Views of Australian Businesses on China Joining the CPTPP

Simon Lester -

On September 30, the Trade Subcommittee of the Australian Parliament's Joint Standing Committee on Foreign Affairs, Defence and Trade met with several witnesses from the Australian business community as part of its inquiry on "Expanding Membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership."

Among other things, the witnesses commented on the general attitudes of business groups towards China joining the CPTPP, China's ability to meet the obligations, and the general rationale for letting China in.

Arnold Jorge of the Export Council of Australia stated that "we believe that China should be given the opportunity to prove its credentials of meeting CPTPP requirements and that Australia should take this as our own opportunity to open and restart a new channel of dialogue with China, especially since all lines of communication seem closed at this time." He noted that "[w]e could use this to discuss with China our current disagreements on trade."

He also said that his organization had polled its members on the issue of whether China should join the CPTPP, and reported that of the 90 responses it received, "Fifty one per cent said no, 42 per cent said yes, and seven per cent were not sure." In comparison, on the same question for the United States, 75 per cent said yes, 14 per cent said no, and 11 per cent were not sure; for the UK, the results were yes at 75 per cent, no at 19 per cent and not sure at six per cent; for India, the results were yes at 87 per cent, no at three per cent, and not sure at 10 per cent; and for Taiwan, the results were 85 per cent for yes, nine per cent for no, and six per cent were not sure.

With regard to explanations of their views on China joining, some of the comments they received were as follows: "If China was to join, would they participate fairly? Would they not maintain artificial or hidden trade barriers, as they currently do with ChAFTA?" And: "It would be churlish not to include China and be unnecessarily confrontational"; "China should be allowed to join, but only if it abides by the agreed rules and removes current impediments to Australian exports to China."

Karen Batt of Standards Australia offered the following comment on China's ability to comply with the CPTPP's obligations on technical barriers to trade (TBT): "If we're talking about China, when it comes to TBT requirements, which is our focus at Standards Australia, I think it'd be very likely that China would be able to meet the obligations that are part of the CPTPP accession process."

David Olsson of the Australia China Business Council noted that "Australia will stand to benefit significantly from China's accession to the agreement," putting forward "six key reasons":

  • "it's an opportunity to address the behind-the-border, non-tariff barriers that continue to impede Australia's exports to China despite the elimination of tariffs under ChAFTA."
  • "it also covers trade and investment issues that have emerged since the signing and negotiation of ChAFTA over that 10-year period, particularly those relating to new developments in the management of data, technology and digital trade."
  • "there are detailed provisions around e-commerce that would enable us to secure greater certainty for the growing number of Australian SMEs that undertake e-commerce sales to China."
  • "it provides a framework to address many issues affecting the broader business environment, including environmental issues, corruption, transparency and labour standards, none of which are contained in any of the existing trade agreements that we're a party to."
  • "it could assist in lowering Australia's exposure to unilateral actions, such as those that we're currently experiencing, against a whole range of Australian industry sectors. Membership of the agreement by China would further enmesh China into a rules based trading system and raise the cost of Chinese unilateral behaviour that contravenes the terms of that membership."
  • "the impetus that China's accession would have to structural reform within China itself."

When asked about the prospects that China can effectively deal with the CPTPP's obligations on state-owned enterprises, Mr. Olsson said "there are many provisions within the current CPTPP which would require China to undertake far-reaching reforms and many of those reforms are opposed by vested interests within China. You identified state owned enterprises, but it also extends to labour standards, transparency and the storage of data." He noted that China has said "very publicly on a number of occasions that they want to be able to use this document as a way to use external forces to bring about change within China itself," and "[t]hat's a process that China have used in the past to try and bring about economic reform." In his view, "China has indicated it wants to adapt itself to bring itself up to speed to be able to address these issues."