So how easy might it be to get the United States back into the CPTPP? That depends on how the United States chooses to behave. If the US were to come to the current 11 parties and ask to reenter on the same terms it had prior to exit, it would be considerably easier. After all, the current 11 locked down the agreement as it stood at the time of US exit, minus 20 provisions that were suspended. The entire text was otherwise unchanged. All market access commitments between members were untouched. These were painful concessions by the 11 to the United States. Many of the 11 members wanted to make changes in the wake of US withdrawal to better match their domestic audience demands for adjustment. This was largely not done. Instead, as our previous Policy Brief noted, just 20 elements of the legal text were suspended. These provisions were not removed entirely, but merely set aside for later consideration. If the US comes back in the near term, the CPTPP could take effect exactly as originally negotiated with all the existing market access commitments for the US still intact and the rulebook as agreed upon under the CPTPP.
The final version of the TPP was released this morning. After more than a year of renegotiation, the release seems like a bit of an anticlimax—the whole “text” is 9 pages. This does understate the issue, of course, since the entire original agreement is now incorporated by reference. The eleven country members are meeting in Chile on March 8 for signature. TPP11 is now on track to begin later this year. Firms should no longer delay. The benefits on offer are substantial. See our latest booklet on how to prepare. For regular readers of Talking Trade, I’m delighted to report that you already knew what the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) contains.
The 11 members of the Trans-Pacific Partnership (TPP) wrapped up the final negotiations on the trade agreement this week in Tokyo. The TPP11 or Comprehensive and Progressive TPP (CPTPP) is set for formal signature on March 8 in Chile. Most businesses will not be prepared. Many firms expected the agreement to fade away. Hence, few have made contingency plans for implementation. Now, the clock is ticking before the agreement takes effect starting in late 2018 or early 2019. Nearly all of TPP11 begins on the very first day (entry into force or EIF), including all market opening for services, investment, most changes in customs procedures, the majority of tariff cuts and more. Most of TPP11 is identical to what was negotiated originally. The majority of the deal remains intact.
The primary difference between the original 12 party Trans-Pacific Partnership (TPP) and the new 11 party version is a set of “suspended” provisions. This is a list of 20 items that officials from the member countries have agreed to remove temporarily from the free trade agreement texts. These suspended provisions (found in Annex 2 of the CPTPP) are meant to be reinstated at some future date. In other words, these elements of the TPP may come back into the agreement as originally negotiated. Between now and then, member governments are not required to implement these rules at the domestic level. Many commentators with an unclear understanding of the TPP have assumed that these suspended provisions are a significant proportion of the document. The removal of both the United States and the 20 elements, therefore, has been said to make the TPP11 less relevant. Neither is the case. The TPP11 (or the CPTPP) is extremely important for companies and continues to set the benchmark for future trade agreements globally.
In other words, all of the existing annexes from the TPP agreement remain unchanged. All tariff cuts will take place on schedule as planned. All services open as intended. All investment is opened as indicated for TPP11 firms. All procurement access that was originally scheduled will continue. Furthermore, there are zero changes to the legal texts at all (beyond removing references to the United States) in the original chapters for 1-4 (definitions, market access for goods, rules of origin, textiles), 6-8 (trade remedies, sanitary and phytosanitary, technical barriers to trade), 12 (temporary movement of business persons), 14 (electronic commerce), 16-17 (competition, state owned enterprises), 19 (labor), 21-25 (cooperation and capacity building, competitiveness and business facilitation, development, SMEs, regulatory coherence), 28 (dispute settlement).