Australia, Canada, New Zealand Ratify CPTPP, Setting Stage for Trade Deal's Entry into Force
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has now been ratified by six signatories, meeting the minimum threshold to take effect by the end of this year.
Canada and New Zealand both approved the accord last week in their respective legislatures and submitted their ratifications shortly thereafter. The past month has seen a flurry of activity on the CPTPP ratification front, as signatories worked to ensure that they would be among those who see the accord’s benefits first.
Proponents have long said that the planned Pacific Rim accord would allow them to deepen commercial relationships with key partners, in some cases connecting countries which previously did not have a formal trade accord between them.
“New Zealand’s ratification means that from day one our businesses will be able to take advantage of improved trading conditions and lower tariffs. We have not previously had a trade agreement with Canada, Mexico, nor with the world’s third largest economy Japan,” said New Zealand Minister for Trade and Export Growth David Parker late last week upon the accord’s ratification in Wellington.
The accord’s 11 signatories together are home to approximately 480 million people, and their combined GDP is 13.5 percent of the world’s GDP as a whole. That share of global trade and population coverage could increase significantly if and when new countries join the accord, which is a prospect that has been touted publicly and privately by some other regional economies, as well as countries further afield. (See Bridges Weekly, 11 October 2018)
Japan, Mexico, and Singapore have already ratified the deal, and both chambers of Australia’s Parliament have endorsed the accord. Canberra wrapped up final formalities this week and deposited its ratification with New Zealand on Wednesday 31 October, as the latter country serves as CPTPP depositary.
Landmark trade deal
When the original version of the accord was signed in February 2016 in Auckland, New Zealand, trade ministers from participating countries deemed it a “historic achievement,” with some saying that they hoped to ratify it later that same year. In those days, deal was then referred to simply as the Trans-Pacific Partnership (TPP), and also included the United States, which later withdrew as a signatory during the early days of Donald Trump’s presidency. (See Bridges Weekly, 11 February 2016 and 26 January 2017)
The US’ withdrawal came as some other TPP members were already in the thick of their ratification processes, with some having approved the accord domestically. The remaining 11 signatories then spent several months in negotiations hoping to rescue the trade agreement, ultimately agreeing in November 2017 to suspend a select number of provisions and ratify an updated version, under a new name and acronym. (See Bridges Weekly, 16 November 2017)
The final trade agreement has 30 chapters overall, covering various aspects of goods and services trade; intellectual property rights; trade remedies; telecommunications; state-owned enterprises; labour; environment; investment; transparency and anti-corruption; regulatory coherence; and dispute settlement, among others.
Additionally, CPTPP members have in place various side letters that cover bilateral understandings between specific pairs of countries, as well as detailed annexes covering tariff schedules, tariff-rate quotas, motor vehicle trade, product-specific rules of origin, government procurement, and temporary entry for business persons.
Supporters have deemed the CPTPP a “gold standard” of trade deals, with its rules slated to reshape the way trade is conducted in much of the Asia-Pacific region. The updated agreement also has significant commercial value, slashing tariffs on a host of agricultural and industrial goods, with the six countries who have ratified to date expected to see the first round of cuts take effect by the end of the year. A second round of cuts will apply in early 2019 for those countries, according to the New Zealand government, though the timeline varies somewhat by country.
Moreover, the timing of the CPTPP’s entry into force has taken on an additional significance. When the 11 countries involved agreed to negotiate to salvage the accord, they did so on the premise that this deal would be impressive in terms of how it would affect regional trade rulemaking and trade flows, including on a sustainability dimension, while also providing a shot in the arm to the wider global trading system as it undergoes a particularly challenging chapter.
Furthermore, officials say, the CPTPP could also provide yet another tool to shore up the global economic recovery, and if implemented well, reduce inequalities within and among partner nations. The trade landscape is changing almost by the day, amid the negotiation of new or updated trade agreements, as well as the growing imposition of unilateral trade measures by some major economies.
Moreover, two CPTPP members, namely Canada and Mexico, have reached an updated version of the North American Free Trade Agreement (NAFTA) with the US, a former CPTPP member, though votes on the accord in the relevant legislatures are not expected until next year at the earliest. (See Bridges Weekly, 4 October 2018)
“The CPTPP is an excellent illustration of how 11 nations can come together against protectionism by liberalising trade and strengthening the rules under which it is conducted. Global trade matters: it’s about improving peoples’ lives by offering more opportunities to turn their hard work into prosperity for their families and themselves,” said Jim Carr, Canadian Minister of International Trade Diversification, on the occasion of Canada’s ratification.