As the trade conflict between the United States and China continues, three free trade agreements are pressing ahead, including– the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), soon to enter into force, the Japan-EU Economic Partnership Agreement (JEEPA), recently signed and which represents 30% of global economic output, and the Regional Comprehensive Economic Partnership (RCEP), an agreement that includes both India and China and comprises the largest trading block in the region.
Specific developments include recent ratification by Mexico and Japan of the CPTPP that now requires ratification by four more signatories before entry into force. Additionally, CPTPP parties recently met to discuss and lay out a procedure for how other countries that are not currently members of the CPTPP can join the agreement. Japan and the EU recently signed JEEPA and hope it is ratified and enters into force early next year. And, separately, the RCEP’s Trade Ministers met in Tokyo in early July, with further working level negotiations planned in July and August 2018.
The 11 parties to the Trans-Pacific Partnership Agreement who remained following the withdrawal of the United States have set March 8th in Chile as the date for signing the successor to that agreement, the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (“CPTPP”). Once ratified by at least six (6) of the 11 parties, the CPTPP will enter into force. Below is a synopsis of what has changed in the new agreement and an overview of opportunities for businesses operating in the CPTPP area.
The Trans-Pacific Partnership (TPP) was hailed as a visionary trade deal — connecting economies across the world as far as Japan and Chile, and pushing forward high standards on labour and the environment and removal of non-tariff barriers to trade. Yet political developments have meant the TPP as agreed cannot be implemented. President Trump announced the withdrawal of the United States from the TPP in January 2017. As currently drafted, the TPP requires 85% of the parties’ GDP for implementation and the 85% threshold cannot be met without the United States.
The United States withdrawal from the TPP has left a vacuum in global trade leadership. However, Asia Pacific is not standing still and waiting for the United States to implement its “free but fair trade” trade policy agenda. There have been significant movements forward for free trade in Asia Pacific without the United States.