Ever-evolving makeup of the CPTPP

The delivery of a formal letter of intent from the United Kingdom to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) has launched a renewed flurry of interest in this trade deal. But what does it take to join?
1537 p2 ever evolving makeup of the cptpp
By Dr. Deborah Elms – Executive director, Asian Trade Centre Singapore

As the text and schedules for all existing members are already available, it is possible to see where likely obstacles may be found and to identify gaps between existing practices, laws, and regulations of a potential member and the requirements of the CPTPP.

An incoming member is meant to canvas the current membership on a bilateral basis and ensure that any potential obstacles are highlighted, discussed between the two sides in detail and, potentially, and removed. While many trade irritants can and should probably be tackled through group negotiations, sometimes a potential member has a specific issue of concern to only one member. In this circumstance, it can be addressed prior to entry to negotiations.

Assuming the current members have no objection, the applicant country can proceed to file a formal request to join. This letter, as the UK has demonstrated, gets sent to New Zealand, as Wellington serves as the official repository location for the CPTPP.

In the absence of a secretariat, the CPTPP is managed through a rotating appointment of commission chairs. The rotation is dictated by the order in which members joined the agreement.

A CPTPP secretariat would make accession talks significantly easier. It would come with a built-in group of officials well versed in CPTPP rules and regulations, familiar with the existing membership and important sensitivities, as well as the current individuals for each member that are actively involved in various chapter activities. Secretariat staff could serve as neutral parties, shepherding new members through accession.

Without a secretariat, CPTPP accession will be started by the current chair. It will help members decide on the composition of a working group to manage the process. It may be that all aspiring members are grouped together into one working group or that members opt to hold separate working groups for each potential member. The chair of the working group(s) will be decided by members and the group(s) will include representatives from all active members.

Accession to the CPTPP is not like launching free trade agreement (FTA) negotiations. The process is closer to that of joining the World Trade Organization. It will likely take some time to organise, as there is no sitting working group for members.

New members are not negotiating over changes to existing rules, and the nearly 600 pages of text need not be adjusted in accession. Instead, work will get underway on crafting new member’s specific schedules which include:

– Tariff cuts (order and timing of cuts to reach tariff elimination quickly);

– Services, including financial services, and investment restrictions which will remain in place after joining the CPTPP (all other services and investments will be opened for all parties);

– Government procurement entities that will not be bound by CPTPP rules to open federal level procurement above the specified thresholds;

– State-owned enterprises (SOEs) that will not be bound by CPTPP rules; and

– Temporary entry of business persons commitments (such as how many inter-corporate transferees are to be allowed or whether spouses have access).

Of course, the start of accession provides a potential opportunity for CPTPP members to adjust the agreement, if all agree. The CPTPP was always designed as a “living agreement” which meant it was pitched as open for adjustment from the very beginning.

An agreement that effectively closed in 2015 is likely to benefit from a careful review in 2021 and beyond. CPTPP members have been enthusiastic participants in a range of FTAs, including the work on the Regional Comprehensive Economic Partnership which closed late last year and a growing set of digital economy agreements.

Some of these later agreements have innovations that might be brought into the CPTPP – such as the creation of a secretariat or the inclusion of MoUs to cover topics of collaboration that are still evolving and not yet ready for binding into the CPTPP texts.

Members could potentially take advantage of an opportunity to adjust their own commitments. Some of the more innovative areas of the CPTPP, like the scheduling of SOEs or government procurement, might look unnecessarily cautious in hindsight.

Such adjustments to texts and existing schedules are not part of the accession process, per se, but members might find it useful to review such elements as negotiating teams are gathering together for the first expansion of the CPTPP.

In short, the receipt of the UK’s letter of interest moves the ball forward for the CPTPP. The start of new negotiations on accession should be a trigger for additional possible members to come forward.

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