Several questions raised by first expansion of CPTPP

Dr. Deborah Elms - Executive director Asian Trade Centre, Singapore

The launch of the accession process for the UK into the CPTPP is an important milestone. It marks the first time that the CPTPP has been expanded since it entered into force in late 2018. The UK had the world’s sixth-largest economy in 2019, before the pandemic and Brexit. The addition of such a large and vibrant economy to the existing membership will create a range of new benefits.

While most of the focus of the accession will be placed on delivering an agreement to incorporate the UK into the CPTPP, it is also time for members to reflect on the deal and consider upgrading or reviewing and adjusting provisions and commitments.

The CPTPP was first approved in January 2016, when the original texts and schedules for the underlying agreement, the Trans-Pacific Partnership (TPP), were released. This means that the rulebook and commitments are now more than five years old. For some categories of commitments, the intervening time has meant little.

As an example, the first substantive pledge in the agreement, to provide national treatment to the goods of the parties in the agreement (Article 2.3), still stands and needs no adjustment or revision.

But there are many other areas across the deal where the passage of time may have created new opportunities to improve on the agreement. The CPTPP members have been active in and enthusiastic about trade negotiations in a wide variety of settings. These activities have resulted in a range of new bilateral and regional agreements for many members.

In some circumstances, these later agreements may have made improvements or advancements that could be usefully incorporated back in the CPTPP now.

Many trade agreements have built-in review mechanisms for precisely this purpose. ASEAN, as an example, has upgraded its internal commitments repeatedly and has also engaged in wholesale reviews of most of its regional agreements, such as the ASEAN-China or ASEAN-Australia-New Zealand deals, the latter of which is due to be upgraded shortly.

The CPTPP was created and repeatedly touted as a living agreement. This means that it was designed from the beginning to allow adjustments. Thus far, no such adjustments have taken place (beyond the suspension of 22 provisions in the transition from the TPP to the CPTPP and a bit of work to provide more clarity on the accession process itself). There is no mechanism for a review to happen. Since all CPTPP member countries will gather together various working groups to discuss the UK accession, it makes sense for these working parties to also reflect on what aspects of the agreement may need a bit of a refresh. There are lots of new ideas that have been built into other agreements that might be useful in the CPTPP.

One area, in particular, that is due for an upgrade is the e-commerce chapter. For example, it currently defines “covered persons” in cross-border transfer of financial services data. This exception has not been replicated in other trade arrangements by the current CPTPP members. The existence of this definition is problematic because it seems to conflict with pledges elsewhere in the agreement, including the financial services chapter. It could be useful to remove this exception or, at least, rephrase the language.

The rest of the chapter was pathbreaking for its time. But the digital economy, in particular, does not stand still and many innovations in technology and changes in rules outside the CPTPP suggest that this chapter is due for a closer look and review.

Many members will baulk or hesitate at the idea of adjusting the agreement now, especially as part of an accession process. Thus far, every new member joining the deal has had to commit to taking the rule book as it stands. Bringing changes or a review into the accession proceedings sets a new precedent to allow future members to expect similar treatment.

While a legitimate and valid concern, it raises the issue of when such reviews might take place. If not now, then when?

There is also the vexing issue of which CPTPP members would get to participate in any such upgrade or review exercise activities. Clearly, the seven active participants (Australia, Canada, Japan, Mexico, New Zealand, Singapore, and Vietnam) would get a seat at the table. It gets a bit more challenging after this. The UK will ask, and probably deserves, at least to listen to such discussions, as future rule adjustments will apply to it as well.

There are four additional members of the CPTPP that have still not completed domestic ratification procedures, leaving the agreement not yet in force for Brunei, Chile, Malaysia, and Peru. These four have been allowed to participate in the accession talks, most probably in the role of observers or as participants without a vote or veto on any provisions.

One possible solution could be to conclude the accession process for the UK and immediately turn to a review process. This would, however, extend the time needed for officials to deliver results.

The UK may have concluded talks, but it will take time for them to complete their own domestic ratification procedures to bring the agreement into force. That could put the UK into the same bucket with the other four signed, but not yet in force, members.

It is also possible that, depending on how long the process takes for the UK, other aspirant countries may have started their own accession talks in the meantime. This could push the timelines for review out even further.

In short, although there may be sensible reasons for arguing that the CPTPP rulebook should not be touched during an accession process, in practice, it is important to leverage the current focus on the deal to include reviews and upgrades as needed.