THE COMPREHENSIVE & PROGRESSIVE TRANS-PACIFIC PARTNERSHIP (CPTPP) AGREEMENT

INTRODUCTION

The CPTPP Agreement (1) is the alliance of eleven countries in the Asia-Pacific region in which the founding nation members are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. This will be expanded further, even if the country is not in the Asia-Pacific region, by the planned addition of the UK (2), which brings the total population it covers to over 550mln.

It may be said it at different times it required much patience and tolerance, while at other times, heavy and feisty negotiations between these various countries. With these nations already existing in different places around the world and whether they were different culturally or poorer financially, their ultimate common aim was to drive towards an alliance of countries which would develop a free trade and investment agreement. These nations were determined to deliver a successful agreement at its conclusion, which they did.

THE CPTPP AGREEMENT

The Agreement liberalises the trade of goods, eliminating the protectionist policies by removing tariffs (3) which would otherwise have distorted the trade markets, or allows these countries to undertake foreign investment in these countries, without legislation restricting this being allowed to occur (6). Initially these negotiations led to the Trans-Pacific Partnership (TPP) Agreement, as it included the largest state party, the US (3). But once the Trump Administration was elected and inaugurated in early 2017, Trump withdrew US support to be included in this alliance of different nations. But rather than waste all these efforts these countries’ governments and their trade departments had done to come to agreements on various different aspects of the Agreement, even after the US withdrew, they continued with the negotiations until the task was completed. It just came under a different banner.

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Interestingly, upon its completion, the Biden Administration has said openly it does not believe the US should have withdrawn from the alliance of nations. With the UK already planning to sign on, despite not being part of the Asia-Pacific region, this has seen Biden more openly provide evidence of his approval to be part of the CPTPP Agreement, and therefore, to join this coalition of nations. Originally, the TPP Agreement’s purpose had both an economic and a political purpose and was to an effective counter-weight to shift power away from China and towards the US (4).

THE TRADE AGREEMENT

There were mutual benefits to be gained by all the state parties in the Agreement, including the US (5) and would have seen the TPP Agreement be one of the most substantial trade agreements to be introduced successfully as complete in over 20 years. The trade agreement built on the WTO regulations, as well as other bilateral FTAs to reach areas (6) such as:

·????????Digital Trade and Economic Commerce

·????????Intelligence Protection of Governments and Companies

·????????State Owned Enterprises, which dominate China’s economy

Ratification of the TPP Agreement would have altered the economic politics of Asia, but as this was also the time when the US election was to occur, which saw Donald Trump finishing up being elected. Trump demonstrated many of his policies were based on his populist ideology meaning these policies appealed more to the general population. As he was part of the Republican Party, they were more conservative. The TPP Agreement introduced promoted economic liberalism, which Republicans were not willing to tolerate (7). Trump soon withdrew from the TPP Agreement (8), which he said was in support of the US automobile manufacturing industry.

With the withdrawal of the US, initially there were queries being asked of how the remaining countries were going to move forward with the Agreement, given the US was the largest state party. But after some discussions between these countries, despite the withdrawal of the US, they decided to accept this decision. Although some information in the provisions and chapters would be altered, the nations agreed the overall structure of the Agreement would not need to largely altered, which would allow for the remaining nations to complete the task. While it did come under a new banner to be called the CPTPP Agreement, much of what had been successfully negotiated stayed in place.

If the Biden Administration does move further forward and decides the US should be part of the alliance of nations, these provisions, which were demanded to be placed in the Agreement by the US in the first place, can be always be added later. Some of the issues to the Agreement include chapters on:

·????????eCommerce and the regulations on digital trade, where different sized companies globally need the internet and technology be up to date and operating efficiently

This International Agreement has broken new ground with the expansion on digital trade regulations, which facilitate:

·????????Trade in Digital Products

·????????Streamline of Commercial Transactions

all which fall under different nation’s SMEs jurisdictions. But these benefits will only be gained if the opportunities are exploited by these companies. Removing trade barriers is therefore vitally important, especially in the digital trade sector, as are the legal obligations and practicalities for SMEs. This enables a better understanding of international trade regulations in the digital trade sector.

The regulation of SOEs, especially as they dominate the China’s economy is another of the CPTPP chapters focused upon. While it was the US insisting this be included in the initial TPP Agreement, are there regulations which could effectively manage these SOEs? The information to expand upon this is to critically analyse the role these SOEs play in the Chinese market and is it possible to effectively manage the market distortions they create, which is currently not mutually beneficial to other nations? According to the contribution and the conclusion made of the provisions in place in the Agreement, they are limited in their effectiveness in controlling the SOEs as they are currently set.

The chapter on competition also provides an insightful analysis of why there needs to be on competition policy included. These provisions are there to give guidance in to how the Agreement intends to include anti-competition regulations in the Regions free trade area.

THE INVESTMENT PROTECTIONS

An additional chapter is on investment protection, which is more specifically directed at Malaysia’s investment regime. Malaysia has a range of investment treaties and under their current structure and practices, it could introduce new measures. More broadly, investment protections in other countries in the alliance should someone be planning to undertake an investment, it has been shown there is a comprehensive suite of investment protections. This means to enforce these protections, and if for any reason, there are limitations, alternative strategies are offered for prospective investors to considering to invest in the region.

Additionally, there is a contribution provided on how to find the balance between investment protection and regulatory sovereignty. Where is the line to be drawn between protection of investments and authority on the nation’s regulations? This is never clarified, so it remains a question as to where the equilibrium will be found. Arbitration of disputes between investments and regulations is discussed in detail in the Agreement and how they will be judged upon. But so are considerations made of overall public welfare.

The Agreement also goes to some effort to address the connections between foreign investment and the environment. This means discussion that focuses on global initiatives to deal with advancing the objectives of:

·????????Environmental Protection

·????????Climate Change mitigation

·????????Sustainable Development Goals of the UN

This is saying there will be an increased desire to increase foreign investment which include with it environmental objectives.

It therefore places these nations in a position where they can consider where they sit with the different interpretations and whether they are meeting the obligations and rights they have under the CPTPP Agreement. This includes the regulatory approach regarding the measures implemented by different CPTPP nations in regards to the health of different aspects of the environment, whether it meets WTO obligations, or go beyond them in certain areas.

These detailed provisions include contribution of commentary about the private sector in the Agreement, where provisions for cooperation and transparency are a key in developing CPTPP measures, which provide examples of the enhancements. For example, do they address the science upon which these measures are based, or alternatively, do they conform with the accepted and stated international standards? This balance is necessary to ensure all the CPTPP nations are able to access all the markets in the whole variety of sectors.

The final chapter deals specifically as to whether these nations’ governments still have the right to, or ability to procure the assets in the Asia-Pacific region by looking at their history of taking such actions in the past. In the Procurement Chapter of the Agreement, are there deficiencies to be highlighted, because overall it provides an outline and overview for businesses to consider if thinking to undertake investments with any of these different nation’s governments in the region.

A SUMMARY OF THE EMERGING THEMES

The CPTPP Agreement has shown there are many topics that still need investigating and expanded upon, including what has already been agreed upon by this alliance of eleven nations. It is agreed these topics of this recently signed and introduced trade and investment agreement that it is an important economic agreement which covers many international economic activities. It tackles a comprehensive agenda (6) which includes:

·????????Economic Liberalisation

·????????Regulatory Consistency

·????????Provides effective Public Services

·????????Sustainable Economic Development

These countries had an objective to succeed with this task before them, even if they lost the support of the US upon the election of the Trump Administration, which withdrew itself from the previously called TPP Agreement. Despite this withdrawal of the largest state party, the Agreement continued with its negotiations so as it could be implemented, applied, interpreted and enforced as the CPTPP Agreement (6).

Notably it shows other countries may join to broaden the coverage of allied nations, which importantly includes the US, under which the Biden Administration has openly seen its mutually beneficial value to all nations belonging to the Agreement. That its withdrawal, as occurred, was an error in judgement of what it did not only for the US, but other countries in the alliance. Most definitely, without causing any reasons for a conflict, it provides an effective counter-weight needed to undermine thoughts to consider for China expand into other regional nations, which was the purpose of it in the first place.

As a comprehensive effort to complete successfully a set task to bring together a group of nations in an alliance, with the likelihood others will join upon seeing the benefits it provides, the CPTPP Agreement still needs further contributions made to address and clarify information in the different chapters. Further discussions on issues relating to trade facilitation and sustainable development will remain an important focus of these discussions (6). It is an ongoing project which continues to play an increasingly important role in world trade and investment markets, especially in the e-commerce digital economy.

Given these are the group of the founding eleven nations in the alliance, the fact that other countries will see its benefits and want to join, as has very much so been the case with the EU, which began with the Rome Agreement in 1959 with only five European nations, it currently now approaches thirty nations of both Western and Central Europe. It has proved to be a very successful free trade agreement, which developed into a much more complex Agreement. The benefit of these Agreements is obvious as it brings together and strengthens diplomatic and trade relationships, which in turn, more easily facilitates the free trade of goods and investment.

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REFERENCES

1.???Comprehensive and Progressive Agreement for Trans-Pacific Partnership, (30 December 2018), https://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/index.aspx?lang=eng accessed 23 June 2021

2.???Inman, P., UK to Start Negotiations to join the Asia-Pacific CPTPP Trade Treaty Trade Policy, The Guardian, (3 June 2021), htpps://www.theguardian.com/politics/2021/jun/02/uk-to-start-negotians-to-join-asia-pacific-cptpp-trade-treaty?utm_term accessed 23 June 2021

3.???Trans-Pacific Partnership, (26 January 2016), https://www.mfat.govt.nz/ en/about-partnership-agreement-tpp/text-of-the-trans-pacific-partnership accessed 23 June 2021

4.???Chow, D., How the United States Uses the Trans-Pacific Partnership to Contain in International Trade, (2016), Issue 17, Chic, Journal International, L 370 [Chow] accessed 23 June 2021

5.???Petri, P.A., Plummer, M.G, The Economic Effects of the Trans-Pacific Partnership: New Estimates, Working Paper Series, WP 16, Petersen Institute of International Economics, (January 2016) https://piie.com/system/files/documents/wp16-2_0.pdf accessed 23 June 2021

6.???Whitsitt, E., Bray, D., Chaisse, J., Forrest, S., Ishikawa, T., Kim, J., Sourgens, F.G., (2019), An Introduction to the TDM Special Issue on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Transnational Dispute Management Journal, TDM 5, Editorial, issn 1875-4120,

https://www.transnational-dispute-management,com/article.asp?key=2661 accessed 23 June 2021

7.???Boyle, S., Hilary Clinton opposes TPP while Donald Trump threatens Tariffs – Both their Policies will leave People worse-off, The Guardian, (4 November 2016), https://www.theguardian.com/business/2016/nov/04/us-election-free-trade-hilary-clinton-tpp-donald-trump-tariffs accessed 23 June 2021

8.???Presidential Memorandum Regarding Withdrawal of the United States from the Trans-Pacific Negotiations and Agreement, (23 January 2016),?https://whitehouse.gov/presidential=actions/presidential-memorandum-regarding-withdrwal-united-states-trans-pacific-partnership-negotiations-agreement/?accessed 23 June 2021