24 October 2016
Officials pose for a group photo after a TPP ministerial-level meeting in Sydney earlier this year. Photo: Internet
Officials pose for a group photo after a TPP ministerial-level meeting in Sydney earlier this year. Photo: Internet

HK risks losing middleman status if it stays out of TPP

During British rule, Hong Kong joined various global bodies such as the World Trade Organization, International Monetary Fund, Asia-Pacific Economic Cooperation, International Olympic Committee and many others under its own right.

Although membership of such global organizations is usually the preserve of sovereign nations, Britain didn’t have any problem with its then colony maintaining a separate identity.

That has helped Hong Kong mark its own presence on the global arena and make its voice heard, paving the way for the city’s ascent as a key world city.

Now, in contrast to past initiatives, the territory’s current administration led by Leung Chun-ying is pussyfooting when it comes to the latest international trade grouping — the Washington-led Trans-Pacific Partnership (TPP).

It appears that the government is being guided more by China’s reservations about the pact, rather than taking decisions based on the city’s own interests. 

Earlier this month, 12 countries reached agreement on outstanding issues related to TPP, bringing seven years of marathon talks to a conclusion.

As China has been excluded from the group, TPP is seen by observers as part of Washington’s strategy to thwart Beijing’s growing clout in trade and commerce.

With Beijing also perceiving a threat from Washington, Hong Kong officials are wary about exploring options for the city’s own TPP membership.

As of now, Financial Secretary John Tsang Chun-wah has been the only senior official who has dared to talk about TPP.

He told reporters recently that he is following the developments and will study related TPP clauses when they are finalized.

The sad truth is that even as key rival Singapore has got on board as a founding member, Hong Kong has no strategy other than “wait and see”.

Although Beijing has never made any public comments, Hong Kong officials know too well that joining the new trade accord would be seen as being politically incorrect.

There is a fear that mainland bosses may even consider any Hong Kong bid for TPP membership as “treason”, given that Washington and its allies are seen as writing new rules aimed at sidelining Beijing.

While the China concerns may be justified, what local officials seem to be forgetting is Hong Kong’s own interests.

If the territory stays away from key trade blocs, it runs the risk of being marginalized in future economic deals.

Hong Kong could also lose its prominence as a key gateway to China, given the formidable threat from nations like Singapore and South Korea.

Singapore and Seoul have both concluded bilateral free trade agreements with China, putting them in a good position to emerge as China’s middlemen.

Meanwhile, Beijing is overlooking the fact that preventing Hong Kong’s participation might run counter to the country’s own interests.

If Hong Kong is a member, China could use the special administrative region as a means to surmount the TPP barriers.

Steve Barclay, director of Hong Kong’s economic and trade office in New York, told EJ Insight on the sidelines of a recent seminar that he was still waiting for the TPP documents to come out.

Not all key politicians in the US are supportive of the accord, he said, suggesting that it may take a long time for the US Congress to ratify the pact.

One challenge that is unique to Hong Kong, according to Barclay, is that the territory is already one of the world’s freest economies and trading hubs, and so it has very little concessions to offer in negotiations and thus is not always invited to join new agreements.

When asked if the Hong Kong government can take its own initiative to work its way toward TPP, the official merely stressed that Hong Kong has autonomy in signing trade and economic deals under the Basic Law.

Hong Kong is currently in talks with the Association of Southeast Asian Nations over a free-trade pact, and is also in discussions with Macau over a Closer Economic Partnership Agreement.

Will the administration show some grit and backbone to put TPP also on the agenda? 

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EJ Insight writer

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