When the United States pulled out of the proposed Trans-Pacific Partnership (TPP) agreement last year, many people thought that was the end of the pact. But the determination of partners such as Japan resurrected the basis of the deal, and 11 countries – excluding the U.S. – signed the revised trade agreement in Chile on 8th March 2018.
Now known as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), shortened to "TPP-11", the agreement is expected to come into force later this year, rather than in 2019 as originally planned when the initial trade pact was signed in 2016.
So, what are the key elements of the agreement, and how might they impact on companies looking to expand their business to the countries involved?
The 11 nations under TPP-11, which together account for about 15% of global trade and approximately 500 million people, are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. With a GDP of US$ 4.9 tril in 2016, Japan alone has the largest economy of the 11 TPP member countries and is the fourth largest exporter in world trade and the fifth largest importer. Once the CPTPP enters into force, it will be one of the largest free trade agreements in the world and will give enhanced market access to key Asian markets.
Whilst 15% of GDP is obviously lower than the original 40% of GDP covered when the US was a member, the remaining agreement partners have stressed that the TPP still has a vast potential for creating new opportunities for trade liberalisation in the region, as well as promoting sustainable development objectives and shoring up the multilateral trading system.
The thinking behind the deal is a commitment to free and open markets, stridently contrasting to the new domestic protectionist policy being forged by the U.S. It is designed to integrate Asia Pacific markets by reducing barriers to goods and services trade, protecting investments and intellectual property rights, establishing rules for e-commerce, and promoting fair competition.
Fully enforceable, the CPTPP is a legally binding agreement, supported by a system of dispute settlement, to bring rule of law and greater transparency and predictability to the regional trading regime.
Why TPP-11 is still exciting?
Trade tariffs between the TPP-11 countries will be slashed considerably, eliminating customs duties on 95% of trade in goods and opening access to a combined marketplace worth around US$13.7...