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.

For the UK, however, 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 UK 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. So, as is often asked, who else might quickly join the line? The “missing four” 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 (Brunei, Chile, Malaysia, and Peru) 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 (perennially mentioned but unable to get consensus domestically) and Thailand (missing key supply chain opportunities to neighboring Vietnam). Taiwan is ready and prepared, although the political issues surrounding entry remain challenging. There are two other possible members that are always mentioned: the United States and China.

Enforcement in Free Trade Agreements

The CPTPP Expands