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China has formally requested to join the trade deal that was originally intended to limit China’s influence in the global economy.

Canada and 10 other Pacific Rim countries signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — the CPTPP — in 2018.

On Thursday, Chinese Commerce Minister Wang Wentao submitted China’s application to join the CPTPP in a letter to New Zealand’s trade minister, Damien O’Connor.

The 11-country CPTPP evolved out of the Trans-Pacific Partnership (TPP), a U.S.-led effort intended to counter China’s economic clout in the Asia-Pacific region. The U.S. signed the TPP under President Obama in 2016, but then withdrew from the multilateral pact on President Trump’s first day in office in 2017.

Trade experts say it’s highly unlikely China will be able to meet the benchmarks and requirements laid out in the CPTPP in the near future, but the move by China forces U.S. allies like Canada, Australia, New Zealand, and Japan to once again assess their trading relationships with China.

The first step for China will be to convince the CPTPP members that they should establish a working group to negotiate the terms of China joining. (You can read the rules for CPTPP accession here.)

“China is far from the free, fair and transparent world that TPP demands…the chances that it can join are close to zero,” said Japan’s State Minister of Finance Kenji Nakanishi, in a tweet.

For Canada, China’s application has potential implications for the new Canada-U.S.-Mexico trade deal, as the USMCA text includes a “poison pill” clause that allows the deal to be terminated if any of the participants enter into a trade agreement with a “non-market” country, such as China.

Article 32.10.5: https://t.co/5nPOJxQOGE

Then, China’s *ENTRY* into CPTPP could trigger termination of USMCA… pic.twitter.com/hcvz4BxtBt

— Chad P. Bown (@ChadBown) September 16, 2021

The application by China could be viewed as an attempt to prevent Taiwan, which China views as its own territory, from signing on to the trade deal. Taiwan has previously expressed interest in joining the CPTPP under its own membership.

“This seems to be an action to prevent Taiwan from joining,” said Japan’s Nakanishi.

Meanwhile, the United Kingdom has also formally applied to join the CPTPP. The ministers for the CPTPP countries, including Canada’s trade minister, Mary Ng, agreed to establish a working group to begin talks with the UK in June of this year.

As well, there’s been some discussion about the U.S. possibly rejoining the deal under the Biden administration.

“We’re going to continue to work with other countries in the region on economic partnerships and relationships. And if there’s an opportunity to renegotiate, then that could be a discussion we could be a part of,” said White House Press Secretary Jen Psaki, following China’s application on Thursday.

Canadian Pacific (CP) Railway’s plan to acquire Kansas City Southern (KCS) is one major step closer to becoming a done deal.

The companies signed a merger agreement on Wednesday after rival Canadian National (CN) Railway waived its right to a five-day period to negotiate new terms with the coveted Kansas City-based railroad.

The US$27.2 billion CP-KCS agreement, which still requires shareholder approval, would result in the formation of the first railroad linking Canada, the U.S., and Mexico.

CP says the combination would create direct rail links between Western Canada, the Upper Midwest, the Gulf Coast, and Mexico, while bringing new rail competition to northern midwest areas in the U.S. that are currently dominated by BNSF or UP.

CP has said it would maintain its global headquarters in Calgary, Alberta, and operate the combined railway under the new name “Canadian Pacific Kansas City,” or “CPKC.”

“Our path to this historic agreement only reinforces our conviction in this once-in-a-lifetime partnership,” said CP President and Chief Executive Officer Keith Creel, in a statement issued Wednesday.

KCS originally signed a merger agreement with CP in March 2021. That offer was eclipsed by a higher $29.6 billion bid from CN Rail in late April, however the U.S. Surface Transportation Board (STB) blocked the CN proposal in late August when it rejected the companies’ application to use a voting trust to complete the deal. In light of the STB decision, on September 12, the KCS board of directors said would once again pursue an agreement with CP. (See timeline below.)

KCS must now pay CN a breakup fee of $700 million, plus an additional $700 million to reimburse CN for covering KCS’s initial termination fee paid to CP back in May. Both of these payments are being covered by CP.

“While we are disappointed that we will not be able to deliver the many compelling benefits of this transaction to our stakeholders, the decision to bid for KCS was a bold and strategic move that still resulted in positive outcomes for CN,” said CN president and CEO JJ Ruest, in a statement shared early Wednesday. ”

We believe that the decision not to pursue our proposed merger with KCS any further is the right decision for CN as responsible fiduciaries of our shareholders’ interests,” continued Ruest.

The STB approved CP’s use of a voting trust in its plan to acquire KCS back in May. The CP offer is also exempt from U.S. rail merger rules adopted in 2001 since the CP and KCS networks do not overlap.

KCS’s board has not yet said when the shareholder vote on the CP merger agreement will take place, just that it will be held “in due course.”