Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Comprehensive and Progressive Agreement for Trans-Pacific Partnership
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as TPP11 or TPP-11, is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. It evolved from the Trans-Pacific Partnership (TPP), which was never ratified due to the withdrawal of the United States. The eleven members have combined economies representing 13.4 percent of global gross domestic product, at approximately trillion, making the CPTPP one of the world's largest free-trade areas by GDP, along with the United States–Mexico–Canada Agreement, the European single market, and the Regional Comprehensive Economic Partnership. The United Kingdom formally signed the trade agreement on 16 July 2023 and will join the agreement when it has been ratified by all parties.
The TPP had been signed on 4 February 2016 but never entered into force, as the U.S. withdrew from the agreement soon after the election of president Donald Trump. All other TPP signatories agreed in May 2017 to revive the agreement, with Shinzo Abe's administration in Japan widely reported as taking the leading role in place of the U.S. In January 2018, the CPTPP was created as a succeeding agreement, retaining two-thirds of its predecessor's provisions; 22 measures favored by the U.S. but contested by other signatories were suspended, while the threshold for enactment was lowered so as not to require U.S. accession.
The formal signing ceremony was held on 8 March 2018 in Santiago, Chile. The agreement specifies that its provisions enter into effect 60 days after ratification by at least half the signatories (six of the eleven participating countries). On 31 October 2018, Australia was the sixth nation to ratify the agreement; it subsequently came into force for the initial six ratifying countries on 30 December 2018.
The chapter on state-owned enterprises (SOEs) requires signatories to share information about SOEs with each other, with the intent of engaging with the issue of state intervention in markets. It includes the most detailed standards for intellectual property of any trade agreement, as well as protections against intellectual property theft against corporations operating abroad.
The CPTPP commission in 2023 is chaired by New Zealand.
Negotiations
During the round of negotiations held concurrently with the Asia-Pacific Economic Cooperation forum in Vietnam in November 2017, the Canadian prime minister Justin Trudeau refused to sign the agreement in principle, stating reservations about the provisions on culture and automotives. Media outlets in Australia, New Zealand, and Japan, which strongly supported quick movement on a deal, strongly criticized what they portrayed as Canadian sabotage.
Canada insisted that cultural and language rights, specifically related to its French-speaking minority, be protected.
However, Canada's major reservation was a conflict between the percentage of a vehicle that must originate in a CPTPP member nation to enter tariff-free, which was 45% under the original TPP language and 62.5% under the NAFTA agreement. Japan, which is a major automobile part exporter, strongly supports lower requirements. In January 2018, Canada announced that it would sign the CPTPP after obtaining binding side letters on culture with every other CPTPP member country, as well as bilateral agreements with Japan, Malaysia, and Australia related to non-tariff barriers. Canada's Auto Parts Manufacturers' Association sharply criticized increasing the percentages of automobile parts that may be imported tariff-free, noting that the United States was moving in the opposite direction by demanding stricter importation standards in the NAFTA renegotiation, later USMCA.
In February 2019, Canada's Jim Carr, Minister of International Trade Diversification, delivered a keynote address at a seminar concerning CPTPP - Expanding Your Business Horizons, reaching out to businesses stating the utilisation of the agreement provides a bridge that will enable people, goods and services to be shared more easily.
The final text of CPTPP was mostly identical to the original TPP, except for some provisions advanced by the US under the TPP, but not supported by the other members. In the intellectual property chapter, copyright and patent terms were shortened relative to TPP, and standards for digital IP protections were eliminated. Provisions allowing use of investor–state dispute settlements for investment agreements and authorizations were also rescinded.
Legislative process
Ratifications
On 28 June 2018, Mexico became the first country to finish its domestic ratification procedure of the CPTPP, with President Enrique Peña Nieto stating, "With this new generation agreement, Mexico diversifies its economic relations with the world and demonstrates its commitment to openness and free trade."
On 6 July 2018, Japan became the second country to ratify the agreement.
On 19 July 2018, Singapore became the third country to ratify the agreement and deposit its instrument of ratification.
On 17 October 2018, the Australian Federal Parliament passed relevant legislation through the Senate. The official ratification was deposited on 31 October 2018. This two-week gap made Australia the sixth signatory to deposit its ratification of the agreement, and it came into force 60 days later.
On 25 October 2018, New Zealand ratified the CPTPP, increasing the number of countries that had formally ratified the agreement to four.
Also on 25 October 2018, Canada passed and was granted royal assent on the enabling legislation. The official ratification was deposited on 29 October 2018.
On 2 November 2018, the CPTPP and related documents were submitted to the National Assembly of Vietnam for ratification. On 12 November 2018, the National Assembly passed a resolution unanimously ratifying the CPTPP. The Vietnamese government officially notified New Zealand of its ratification on 15 November 2018.
On 14 July 2021, the CPTPP was approved by the Congress of the Republic of Peru. The official ratification was deposited on 21 July 2021.
On 30 September 2022, Malaysia ratified the CPTPP and deposited its instrument of ratification.
On 17 April 2019, the CPTPP was approved by the Chamber of Deputies of Chile. The final round of approval in the Senate was scheduled for November 2019, after being approved by its Commission of Constitution. However, due to a series of massive protests against the government of Sebastián Piñera, the ratification process was paused. Only in 2022, the ratification process was resumed after a new Congress and a new President were elected. Despite the public opposition of Gabriel Boric to the treaty before his election as President, the new administration didn't interfere in the voting. The CPTPP was approved in the Senate with 27 votes in favor (mainly from the right-wing opposition and some center-left politicians) and 10 against, mostly by members of the ruling coalition. The treaty was deposited on 23 December, once several side letters were negotiated with the other signatories in specific topics considered harmful by the Chilean government. On 23 February 2023, Boric ratified Chile's entry to TPP-11.
On 13 May 2023, Brunei ratified the CPTPP and deposited its instrument of ratification.
On 16 July 2023, the United Kingdom became the first non-original signatory and European country to sign the CPTPP agreement, the UK is expected to ratify the agreement in the coming months, additionally all current CPTPP members must ratify the UK's application.
Entry into force
The agreement came into effect 60 days after ratification and deposit of accession documents by at least half the signatories (six of the eleven signatories). Australia was the sixth country to ratify the agreement, which was deposited with New Zealand on 31 October 2018, and consequently the agreement came into force between Australia, Canada, Japan, Mexico, New Zealand, and Singapore on 30 December 2018.
On 1 January 2019, Australia, Canada, Mexico, New Zealand, and Singapore implemented a second round of tariff cuts. Japan's second tariff cut took place on 1 April 2019.
On 15 November 2018, Vietnam deposited the accession documents, and the agreement entered into force in Vietnam on 14 January 2019.
On 21 July 2021, Peru deposited the accession documents, and the agreement entered into force in Peru on 19 September 2021.
On 30 September 2022, Malaysia deposited the accession documents, and the agreement entered into force in Malaysia on 29 November 2022.
On 23 December 2022, Chile deposited the accession documents, and the agreement entered into force in Chile on 21 February 2023.
On 13 May 2023, Brunei deposited the accession documents, and the agreement entered into force in Brunei on 12 July 2023.
Summary
An overview of the legislative process in selected states is shown below:
CPTPP Commission
The CPTPP Commission is the decision-making body of the CPTPP, which was established when the CPTPP entered into force on 30 December 2018.
1st CPTPP Commission (2019)
Representatives from the eleven CPTPP signatories participated in the 1st CPTPP Commission meeting held in Tokyo on 19 January 2019, which decided:
A decision about the chairing and administrative arrangements for the commission and special transitional arrangements for 2019;
A decision to establish the accession process for interested economies to join the CPTPP; Annex
A decision to create rules of procedure and a code of conduct for disputes involving Parties to the; Annex; Annex I
A decision to create a code of conduct for investor-State dispute settlement.; Annex* Members of the CPTPP Commission also issued a joint ministerial statement on 19 January 2019.
2nd CPTPP Commission (2019)
The 2nd CPTPP Commission meeting was held on 9 October 2019 in Auckland, New Zealand. Alongside the commission, the following Committees met for the first time in Auckland: Trade in Goods; Rules of Origin; Agricultural Trade; Technical Barriers to Trade; Sanitary and Phytosanitary Measures; Small and Medium Sized Enterprises; State Owned Enterprises; Development; Cooperation and Capacity Building; Competitiveness and Business Facilitation; Environment; and the Labour Council. The Commission adopted two formal decisions, (i) on its Rules of Procedure under Article 27.4 and (ii) to establish a Roster of Panel Chairs as provided for under Article 28.11.
3rd CPTPP Commission (2020)
The 3rd CPTPP Commission meeting was held virtually and hosted by Mexico on 5 August 2020.
4th CPTPP Commission (2021)
The 4th CPTPP Commission meeting was held virtually and hosted by Japan on 2 June 2021. The Commission decided to move forward with the application of the United Kingdom as an aspirant economy.
5th CPTPP Commission (2021)
The 5th CPTPP Commission meeting was held virtually and hosted by Japan on 1 September 2021. The Commission decided to establish a Committee on Electronic Commerce composed of government representatives of each Party.
6th CPTPP Commission (2022)
The 6th CPTPP Commission meeting was held on 8 October 2022 and hosted by Singapore.
7th CPTPP Commission (2023)
The 7th CPTPP Commission meeting was held on 16 July 2023 in New Zealand. The commission decided to establish a Committee on Customs Administration and Trade Facilitation. The meeting included the formal signing of the accession of the United Kingdom.
8th CPTPP Commission (2024)
The 8th CPTPP Commission meeting is scheduled to be held in 2024, hosted by Canada.
Enlargement
CPTPP rules require all eleven signatories to agree to the admission of additional members.
Current signatories
United Kingdom
In January 2018, the government of the United Kingdom stated that it was exploring membership of the CPTPP to stimulate exports after Brexit and had held informal discussions with several of the members.
The United Kingdom has sovereignty over the Pitcairn Islands, located in the Pacific Ocean, has allowed the UK to qualify to join CPTPP. In October 2018, Japanese Prime Minister Shinzo Abe said he would welcome the United Kingdom joining the partnership post-Brexit. Liz Truss, the UK Secretary of State for Trade, expressed in a joint Daily Telegraph article with Simon Birmingham, David Parker, and Chan Chun Sing, the trade ministers of Australia, New Zealand, and Singapore, the intent of the United Kingdom to join the CPTPP.
On 1 February 2021, the United Kingdom formally applied to join CPTPP. The UK is the first non-founding country to apply to join the CPTPP. If successful, Britain would become the second-largest CPTPP economy, after Japan. Japan had expressed support for the UK's potential entry into CPTPP in 2018, and as 4th CPTPP Commission (2021) chair, Japan's minister in charge of negotiations on the trade pact, Yasutoshi Nishimura, expressed hope on Twitter that Britain will "demonstrate its strong determination to fully comply with high-standard obligations" of the free trade accord, and mentioned that "I believe that the UK’s accession request will have a great potential to expand the high-standard rules beyond the Asia-Pacific."
In June 2021, the CPTPP agreed to open accession talks. A working group was established to discuss tariffs and rules governing investment and trade, led by Japan.
, the United Kingdom is set to join the CPTPP, as the 11 members have reached an agreement to Britain's accession. Each of the existing member nations will need to ratify the UK's addition to the partnership before it takes effect.
On 31 March 2023, the UK government announced it had secured an extension mechanism, which could extend the whole agreement to any Crown Dependency or British Overseas Territory. On the same day, Guernsey and Jersey confirmed their intentions to participate in CPTPP. In May 2023, a UK government spokesman confirmed that "the deal will cover goods trade between the Crown Dependencies and CPTPP countries, with a mechanism to include trade in services in future."
The United Kingdom formally signed the CPTPP trade deal during the ministerial meeting of members in New Zealand on 16 July 2023.
Current applicants
China
In May 2020, China's Premier Li Keqiang said that China was willing to consider joining CPTPP. Meanwhile, China's leader Xi Jinping said at an Asia-Pacific Economic Cooperation (APEC) summit in November 2020 that China would “actively consider” joining CPTPP.
In December 2020, Japan Foreign Minister Toshimitsu Motegi has said that "TPP-11 sets high standards for regulations on e-commerce, intellectual property and state-owned enterprises", suggesting the amount of government intervention in the Chinese economy will not meet CPTPP requirements.
China's application to CPTPP is unlikely to gain traction. Although not a member of CPTPP, the U.S. can exercise the "poison pill" within the United States–Mexico–Canada Agreement that prevents Canada and Mexico from voting in favor of the Chinese application.
On 16 September 2021, China formally applied to join CPTPP. Reactions from CPTPP members after the Chinese application:
Japan Economy Minister Yasutoshi Nishimura was quoted by Reuters: "Japan believes that it's necessary to determine whether China, which submitted a request to join the TPP-11, is ready to meet its extremely high standards"; indicating that Japan would not support the Chinese application under the current circumstances.
Former Australian Trade Minister Dan Tehan indicated that Australia would oppose China's application until China halts trade strikes against Australian exports and resumes minister-to-minister contacts with the Australian government. Also, Australia has lodged disputes against China in the WTO on restrictions imposed by China on exports of barley and wine.
Taiwan
Taiwan applied to join CPTPP on 22 September 2021.
It had previously expressed interest to join TPP in 2016. After TPP's evolution to CPTPP in 2018, Taiwan indicated its will to continue efforts to join CPTPP. In December 2020, the Taiwanese government stated that it would submit an application to join CPTPP following the conclusion of informal consultations with existing members.
In February 2021 again, Taiwan indicated its will to apply to join CPTPP at an appropriate time. A few days after China submitted its request to join the CPTPP, Taiwan sent its own request to join the CPTPP, a move that has been one of the main policy objectives of Tsai Ing-wen's government.
Ecuador
Ecuador filed its application to join the CPTPP trade pact on 29 December 2021 as the country moves to reduce its reliance on oil and diversify its economy through exports.
Costa Rica
Costa Rica filed its application to join the CPTPP trade pact on 11 August 2022.
Uruguay
Uruguay filed its application to join the CPTPP trade pact on 1 December 2022.
Ukraine
On 1 May 2023, the Ukrainian government announced its intention for the accession of Ukraine to CPTPP. Ukraine aims to accelerate its efforts to restore its economy severely damaged by the Russian invasion. Canadian Trade Minister Mary Ng expressed support for Ukraine's application. Ukraine submitted a formal request to join the trade bloc on 5 May 2023.
Potential applicants
South Korea
In January 2021, South Korea’s Moon administration announced it would seek to join CPTPP. The country will examine sanitary and phytosanitary measures, fisheries subsidies, digital trade and guidelines related to state-run enterprises to meet the requirements that CPTPP has suggested. The South Korean government formally announced it will begin its application to join CPTPP in December 2021.
Thailand
Foreign Minister Don Pramudwinai was expected to submit a letter of intent for the country to apply to join the pact to the cabinet for its approval. A campaign against joining the pact called "#NoCPTPP" which has gathered 400,000 signatures has demanded the prime minister to not consider joining the pact.
Philippines
The Philippines previously wanted to join the TPP in 2016 under Benigno Aquino, who said that the country stood to gain from becoming a member of the trade pact.
Former TPP signatory
United States
On 25 January 2018, U.S. President Donald Trump in an interview announced his interest in possibly rejoining the TPP if it were a "substantially better deal" for the United States. He had withdrawn the U.S. from the original agreement in January 2017. On 12 April 2018, he told the White House National Economic Council Director Larry Kudlow and U.S. Trade Representative Robert Lighthizer to look into joining CPTPP. U.S. Wheat Associates President Vince Peterson had said in December 2018 that American wheat exporters could face an "imminent collapse" in their 53% market share in Japan due to exclusion from CPTPP. Peterson added, "Our competitors in Australia and Canada will now benefit from those [CPTPP] provisions, as U.S. farmers watch helplessly." The National Cattlemen's Beef Association stated that exports of beef to Japan, America's largest export market, would be at a serious disadvantage to Australian exporters, whose tariffs on exports to Japan would be cut by 27.5% during the first year of CPTPP.
In December 2020, a bipartisan group of U.S. policy experts, Richard L. Armitage and Joseph S. Nye Jr., called for Washington to join the CPTPP, but this call was rejected by Secretary of Commerce Gina Raimondo when meeting Japanese government leaders on 15 November 2021. Raimondo stated that the Biden administration would not be joining CPTPP but instead planned to create a new trade framework as an alternative to CPTPP in the Indo-Pacific region.
Enlargement summary
Responses
Economist José Gabriel Palma has criticized the treaty for severely restricting the sovereignty of the signatories. Signatories are subject to international courts and have restrictions on what their state-owned enterprises can do. According to Palma the treaty makes it difficult for countries to implement policies aimed to diversify exports thus becoming a so-called middle income trap. Palma also accuses that the treaty is reinforcing unequal relations by being drafted to reflect the laws of the United States.
In the case of Chile, Palma holds the treaty is redundant regarding the possibilities of trade as Chile already has trade treaties with ten of its members. On the contrary, economist Klaus Schmidt–Hebbel consider that the CPTPP "deepening" of already existing trade relations of Chile is a point in favour of it. In the view of Schmidt-Hebbel approving the treaty is important for the post-Covid economic recovery of Chile and wholly in line with the economic policies of Chile since the 1990s.
Before renaming to CPTPP, there are also concerns regarding intellectual property-related terms, as they will likely drop the Antragsdelikt requirements on defining copyright violations, which could affect several fanart communities like Pixiv or Deviantart. In 2016, Prime Minister Shinzo Abe said that Doujinshis will be safe even TPP came into force.
See also
Accession of the United Kingdom to CPTPP
Free and Open Indo-Pacific (FOIP)
Free trade agreements of Canada
Free trade agreements of New Zealand
Free trade agreements of the United Kingdom
Free trade area
Indo-Pacific Economic Framework (IPEF)
Market access
Regional Comprehensive Economic Partnership (RCEP)
Rules of origin
Tariff
References
External links
Agreement text
TPP text (largely incorporated in this agreement)
Consolidated text of CPTPP and TPP
2018 in Chilean law
Free trade agreements of Australia
Free trade agreements of Canada
Free trade agreements of Chile
Free trade agreements of Japan
Free trade agreements of Malaysia
Free trade agreements of Mexico
Free trade agreements of New Zealand
Free trade agreements of Peru
Free trade agreements of Singapore
Free trade agreements of Vietnam
Free trade agreements of the United Kingdom
Free-trade areas
Trade blocs
Trans-Pacific Partnership
Treaties concluded in 2018
Treaties entered into force in 2018