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Why the CPTPP could be the answer to the US-China trade war

35 0 14
11.01.2019

Alexander Graham Bell once said that when one door closes, another opens. So it is now: 2018 saw the beginning of a trade war between the United States and China, but also gave birth to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an 11-member, cutting-edge trade agreement fashioned for the 21st century that came into force on December 30.

A bold decision by China to join the CPTPP could address many challenges that the continuing trade war created. By adopting CPTPP trade rules, China could ease tensions with the US and other countries. By joining a dynamic regional trade network, China could accelerate its economic growth and diversify its markets. And by committing itself to high international policy standards, China could energise its own reforms in building a modern, open economy.

Let’s begin with the economics. The CPTPP would lend momentum to China’s “opening up” policy, which is widely seen as crucial to China’s growth. China already has robust trade and investment relations with other CPTPP members, yet the agreement could reduce some high barriers that still saddle this trade. Trade would increase in Asia-Pacific networks, making manufacturing supply chains even more productive and diversifying the region’s dependence on North America.

In forthcoming study for the Peterson Institute for International Economics, we estimate that the CPTPP, in its present form, will........

© South China Morning Post