Comprehensive and Progressive Trans Pacific Partnership

CPTPP: Moving to Entry Into Force for the UK

CPTPP: Moving to Entry Into Force for the UK

While the UK signature on the concluded accession protocol is to be welcomed, it does not mean that firms should expect to receive benefits from CPTPP expansion just yet.  First, the agreement has pass domestic UK approval procedures, which includes Parliamentary votes.  The protocol will also need to be approved by existing CPTPP members, using whatever domestic procedures are in place for managing this process.  In some members, domestic approvals might also require Parliamentary approval. The UK accession protocol will only enter into force (EIF) once the UK and at least 6 existing members have completed their internal processes and 60 days pass.  Members appear to be targeting approval within 15 months. Of course, these procedures could be shorter or longer than anticipated.  When the original CPTPP was moving towards ratification and approval, members were targeting a start date of January 1, 2019.  However, timing can be difficult to get quite right.  Several members wanted to be among the first 6 members to ratify the deal.  The Vietnamese were working hard to hit the January 1 deadline.  Several existing members moved slightly faster than anticipated and the 6th instrument of ratification was deposited in time to launch entry into force on December 30, 2018, instead of January 1.  This meant that the whole agreement came into force sooner than expected, with the first round of tariff cuts taking place on December 30 and the second “year” of tariff cuts starting just three days later on January 1.[1] The Vietnamese had an unexpected delay, which meant CPTPP did not come into force for Vietnam until January 14, 2019, when it joined Australia, Canada, Japan, Mexico, New Zealand, and Singapore.  Peru was not a full member until September 19, 2021, Malaysia on November 29, 2022, Chile on February 20, 2023, and Brunei finally joined just last week, on July 12, 2023.[2] [Photo courtesy Photo: RNZ / Giles Dexter]

Enforcement in Free Trade Agreements

Enforcement in Free Trade Agreements

Which makes the use of the dispute system in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) all the more surprising.  Last year, New Zealand challenged Canada over the proper implementation and allocation of tariff rate quotas for dairy products.  CPTPP members established the first-ever panel to review the case in March 2023.  The public hearing for the case is taking place this week in Ottawa, with a decision expected in a matter of weeks afterward.  The case is expected to be publicly released in September.  This will give observers a first glimpse into how well or poorly the dispute system embedded in the CPTPP works.  It could also provide an important impetus to future use of the dispute mechanism as a tool to prod members towards improved enforcement of various provisions. Frankly, none of the current CPTPP members is likely to have fully implemented all their commitments.  As a simple example, the agreement requires all members to update their government procurement thresholds at least every two years.  This is necessary because the limits were written as Special Drawing Rights (SDRs) which are not typically top of mind for firms looking to compete for construction contracts.  The SDR conversion rates and the adjustments to procurement are supposed to be published regularly but (as far as I know) not a single government has done so.  These sorts of implementation gaps appear across the agreement.  Some may be relevant to businesses and others may be less so.  But the basic point here is that, by relying on a dispute settlement mechanism built into an FTA to manage effective implementation, it requires such a mechanism to actually be used by participants.  Otherwise, enforcement and compliance will always be weak. The use of the dispute settlement provisions for the first time in the CPTPP, then, represents a potentially significant boost to the overall implementation incentives for this agreement.  For companies that may be waiting for improved delivery of various CPTPP promises, stepped up attention to implementation cannot come soon enough. 

CPTPP: Back to a Dozen Members!

CPTPP: Back to a Dozen Members!

The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement is gaining its first new member with the announcement this morning of substantial conclusion of accession talks for the United Kingdom. While the Ministerial statement containing the good news amounted to just four paragraphs, regular Talking Trade readers will know that getting this far in accession talks is an important milestone.  The process has taken nearly two years, driven partly by Covid-19 pandemic travel disruptions which meant early talks were held online.  This was not the only challenge.  During the Working Party discussions, the CPTPP’s own active membership increased by three, with the ratification of Peru, Chile, and Malaysia.   (Just Brunei remains an original signatory, but not yet an active member of the group.)  Covid was not the only disruption during the past two years either.  The UK itself went through substantial domestic upheavals.  The country was also wrapped up in complex talks to help sort out its own trade strategy and engagements across the globe.  As trade experts are keenly aware, there can be a lag between the announcement of “substantial conclusion” and the actual closure of a trade deal.  Often this gap is described as allowing sufficient time for “legal scrubbing” to take place.  However, international trade lawyers will argue that a good legal eagle should be able to review any final changes that arise from a last marathon sprint in negotiations very quickly and, certainly, good lawyers should not need weeks or months to get their jobs done. 

China Applies to Join the CPTPP

China Applies to Join the CPTPP

China has submitted a formal letter of application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Now, after years of speculation, it’s decision time. Will the current members of the CPTPP agree to allow China to start accession or not? As readers may recall, a CPTPP accession process has started already. Members have formed accession working parties to manage the addition of the UK. With China’s request, members will need to hold formal bilateral consultations. Then, they will convene to decide on what to do with the application request. If the current members decide to allow it, China will proceed to the accession stage and start working on their own country-specific schedules for market access in goods, services, investment, movement of business persons, state-owned enterprise (SOE) exceptions, and government procurement commitments. The text of the agreement and all existing member schedules are not intended to be adjusted in the wake of new accession discussions. The key question of concern for current members will be whether or not they judge China to be ready, willing and able to uphold the existing rules in the agreement?

Pop Open the Sparkling Wine: Round 2 for TPP

Negotiations started in March 2010.  The original deal was finished in January 2016 with 12 parties.  When the United States withdrew a year later, many people expected the agreement to die a quiet death. However, officials persevered and fought hard to maintain the high quality of the trading arrangements.  For many, this meant accepting tough provisions originally negotiated as part of a comprehensive package with 12 members. The consequences of the final agreement are important for companies.  Our brand-new booklet on 10 Benefits of the CPTPP can be downloaded here.  The final agreement signed in Chile pared back the commitments by suspending 19 elements, amending one provision, and clarifying the terms for two others.  (For more specific details, see our revised Policy Brief 17-11a.)