British involvement to deepen depth and breadth of CPTPP

Dr. Deborah Elms - Executive director, Asian Trade Centre

While this is the first time the agreement has expanded since it entered into force, the deal has experience with adding new members over its negotiating history. It started as an agreement with four members in 2006 (Brunei, Chile, New Zealand, and Singapore). By the time of conclusion, the Trans-Pacific Partnership (TPP) had 12 members: the original four plus Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, and Vietnam.

It then famously shrunk when the US withdrew in early 2017 and was converted into the CPTPP before entering into force, at long last, for seven members nearly two years later.

The CPTPP has been up and running for several years and delivering benefits to companies across Australia, Canada, Japan, Mexico, New Zealand, Singapore, and Vietnam.

The CPTPP member countries will get together in what will be called “working parties”. These are groups of trade officials in each member country to help facilitate or guide the process.

When a new member joins the agreement, it is not a full-blown negotiation. The new member will not be reopening or discussing the existing texts or rules. The current members will not be adjusting their own specific commitments as shown in their schedules.

Instead, the United Kingdom and other potential new members will be working on creating their own market access schedules for goods, services and investment reservations, business mobility, state-owned enterprise commitments, and government procurement.

Current members, while not preparing to adjust their own existing commitments, will need to recall what they have promised to deliver and review the texts and rules in order to more effectively work with the acceding members. The final commitments for the UK have to be approved by CPTPP members and the working party will manage the processes.

For the UK, the process of acceding to the CPTPP is likely to be fast. Joining the deal has political engagement at the highest levels in London, discussions have been underway for some time, and many of the most challenging topics have already been flagged.

The CPTPP members had hoped to have additional countries joining the agreement at the same time. After all, it is costly to get teams together to manage the process and doing it for one aspiring member is not significantly different from handling two or more new members.

The “missing four” of Brunei, Chile, Malaysia, and Peru should be at the top of the list. These are the four members of the CPTPP that have not yet completed their domestic ratification procedures to bring the deal into force for their markets. Most of the four have undergone significant political changes during the past few years that has made it difficult to put CPTPP entry on the table. With the agreement expanding, the time is ripe for trying again.

After these four, likely new candidates include South Korea and Thailand. Taiwan is ready and prepared, although political issues surrounding their entry remain quite challenging.

There are two other possible members that are always mentioned: the US and China. The US could, certainly, rejoin the CPTPP. There were 22 provisions suspended or adjusted in the wake of American withdrawal from the original TPP agreement. These might or might not be reactivated if the US were to come back.

There are two bigger challenges however. Firstly, the executive branch in the US is about to lose the authority to negotiate trade deal granted by Congress on July 1. The Trade Promotion Authority (TPA) expires, and with it, instructions from the legislature about what must be included to help ensure a smooth passage of the agreement at the end. Getting TPA is not on the priority list for the Biden administration at this time and probably will not be part of the agenda for a while to come.

Secondly, if the US were to return to the CPTPP, it is highly unlikely that the 22 items would be the only changes the US would demand as conditions for entry, as they would insist on making rule adjustments in other areas. After holding the line on exactly such changes for other parties, it could be difficult for the current members to agree. Even if they wanted to do so, the specific types of requests the US might make could be challenging for existing members.

Hence, while it is certainly possible for the US to join or rejoin the CPTPP, the timing is not auspicious and the price may be seen as too high for some current members.

Chinese interest in joining the CPTPP ought not be dismissed. While not asking for entry at this moment, the Chinese government has been increasingly active and involved in determining what sort of adjustments would be needed domestically to come into compliance with the agreement and what sort of schedules could be offered to the members.

Chinese entry would, of course, be complicated. Among other challenges, the timing is critical. Many current members want the US back in the deal, but the US is unlikely to do so in the near term and may never come back. If China were in ahead of the US, of course, it would likely be impossible for the US to rejoin. However, keeping China out may also be problematic, particularly as many of the CPTPP rules would be encouraging exactly the sort of behaviour that many want.

In the meantime, current and potential future members will be watching the accession process for the UK with significant interest. This is a trade deal that delivers results, and getting new members in only increases its attractiveness.