Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

FTAs in the Asia-Pacific: a Chinese Perspective
Zhang Yunling
Professor, Director of Academic Division of International Studies, Chinese Academyof Social Sciences (CASS)

Shen Minghui
PhD, associate research fellow of National Institute of International Strategy, CASS

1. Overview
While the multilateral trade process (Doha Development Agenda) stagnates, theregional trade arrangements (RTAs) are prevailing. Currently, some 546 notificationsof RTAs have been received by the GATT/WTO. The trade covered by RTAs accounts
for about 50% of the global trade. Compared with WTO process, RTAs are easier
negotiated since members are selected based on shared interests and good will. RTAs
could cover more areas, liberalization, facilitation, cooperation, as well as political
relations. RTAs are actually not an alternative to the multilateral arrangements, andthey seem supplementary in nature.
Asian economic integration used to be market oriented. They have become very
active in negotiating FTAs in the 21st century. FTAs in Asia has increased dramatically,
with 109 FTAs in effect, 75 under negotiation and 50 proposed, and in East Asia,
there are with 67 FTAs in effect, 63 under negotiation and 41 proposed as of March,
2013.1
Gains from FTAs could be realized either through traditional benefits or
non-traditional benefits. The traditional benefits consist of trade creation & trade
diversion, improved terms of trade, increasing returns to scale, wealth effectoriginating from more efficient allocation of resources due to improved competition,
stimulating regional and outside investment to promote economic growth. The
non-traditional benefits are more persuasive from a regionalism perspective: obtaining
insurance to avoid loss of wide-range trade war through regional cooperation, creating
1

ADB, Asian Economic Integration Monitor, Mandaluyong City, Philippines: Asian Development Bank, March,
2013, p51.

1Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

a more secure international environment, enhancing the bargaining power in external
negotiations, promoting domestic reform.
China began its efforts on negotiating FTAs after joining WTO in 2001. The FTA
strategy serves China’s interests in many ways: market access (trade, service, as wellas investment), promoting domestic opening and reform, as well as improving its
relations with the partners.1 Currently, China has 14 FTA partners comprising of 31
economies, among which 8 Agreements have been signed already including
China-ASEAN FTA, China-Pakistan FTA, China-Chile FTA, China-New Zealand
FTA, China-Singapore FTA, China-Peru FTA, China-Costa Rica FTA and
Asia-Pacific Trade Agreement (known as the Bangkok Agreement signed in 2001).2
China-ASEAN FTA (CAFTA) is China’s first initiative, which was proposed by
China and supported by ASEAN as a group in 2000. The Framework Agreement was
signed in 2002, the Agreement on Trade in Goods in 2004, the Agreement on Trade inServices in 2007 and the Agreement on Investment in 2009 (fully implementationfrom 2010). Nowadays, five more FTAs are under negotiation including China-GCC(Gulf Cooperation Council) FTA, China-Australia FTA, China-Iceland FTA,
China-Norway FTA and China-SACU (Southern African Customs Union) FTA. And
four more FTAs are under consideration, including China-India Regional Trade
Arrangement, China-Korea FTA (CKFTA), China-Japan-Korea FTA (CJK FTA) andChina-Switzerland FTA.
China has adopted a gradual approach when negotiating FTAs with trading
partners: firstgoods, then services and investment. China-ASEAN FTA,

China-Pakistan FTA (CPFTA) and the China-Chile FTA were conducted via thisgradual approach. Both CAFTA and CPFTA were preceded by an Early Harvest
Program, after which further negotiations around goods, service and investment took
place. 3 In contrast, China-New Zealand, China–Singapore and China–Peru FTAs are1

http://fta.mofcom.gov.cn/english/index.shtml
As the special arrangements, Mainland China signed Close Economic Partnership Agreement (CEPA) with Hong
Kong in, with Macao in, the Economic Cooperation Framework Agreement with Taiwan in.
3
Zhang, Yunling, Economic and Social Impact of Liberalization: A Study on Early Harvest Program under
China–ASEAN FTA, Beijing: Social Science Academic Press, 2009.
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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

comprehensive and single undertaking upon signing.1
In general, FTAs between China and the developing economies tend to center
upon the market access and economic cooperation, while those with the developed
economies, such as New Zealand and Singapore, incorporate more policy andinstitutional issues including intellectual property rights, transparency measures,quality assurance standards and competition policy.2
2. RCEP as a new strategy
Due to continuous pursuit of FTAs, East Asia is featured with a tangled web ofoverlapping bilateral and plurilateral trade agreements, often described as the"Spaghetti Bowl” effect (or Asian Noodle Bowl). Noodle Bowl effect usually meansthat one same commodity is subject to different tariffs, tariff reduction trajectories,
and ROOs for obtaining preferences due to the multiple, overlapping FTAs. With agrowing number of FTAs, the trading market is likely to become chaotic, andtransaction costs increase correspondingly due to cumbersome red tapes andcross-border procedures.3

Table 1 Overview of ROO of FTAs in East Asia

CTC
RVC Ratio
SP
Cumulation
De Minimis

AFTA
Yes,
but
not
necessary
40%
Chap.
50-63

ACFTA
Yes,
but
not
necessary
40%
Chap.
50-63

AJCEP
Yes

AKCEC
Yes

JSEPA
Yes

NCFTA
Yes

40%
Chap.
50-63

Yes
Not
mentionedYes
Notmentione
d

Yes
7-10%

60-40%
NotmentionedYes
10%60-40%
Chap.
28-40,5063
Yes
8-10%

50-30%
Chap.
28-40,5063
Yes
Notmentioned

1

Zhang, Yunling (ed.), China and Asian Regionalism, Singapore: World Scientific c Publishing Company, 2009.
Zhang Yunling, People’s Republic of China, in edited by Masahiro Kawai and Ganeshan Wignaraja, Asia’s Free
Trade Agreements: How is Business Responding?, Edward Elgar Publishing Limited, 2011, pp.107-109.
3
Jagdish Natwarlal Bhagwati, US Trade Policy: The Infatuation with FTAs, Columbia University Discussion Paper
Series 726, New York: Columbia University, 1995.
Baldwin, R., Multilateralizing Regionalism: Spaghetti Bowls as Building Blocks on the Path to Global Free Trade,the World Economy Vol.29, 2006.
2

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

Notes: (1) AFTA = ASEAN Free Trade Agreement, ACCEC = ASEAN-China
Comprehensive Economic Cooperation, AJCEP = ASEAN-Japan Comprehensive
Economic Partnership, AKCEC = ASEAN-Korea Comprehensive Economic
Cooperation, ASEAN = Association of Southeast Asian Nations, JSEPA =Japan-Singapore Economic Partnership Agreement, Korea = Republic of Korea,
NCFTA = .New Zealand-China Free Trade Agreement.
(2)CTC: change in tariff classification rule, RVC: regional value content rule, SP:
specific process rule
Source: Summarized from individual FTA agreements.

As the ADB report indicates, inconsistencies between agreements may raise costs ofdoing business and cause welfare losses associated with trade diversion. 1 In fact, East
Asian economies differ much in their respective cross-border measures as indicatedby Table 2. Noodle Bowl effect is particularly significant compared to the otherregions due to regional under-development in doing business.

Table 2
Economies

Australia
Brunei
Cambodia
China
India
Indonesia
Japan
ROK
Lao PDR
Malaysia
Myanmar
New
Zealand
Philippines
Singapore
Thailand
Viet Nam

Doing Business in East Asia

Documents toexport(number)
6
6
9
8
9
4
3
3
10
5
-5

Documents toimport(number)
7
6
10
5
11
7
5
3
10
6
-6

Time toexport (days)

Time toimport (days)

9
19
22
21
16
17
10
7
26
11
-10

8
15
26
24
20
23
11
7
26
8
-9

7
4
5
6

8
4
5
8

15
5
14
21

14
4
13
21

1

ADB, Asian Economic Integration Monitor, Mandaluyong City, Philippines: Asian Development Bank, July 2012,p44.

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

Notes: Documents required for clearance by government ministries, customs
authorities, port and container terminal authorities, health and technical control
agencies and banks are taken into account. Time required for obtaining all the
documents, inland transport and handling, customs clearance and inspections, port
and terminal handling and does not include ocean transport time.
Source: Dong Business 2013.

As a result of the Noodle Bowl effect, the usage rates of FTAs’ in East Asia are
low in all economies. Many companies may abandon the use of FTAs’ preference due
to varying schedules for phasing out tariffs, exclusion lists, conflicting standards,
ROOs across FTAs and particularly cumbersome red tapes and documents including
certificates of origin (CO). For instance, ADB study seeks the views of andexperience with FTAs from 841 manufacturing firms based in the China, Japan, theROK, the Philippines, Singapore, and Thailand, the average percentage of surveyed
firms utilizing FTA preferences is about 28%. 1 A survey of China firms wasundertaken in order to investigate the actual and perceived effects of FTAs on export
businesses in late 2008. The 232 firms surveyed were randomly selected from 15
provinces and major cities. According to the firms that made use of FTAs,
China-ASEAN FTA had the highest usage rate, for 29.6 percent, China-Chile FTA for
14.6 percent, China- Pakistan FTA, for 9.7 percent, China-New Zealand FTA, for 6.6
percent only. 2
Recognizing the problems created by the overlap of FTAs in East Asia, the need tomove toward an integrated regional FTA has been emphasized. A preliminary politicalconsensus in this direction was reached by ASEAN+3 Economic Ministers in 2004
when it was recognized that study of the feasibility of an East Asia FTA (EAFTA) was
needed. Initiated and chaired by the China, a joint expert group of experts from 13
ASEAN+3 countries (ASEAN plus China, Japan and ROK) was set up in 2005. The
group presented a report to the ASEAN+3 Economic Ministers in September 2006,
which asserted that the rationale for an EAFTA was consistent with the interests of1

Shen Minghui, Towards a Region-wide FTA in East Asia----A Chinese perspective, Ritsumeikan International
Affairs, No.34, 2011, pp.16-18.
2
Zhang Yunling, Shen Minghui and Liu Dewei, Impact of FTA on Business Activity --A survey on Firms in PRC (thePeople's Republic of China), Contemporary Asian-Pacific Studies, No.1, 2010.

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

East Asian countries. The economic benefits from EAFTA would exceed AFTA, any
ASEAN+1 FTA, or other bilateral and sub-regional arrangements. 1 The report
recommended that an EAFTA should be comprehensive, high standard and negotiatedand implemented as a single undertaking. It recommended that an EAFTA go beyond
existing East Asian FTAs, be formed among ASEAN+3 countries first, and then to beextended to other countries in the region. 2 The group urged East Asian leaders tostart the process of forming an EAFTA soon. Unfortunately, the recommendations in
the first report were not immediately accepted. EAFTA Phase II Study report
recommended that EAFTA should follow a gradual and realistic strategy withconsolidating the existing FTAs into a region-wide FTA and creating a unified ROO
regime as the first step. Importance was attached on the concrete trade and investment
facilitation measures which could help all participating economies to fully realize thebenefits of an EAFTA.3
Japan proposed an alternative approach, the comprehensive economic partnershipof East Asia (CEPEA) based on the East Asia Summit (EAS) framework in 2006. The
report of the feasibility study of CEPEA was completed in July 2008 and presented to
the EAS ministers’ meeting. It argued that a wider regional comprehensive economic
partnership that included India, Australia and New Zealand would create larger gains
than any other regional FTA. The report recommended that the CEPEA should
provide a broader framework for regional integration and cooperation—with
economic cooperation as the priority and an FTA as a core, covering facilitation,liberalization, environment, energy, and information and communication technology. 4
The study report sets out CEPEA’s objectives as deepening economic integration,
narrowing development gaps, and achieving sustainable development through thethree pillars of economic cooperation, trade and investment facilitation, and trade and1Zhang Yunling and Shen Minghui, The Status of East Asian Free Trade Agreements, ADBI Working Paper Series
No.282, May 2011, p26.
2
Joint Expert Group for Feasibility Study on EAFTA, Towards an East Asian FTA: Modality and Roadmap, 2006.
http://www.thaifta.com/ThaiFTA/Portals/O/eafta_report.pdf
3
Joint Expert Group on EAFTA Phase II Study, Desirable and Feasible Option for an East Asia FTA: A Report,
Monograph, 2009.
4
CEPEA Track Two Study Group, Report of the Track Two Study Group on Comprehensive Economic Partnershipin East Asia (CEPEA), Monograph, June 2008.

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

investment liberalization, as well as institutional developments.1
Almost no significant progress was made in forging a regional FTA in East Asia
before a joint proposal by China and Japan was declared in 2011 (Initiative on
Speeding up the Establishment of an EAFTA and CEPEA), which is considered as a
big step for formulating a broadly based RTA in East Asia with the background of
progress of Trans-Pacific Partnership agreement (TPP) in the Asia-Pacific led by the
US.2 ASEAN quickly made the response by initiating the Regional Comprehensive
Economic Partnership (RCEP) in November 2011. During the ASEAN Economic
Ministers Meeting in 2012, the guiding principles of RCEP were endorsed. RCEP was
fully supported by all ASEAN +6 countries during the EAS meeting at the end of theyear.
The RCEP will seek to promote greater regional economic integration,
progressively eliminate tariff and non-tariff barriers, and ensure consistency with the
WTO’s rules at the same time. The RCEP is expected to tackle trade in goods, trade inservices, investment, economic and technical cooperation, intellectual property,
competition policy, and dispute settlement etc. An open accession scheme is adopted
to allow future members to join as long as they agree to comply with RCEP’s rules
and guidelines.
RCEP is expected to deepen the regional integration through further liberalizationof trade, service and investment, harmonization of policies, rules and standards
governing trade and investment. Although market-driven economic integration has
contributed much towards East Asian production networks and supply chains, many
impediments, including cross-border measures, non-compatible domestic rules,
discriminatory regulations and red tapes increasing doing business costs, are still left
to be dealt with. 3 RCEP is therefore regarded as part of supporting policy frameworkfor deepening regional production networks and supply chains.
1

CEPEA Track Two Study Group, Phase II Report of the Track Two Study Group on Comprehensive Economic
Partnership in East Asia (CEPEA), Monograph, July 2009.
2
Joel Rathus, East Asian Free Trade Area: bank on it, East Asia Forum, December 11th, 2011,
http://www.eastasiaforum.org/2011/12/11/east-asian-free-trade-area-bank-on-it/3Masahiro Kawai and Ganeshan Wignaraja, Asian FTAs: Trends and Challenges, ADBI Working Paper Series No.
144, August 2009, p5.

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

RCEP is expected to be one new effort to embrace East Asian model of FTA forthe region. Considering large development gap in East Asian economies, one highstandard FTA could hardly meet the diversified needs in the region. Flexible anddifferential treatment may emerge to better adopt less-developed countries. Whencomprehensive coverage is expected to be insisted, more importance may be attachedon traditional trade clauses instead of labor rights, environmental standards,
state-owned enterprises and intellectual property rights. Furthermore, priority will begiven to the economic cooperation to promote balanced development in the region. In
the mean time, issue such as connectivity could be incorporated in the RCEP. That is,
RCEP could provide better environment to promote regional investment and tostrengthen development cooperation.
China shows its high interest to RCEP since it made lots of efforts on the
consolidating the overlapping FTAs by leading the EAFTA study and initiating joint
proposal with Japan. China intends to play an active role in promoting the negotiationof RCEP and take forward looking and practical policy in the negotiation.
China’s positive attitude towards RCEP is understandable for several reasons. For
examples, as China makes efforts to rebalance its trade structure, an integrated East
Asian market becomes more important and significant if considering the declining
market potential of the United States and EU. As TPP potentially excludes China,
China pays more attention to the alternative choice in East Asia. And also, China
expects to play a significant role in the regional integration and institutional buildingin the background of rising economic power.
3. CJK FTA as a real test
The trilateral cooperation between China, Japan and Korea (ROK) has madeprogress since it was formally initiated in 2008. Among the achievements, the launchof the trilateral FTA (CJK FTA) is considered as the most significant. The three
economies are highly integrated by the close supply chain and the complementary
structure. A FTA among them will surely help them to enhance the economic
efficiency and promote the upgrading their economic structure. The three countries
8Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

signed the agreement for investment promotion, facilitation and protection which sets
up a good base for further negotiation.
The proposal of CJK FTA was made in 2002 and received positive support by theleaders of three countries. The joint academic studies were conducted for 7 years thatprovide comprehensive analysis on the benefit and cost, the modality and approach.
An official led joint study was started from 2011 and final report was accepted bythree countries. The formal negotiation is planned to start in early 2013 though thepreliminary consultations were conducted earlier.
Considering the structural differences among three economies, the negotiation
would be not easy though there are strong common interests among the three.
Concerning the liberalization, both Japan and ROK have sensitive lists on the
agriculture products, while China has its weakness on some industrial products. In theservice and investment sectors, China has the difficulty to adopt the negative list
approach and pre-national treatment policy. Considering the difficulties of thenegotiation, CJK FTA really needs strong political support and consensus.
CJK FTA is a real test for the three countries. Unfortunately, the politicalenvironment of three countries seems not good for making close cooperation due tothe disputes on the islands between China and Japan and Japan and ROK though thebusiness community of the three countries has shown strong support to an earlyconclusion of the negotiation. Ideally, an early conclusion of the CJK FTA will give avery strong support to the negotiation of RCEP since three economies account for
more than 2/3 of the GDP of RCEP members. Alternatively, if the negotiation of CJK
FTA goes slowly, RCEP negotiation process may be a catalyst for the negotiation of
CJK FTA.
4. TPP as a challenge
The US’s announcement to join the P4 in 2009 intends to change the landscapeand redesign it to be one high-standard, broad-based regional pact by renaming it

asTrans-Pacific Partnership (TPP) and inviting more countries to join, including
Australia, Peru, Vietnam and Malaysia, Canada, Mexico, as well as Japan. The TPP is
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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

designed to create a comprehensive, modern template in future FTA negotiations andto provide an alternative model for consolidating existing trade agreements.1
Although TPP is claimed to consolidate existing trade agreements and thus
handle noodle bowl effect, it has been doubted whether it could serve as one model tocurtail noodle bowl effect. 2 The US has strongly urged that existing FTA
market-access schedules should be maintained in the current TPP negotiations. The
existing complex ROOs, instead of one new simple, region-wide cumulation rules, areexpected to be incorporated into the TPP agreement. And the US negotiators arepushing for narrow, product-specific ROOs to protect its sensitive products. In
addition, for textiles, the US is demanding that the so-called yarn-forward rule beincorporated into the agreement. In effect, this rule would mandate that the material(cotton or synthetic fiber) for a textile product be sourced either in the home country
or in an FTA partner country.3 If the hybrid approach is adopted throughout the TPP
negotiation,4 the ROOs of TPP would fail to be liberal, effective and simple rules andbe expected to be one noodle in the noodle bowl.5
The TPP is expected to be one strategic activity. Some scholars in China believe
the real US’s intention is to gain indirect long-term economic benefits, including
helping American enterprises enjoy an enabling FTA environment, and ensuring the
US as the rule-maker in regional trade regulations. 6 More importantly, the US worries
that the American firms would face discrimination and trade diversion therefore.
While the “21st century” TPP agreement including environment, transparency, laborand intellectual property is supposed to help the American multinationals and SMEs
1

Petri Peter A., Michael G. Plummer, and Fan Zhai, The Trans-Pacific Partnership and Asia-Pacific Integration: A
Quantitative Assessment, East-West Center Working Papers, Economics Series, No. 119, October 24, 2011, p6.
2
Ravenhill John, Extending the TPP: The Political Economy of Multilateralization in Asia, Paper presented in
UNESCAP Asia-Pacific Trade Economists’ Conference on Trade-Led Growth in Times of Crisis, November 2-3, 2009,
Bangkok, Thailand.
3
Barfield Claude, The Trans-Pacific Partnership: A Model for Twenty-First-Century Trade Agreements?,
American Enterprise Institute for Public Policy Research International Economic Outlook No.2, June
2011, pp.4-5.
4Market access is sure to follow the hybrid approach. See Office of the United States Trade Repres
entative, Trans-Pacific Partnership Negotiations Take Place in Kuala Lumpur, December, 2011. http://www.
ustr.gov/about-us/press-office/blog/2011/december/trans-pacific-partnership-negotiations-take-place-kuala-lum.
5
Shiro Patrick Armstrong, Australia and the Future of the Trans-Pacific Partnership Agreement, East Asian Bureau
of Economic Research Working Paper No. 71, December 9, 2011.
6
Wei Lei and Zhang Hanlin, The Intensions of America’s TPP Strategy and China's Responses, International Trade,
No.9, 2010, pp.54-58.

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

to acquire market access in the Asian markets.
In fact, the aim for the US pushing TPP is thought to monopolize regulatinginternational economic rules. The US has been the champion to level the playing fieldin trade negotiation through initiating several FTA negotiations simultaneously(competitive liberalization), pushing the negotiations by asymmetric power, thenforming one larger ad hoc and finally levering the multilateral trading negotiation,
which is also called as sequential negotiation.1 The on-going TPP negotiations cover
not only traditional WTO-plus issues such as financial services, E-commerce,
investment, environment and labor, but also many cross-cutting horizontal issues like
SOE, regulatory coherence and SMEs. As noted by the US chief negotiator for the
TPP Barbara Weisel, the US aim was to reach a set of rules applying to all the
Asia-Pacific countries, and any country ready to join must comply with the rules.2
The exclusion of China from TPP makes China nervous. Many Chinese scholars
are quite skeptical about the US’s authentic aim to push the TPP negotiation. Some
indicate that TPP reflects the fact that the US is taking a substantive step on its
strategy of returning to the Asia-Pacific region. 3 Yang suggests that the US pivot
strategy dilutes and reduces China’s influence in the Asia-Pacific region, which could
be considered a soft confrontation.4 Some even assert that the US not only wants tocontain China, but also expects to postpone and interrupt the East Asian cooperation
process, paving the way for the US to claim dominance over the East Asia. 5 However,some others hold different views. They insist that TPP would have little impact on
China since China has its own advantage due to its continuous growing potential andspecial competitiveness. China becomes the largest market for most of the economies

1

Craig Van Grasstek, US Plans for a New WTO Round: Negotiating More Agreements with Less Authority, The
World Economy, Vol.23, 2000, pp.673–700
2Du Lan, Comments on US Strategy for Promoting Trans-Pacific Partnership, http://www.ciis.org.cn/englis
h/2011-08/03/content_4380581.htm
3
Fu Mengzi, TPP, the Adjustment of America’s Asia-Pacific Strategy, and Its influence on China, China Review,
March 2012
4
Yang Jiemian, The Change of America’s Power and Re-structure of International System, International Studies,No.2, 2012, p.57.
5Huangpu and Liping, The Real Intention behind the United States’ Proactive Promotion of TPP, Outlook,
December 6, 2011, p58.

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

in East Asia and will provide more public goods to the region. 1
In fact, most countries in East Asia keep their interests in engaging both TPP and
RCEP since they may serve their different interests. The differences in interests could
be documented. From the geopolitical perspective, the parallel architectures including
TPP and RCEP would make both US and China rest assured. The TPP and RCEP may
be viable and complementary pathways to Asia-Pacific integration in the future.2
5. Future perspective
Considering the risk to be marginalized by the TPP, the Chinese government
may attach much more importance to its own FTA strategy. China needs to exert more
efforts through FTAs to promote its steps towards liberalization both at home andabroad due to the disenchantment with the WTO. For instance, more efficient andfreer regional production networks as well as supply chain could be restructured with
the RECP pact. Several cumbersome rules of origin across East Asian economies are
expected to be eliminated and more market access is likely to be obtained through the
RCEP. China is confident in participating in this process and is believed to contributeto the success of the RCEP.
As the economies of China, Japan, and Korea are highly integrated through an
FDI-trade network. Each of the three has an FTA with ASEAN, but there is no formal
arrangement among them. CJK FTA is highly demandable and beneficial to all.
Although the political momentum at the moment seems weak and vulnerable, China
will continue to participate and promote the negotiation process.
Currently, CKFTA is under the negotiation. The two economies are highly
integrated based on the investment-trade structure. CKFTA may serve as a catalyst for
the CJK FTA since Japan would worry it may pay the cost if only China and ROK
sign the agreement. Interestingly, we are witnessing some competitively driven efforts
in FTAs in East Asia.
China seems not possible to join TPP in the near future. However, China takes
1

See Guoyou Song and Wen Jin Yuan, China’s Free Trade Agreement Strategies, The Washington Quarterly,
Center for Strategic and International Studies, 2012, pp. 110-111.
2
Petri Peter A., Michael G. Plummer, and Fan Zhai, The Trans-Pacific Partnership and Asia-Pacific Integration: A
Quantitative Assessment, East-West Center Working Papers, Economics Series, No. 119, October 24, 2011, p4.

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Zhang Yunling, Shen Minghui, “FTAs in the Asia-Pacific: a Chinese Perspective,” Kokusai Mondai(International Affairs), No.622, June 2013

great attention to its relations with the US. Although a FTA between China and the US
will be difficult to be negotiated, the two is now considering an investment agreement.
However, even this single investment pact will not be easy since there are issues likepre-establishment national treatment, SOE, performance requirements, labor andenvironment that must be handled. China will also seek other opportunities to expand
the FTA networks. China-Canada FTA now is taken into consideration. As Canada isboth the member of NAFTA and TPP, it is highly strategic for China to forge theChina-Canada FTA.
Moreover, China’s past economic success has relied highly on an open andsupportive global environment. 1 Although China has committed to change its
export-oriented growth model and to create a stronger internal demand structure, its
interest in the global market will not be reduced because its future economic
dynamism will be closely associated with the global market environment. 2 To thisend, China has its real interest in supporting multilateral trading system and tries toplay a more active role in supporting the active role of WTO in either negotiating thenew plural agreements like trade facilitating agreement, new ITA agenda, even an
investment promotion and facilitation agreement, or the renewed DDA agenda.

1

World Bank, East Asia and Pacific Economic Update: Securing the present, shaping the future, Washington, DC:
World Bank., 2011.
2
Zhang Yunling and Shen Minghui, Emergence of ASEAN, China and India and the Regional Architecture, China &World Economy No.4, 2012, pp.14-15.

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