CPTPP Signed To Lower Trade Barriers Across The Region
In view of increasing protectionism, ministers from 11 countries recently signed a revised Trans-Pacific Partnership. The signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which took place in Chile signals a commitment to lower barriers to trade across the region. The CPTPP also sets up the world’s most populous trade bloc and comes soon after US President Donald Trump’s move to impose steep tariffs on steel and aluminium imports sparked fears of retaliation.
Chilean Foreign Minister Heraldo Munoz said the partnership was most important free trade agreement and the most rigorous that has been signed until now in the world. “While taxes are going to be applied to certain products and there is a threat of a trade war, we are going to give a signal of openness,” he said. Japanese Foreign Minister Taro Kono meanwhile, expressed hope that the TPP-11 will be an important cornerstone for the countries’ collective efforts to expand a free, fair and rules-based economic order.
The pact represents 13.5 per cent of the global economy with a market of 500 million people, and comes amid a backlash against globalisation. Singapore was represented at the signing by Minister for Trade and Industry (Trade) Lim Hng Kiang. Once ratified by at least six of its 11 countries, the CPTPP will enter into force. The process could take up to a year and involves amending their respective laws. The 11 countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Led by Japan, the deal’s completion comes a year after Trump pulled the United States out of the original agreement on his first day in office. Members spent a year reworking the deal and ended up suspending 22 out of the over 1,000 provisions. The CPTPP will do away with virtually all tariffs and other barriers to trading goods, and help shipments clear Customs more easily. CPTPP countries accounted for $214 billion – a fifth – of Singapore’s total goods trade last year.
For the first time, under the deal, service providers will be able to compete for some government contracts in other member states, including in Singapore. E-commerce rules can also ensure that data moves freely across borders. The signing also helped push ongoing negotiations on the Regional Comprehensive Economic Partnership (RCEP), an Asean-led pact involving seven CPTPP members, which Singapore is pushing hard to conclude. Singapore’s hope is that the CPTPP and RCEP can be stepping stones to its “end-goal” of a wider free trade area of the Asia-Pacific, Lim said.
The CPTPP agreement also opens the door for the US to rejoin the club, a step Trump in January hinted he would be open to if the US could get a “substantially better deal”. Meanwhile, Kono said protectionism harms the very jobs it seeks to protect. He explained that protectionist measures make producers unable to access the cheapest and best quality inputs and as a result, producers lose export competitiveness in global markets, making them less able to sustain jobs at home.
National University of Singapore economist Davin Chor said the deal showed that the rest of the world was prepared to advance free trade, with or without the US. “Like it or not, the Trump administration and the US could find itself increasingly isolated in the international trade policy arena,” he said.