China can lose $100 billion if TPP passes? That's a concern.
U.S. Blocks China Efforts to Promote Asia Trade Pact
Tussle Involves Regional Influence, Billions of Dollars in Trade
BEIJING—The U.S. has blocked China’s efforts to use a leaders’ summit to begin negotiations on a free-trade zone spanning the Pacific, people close to the matter said, as the world’s two largest economies tussle over influence in the region and billions of dollars in trade.
China, the host of this year’s Asia-Pacific Economic Cooperation forum on Nov. 10-11, has sought to highlight its expanding international role by pressing for a pact known as the Free Trade Area of the Asia Pacific.
Beijing’s free-trade zone has been on the agenda of APEC for years—and was initially pushed by the U.S.—but has been relegated to the back burner as the U.S. has poured its efforts into the Trans-Pacific Partnership, a trade pact it is negotiating with 11 nations that include Japan but not China.
For Beijing, the FTAAP would offer a way to ensure that it continues to get preferential access to some of its largest trading partners. A TPP deal would cost China about $100 billion a year in lost exports as the partners trade more among themselves and less with China, according to an estimate by the Peterson Institute for International Economics, in Washington.
“China wanted to reinvigorate” FTAAP, said Alan Bollard, executive director of APEC, an association of 21 economies including the U.S., China, Russia and Japan, whose leaders meet annually and whose decisions are taken by consensus. The APEC leaders’ summit next week will be the first major international conference held in Beijing since Xi Jinping took power as Communist Party chief.
Under U.S. pressure, Beijing dropped two provisions from the draft of an APEC communiqué to be released at the end of the leaders’ session, negotiators said. The statement no longer calls for an FTAAP “feasibility study”—trade lingo for starting negotiations—and has no target date to finish the deal. China wanted 2025 as an end date.
A U.S. Trade Representative spokesman said the U.S. and China are working on a “constructive proposal” for how APEC can further FTAAP under what the spokesman called a “long-term vision” that builds on other trade deals.
Starting work on it now, Washington fears, would hobble its efforts to complete the TPP, which has stalled on several fronts, such as how to handle state-owned enterprises or Japan’s agricultural subsidies.
“The U.S. is afraid that setting up a parallel process for different negotiations would deflect attention from TPP,” said Fred Bergsten, a senior fellow at the Peterson Institute. “Plus, if Congress thought China was getting into [negotiations] with the U.S., it would raise additional problems.”
Lu Feng, a Beijing University economist, said “there is a game going on between the two countries.” The U.S. pushes forward its proposals. But “the Chinese government doesn’t just want to wait” for the Americans, Mr. Lu said. “China wants to do something else.”
At times, the trade discussions have gotten heated. During an August negotiating session in Beijing, a U.S. delegate said that “my minister has made it abundantly clear” that the U.S. won’t agree to language that would signal the start of FTAAP negotiations, according to three officials familiar with the discussions. Still, China continued to press for the provisions.
After an Oct. 14 Kyodo News Service report that China’s FTAAP language was still in the draft communiqué caused an uproar in APEC circles, China relented, according to officials involved in the talks. Beijing dropped the controversial language in a draft it circulated to APEC members on Oct. 16 and is no longer pushing for it, the officials said.
The FTAAP won’t be absent from the talks: APEC negotiators will work over the coming week to further define it. Members have agreed to examine how other trade deals in the region could affect it, said Mr. Bollard, the APEC executive director.
Chinese Foreign Minister Wang Yi said in a speech on Thursday that the APEC talks would boost FTAAP by helping to consolidate various trade pacts. China’s APEC office and commerce ministry didn’t respond to requests for comment.
The scuffle over trade policy is the second recent example of the U.S. challenging Chinese international economic ambitions. The U.S. has also lobbied hard against Chinese plans for a new infrastructure development bank, said Western economic officials, including during teleconferences of the Group of Seven major industrial powers. The U.S. argued that a Chinese-dominated Asia Infrastructure Investment Bank could undercut standards used by other development banks, and might work primarily to boost Chinese firms.Washington circulated a June report by the Chinese Academy of Social Sciences that said the bank would help Chinese infrastructure companies plagued by excess capacity.
The bank is still being launched but without European and some major Asian countries.
Mr. Bergsten of the Peterson Institute said U.S. tactics are shortsighted. It should instead join the infrastructure bank, he said, and work from the inside to influence its direction.
“We keep saying, ‘We want China to show leadership,’ ” he said. “But when they take the lead, we say, ‘No, it doesn’t meet our tests.’ ”
U.S. Blocks China Efforts to Promote Asia Trade Pact
Tussle Involves Regional Influence, Billions of Dollars in Trade
BEIJING—The U.S. has blocked China’s efforts to use a leaders’ summit to begin negotiations on a free-trade zone spanning the Pacific, people close to the matter said, as the world’s two largest economies tussle over influence in the region and billions of dollars in trade.
China, the host of this year’s Asia-Pacific Economic Cooperation forum on Nov. 10-11, has sought to highlight its expanding international role by pressing for a pact known as the Free Trade Area of the Asia Pacific.
Beijing’s free-trade zone has been on the agenda of APEC for years—and was initially pushed by the U.S.—but has been relegated to the back burner as the U.S. has poured its efforts into the Trans-Pacific Partnership, a trade pact it is negotiating with 11 nations that include Japan but not China.
For Beijing, the FTAAP would offer a way to ensure that it continues to get preferential access to some of its largest trading partners. A TPP deal would cost China about $100 billion a year in lost exports as the partners trade more among themselves and less with China, according to an estimate by the Peterson Institute for International Economics, in Washington.
“China wanted to reinvigorate” FTAAP, said Alan Bollard, executive director of APEC, an association of 21 economies including the U.S., China, Russia and Japan, whose leaders meet annually and whose decisions are taken by consensus. The APEC leaders’ summit next week will be the first major international conference held in Beijing since Xi Jinping took power as Communist Party chief.
Under U.S. pressure, Beijing dropped two provisions from the draft of an APEC communiqué to be released at the end of the leaders’ session, negotiators said. The statement no longer calls for an FTAAP “feasibility study”—trade lingo for starting negotiations—and has no target date to finish the deal. China wanted 2025 as an end date.
A U.S. Trade Representative spokesman said the U.S. and China are working on a “constructive proposal” for how APEC can further FTAAP under what the spokesman called a “long-term vision” that builds on other trade deals.
Starting work on it now, Washington fears, would hobble its efforts to complete the TPP, which has stalled on several fronts, such as how to handle state-owned enterprises or Japan’s agricultural subsidies.
“The U.S. is afraid that setting up a parallel process for different negotiations would deflect attention from TPP,” said Fred Bergsten, a senior fellow at the Peterson Institute. “Plus, if Congress thought China was getting into [negotiations] with the U.S., it would raise additional problems.”
Lu Feng, a Beijing University economist, said “there is a game going on between the two countries.” The U.S. pushes forward its proposals. But “the Chinese government doesn’t just want to wait” for the Americans, Mr. Lu said. “China wants to do something else.”
At times, the trade discussions have gotten heated. During an August negotiating session in Beijing, a U.S. delegate said that “my minister has made it abundantly clear” that the U.S. won’t agree to language that would signal the start of FTAAP negotiations, according to three officials familiar with the discussions. Still, China continued to press for the provisions.
After an Oct. 14 Kyodo News Service report that China’s FTAAP language was still in the draft communiqué caused an uproar in APEC circles, China relented, according to officials involved in the talks. Beijing dropped the controversial language in a draft it circulated to APEC members on Oct. 16 and is no longer pushing for it, the officials said.
The FTAAP won’t be absent from the talks: APEC negotiators will work over the coming week to further define it. Members have agreed to examine how other trade deals in the region could affect it, said Mr. Bollard, the APEC executive director.
Chinese Foreign Minister Wang Yi said in a speech on Thursday that the APEC talks would boost FTAAP by helping to consolidate various trade pacts. China’s APEC office and commerce ministry didn’t respond to requests for comment.
The scuffle over trade policy is the second recent example of the U.S. challenging Chinese international economic ambitions. The U.S. has also lobbied hard against Chinese plans for a new infrastructure development bank, said Western economic officials, including during teleconferences of the Group of Seven major industrial powers. The U.S. argued that a Chinese-dominated Asia Infrastructure Investment Bank could undercut standards used by other development banks, and might work primarily to boost Chinese firms.Washington circulated a June report by the Chinese Academy of Social Sciences that said the bank would help Chinese infrastructure companies plagued by excess capacity.
The bank is still being launched but without European and some major Asian countries.
Mr. Bergsten of the Peterson Institute said U.S. tactics are shortsighted. It should instead join the infrastructure bank, he said, and work from the inside to influence its direction.
“We keep saying, ‘We want China to show leadership,’ ” he said. “But when they take the lead, we say, ‘No, it doesn’t meet our tests.’ ”
