies among the United States and its al ies within the CPTPP, such as Japan.
China and Taiwan adhering to CPTPP rules and agreeing to liberalize their tariffs in line with existing
CPTPP commitments (i.e., 99% tariff elimination) could have mixed economic impacts for the United
States. Such an outcome could result in domestic reforms in China long sought by the United States. It
also could put U.S. firms at a competitive disadvantage in China, Taiwan, and certain CPTPP markets.
The impact of China and Taiwan’s CPTPP accession requests may depend on their intent and the
interpretation and response of CPTPP members and the United States. Questions for Congress as it
considers these scenarios include:

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 What are the costs and benefits to the United States of participating or not participating in
significant regional trade liberalization and rules-setting initiatives involving major U.S.
trading partners?
 How important is it for U.S. priorities to shape regional trade and investment rules and
what are the most effective tools to achieve this?
 How does the expiration of U.S. Trade Promotion Authority (TPA) affect the
advancement of future U.S. trade agreements?


Author Information

Brock R. Williams
Michael D. Sutherland
Specialist in International Trade and Finance
Analyst in International Trade and Finance





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