The missing anchor: Why the EU should join the CPTPP

Abstract

For its members, including Australia, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is an important pillar for ensuring a rules-based, market-orientated trade environment in East Asia and the broader Indo-Pacific region. However, without the United States anchoring the agreement, the CPTPP risks underachieving on the original Trans-Pacific Partnership (TPP) goal of strengthening and deepening the “rules of the road” for the regional trading system. US domestic politics militate against Washington’s return to the agreement, leaving the question of the CPTPP’s ability to secure regional trade rules and norms in doubt. China’s formal request to accede to the CPTPP, made in September 2021, poses difficult questions for the future of the club, with the potential to sow divisions in the existing membership on the way forward. The fact that China’s nominal GDP is significantly greater than the combined GDP of the 11 CPTPP members, alongside its trade centrality in the region, would provide Beijing with strong leverage for negotiating exemptions favourable to its state-capitalist model of trade as part of accession talks, or for watering down existing commitments once a member of the club.By contrast, the European Union (EU), with a combined nominal GDP equal to that of China, has been notably absent in the debate on the rules needed for regional economic integration. Australia and other CPTPP members have tended to view the EU as a market, rather than a strategic partner in the Indo-Pacific. Yet the world’s largest trading bloc is also the primary source of foreign direct investment and development assistance into the Indo-Pacific region, and the second largest trading partner for countries in Southeast Asia behind only China.