General

According to the website of the Ministry of Commerce, on September 16, China's Minister of Commerce Wang Wentao submitted a written letter to China's official application to join the CPTPP to New Zealand Minister of Trade and Export Growth O'Connor, the depositary of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The ministers of the two countries also held a teleconference to communicate on the follow-up work related to China's formal application for membership.

With the huge impact of the new crown epidemic on the recovery of the world economy, China, as the world’s largest country in trade in goods and the largest consumer market in the world, applying to join the CPTPP can be described as both opportunities and challenges. This is not only a major event for China, but also ushered in CPTPP. This will promote domestic reforms and the steady recovery of the world economy.

Once joined, it accounts for about 30% of global GDP

At present, the founding members of CPTPP include 11 countries including Australia, Japan, Canada, New Zealand, Singapore, Vietnam, Mexico, etc., covering a total of 500 million people around the world. The total production of these countries amounts to 11 trillion US dollars, accounting for approximately global GDP. Of 13%.

Once China joins, CPTPP will cover nearly 2 billion people around the world, and GDP will exceed 25 trillion US dollars, accounting for about 30% of the world. With China's accession to the CPTPP, there has been a doubling in population size, market size, and trade scale. Not only will the advantage of market scale be brought into play, and the advantage of trade expansion will appear, CPTPP will also have more vitality, more development potential and more influence.

Why join CPTTP?

1. Conducive to alleviating Sino-US trade frictions

If China joins the CPTPP, subject to stricter rules and standards and higher compliance costs, it is likely to increase imports to the United States, thereby reducing the trade deficit between the two countries; at the same time, joining the CPTPP means that China is willing to further open up the investment market. Accept higher standard investment terms. In addition, the trade creation effect of China's accession to the CPTPP can also effectively alleviate the trade diversion effect of Sino-US trade frictions and help resolve the structural contradictions in Sino-US relations.

2. Fill in the gaps in trade agreements with Mexico and Canada

Statistics show that Mexico is China’s second largest trading partner in Latin America (China’s exports to Latin America in 2020 are 1.043.48 billion yuan, of which Mexico is 195.02 billion yuan and 241.65 billion yuan.), China is Canada’s second largest import Origin and second largest export market (The total value of China's exports to Canada in 2020 is 291.75 billion yuan, compared with 254.37 billion yuan in 2019, an increase of 13% year-on-year.). At present, my country has not signed relevant trade agreements with these two trading partners. After joining the CPTPP, this gap will be filled.

3. CPTPP has a larger tax cut ratio

By calculating the proportion of the most-favoured-nation treatment (MFN) tariff-zero products of each member country and the proportion of zero-tariff products one year after the implementation of the agreement, it can be seen that after the implementation of the CPTPP, the proportion of zero-tariffs in most member states will reach more than 80%.

From the final result, CPTPP has directly adopted zero-tariff measures on more than 98% of commodities. According to the calculations of the Peterson Institute for International Economics (PIIE), joining CPTPP will bring greater economic benefits to China. In 2030, national income will increase by US$298 billion. In addition, if China joins the CPTPP, the annual contribution of the agreement to global revenue will increase to 632 billion U.S. dollars.

4. CPTPP is a higher level trade agreement

RCEP focuses on traditional tariffs on trade in goods, while CPTPP includes new business areas such as trade in services, high technology, intellectual property rights, and data flows, with higher standards.

Joining CPTPP is a huge opportunity for China's future service industry, high-tech industry and digital economy. According to statistics, China's digital economy accounts for 36% of total GDP, and the service industry accounts for nearly 60% of GDP. After joining the CPTPP, China's digital economy and service industry will step up to go global.

5. There are more ways to determine the origin of CPTPP

CPTPP’s origin determination methods include price method (based on the value of specific non-originating materials), deduction method (based on the value of non-originating materials), and value-added method (based on the value of original materials). Method, as long as the product meets one of the methods for calculating the regional value content, it is regarded as the original product.

What opportunities will be brought after successfully joining?

The benefits of joining CPTPP are still enormous for our country. This agreement will strengthen the links between member economies and promote trade, investment and economic growth in the Asia-Pacific region.

my country has joined the RCEP, and RCEP focuses on the traditional tariffs on trade in goods. It has formed the world’s largest trade zone with the other 14 countries for the exchange of various resources. This free trade zone includes the east coast and the south coast of the Pacific, while the CPTPP focuses more on Service trade, high-tech intellectual property data flow and other new business fields, joining CPTPP, can strengthen the integration of services and various cooperation with the entire Pacific Rim 12 countries, supplementing the shortcomings of RCEP.

Moreover, many issues that cannot be resolved in the WTO, such as digital economy, intellectual property protection, environmental standards, state-owned enterprise reform, labor standards, etc., can be well resolved in the CPTPP, which is conducive to strengthening China's progress in these areas.

After joining the CPTPP, China's future service industry, high-tech industry and digital economy will usher in an unprecedented opportunity, which can promote China's further reform and opening up and realize China's economic take-off. In the long run, China's accession to CPTPP will help us become an internationalized country and improve our country's international competitiveness.

The UK has formally applied to join the CPTPP on February 1, 2021.