Canada, Japan Move Closer to CPTPP Ratification, Malaysia Calls for Trade Deal Review

28 June 2018

Legislation to ratify the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) is making its way through both the Canadian and Japanese legislatures, officials say, bringing the deal closer to entering into force. 

Earlier this month, Canadian international trade minister François-Philippe Champagne pledged that his government would work “expeditiously” to advance the ratification process, though the final passage of the legislation may not take place before autumn, according to comments reported in Canadian newspaper iPolitics. 

The 11 signatories of the CPTPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. They signed the deal in March during a ceremony in Chile. (See Bridges Weekly, 15 March 2018

The agreement will enter into force 60 days after at least six of the signatory countries complete their respective ratification procedures, or if half of the signatories do so. 

Testifying  before the House of Commons trade committee, Champagne told fellow parliamentarians that Ottawa wants to be in the “first wave” of signatories to ratify the deal. 

“The momentum of our progressive trade agenda continues with this next important step on CPTPP. We negotiated the best deal for Canadians from coast to coast to coast, and this Agreement will benefit industries across Canada – from beef and barley to forestry products, seafood, manufacturing, and services,” said Champagne. 

Canadian Prime Minister Justin Trudeau wrote on Twitter that the accord provides significant economic gains over the coming years that would be a benefit to Canadian workers, consumers, and companies alike. “Trade deals – like the CPTPP – open up new markets around the world for Canadian businesses, and will create good middle class jobs,” the tweet said. 

Canadian agricultural exporters have been pressuring lawmakers to accelerate the ratification. In a letter to Champagne, the Canadian Agri-Food Trade Alliance warned that “the race is on as other CPTPP members are moving quickly to ratify the agreement.” 

“If we don’t act to implement the CPTPP as soon as possible, Canada will lose the ‘first mover advantage’ and see our competitors benefit from tariff cuts while we are taxed at a higher rate,” the letter says. 

Mexico was the first country to ratify the multi-country trade deal in April. Australia tabled the treaty in Parliament earlier this year, where it is undergoing consideration by the Joint Standing Committee on Treaties (JSCOT), and has been a vocal proponent of the accord. Chile is also expected to ratify in the near term, according to the letter from the Canadian farm association. The same coalition indicated the several others could follow suit over the summer months, naming among these New Zealand, Singapore, Peru, Vietnam, and Brunei. 

The lower house of the Japanese Diet, the country’s legislature, has already endorsed the bill, which is expected to be fully ratified by the end of this month. Japan still has to enact a separate bill to implement domestic measures related to the agreement, such as support for livestock farmers, who will be facing greater competition from abroad. 

The original Trans-Pacific Partnership (TPP) accord was signed by 12 countries in February 2016, but US President Donald Trump withdrew his country from the deal shortly after his inauguration in January 2017. The withdrawal prompted renewed negotiations among the remaining 11 members, who ultimately agreed in January to suspend a couple dozen provisions of the original accord. (See Bridges Weekly 25 January 2018

The CPTPP incorporates the original TPP agreement, pledging to slash tariffs on 95 percent of trade in goods, along with covering a host of trade topics, ranging from technical barriers to trade and sanitary and phytosanitary measures to competition policy and intellectual property rights. 

The renewed deal suspends a number of the TPP’s original provisions, especially from the chapter on intellectual property rights. A few other provisions were suspended in chapters such as environment, investment, and public procurement. 

Malaysia’s pledge for a review

As Canada and Japan move forward with ratification, Malaysian Prime Minister Mahathir Mohamad said in a recent interview with the Nikkei Asian Review on the sidelines of a Tokyo conference that his new government would be studying the agreements signed under his predecessor, and may potentially seek changes.

The deals under scrutiny involve trade accords, including the CPTPP, as well as agreements covering various other policy areas. 

“This government must review all agreements entered into by the previous government. We will honour treaties made in the past, but when there is a need for reconsideration, we will appeal to our partners to give us a chance to take into consideration the situation we are in,” Mahathir said. 

“We want to rectify [the accord], but we want to modify the agreement in such a way that there is fair competition between the members of the TPP,” he added.

Mahathir said during his Tokyo visit that smaller developing nations need trade rules that are better crafted to suit their specific needs, particularly relative to large advanced or emerging economies. “Small countries cannot compete on the same terms as bigger countries,” he said, according to comments reported by Reuters. 

“We are not completely against the TPP but it needs to be re-negotiated, so that smaller countries would have the chance to compete because they would be given certain handicaps,” he added. He did not specify which of the CPTPP’s provisions were problematic in his view. 

Should Malaysia withdraw from the CPTPP, it will not affect the accord’s prospects for entering into force. As noted above, the CPTPP’s revised terms state that the deal will still take effect once six signatories, or at least half of whichever signatories remain, ratify the accord. The CPTPP text specifies that whichever threshold is smaller will apply. 

Colombia interested in signing on

Meanwhile, New Zealand’s Trade and Export Minister David Parker and Mexican Economy Secretary Ildefonso Guajardo both confirmed to reporters that Colombia has expressed its plans to request entry into the CPTPP after the deal enters into force. 

Parker confirmed the Colombian request, saying that he will support “the importance of defending and promoting a trading system based on rules, and the importance of regional agreements like CPTPP being open to those willing to join.” 

“Colombia is the first to formally notify New Zealand, as depositary, of its interest in joining once CPTPP enters into force,” he added. 

New Zealand is the depositary of the deal, which among other roles involves publishing the CPTPP text, accepting documents such as any negotiated amendments or requests for accession, and taking in submissions from signatories of their ratification instruments. 

Guajardo said earlier this month during a meeting of Pacific Alliance ministers that the participation of Colombia, a member of the Pacific Alliance, would help bridge the two trade blocs, given their overlapping membership. Pacific Alliance, a four-member Latin American trade pact, also includes Chile, Mexico, and Peru, all CPTPP members. 

The group is also negotiating with four countries – Australia, Canada, New Zealand, and Singapore – in order to bring them on board as associate members. Those four countries are also CPTPP members. 

On a separate note, the American Chamber of Commerce in Singapore (AmCham), a regional version of the major US business federation, has publicly called on the US government to join CPTPP. AmCham Singapore chairman Dwight Hutchins said that the  CPTPP is “the best and most strategic trade framework from a business perspective and the US needs to be a member for American businesses in Singapore, across the region and at home to remain at the forefront of 21st century trade.” 

ICTSD reporting; “Liberals table legislation to ratify Trans-Pacific free trade deal,” CBC, June 15 2018; “In his own words: Mahathir Mohamad speaks to the Nikkei Asian Review,” NIKKEI ASIAN REVIEW, 11 June 2018; “TPP must be renegotiated, says Malaysian Prime Minister Mahathir,” THE JAPAN TIMES, 11 June 2018; “Malaysia PM Mahathir says to review TPP-11, revive 'Look East Policy', ahead of Japan visit,” THE STRAITS TIMES, 9 June 2018; “Colombia has made request to join Pacific trade pact: Mexico,” REUTERS, 15 June 2018; “Colombia looking to join new TPP,” ZDNET, 8 June 2018; “Colombia wants to join CPTPP,” NEWSROOM PRO, 11 June 2018; “American Chamber of Commerce in Singapore urges US to rejoin Trans-Pacific trade pact,” THE BUSINESS TIMES, 19 June 2018; “CPTPP legislation coming before the end of summer: Champagne,” iPOLITICS, 5 June 2018.

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