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Australia’s Asia-Pacific strategy endangered by UK CPTPP accession

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Australian Prime Minister Scott Morrison arrives at Haneda airport in Tokyo, Japan, 17 November, 2020 (Photo: Reuters/Issei Kato/File Photo).

In Brief

Australia’s Morrison government has welcomed the UK’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In doing so, it risks undermining the positive results of more than half a century of diplomacy.

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Over the years, Canberra has championed Asia Pacific regional economic integration, preferring it to the ‘East Asian’ approach favoured by many ASEAN countries and China. Including the United States in regional economic groupings served both economic and geopolitical purposes. Washington’s participation increased prospects for the grouping to set the rules of the game in international trade.

But trade agreements also have security dimensions. ‘Anchoring’ the United States in the region through institutionalised economic collaboration was expected to strengthen US alliances with regional partners and to discourage its longstanding isolationist tendencies.

The establishment of APEC in 1989 was an early success. It was followed by the Trans-Pacific Partnership (TPP) in 2016, and its reduced form — after the Trump administration withdrew the United States from the agreement — the CPTPP in 2018. The TPP was not intended to exclude China. Rather, by creating a template for an Asia Pacific free trade area, it would pressure Beijing to undertake domestic economic reforms so that it could eventually join the grouping.

The United Kingdom’s accession to the CPTPP would be transformational, but not for its economic effects. Although the United Kingdom would become the grouping’s second-largest economy after Japan, its economy is only one-fifth the size of China’s or one-seventh that of the United States in purchasing power parity terms. While the UK’s desire to deepen economic ties with the region is understandable, the question is what value it adds to the CPTPP. It has signed — or is finalising — bilateral trade agreements with all but two (Brunei and Malaysia) of the CPTPP’s 11 members. If it reaches a bilateral agreement with Australia, the economic benefits for Australia from its accession to the CPTPP will be minimal.

Rather, UK membership would transform the CPTPP from a template for realising APEC’s goal of creating an Asia Pacific free trade area to a club of ‘like-minded countries’ committed to deeper economic integration. Some have already suggested it should be a renamed, with one author proposing the ‘Comprehensive Agreement for International Partnership’.

Canberra’s Asia Pacific strategy rests on securing US participation in regional agreements. Under the Biden administration, US re-entry appears unlikely in the immediate future given its domestic preoccupations. Some argue that UK membership could revitalise the CPTPP, which has stalled since its signature in March 2018 with four members (Brunei, Chile, Malaysia, and Peru) yet to ratify the agreement. UK membership, it is suggested, might also encourage the United States to rejoin the agreement. But Washington’s decision on the TPP is unlikely to be affected by the UK’s accession; it clearly has little enthusiasm for rewarding ‘Global Britain’ for its exit from the EU.

Rather than revitalising the agreement, UK accession might lead to the unravelling of the CPTPP by removing its core raison d’etre as a template for regional free trade. The Malaysian government has always had doubts about the agreement, especially its provisions on government procurement and state-owned enterprises, which it fears will undermine its efforts to promote ‘Bumiputera’ (Malay) economic interests.

Malaysia has long been the champion of an East Asian alternative to regional economic cooperation, originally through the East Asian Economic Caucus (EAEC) — transformed over time into the East Asia Summit, whose economic dimension became the Regional Comprehensive Economic Partnership (RCEP), signed in November 2020. Compared to the CPTPP, RCEP’s rules are less demanding, making it attractive not just to Malaysia, but to most ASEAN states. Economic modelling indicates that, although its provisions are shallower than the CPTPP, its broader membership — even without India — will produce larger welfare gains than the CPTPP without China or the United States. The UK’s accession might unintentionally enhance the appeal of RCEP.

Should Canberra be concerned? After all, Australia is a founding member of RCEP. The grouping’s membership is far removed from Malaysia’s former prime minister Mahathir Mohamad’s original design for an Asian-only EAEC. But from economic, political and strategic perspectives, Australia should have concerns.

As former US president Barack Obama asserted, a significant objective of the TPP was to set the ‘rules of the game’ for economic interdependence in the Asia Pacific region. And these would be US rules (supported for the most part by Australia) — not China’s. Eight years of RCEP negotiations have resulted in an agreement with provisions far shallower than those of the CPTPP. China’s preferences on rules prevail.

Perceptions matter in politics. Australia’s support for UK entry to the CPTPP appears to be part of a retreat to an Anglosphere that brings together — in Gideon Rachman’s words — ‘a group of English-speaking countries, all of whom have adopted more confrontational policies towards Beijing’.

There is also the strategic dimension to regional economic agreements. While the CPTPP would not be the only factor influencing Washington’s engagement with the Asia Pacific, removing the regional dimension from the agreement significantly weakens the economics–security nexus.

John Ravenhill is Professor and Chair of the Political Science Department at the University of Waterloo, Ontario.

2 responses to “Australia’s Asia-Pacific strategy endangered by UK CPTPP accession”

  1. As John Ravenhill argues, wallowing in the ‘Anglosphere’ Global Britain rhetoric – linked to BoJos ‘Dunkirk spirit’ trope – not only does a disservice to Australia’s unique contribution to regional integration in the Asia-Pacific.
    But it also does a disservice to European integration and, yes, to the British people who were sold the Brexit calamity on the basis of fears of migration and the empty promise of ‘taking back control’ in an interdependent world
    The logic of regional integrations is to forge first of all links to a country’s closest partners. The English – and more unfortunately the Scots and Irish of the north – are paying the price of Brexit, one of the greatest acts of self harm in history.
    It would be best for all concerned that these costs (camouflaged somewhat by the Covid 19 pandemic) could force the UK to take on a Norwegian type status in relation to the EU in a future UK-EU FTA.
    This may well avoid the possible break up of the UK that increasingly possible Scottish independence and Irish unification would engender.

  2. Hearing the CPTPP characterised as an ‘Anglosphere’ as if Japan, Malaysia, Mexico, Peru, Singapore were of no account is somewhat surprising coming from a university in a member nation.

    The impact of Brexit does little harm to European integration in the long run.

    Exports from the UK to the EU have steadily deteriorated as members of the EU while exports to Asia have grown in spite of no freedom to build closer relations unilaterally due to EU membership. Note that CPTPP restricts none of its members from pursuing relationships unilaterally; the EU does.

    The UK had been increasingly on the sidelines in the EU since its decision not to join the Eurozone early on. Notably, the UK had lobbied the EU for closer relations with the likes of Australia for many years. No action in this direction was taken until it was clear the UK was on course to leave the EU.

    The UK has done things by the book: left the EU according to EU treaty, with the EU setting all of the terms as to how that happened, following a free and fair vote on the subject.

    The UK does bring things to the table for the CPTPP politically, such as a permanent seat on the UN Security Council in a package more open to discussion by consensus than either the US or China.

    There is some desperation in EU circles to see the UK fail as a result of this exercise as an opportunity to validate itself.

    As an aside, the suggestion that the UK could be in a ‘Norway’ arrangement with the EU betrays a lack of understanding of what Norway’s arrangement is: Norway is in EFTA, which is a trade bloc with a bilateral relationship with the EU. If UK joins CPTPP and CPTPP builds a bilateral FTA with the EU then the UK will be in an ‘Norway-type’ arrangement with the EU.

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