CPTPP explained for Asia-Pacific business owners

CPTPP explained in one line: it is a trade pact that 11 Asia-Pacific economies signed on 8 March 2018 in Santiago, Chile. The formal title is Comprehensive and Progressive Agreement for Trans-Pacific Partnership. It is not in force yet. Each member must first finish its own approval steps. This guide covers who is in, what it is meant to do, what was put on hold, and what you can do now.

Who signed the CPTPP

Eleven economies signed on 8 March 2018. They are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia and Mexico, plus New Zealand, Peru, Singapore and Vietnam.

Five of them are in Asia: Japan, Singapore, Vietnam, Malaysia and Brunei. Australia and New Zealand also trade heavily with Asia. If your company sells to, buys from, or has a plant in any of these markets, this pact may matter to you.

The ministers also said that other economies have shown interest in joining later. Nothing is decided on that yet. Treat any talk of new members as a possibility, not a plan.

Sources: CPTPP Ministerial Statement, Santiago, 8 March 2018 (New Zealand Ministry of Foreign Affairs and Trade, mfat.govt.nz; Japan Cabinet Secretariat, cas.go.jp).

What the pact is meant to do

The ministers say the agreement will boost trade, investment and economic growth in the region. They also say it will create new chances for businesses, consumers, farmers and workers. They describe it as a high standard, rules-based deal.

In plain terms, a trade pact like this sets common rules for selling goods and services across borders. It also covers investment and the protection of ideas such as patents and copyright. The legal text is long. It was released in its checked final form in English, French and Spanish on 21 February 2018.

The ministerial statement does not list tariff rates. Do not assume a rate on your product has changed. The tariff schedule for each country sits in the agreement text, and you need to look up your own product code.

Sources: CPTPP Ministerial Statement, Santiago, 8 March 2018; New Zealand Ministry of Foreign Affairs and Trade, CPTPP treaty page (mfat.govt.nz).

When it starts

Signing is not the same as the pact starting. After signing, each member must complete its own legal steps, such as a vote or review by its government. The ministers said they are determined to finish these steps quickly.

The text sets a clear rule for the start. The agreement begins once 60 days have passed since at least six signatories (or half of them, if that is a smaller number) told the depositary in writing that their steps are done. The depositary is New Zealand. A member that is not ready by then becomes bound 60 days after its own notice.

That means the start date depends on how fast six members finish. Until then, today's tariffs and rules still apply. Plan with today's costs.

Sources: CPTPP Ministerial Statement, Santiago, 8 March 2018; Article 3.1 of the agreement as described on the New Zealand Ministry of Foreign Affairs and Trade treaty page (mfat.govt.nz).

What was put on hold

The CPTPP grew out of the earlier Trans-Pacific Partnership talks. Many rules from that deal carried over. A set of them was suspended, meaning they do not apply for now. The Center for Strategic and International Studies counted 22 provisions from the earlier text that were suspended or changed.

Most of the suspended items are about intellectual property. They include longer patent periods for new medicines, some copyright rules, and rules on internet service providers. A smaller number cover investment, trade facilitation and other areas.

The suspended rules can be brought back later. That would need agreement among the members. For a business owner, the point is simple. The IP and investment rules in this pact are narrower than in the earlier draft. If your business relies on patents or on investment contracts, ask a trade lawyer how this affects you.

Sources: Intellectual Property Watch, "New TPP still advanced IP trade agreement ever, think tank says," 9 March 2018 (ip-watch.org); Asian Trade Centre, "TPP11: Unpacking the suspended provisions," policy brief (asiantradecentre.org).

What to do now

Nothing has to change in your business right now, but you can get ready. These steps are low cost and useful whatever the final start date turns out to be.

List the products you sell or buy in the 11 member markets, with their customs codes.
Read the tariff schedules in the agreement text for those codes, and note the current rates beside them.
Ask your suppliers where their goods and parts are made. Trade deals often reward origin, and you may need records.
Watch official government notices for each member's approval progress. The start date follows from them.
Keep your pricing and contracts on today's costs until a start date is confirmed.

If you sell mainly inside one country, the pact may matter only through your suppliers or your competitors. Even then, it is worth a short check each quarter.

Sources: CPTPP Ministerial Statement, Santiago, 8 March 2018; New Zealand Ministry of Foreign Affairs and Trade, CPTPP treaty page (mfat.govt.nz).

Key facts at a glance

Signed: 8 March 2018, Santiago, Chile.
Members: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia and Mexico, plus New Zealand, Peru, Singapore, Vietnam.
Status: signed, not yet in force. Each member is finishing its own approval steps.
Start rule: 60 days after six signatories, or half of them if fewer, confirm in writing.
On hold: a set of rules from the earlier draft, mostly on intellectual property.

This is general information for business planning, not legal advice. Check the official text and talk to a trade adviser before you make a decision that costs money.

Sources: CPTPP Ministerial Statement, Santiago, 8 March 2018, mfat.govt.nz/assets/Trade-agreements/CPTPP/CPTPP-Ministerial-Statement-Santiago.pdf; cas.go.jp/jp/tpp/tppinfo/2018/pdf/180308_tpp_statement_en.pdf; mfat.govt.nz, CPTPP treaty page; ip-watch.org/2018/03/09/new-tpp-still-advanced-ip-trade-agreement-ever-think-tank-says; asiantradecentre.org/talkingtrade/tpp11-unpacking-the-suspended-provisions.