At the beginning of 2019, the Comprehensive and Progressive Trans-Pacific Partnership has entered into force. It is one of the most progressive free trade agreements and contains many novel elements – which is why it has served as a model for successive trade agreements and will continue to do so for the foreseeable future. In this blogpost, we introduce our latest publication that tells you all about CPTPP that you always wanted to know but never dared to ask.
What is the CPTPP?
The trade world is full of impossible acronyms. But CPTPP is undoubtedly one of the more exotic concoctions in this eccentric world. It stands for Comprehensive and Progressive Trans-Pacific Partnership, an agreement that has been in the making for many years but that has finally entered into force at the beginning of 2019.
Originally, it was negotiated under the name of the Trans-Pacific Partnership (TPP) by the USA and eleven other countries in the Asia-Pacific. An important geopolitical objective was to counter China’s growing influence in the region. For the participating countries, it was important to set rules for many areas of trade before China would be the country setting these rules. Therefore, TPP contained provisions for important and emerging areas of trade policy, such as e-commerce, state interference with market outcomes and protection of intellectual property.
But when President Trump came to power, his first action was to halt the ratification process of the TPP, effectively withdrawing from a readily negotiated agreement. The remaining countries eventually decided to go ahead with the agreement regardless of the US withdrawal. They also renamed the agreement CPTPP (or sometimes called TPP11).
Why does the CPTPP Matter?
CPTPP being a particularly novel agreement means that some of its ideas have been taken up by some newer trade agreements. For example, it served as a template for the renegotiated NAFTA, the USMCA. It’s chapters on digital trade are also informing the discussions currently going at the WTO on this matter. Thus, the CPTPP is a trade agreement worth watching – some commentators have called it an organ donor for international trade policy.
Here are three areas in which CPTPP is currently one of the most advanced trade agreements shaping the international policy debate:
- E-Commerce: CPTPP is the first major trade agreement that has extensive rule on this emerging area of trade. They range from banning requirements to store data in each state to prohibiting countries to request access to the source code of a certain software. Also consumer protection rules for people who buy stuff from online platforms hosted in the CPTPP countries are in the content of the CPTPP.
- Intellectual Property Protection: The CPTPP has wide-ranging provisions for safeguarding intellectual property. Some of these were added by specific request of the US and subsequently suspended by the remaining members but they would enter into force if ever the US entered the agreement.
- State Owned Enterprises: The increasing role of state-owned enterprises (SOEs) is a major concern in the world economy. The CPTPP contains rules that ensure that SOEs do not distort market outcomes and compete with private companies on equal footing.
A final reason, why everyone should know about CPTPP is because it could be the embryo of a new way of governing world trade: As CPTPP is working well and has many advanced provisions, many countries are interested in joining it. The UK has expressed its interest to become a member after Brexit, others have suggested that the EU and/or China should join. Why the latter is a long shot, it keeps coming up in discussions. If the WTO continues to be blocked, the richer, pro-trade countries could use CPTPP as a basis for a new club of big traders.
If you want to know more, then read this excellent piece written by Deborah Elms of the Asian Trade Centre.