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Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Background, Members, Significance for India

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

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The United Kingdom recently made a significant move by signing a treaty to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is considered the largest trade deal since the country’s departure from the European Union in 2020. With this membership, the UK aims to establish itself as an open and business-friendly nation in the rapidly growing Indo-Pacific region. The government’s analysis predicts substantial benefits from the pact, including increased exports and imports, as well as a boost to the country’s gross domestic product (GDP). The CPTPP is expected to take effect in the second half of 2024.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) mindmap

This topic of “Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Background, Members, Significance for India” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

I. About CPTPP

Background of the CPTPP

  • The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement among 11 countries in the Asia-Pacific region.
  • The CPTPP was born out of the Trans-Pacific Partnership (TPP), a trade agreement that originally included the United States.
  • The United States withdrew from the TPP in 2017, leading the remaining countries to renegotiate and sign the CPTPP in 2018.
  • The CPTPP aims to promote economic growth, create jobs, and enhance the living standards of its member countries.

Purpose and Objectives

  • The primary goal of the CPTPP is to liberalize trade among its member countries by reducing tariffs and non-tariff barriers.
  • The agreement also seeks to establish a common set of rules and standards for trade, investment, and intellectual property rights.
  • The CPTPP aims to promote regional economic integration and strengthen economic ties among its member countries.
  • The agreement also addresses 21st-century trade issues, such as digital trade, state-owned enterprises, and labor and environmental standards.

Member Countries

  • The CPTPP currently has 11 member countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
  • These countries represent a combined population of nearly 500 million people and a combined GDP of over $13.5 trillion.
  • The CPTPP entered into force for the first six countries to ratify the agreement on December 30, 2018, and for Vietnam on January 14, 2019.
  • Other countries have expressed interest in joining the CPTPP, including the United Kingdom, Taiwan, and South Korea.

II. Historical Context

Origins of the Trans-Pacific Partnership (TPP)

  • The Trans-Pacific Partnership (TPP) was a proposed free trade agreement among 12 countries in the Asia-Pacific region.
  • The TPP negotiations began in 2005 with the P4 (Pacific Four) countries: Brunei, Chile, New Zealand, and Singapore.
  • The TPP aimed to promote economic growth, create jobs, and enhance the living standards of its member countries by liberalizing trade and investment.
  • Over time, more countries joined the negotiations, including the United States, Australia, Peru, Vietnam, Malaysia, Mexico, Canada, and Japan.
  • The TPP negotiations concluded in October 2015, and the agreement was signed by all 12 countries in February 2016.

Withdrawal of the United States and the Birth of the CPTPP

  • In January 2017, newly inaugurated U.S. President Donald Trump signed an executive order withdrawing the United States from the TPP.
  • The withdrawal of the United States, which represented about 60% of the combined GDP of the TPP countries, significantly impacted the future of the agreement.
  • The remaining 11 countries decided to continue negotiations and pursue a new agreement without the United States.
  • In November 2017, the 11 countries agreed on the core elements of the new agreement, which was named the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
  • The CPTPP was signed by all 11 countries in March 2018 and entered into force for the first six countries to ratify the agreement in December 2018 and for Vietnam in January 2019.

Timeline of Negotiations and Ratification

  • 2005: TPP negotiations begin with the P4 countries (Brunei, Chile, New Zealand, and Singapore).
  • 2008-2013: Additional countries join the negotiations, including the United States, Australia, Peru, Vietnam, Malaysia, Mexico, Canada, and Japan.
  • October 2015: TPP negotiations conclude, and the agreement is signed by all 12 countries in February 2016.
  • January 2017: U.S. President Donald Trump signs an executive order withdrawing the United States from the TPP.
  • November 2017: The remaining 11 countries agree on the core elements of the new CPTPP agreement.
  • March 2018: The CPTPP is signed by all 11 countries.
  • December 2018: The CPTPP enters into force for the first six countries to ratify the agreement.
  • January 2019: The CPTPP enters into force for Vietnam.

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III. Economic Implications

Trade Liberalization and Market Access

  • Trade liberalization refers to the process of reducing barriers to trade, such as tariffs, quotas, and other restrictions, to promote the free flow of goods and services between countries.
  • The CPTPP aims to liberalize trade among its member countries by eliminating or reducing tariffs on a wide range of products, covering over 95% of all goods traded between the member countries.
  • The agreement also addresses non-tariff barriers to trade, such as customs procedures, technical regulations, and sanitary and phytosanitary measures, to facilitate market access for businesses.
  • By liberalizing trade, the CPTPP aims to increase market access for its member countries, allowing businesses to expand their customer base and tap into new opportunities in the Asia-Pacific region.

Impact on GDP and Economic Growth

  • The CPTPP is expected to have a positive impact on the Gross Domestic Product (GDP) and economic growth of its member countries.
  • According to various studies, the CPTPP could increase the combined GDP of its member countries by approximately $147 billion by 2030.
  • The economic benefits of the CPTPP are expected to be unevenly distributed among its member countries, with some countries experiencing more significant gains than others.
  • For example, Vietnam and Malaysia are projected to see the largest percentage increases in GDP, while countries like Canada and Chile are expected to experience more modest gains.
  • Overall, the CPTPP is expected to contribute to economic growth in the Asia-Pacific region by promoting trade, investment, and regional economic integration.

Effects on Specific Industries and Sectors

  • The CPTPP is expected to have varying effects on different industries and sectors within its member countries, depending on factors such as the level of trade liberalization and the competitiveness of domestic industries.
  • Some industries are expected to benefit significantly from the CPTPP, such as the agricultural sector, which will gain increased market access due to the reduction of tariffs and non-tariff barriers.
  • For example, beef and dairy producers in countries like Australia and New Zealand are expected to benefit from increased exports to markets like Japan and Canada.
  • The automotive industry is another sector that is expected to benefit from the CPTPP, particularly in countries like Japan and Mexico, where the agreement will facilitate the integration of regional supply chains and reduce the costs of exporting vehicles and parts.
  • On the other hand, some industries may face increased competition due to the CPTPP, such as the textile and apparel industry in countries like Vietnam and Malaysia, where domestic producers may struggle to compete with imports from more advanced economies.
  • Overall, the effects of the CPTPP on specific industries and sectors will depend on a variety of factors, including the level of trade liberalization, the competitiveness of domestic industries, and the ability of businesses to adapt to new market conditions.

Intellectual Property Rights

  • The CPTPP includes provisions on intellectual property rights (IPR) that aim to establish a common set of rules and standards for the protection and enforcement of IPR among its member countries.
  • The agreement covers various types of intellectual property, such as patents, trademarks, copyrights, and trade secrets.
  • The CPTPP’s IPR provisions are designed to promote innovation, creativity, and economic growth, while also balancing the interests of right holders and users.
  • Some of the key IPR provisions in the CPTPP include the protection of patents for a minimum term of 20 years, the protection of trademarks for a minimum term of 10 years, and the protection of copyrights for the life of the author plus 70 years.

Labor and Environmental Standards

  • The CPTPP includes provisions on labor and environmental standards that aim to ensure that the economic benefits of the agreement do not come at the expense of workers’ rights or environmental protection.
  • The labor provisions in the CPTPP require member countries to adopt and maintain laws and regulations that uphold the principles of the International Labour Organization (ILO), such as the elimination of forced labor, child labor, and employment discrimination.
  • The environmental provisions in the CPTPP require member countries to adopt and maintain laws and regulations that protect the environment, conserve natural resources, and promote sustainable development.
  • The CPTPP also includes mechanisms for cooperation and capacity building among member countries to support the implementation of labor and environmental standards.

Investor-State Dispute Settlement Mechanism

  • The Investor-State Dispute Settlement (ISDS) mechanism is a feature of the CPTPP that allows foreign investors to bring claims against host governments for alleged breaches of the agreement’s investment provisions.
  • The ISDS mechanism is designed to provide a neutral and transparent forum for the resolution of investment disputes, with the goal of promoting investor confidence and facilitating cross-border investment.
  • Under the CPTPP’s ISDS mechanism, disputes are typically resolved through arbitration, with decisions made by a panel of independent arbitrators.
  • Critics of the ISDS mechanism argue that it can undermine national sovereignty and regulatory autonomy, as it allows foreign investors to challenge domestic laws and regulations that may be in the public interest.
  • In response to these concerns, the CPTPP includes safeguards to protect the right of governments to regulate in the public interest, as well as provisions to enhance the transparency and accountability of the ISDS process.

V. Geopolitical Considerations

Influence of China in the Asia-Pacific Region

  • China is a major economic and political power in the Asia-Pacific region, with significant influence over trade, investment, and regional security.
  • China has pursued a strategy of economic integration in the region through initiatives such as the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB).
  • China is not a member of the CPTPP, but its presence in the region has implications for the agreement and its member countries.
  • The CPTPP can be seen as a counterbalance to China’s growing influence in the region, as it promotes trade liberalization and regional economic integration among its member countries.
  • The CPTPP also establishes a set of rules and standards for trade and investment that could potentially influence China’s trade practices and encourage it to adopt similar standards.

Role of the CPTPP in Shaping Regional Trade Dynamics

  • The CPTPP plays a significant role in shaping regional trade dynamics in the Asia-Pacific region by promoting trade liberalization and economic integration among its member countries.
  • The agreement creates a large, integrated market that accounts for a significant share of global trade and GDP, making it an attractive destination for businesses and investors.
  • By establishing a common set of rules and standards for trade and investment, the CPTPP encourages its member countries to adopt more open and transparent trade practices, which can have a positive impact on the overall business environment in the region.
  • The CPTPP also serves as a platform for its member countries to engage in dialogue and cooperation on a range of trade-related issues, fostering greater regional cooperation and collaboration.

Implications for Non-Member Countries

  • Non-member countries in the Asia-Pacific region may face both opportunities and challenges as a result of the CPTPP.
  • On the one hand, non-member countries may benefit from increased trade and investment flows between CPTPP member countries, as businesses in the region seek to take advantage of the opportunities created by the agreement.
  • On the other hand, non-member countries may face increased competition from CPTPP member countries, as businesses in those countries gain preferential access to markets and resources.
  • Non-member countries may also face pressure to adopt similar trade and investment rules and standards as those established by the CPTPP, in order to remain competitive in the region.
  • In some cases, non-member countries may consider joining the CPTPP or pursuing other trade agreements in order to secure their position in the regional trade landscape.

VI. Criticisms and Controversies

Concerns about Transparency and Public Participation

  • One of the main criticisms of the CPTPP is the perceived lack of transparency and public participation in the negotiation process.
  • Critics argue that the negotiations were conducted behind closed doors, with limited access to information and opportunities for public input.
  • This has led to concerns that the agreement may not adequately represent the interests of all stakeholders, including consumers, workers, and environmental groups.
  • In response to these concerns, CPTPP member countries have emphasized their commitment to transparency and public consultation, and have made efforts to share information and engage with stakeholders throughout the negotiation process.

Potential Negative Effects on Domestic Industries and Employment

  • Another criticism of the CPTPP is the potential negative impact on domestic industries and employment in member countries.
  • Critics argue that trade liberalization and increased competition may lead to job losses and the decline of certain industries, particularly in sectors that are less competitive or more vulnerable to foreign competition.
  • For example, some argue that the reduction of tariffs and non-tariff barriers in the agricultural sector may expose domestic farmers to increased competition from imports, potentially leading to job losses and reduced income for rural communities.
  • However, proponents of the CPTPP argue that the agreement will create new opportunities for businesses and workers in member countries, as increased trade and investment flows can lead to economic growth and job creation.

Impact on Access to Medicines and Healthcare

  • The CPTPP has also been criticized for its potential impact on access to medicines and healthcare in member countries.
  • The agreement includes provisions on intellectual property rights, which some argue may lead to higher prices for pharmaceuticals and reduced access to affordable medicines, particularly in developing countries.
  • Critics are concerned that the CPTPP’s intellectual property provisions may extend patent protections for pharmaceuticals, potentially delaying the entry of cheaper generic drugs into the market.
  • In response to these concerns, CPTPP member countries have emphasized that the agreement includes safeguards to protect public health and ensure access to affordable medicines, such as provisions allowing for the use of compulsory licenses and parallel imports in certain circumstances.

VII. Comparisons with Other Trade Agreements

CPTPP vs. the Original TPP

AspectCPTPPTPP
Member Countries11 (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam)12 (CPTPP members plus the United States)
Tariff ReductionsCovers over 95% of goods traded among member countriesSimilar to CPTPP
Intellectual Property RightsSome provisions suspended, allowing for more flexible IP regulationsStricter IP regulations, including longer patent protections for pharmaceuticals
Investor-State Dispute SettlementMore limited in scope, with some exclusions for certain sectorsBroader in scope, covering more sectors

CPTPP vs. Regional Comprehensive Economic Partnership (RCEP)

AspectCPTPPRCEP
Member Countries11 (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam)15 (Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand, Vietnam)
Tariff ReductionsCovers over 95% of goods traded among member countriesLower tariff reductions compared to CPTPP
Intellectual Property RightsSome provisions suspended, allowing for more flexible IP regulationsLess stringent IP regulations compared to CPTPP
Labor and Environmental StandardsIncludes provisions on labor rights and environmental protectionLess emphasis on labor and environmental standards

CPTPP vs. European Union Trade Agreements

AspectCPTPPEU Trade Agreements
Member Countries11 (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam)27 EU member countries, plus various partner countries depending on the specific agreement
Tariff ReductionsCovers over 95% of goods traded among member countriesVaries depending on the specific agreement
Intellectual Property RightsSome provisions suspended, allowing for more flexible IP regulationsVaries depending on the specific agreement
Labor and Environmental StandardsIncludes provisions on labor rights and environmental protectionVaries depending on the specific agreement, but generally includes labor and environmental standards

VIII. United Kingdom Joining the CPTPP

Background of the United Kingdom’s Accession

  • The United Kingdom formally signed a treaty to join the CPTPP in 2023, marking its biggest trade deal since leaving the European Union in 2020.
  • The UK government views the CPTPP as an opportunity to deepen trade ties in the Asia-Pacific region and promote its “Global Britain” strategy following Brexit.
  • The UK already has trade deals with 10 of the 11 other CPTPP members, and its accession to the agreement is expected to take effect in the second half of 2024.

Economic Benefits for the United Kingdom

  • The UK government estimates that the CPTPP will boost UK exports by £1.7 billion, imports by £1.6 billion, and GDP by £1.8 billion in the long term.
  • With the UK’s membership, the CPTPP trading bloc will have a combined GDP of £12 trillion and account for 15% of global trade.
  • The UK’s accession to the CPTPP is expected to cut tariffs for UK exports to Asia-Pacific countries and facilitate market access for British businesses.

Challenges and Concerns

  • Critics argue that the economic benefits of the CPTPP and other trade deals may not fully compensate for the economic damage sustained by the UK as a result of leaving the European Union.
  • The UK’s long-term productivity is forecast to be reduced by 4% as a result of Brexit, according to the government’s spending watchdog, the Office for Budget Responsibility [source].
  • The eventual economic boost from the CPTPP is likely to increase the UK’s GDP by just 0.08% annually.
  • In 2022, the UK exported £340 billion of goods and services to the EU, accounting for 42% of total UK exports.

Impact on Global Trade and CPTPP Expansion

  • The UK’s accession to the CPTPP could potentially influence the future expansion of the agreement, as other countries may be encouraged to join the trading bloc.
  • The CPTPP members are currently gathering information on countries interested in joining the agreement, including China, Taiwan, Ukraine, Costa Rica, Uruguay, and Ecuador.
  • Decisions on future CPTPP membership will be made collectively by the existing member countries, taking into account the ability of prospective members to meet the agreement’s requirements and address any outstanding concerns.

IX. India and the CPTPP

A. India’s Trade Relations and Policies

  • India has a number of bilateral and regional trade agreements with various countries and trading blocs.
  • Some of India’s key trade partners include the United States, European Union, China, and countries in the Association of Southeast Asian Nations (ASEAN).
  • India has been cautious about joining multilateral trade agreements, preferring to focus on bilateral and regional agreements that allow for more flexibility in addressing its specific needs and concerns.

B. Potential Benefits of CPTPP Membership for India

  • Joining the CPTPP could provide India with access to new markets and increased exports, particularly in the Asia-Pacific region.
  • CPTPP membership could also attract foreign investment to India, as the agreement promotes a stable and transparent business environment.
  • Additionally, India could benefit from enhanced cooperation in areas such as technology and innovation, as the CPTPP includes provisions on intellectual property rights and digital trade.

C. Challenges and Concerns for India

  • One of the main challenges for India in joining the CPTPP would be aligning its domestic regulations with the agreement’s standards, particularly in areas such as intellectual property rights, labor, and environmental standards.
  • India may also be concerned about the potential impact of CPTPP membership on sensitive sectors, such as agriculture and manufacturing, which could face increased competition from imports.
  • Balancing trade liberalization with domestic development goals is another challenge for India, as it seeks to promote economic growth while also addressing issues such as poverty, inequality, and environmental sustainability.

D. India’s Engagement with CPTPP Member Countries

  • India has engaged in bilateral trade agreements and negotiations with several CPTPP member countries, including Japan, Australia, and New Zealand.
  • India is also an active participant in regional forums and initiatives, such as the ASEAN-India Free Trade Area and the South Asian Association for Regional Cooperation (SAARC).

E. Prospects for India’s Future Involvement in the CPTPP

  • Assessing the feasibility of joining the CPTPP will require India to carefully consider the potential benefits and challenges associated with membership, as well as the implications for its broader trade strategy and relations with other countries.
  • India’s decision to join the CPTPP will likely depend on a variety of factors, including changes in its domestic political and economic landscape, as well as the evolving dynamics of global trade and regional integration.

X. Future Prospects and Expansion

Possibility of the United States Rejoining the Agreement

  • The United States was originally a member of the Trans-Pacific Partnership (TPP), the precursor to the CPTPP, but withdrew from the agreement in 2017.
  • There has been ongoing debate and speculation about the possibility of the United States rejoining the CPTPP or pursuing a similar trade agreement in the future.
  • Some argue that rejoining the CPTPP would be beneficial for the United States, as it would provide access to new markets, promote economic growth, and counterbalance China’s influence in the Asia-Pacific region.
  • However, there are also concerns about the potential impact on domestic industries, employment, and sovereignty, as well as the political feasibility of rejoining the agreement.
  • The future involvement of the United States in the CPTPP will likely depend on a variety of factors, including changes in political leadership, economic conditions, and strategic priorities.

Potential New Member Countries

  • Several countries have expressed interest in joining the CPTPP, including the United KingdomTaiwan, and South Korea.
  • The addition of new member countries could further expand the CPTPP’s market size and economic impact, as well as strengthen its role in shaping regional trade dynamics.
  • However, the accession process for new member countries can be complex and time-consuming, as it requires negotiations on a range of issues, such as market access, rules and standards, and dispute settlement mechanisms.
  • The potential expansion of the CPTPP will depend on the willingness of existing member countries to accommodate new members, as well as the ability of prospective members to meet the agreement’s requirements and address any outstanding concerns.

Long-term Impact on Global Trade and Economic Integration

  • The CPTPP has the potential to significantly impact global trade and economic integration in the long term, particularly in the Asia-Pacific region.
  • By promoting trade liberalization, regional economic integration, and a common set of rules and standards, the CPTPP can contribute to the growth and development of its member countries and the broader regional economy.
  • The CPTPP may also serve as a model for future trade agreements, as it addresses a range of 21st-century trade issues, such as digital trade, state-owned enterprises, and labor and environmental standards.
  • The long-term impact of the CPTPP on global trade and economic integration will depend on a variety of factors, including the success of the agreement in achieving its objectives, the potential expansion of the agreement to include new member countries, and the evolution of the global trade landscape.

XI. Conclusion

In conclusion, the CPTPP is a significant trade agreement that promotes economic growth, liberalizes trade, and fosters regional integration among its member countries. While it faces criticisms and challenges, the CPTPP has the potential to reshape global trade dynamics and influence the future of international trade policy. As new countries, such as the United Kingdom and potentially India, consider joining the agreement, the CPTPP’s impact on global trade and economic integration will continue to evolve.

Practice Questions

  1. Discuss the significance of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) for the United Kingdom in the post-Brexit era. Examine the potential benefits and challenges that the UK may face as it joins the CPTPP. (250 words)
  2. Analyze the reasons behind India’s reluctance to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Evaluate the potential implications of India’s decision to stay out of the CPTPP, considering the changing dynamics of global trade and India’s strategic interests in the Indo-Pacific region. (250 words)

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