jiang, qing- yun shanghai university of international business and economics
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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. - PowerPoint PPT PresentationTRANSCRIPT
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-YunShanghai University of International
Business and Economics& Co-Effort LLP, Shanghai
Mega-Regional Trading Arrangements: TPP and TTIP
How should China React?
Center for International Economic and Trade Governance
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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
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Center for International Economic and Trade Governance
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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?)
April 2014
Center for International Economic and Trade Governance
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TPP combines existing RTAs
April 2014
Source: Fergusson et al (2013)
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Comprehensive High Quality RTA
April 2014 Source: Fergusson et al (2013)
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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’
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Center for International Economic and Trade Governance
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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)
April 2014
Center for International Economic and Trade Governance
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US vs. Asian Templates
April 2014
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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
April 2014
Center for International Economic and Trade Governance
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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.
April 2014
Center for International Economic and Trade Governance
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TTIP Main Areas
market access for agricultural and industrial goods,
small- and medium-sized enterprises,
government procurement, sustainable developmentinvestment, services,intellectual property rights, dispute settlement, energy raw materials, competition, sanitary and phytosanitary measures,
customs/trade facilitation,
regulatory issues, state-owned enterprises.
April 2014
‘Living agreement’
Center for International Economic and Trade Governance
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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
April 2014
Center for International Economic and Trade Governance
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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 somewhatSource: Petri ,Plummer and Zhai (2012)
April 2014
Center for International Economic and Trade Governance
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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)
April 2014
Center for International Economic and Trade Governance
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What is TTIP worth (A) Trade?
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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
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What is TTIP worth (A) - GDP?
April 2014
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
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Effects on China - % of GDP
April 2014
RTA Liberalisation
TPP TPP and TTIP
TPP and TTIP, China accedes
Tariffs only -0.17 -0.60 1.01 Tariffs and some NTBs -0.40 -0.90 1.43 Tariffs and all NTBs -0.67 -2.26 2.10 Tariffs, NTBs, spill-overs -0.41 -1.51 2.44 Source: Aslan, Mavus and Oduncu, 2014
Center for International Economic and Trade Governance
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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
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Center for International Economic and Trade Governance
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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
April 2014
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China
April 2014
•China is excluded •Enter TPP?
TPP created fails Expected Value Probability 25% 75%
China in 1 N/A 0.25 China out 0 2 1.50
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China
April 2014
•China is excluded •Enter TPP?
TPP created fails Expected Value Probability 25% 75%
China in 1 N/A 0.25 China out 0 2 1.50
TPP created fails Expected
Value Probability 75% 25% China in 1 N/A 0.75 China out 0 2 0.50
Center for International Economic and Trade Governance
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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?
April 2014
Center for International Economic and Trade Governance
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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
April 2014
Center for International Economic and Trade Governance
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Thank you
Questions and Comments?
April 2014