When US President Donald Trump made America’s withdrawal from the Trans-Pacific Partnership one of his first official acts, many assumed that this significant free trade agreement was effectively dead and buried. However, the remaining 11 nations went back to the drawing board and last month agreed the outlines of a new deal, in a move that should increase access to this sizeable regional marketplace for Canadian businesses.
The final agreement was signed in February 2016. However, almost a year later, the US withdrew from the agreement as a result of Trump’s first executive order as President.The TPP’s origins go back more than 10 years. Initially, a small FTA signed between Chile, New Zealand and Brunei in 2005, its membership eventually swelled to 12 countries, including Australia, Canada, Japan, Malaysia, Mexico, Peru, Singapore, the United States and Vietnam.
From TPP To CPTPP
Arranged over 30 chapters, the original TPP covered the full gamut of trade issues, from trade in goods and services to e-commerce, government procurement, intellectual property, and the environment, among others.
Furthermore, it was due to eliminate nearly all trade taxes immediately after going into force, with the remainder to be phased out over longer time frames. Significantly, TPP members agreed to eliminate tariffs on apparel and textiles, which are major contributors to the economies of some members.
The new agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), retains all of these tariff reductions and market access commitments, and, according to the ministerial statement, "maintains the high standards, overall balance, and integrity of the TPP."
However, a number of measures from the original TPP have been suspended. These include:
- Obligations on patent term adjustment, which would have required parties to adjust the patent term to compensate for "unreasonable" patent office delays, as well as on patent term restoration for marketing approval delays;
- An obligation on the term of protection for copyright and related rights;
- Provisions related to Investment Agreements and Investment Authorisations; and
- The application of investor-state dispute settlement to Minimum Standards of Treatment provisions in the Financial Services Chapter.
What’s In It For Canada?
According to the Government of Canada, the CPTPP will give Canadian exporters tariff-free access to one of the world’s fastest-growing regional economies, a marketplace of 500 million with a combined gross domestic product of USD13.5 trillion, or 13.4% of global GDP. The CPTPP will also mean that Canada will have a free trade agreement with every G7 country.
The expected gains from the CPTPP will benefit a wide range of sectors, says the Government, including financial services, fish and seafood, forestry, agriculture and agri-food, and metals and minerals.
The Government anticipates that Canadian exports to CPTPP markets, which stood at CAD31.5bn (€20.4bn) in 2016, will increase substantially after the agreement is implemented. Of course, it is also likely that exports from CPTPP nations to Canada will also increase; these stood at CAD72.5bn in the same year.
The CPTPP is not a done deal yet. All parties are currently undertaking a legal review of the agreement ahead of its formal signing, which is scheduled to take place in Chile on 8 March 2018.
After signature, each CPTPP country will undertake its own domestic ratification procedures, and this is unlikely to be a rapid process.