China's Regional Trade Agreement (RTA) Approach: The Law, the Geopolitics, and the Impact on the Multilateral

Abstract

This paper examines China's recent movement in negotiating and signing regional trade agreements (RTAs) in the context of the regionalism versus multilateralism debate in international trade law, focusing on the China-Hong Kong Closer Economic Arrangement (CEPA) and the proposed China-ASEAN Free Trade Agreement (CAFTA). The broader background is that the potential negative effects of regional trade arrangements like CAFTA conflict with the economic goal of the multilateral trading system of the GATT/WTO regime. Countries, however, have a variety of non-economic considerations in approaching RTAs, such as regional stability and national security. Furthermore, the literature suggests that the economic benefits to members of RTAs, although they vary depending on the circumstances, are at least apparent in some cases. This paper, after introducing the content and progress in the CEPA and CAFTA negotiations, discusses the geopolitical considerations under China's CAFTA approach. It also analyzes the legal status and WTO-consistency of China's RTAs. It concludes that, while multilateralism is still serves the long-term interest of trading nations for peace and prosperity, the multilateral trading system should accommodate regionalism in a fashion that strikes a balance between the economic and non-economic concerns of the various countries and the goal of broader liberalization in global trade and investment. China, as a rising trade power with global influence, has the responsibility to promote regional integration and global trade liberalization in the interest of the aforesaid balance.

Keywords: China, WTO, RTA/FTA, Trade

JEL Classification: K33, N40, N45, N70, N75