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Mega-Regional Trading Arrangements: TPP and TTIP - how China and other emerging economy react to the new rules governing the trade and investment?. Jiang, Qing- Yun Shanghai University of International Business and Economics & Co-Effort LLP, Shanghai.

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jiang qing yun shanghai university of international business and economics co effort llp shanghai

Mega-Regional Trading Arrangements: TPP and TTIP- how China and other emerging economy react to the new rules governing the trade and investment?

Jiang, Qing-Yun

Shanghai University of International Business and Economics

& Co-Effort LLP, Shanghai

problems with regionalism
Problems with Regionalism
  • Trade diversion tendency to favour over trade creation
  • Discrimination (Cordell Hull)
  • Inward focus
    • Market development – small and local
    • Cost to multilateral system
  • Competing blocs – less flexible than countries

Center for International Economic and Trade Governance

today s mega regionals
Today’s Mega-Regionals
  • RCEP
    • 10 ASEAN members plus China, Japan, Korea, Australia, India and New Zealand (by 2016?)
  • TPP
    • Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, Vietnam (P4 2005, TPP by 2015?)
  • T-TIP
    • United States and European Union (by 2015?)

Center for International Economic and Trade Governance

tpp combines existing rtas
TPP combines existing RTAs

Source: Fergusson et al (2013)

Center for International Economic and Trade Governance

comprehensive high quality rta
Comprehensive High Quality RTA

Source: Fergusson et al (2013)

Center for International Economic and Trade Governance

why tpp in 2008 2012
Why TPP in 2008-2012?
  • Doha failing,
    • TPP signals ‘pivot’ to Asia
    • TPP preferences may attract US business
    • Counter China’s influence in WTO via East Asians
  • Europe failing to grow or influence
    • Asia is the dynamic bit of the world economy
  • Force the Democrats to state their position on trade
  • Cement in the ‘US template’

Center for International Economic and Trade Governance

benefits of a single agreement
Benefits of a Single Agreement
  • More trade – and more advantage over excluded
  • US model harder to change ex post
  • ‘Eclipse models offered by ..China ..EU-Japan’ (Fergusson et al, 2013)

Center for International Economic and Trade Governance

us vs asian templates
US vs. Asian Templates

Center for International Economic and Trade Governance

key implications of the us template
Key implications of the US template
  • Small partners – small voices; little differentiation by income level
  • Excluded countries no voice;
  • IP provisions –extended even beyond US-Korea
  • Dispute settlement – more legalistic
  • Investor-State arbitration
  • SOEs
  • Secret negotiations

Center for International Economic and Trade Governance

ttip ambitious outcomes in
TTIP ambitious outcomes in …
  • Market access;
  • Regulatory issues and non-tariff barriers; and
  • Rules, principles, and new modes of cooperation to address shared global trade challenges and opportunities.

Center for International Economic and Trade Governance

ttip main areas
TTIP Main Areas

‘Living agreement’

Center for International Economic and Trade Governance

why ttip
Why TTIP?
  • EU
    • Stagnation – parallel of Single Market
    • Counter the ‘pivot’
    • Fear of trade exclusion
  • US
    • Access to sensitive markets
    • Extend US template or at least prevent emergence of an alternative
    • Even if not, reinforce ‘standards’ in WTS – justified by interest in GVCs

Center for International Economic and Trade Governance

what are these rtas worth tpp
What are these RTAs worth? TPP
  • Without Japan and Korea 0.4% of world trade
    • USA 1.9%, Mexico 3.9%, Vietnam 19.8% of exports
  • With Japan and Korea 1.6% of world trade
    • USA 4.4%, Mexico 6.2%, Vietnam 37.3% - exports
    • Japan 14.0%, Korea 12.4% - exports
  • Big effects for big reformers
  • Non-members lose somewhat

Source: Petri ,Plummer and Zhai (2012)

Center for International Economic and Trade Governance

what are these rtas worth tpp1
What are these RTAs worth? TPP
  • Without Japan and Korea 0.1% of world GDP
    • USA 0.1%, Mexico 0.7%, Vietnam 7.7%
  • With Japan and Korea 0.3% of world GDP
    • USA 0.4%, Mexico 1.0%, Vietnam 13.6%
    • Japan 2.2%, Korea 2.2%

Source: Petri ,Plummer and Zhai (2012)

Center for International Economic and Trade Governance

what is ttip worth a trade
What is TTIP worth (A) Trade?

Source: Francois et al , (2013)

RoW converges onto US-EU standards, thus reducing trade costs everywhere; everyone gains something

% change in exports by 2027, high spill-overs

Center for International Economic and Trade Governance

what is ttip worth a gdp
What is TTIP worth (A) - GDP?

Source: Francois et al , (2013)

RoW converges onto US-EU standards, thus reducing trade costs everywhere; everyone gains something

% change in GDP by 2027, high spill-overs

Center for International Economic and Trade Governance

effects on china of gdp
Effects on China - % of GDP

Center for International Economic and Trade Governance

how realistic are these plans
How realistic are these plans?
  • Less than 50:50 chance of TPP or TTIP occurring effectively
  • Lack of US Trade Promotion Authority
  • Opposition probably growing – in USA and in partners
  • But high commitment from some TPP governments
  • EU/US political challenges massive

Center for International Economic and Trade Governance

how to react at a world level
How to react at a world level?
  • Mega-RTAs are discriminatory
  • Multilateralism has served the world well – especially the smaller powers
    • More voice and rights
    • Strength in numbers
  • Complete Doha and start on WTO 2.0
    • Keep agenda relatively simple
    • Create genuine alliances among challenger powers
  • Try to make more use of Article 24 reviews

Center for International Economic and Trade Governance

china
China
  • China is excluded
  • Enter TPP?

Center for International Economic and Trade Governance

china1
China
  • China is excluded
  • Enter TPP?

Center for International Economic and Trade Governance

china macro responses
China: Macro responses
  • Emerging market group
    • Large growing market
    • Shallower integration;
    • Less demanding standards – based on China’s
  • EU-China
    • Counter-force ?
    • Constrain Europe options under TTIP
    • But what do you have to offer?

Center for International Economic and Trade Governance

china micro responses
China: Micro responses
  • Press to be included in TPP?
    • Likely influence on outcome small
    • Press for information? Not successful so far
  • Therefore - wait and see
  • Try to keep standards-deep processes flexible
  • Continue domestic reform process anyway
  • Press for WTO engagement
  • Establish US branches to use US law

Center for International Economic and Trade Governance

thank you
Thank you

Questions and Comments?

Center for International Economic and Trade Governance

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