Trade-exposed economies will not thrive in an increasingly protectionist world. But how should governments go about maintaining trade links and expanding collaboration amid disruption?

One solution is to leverage existing platforms and build out new areas of alignment and cooperation. The soon-to-be 13 members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)¹ and the 27 members of the European Union (EU) are working on just such an initiative.

The CPTPP and the EU are not currently planning to merge or to create a new free trade agreement (FTA). Instead, they should create an adaptive accord to manage alignment.

An adaptive accord represents a new model. It allows members flexibility to craft specific commitments as well as engage in dialogue on a range of topics. It uses a modular approach to create consistency around specific topics.

Rather than trying to create a comprehensive, inclusive trade arrangement from the start, an adaptive accord provides immediate opportunities for collaboration. In some areas, included modules can be quickly developed, as they can be built on similar pledges made by members in other trade arrangements. For other topics, members may need to proceed more slowly or allow softer commitments at the outset.

A modular approach is not new. For example, many of the latest digital economy agreements negotiated with Singapore can be seen as an illustration of this model.² The arrangements that Singapore has signed with Australia, the United Kingdom, and South Korea contain legally binding commitments on a range of topics related to digital trade, like paperless trade or data flow provisions.³ There are also some areas of softer legal language, promising future cooperation in areas like electronic invoicing or cybersecurity cooperation. Finally, each agreement also includes a set of Memorandums of Understanding (MOUs) which cover topics like artificial intelligence (AI) or open government data. These MOUs could eventually result in a more formal commitment slotted into the legal text.

Singapore and the EU also have a digital partnership which can also be seen as taking a modular approach.⁴ The existing framework identifies areas of cooperation and joint work areas such as digital connectivity, cross-border data flows, cybersecurity, and digital education. The partnership includes an operating structure to ensure that talks continue to evolve.

These trade arrangements allow members greater flexibility, which is especially important in fast-evolving areas like digital trade. Provisions could be adjusted relatively easily over time as, for instance, some previously cooperative arrangements or MOU topics evolve into harder legal commitments. New areas could potentially be added to the existing frameworks as well.

The CPTPP-EU Accord could use a similar structure. Members could flag certain areas of interest that would move more quickly. Other topics might be included as part of a future work program. Early candidates for a CPTPP-EU Accord include digital trade, trade in services, and trade facilitation.

There is value in replicating commitments across different platforms. The CPTPP-EU Accord should endeavor to do more than simply repeat promises made elsewhere, but an opening approach using language and commitments from past agreements can speed up discussions and more clearly indicate where additional alignment might be possible.

Digital trade, for example, could include modules drawn directly from pledges made by members as part of the Joint Statement Initiative on electronic commerce at the World Trade Organization.⁵ Most CPTPP and EU members have already agreed to start implementing these commitments.⁶

Provisions that could be in a digital trade module include: use of laws consistent with the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce and UNCITRAL Model Law on Electronic Transferable Records; agree not to impose customs duties for electronic transmissions; allow for the use of electronic signatures and for private parties to determine the appropriate form of electronic authentication or signature for their transaction; make customs forms electronically available and accept their electronic submission; regulate spam or unsolicited commercial electronic messages; or adopt measures to protect the personal data of users.

For a potential module on services and investment, there are several provisions that most CPTPP and EU members have already made that could be drawn together in an accord.⁷ Members could perhaps agree to non-discrimination, prohibit key performance requirements, and apply domestic regulation guidelines. They might create a joint information portal to provide service providers with information about licensing requirements or specific regulatory requirements.

Trade facilitation provides an opportunity to also explore different types of alignment. For example, members could use pathfinders to exchange different types of information for specific cargo shipments, design projects to test new express delivery and customs clearance procedures, or consider ways to coordinate on rules of origin for certain products to allow cumulation of content from across the CPTPP and EU markets.

As a CPTPP-EU arrangement includes 30 participants with more potential members in the pipeline, it will be important for governments to think carefully about institutional arrangements from the beginning. An adaptive accord need not include a rigid formal structure, but it will at least need to address the methods for reaching agreement and pathways for implementation.

Requiring all members to agree before proceeding is likely to tie up the arrangement in knots for an extended period of time. This approach seems particularly ill-suited to an agreement that is meant to be adaptive. Hence, members will have to think about how to allow forward movement with flexibility.

Flexibility, however, does come with challenges. Businesses that are looking for clarity and consistency in rules and procedures for operating across member markets will be skeptical of any arrangement that allows members to move at different speeds. The challenge is not insurmountable. Other trade groupings allow pathfinder initiatives to proceed with less than full membership.

Because members are not currently looking to negotiate an FTA, the overall content of the accord will look different from many past trade deals. Legally binding commitments are largely going to be off the negotiating table for now. Alignment and regulatory coherence are in. But these are important promises that members can make to one another. Businesses are often stymied by regulatory inconsistencies, and the practical consequences of resolving these issues could be very significant.

The members of CPTPP and the EU have an opportunity to craft a new sort of trade arrangement that could meaningfully tackle trade issues while remaining flexible enough to navigate the choppy trade waters ahead. Getting an adaptive accord into place will require speed and agility to avoid getting sucked into a cycle of bland policy statements supporting multilateral rules repeated at regular intervals. The clock is already ticking.