CPTPP is an acronym representing ‘the Comprehensive and Progressive Agreement for Trans-Pacific Partnership’, also known as TPP-11, a trade agreement between eleven nations after the U.S. pulled out. The original Trans-Pacific Partnership (TPP) was involving twelve nations including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. Oddly, the TPP excluded China, the biggest trading partner in the Pacific. The original TPP grew out of a trade agreement between Brunei, Chile, New Zealand and Singapore, known as P4, initiated by Brunei and signed in 2005. In 2008, it attracted the eight additional nations under the New name TPP.
The U.S. under the Obama Administration with its Secretary of State, Hillary Clinton, was supportive of the TPP, although there were arguments that TPP was not beneficial to the U.S. The twelve nations signed the agreement on 2/4/2016 allowing two years for each member nation to ratify the agreement; the effective date was set to be December 30, 2018, 60 days after 50% of members ratified it. One of the motivation factors in reaching this agreement was that the TPP might have a geopolitical effect of reducing the members’ dependence on Chinese trade. On this point, it is debatable whether the ‘China dependency’ is a good or bad thing from global trade perspective. The TPP issue had become a debate item in the US 2016 Presidential Election. Presidential candidate Trump had, since April, 2015, expressed opposition to TPP claiming that it would be unfair to the U.S. causing more unemployment and trade deficit. Candidate Hillary Clinton also took an about-face opposing TPP during her campaign. Thus, when Trump won the election, only days after taking office, he issued an executive order to pull out of the TPP.
The legally verified text of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was released on February 21, 2018. The text of the agreement contains 30 chapters, numerous side letters between specific member nations and annexes to the chapters. Since the Pull-out of the U.S. many chapters and languages pertaining to the U.S. are no longer valid. Even excluding the U.S. and China, the economies included in the CPTPP are significant, amount to 13.5 percent of the world GDP – worth a total of $10 trillion. Of course, the main purpose of CPTPP is concerned with reducing costs for doing trades and businesses, but more importantly, it includes commitments to safeguard and enforce high labor and environmental standards across the Asia-Pacific region preserving Member Nation’s right to regulate for legitimate public policies and creating new opportunities for international trade and generating jobs leading to a better standard of living for Member Nations.
The CPTPP inherited many of the elements that were negotiated as part of the Trans-Pacific Partnership (TPP), but following the pull-out of the United States, the remaining participants had to agree and suspend 22 items from the TPP, particularly in the areas of investment, intellectual property and pharmaceuticals. One of the concerns in global trade is the threat of the effective operation of World Trade Organization (WTO) rules, including its dispute resolution mechanism. With the two largest economies, the U.S. and China excluded from the CPTPP and currently (they) engaged in a trade war and legal proceedings concerning WTO rule compliance and interpretations, the real effectiveness of CPTPP could be limited. Of course, the more members joining the CPTPP, the more effective the CPTPP agreement would become. Therefore, it is desirable that the current CPTPP members recruit the U.S., China, and other significant economies in the Asia-Pacific region, namely, South Korea, Hong Kong and Taiwan into CPTPP and broaden its scope and effectiveness.
Trade agreement couldnot be totally disconnected from international politics and nationalism but if it was overwhelmed by political conflicts, it would lose its significance. Japan should be given credit for laboring and transforming TPP to CPTPP, while the U.S. was moving towards protectionism in an opposite direction of reaching global trade agreement. This change of US behavior is exhibited in the new USMCA orchestrated by the U.S. replacing the old NAFTA with Mexico and Canada as well as in the trade war initiated by her against China. From lowering tariff and protectionism point of view, the CPTPP may be considered as the ‘Gold Standard’. The Twenty-two TPP provisions suspended were more of the interest of the United States rather than that of other negotiating partners. One of the most contested provisions advocated by the U.S. was increasing the abilities of companies to sue national governments over strict government regulations on oil and gas developments. Another issue, the extension of author’s copyright to life plus seventy years, different from the standards in other countries but insisted by the U.S., was substantially reduced in the CPTPP language. The original chapter on state-owned enterprises (SOEs) is unchanged, requiring signatories to share information about SOEs with each other, an obvious intent of preventing state intervention in markets. CPTPP also includes the most detailed standards for protecting intellectual property of any trade agreement, from protections against intellectual property theft to corporations operating abroad.
Six nations, Mexico, Japan, Singapore, Australia, New Zealand and Canada, have already ratified CPTPP, thus, it will become effective December 30, 2018. Looking into the future, there may be new members wishing to join in. The U.K. has already expressed interest in joining CPTPP after her Brexit in March 2019. The Trump Administration had kept the door open by saying that she may join if the agreement is renegotiated. Further on 4/12/2018, Trump even ordered his staff to look into the rejoining Issue. As mentioned above, South Korea, Hong Kong Taiwan and China should be invited into CPTPP, ideally with China and the U.S. joining as full members at the same time. It seems that the CPTPP 11-members may have an opportunity to transform their ‘Gold Standard’ to a ‘Diamond Standard’ by making extra efforts to persuade the above members to join CPTPP.
South Korea and the U.S. had just concluded a bilateral trade agreement. If the U.S. could be persuaded to join CPTPP, South Korea would likely to follow. On the other hand, if China was persuaded to join, Hong Kong would be a sure in. Taiwan is in fact the most vulnerable economy being excluded from the CPTPP and yet Taiwan may be the only obstacle for Hong Kong and Mainland China to join CPTPP out of a political dilemma created by a post WW II political division of Mainland China and Taiwan followed after Japan’s surrender and returning Taiwan to China. Mainland and Taiwan each claimed to be a part of China and yet politically divided in the world arena for no good reason. Accepting one China with two separate political systems is advocated by Mainland, practiced by Hong Kong and Macao but resisted by Taiwan out of insecurity. Taiwan seems to have an excellent opportunity to use the CPTPP as the test case to evaluate whether Taiwan can function under ‘the one China two political systems’, in fact three or four political systems if including Hong Kong and Macao in CPTPP. Taiwan’s economy is very much dependent on the Mainland market and so do many other CPTPP member nations. Collaborating with Mainland China and inviting her to join the CPTPP makes logical sense. When Taiwan and every country finally realize that by putting aside the political confrontation with Mainland China aside, all the significant economies in the AP region can work under a renegotiated CPTPP for everyone’s benefit. Then the CPTPP can become a ‘diamond standard’ trade agreement for the entire Asia Pacific region. Therefore, it makes perfect sense for the present CPTPP or TPP-11 members to work hard towards getting China and the U.S. into the CPTPP along with the two Koreas, Hong Kong, Macao and Taiwan.