Talking Trade blog
Time to upgrade the CPTPP
Published 24 June 2021
The launch of the accession process for the UK into the Comprehensive and Progressive Trans-Pacific Partnership (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, pre-covid 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, of course, will be on delivering an agreement to incorporate the UK into the CPTPP, it is also timely 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 might have created new opportunities for changes or tweaks to improve on the agreement. CPTPP members have been active and enthusiastic members of 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 ASEAN-China, or ASEAN-Australia-New Zealand (AANZFTA) 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 obvious mechanism for a review to happen.
Since all CPTPP member countries will gather together various working groups to discuss 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 usefully imported in the CPTPP.
One area, in particular, that is due for an upgrade is the e-commerce chapter. For example, it currently carves out, in the opening chapter paragraphs via the definitions of “covered persons,” the 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, to provide such services. It could be time to remove this exception or, at a minimum, relook at the language to determine whether it needs to remain exactly as it was originally written.
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, the extent to which digital increasingly underpins nearly every other aspect of the economy, and changes in rules outside the CPTPP suggest that this chapter is due for a closer look and review.
Many members will balk or hesitate at the idea of adjusting the agreement now, and 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? Preparing teams to handle the CPTPP is not simple. Absent a Secretariat with full-time officials that have made CPTPP a daily priority, every government manages the CPTPP on the side or as part of their overall job addressing a range of trade commitments and new negotiations elsewhere. Staffing up at the level of detail and knowledge necessary to carefully review provisions is likely to be a major undertaking. It won’t happen again easily.
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 a listen in 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, perhaps, as participants without a “vote or veto” on any provisions.
One possible solution might 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 might 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, at the same time.
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