context: Participation in FTA negotiations benefits China in several ways. First, by shaping global trading rules in strategic and emerging industries. As the WTO enters deadlock, grouping with large economies. e.g. the EU and Japan, may allow China to avoid isolation from the rule-making process. Also, mega-regional trade pacts such as RCEP may reduce the damage of the US-China trade war. And as China moves up the global value chain, it eyes other developing markets to export goods and standards.
China’s evolution over the past 30 years in manufacturing, division of labour and services trade is shaping new global trade rules, says Huang Qifan 黄奇帆 China International Economic Exchange Centre executive vice president. This has also led to the rise of goods’ proportion of total international trade, over 70 percent, with services around 30 percent, Huang adds, noting changes in manufacturers’ management methods have facilitated world-class production and led to control of global industrial supply and value chains.
Realising the Three Zeros (CP note: referring to zero tariffs, zero market barriers, zero subsidies) strategy is difficult under the WTO, as developing or less-developed countries believe it would lead to unfair treatment in global trade, Huang notes.
FTA negotiations could become a way for countries to achieve a Three Zeros policy with limitations, Huang says. If Europe, the US, Japan, Canada and Mexico form an FTA with a combined economic volume that is 50 percent of the world’s total by 2020, this would be tantamount to setting up a new integrated international trade system. China joining this trade system would link it to an international trade body accounting for 70 percent of global GDP, facilitating a Three Zeros-based free trade system.
China should also consider joining the Comprehensive Progressive Trans-Pacific Partnership (CPTPP), as the opportunities presented by the CPTPP echo those made available by the WTO, says Huang. Huang concludes that trade negotiations will impact China's role in world economic development and lay the foundation for China to become a ‘modern nation’ by 2035 and a ‘strong nation’ by 2050.