Remove both tariff and non-tariff barriers
This FTA project is slated as Beijing’s alternative to the trade association that the U.S. has been lobbying for the past two years: the Trans-Pacific Partnership (TPP), which, through negotiations among the 12 largest economies of the region (including the U.S., Japan, Australia, and the ASEAN majors), seeks to substantially liberalize trade and remove both tariff and non-tariff barriers.
Washington is sure that the high competitiveness of U.S. products will outweigh the potential competition risks to its economy from opening up these markets. However, for China, with its state protectionism for sensitive industries that provide growth and employment (and, hence, the ones important for political stability), the terms of the TPP are unacceptable. Moreover, Beijing suspects the U.S. of wanting to create a trading bloc in Asia without China, so as to exclude it from the integration processes.
China initially tried to resist the TPP by promoting an alternative project: the Regional Comprehensive Economic Partnership (RCEP). In a tit-for-tat move, the talks on RCEP left out the U.S. However, in recent months the U.S. has made progress in developing the TPP. According to several participants in the APEC summit, the latest round of talks in Australia nearly came to a consensus on the text of the agreement — only a few points remain, the most contentious of which is the opening-up of the agricultural markets of Japan and several ASEAN countries.
It was against this backdrop that Beijing sought to use the APEC summit as a launch pad for the FTA, which is a less ambitious agreement in terms of tariff reductions, but larger in scope, involving all 21 APEC economies.
