In the midst of the trade war between the United States and China there is an opening up of trade in Asia–the entry into force of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) on December 30, 2018, 60 days after the date of the 6th entrant’s ratification. The members who will begin receiving CPTPP benefits beginning on December 30 are the six ratifying members: Australia, Canada, Japan, Mexico, New Zealand and Singapore. As a result of the efforts of Japan and the other members, the landmark trade deal is taking shape and influencing the global trade landscape. As the trade war tariffs impact investment and push supply chains out of China, the CPTPP will attract trade and provide incentives for the consolidation of supply chains in the member states and the Asia Pacific region.
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.
Recently, the UK’s International Trade Secretary Liam Fox stated that the UK is considering joining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (“CPTPP” or “CPTPP11“). While this gave rise to excitement among CPTPP proponents, and it is technically feasible, various factors would likely make it unlikely in the short term.
UK Exploring Options Post Brexit
It is good news that the UK is showing interest in joining the CPTPP, even if only because it demonstrates that the CPTPP is alive and well. The idea of the UK joining the CPTPP was floated shortly after the Brexit vote and has been simmering at various levels since. As several commentators have already pointed out, there are no legal restrictions in the trade agreement for adding new members outside of the Trans-Pacific Partnership’s original 12 members (“TPP12“), the CPTPP11, or any other countries.