BANGKOK -- China's and Taiwan's applications to participate in the Trans-Pacific Partnership agreement -- which came six days apart in September -- stirred up waves in the Taiwan Strait and sent ripples across much wider oceans.

Beijing, which insists Taiwan is a part of "one China," is "absolutely opposed to any country officially engaging in talks with Taiwan," Chinese Foreign Ministry spokesman Zhao Lijian said.

Taiwanese Economic Affairs Minister Wang Mei-hua, meanwhile, drew a contrast between her island republic and China, telling Reuters: "Look at their information -- nothing can enter. Facebook can't enter, Google can't enter.

"At the very least after we submitted the written application, we've not heard that any member opposes, not like after China applied, when some countries brought it up."

From an early phase, Taiwan showed enthusiasm about joining the CPTPP, which was launched with 11 countries after the United States withdrew at the beginning of 2017.

"Taiwan is vehemently demanding that it be [accepted]," a Japanese government official said, "but it's difficult to make [Taiwan] the first instance of expansion."

The United Kingdom was actually first to ask to join the bloc, back in January, and indications were that Taiwan might follow. But China derailed that scenario with its unexpected application.

Politicians from the TPP nations hope to persuade U.S. President Joe Biden to go to work toward bringing the U.S. back into the trade bloc.   © Reuters

A new member must be unanimously endorsed by all existing CPTPP countries. If China and Taiwan approach CPTPP members individually to seek their support, and if either gains membership before the other, it might refuse to endorse the other's application.

Regardless, the brewing conflict could split the original members, known as the TPP11. How should the situation be handled? Which applicant would bring more economic benefits to the CPTPP?

The truth is that Taiwan and China each would not only bring benefits but disadvantages as well.

From one perspective, that of maintaining fair and transparent rules -- the CPTPP's raison d'etre -- there is no doubt Taiwan should be the choice. "We are ready to accept all rules," Taiwanese President Tsai Ing-wen has said.

Also consider that nine CPTPP countries have free trade agreements with China or are waiting for negotiated deals to take effect. Only two have such an agreement with Taiwan. So Taiwan's participation would help expand free trade.

China, meanwhile, is dangling its enormous economy. Its trade with the 11 CPTPP member nations in the pre-pandemic year of 2019 totaled $1.68 trillion, seven times the corresponding figure for Taiwan. Many observers say China will have difficulty clearing CPTPP standards, considering its favoring of state-run enterprises, its loose intellectual property protections and tight data transfer restrictions.

Still, some original TPP members have been granted exemptions to some requirements. The question is whether the members can resist the riches that trading with China might bring were Beijing to boldly open its market in exchange for being granted concessions.

"If China promises to enhance its legal system and business environment, there's no doubt the country would be attractive to the CPTPP 11," Kokushikan University professor Seiya Sukegawa said.

But there is another perspective to consider, whether China and Taiwan can sit together. A look at past examples is in order here.

After a civil war, the Chinese Communist Party led by Mao Zedong founded the People's Republic of China, and in 1949 the government led by Chiang Kai-shek's Chinese Nationalist party retreated to Taiwan. The Taiwanese authority went on to join previously established international organizations as a "Chinese representative," but Beijing took over Taiwan's roles at the United Nations in 1971 and at the International Monetary Fund and the World Bank in 1980.

There are precedents for China and Taiwan belonging to the same international organization. A coast guard vessel in the Port of Taipei, Taiwan, on February 9, 2021.   © Reuters

It was the Asian Development Bank that set the precedent for China's and Taiwan's coexistence in international bodies. In 1986, 20 years after the ADB was founded, it approved China's membership while Taiwan, a founding member, retained its membership. There are other examples of coexistence. The Asia-Pacific Economic Cooperation in 1991 simultaneously approved China's and Taiwan's membership applications. The World Trade Organization did likewise in 2001.

The current situation in regard to the CPTPP is similar to the machinations surrounding the WTO applications 20 years ago. Taiwan filed its CPTPP application under the name "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu." This is the name Taiwan used when it joined the WTO, which makes it difficult to argue Taiwan should be excluded from the CPTPP.

It is a given that the more countries and regions that join the mega FTA, the more supply chains will become reasonable and efficient, thus bringing about more positive economic effects. Of course, China will be required to meet preconditions for joining the CPTPP. But to promote memberships from the standpoint of economic principles, it seems that allowing China and Taiwan to join simultaneously is the only solution.

The U.S. will become another bottleneck in this scenario.

There are two facts to consider here. First, Canada and Mexico are the only CPTPP members that have not signed an FTA with China. Second, both countries as well as the U.S. belong to the North American Free Trade Agreement, which has been reworked; the new deal took effect in July 2020.

The new NAFTA has a clause allowing members to cancel the agreement six months later should one of them sign an FTA with a partner deemed a "nonmarket economy country." By invoking this poison pill, the U.S. can prevent China from joining the CPTPP as neither Canada nor Mexico would discard its top export market in favor of bringing China into the CPTPP.

It would be understandable, however, for the nine other CPTPP members to express skepticism about an outsider influencing the bloc's membership rolls.

U.S. President Donald Trump signs an executive order withdrawing the U.S. from the 12-nation Trans-Pacific Partnership on Jan. 23, 2017, fulfilling a campaign promise.   © AP

In one of his first acts as president, Donald Trump withdrew the U.S. from the TPP, which had yet to be ratified. Still, the world's largest economy has a lot of responsibility for the pact it played a leading role in creating.

It was Trump's predecessor, Barack Obama, who got the ball rolling, and the 11 partners Trump stranded have always planned to be patient and eventually persuade the U.S. to return. Trump's successor, Joe Biden, might be stoking their hopes simply because he was vice president under Obama.

Now China's unexpected bid might light a fire under Biden. Should China beat the U.S. to the CPTPP, the U.S. might forever be an outsider.

"China's bid to join the CPTPP is a well-crafted move," said Keisuke Hanyuda, the CEO of Owls Consulting Group who engaged in trade talks while at the Ministry of Economy, Trade and Industry. "It puts pressure on the member nations to choose China or the U.S. and Taiwan. "For Beijing, it would be better if it can win concessions to join the TPP, but even if it cannot, it would be OK as long as it can disrupt the unity among the member nations."

As for the dueling Chinese and Taiwanese bids, Hanyuda expects the issue to become a discussion of "who will jump aboard the bus next."

The CPTPP has another matter to consider. South Korea, Colombia, Thailand, Indonesia and the Philippines have expressed an interest in joining the bloc, and it might be easier to conduct so-called "packaged negotiations" with them rather than negotiating separately with the U.K., China, Taiwan and perhaps the U.S.

Choosing between the U.S. or China would not be easy for the CPTPP. In 2019, the 11 nations' trade value with the U.S. came to $1.72 trillion, 60% more than the corresponding figure for China, trade statistics show. But while trade value with the U.S. rose 66% over the past decade, that with China jumped 120%.

Either way, the CPTPP is in a squeeze. None of the 11 want the negative trade repercussions that would come from damaging relations with either the U.S. or China. And they could stoke the ill will of one simply by negotiating with the other.

But if they were to opt for packaged talks, the member nations could disperse that pressure.

The U.S.-China conflict reached a new crescendo with the creation in September of AUKUS, a security cooperation framework between the U.S., U.K. and Australia. But the two economic superpowers also seem to be trying to ease tensions. They have resumed trade talks and agreed to hold a summit by the end of the year.

China's and Taiwan's near-simultaneous bids may present the CPTPP with a difficult task. But the bids also represent an opportunity to press the U.S. to return to the negotiating table.