[UK]CPTPP: A "UK model" as a "high standard" for the future?
The author: Pang Zhongying, Academic Member of Pangu Think Tank and Chair Professor of Liberal Arts, School of Economics, Sichuan University
On 8 October 2022, the sixth meeting of the CPTPP Committee (at ministerial and senior official level), the highest decision-making body of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), was held in Singapore to discuss matters such as rule-making and accession of new members. Singapore holds the rotating chairmanship of the Committee. Speaking at a press conference after the meeting, Singapore's Minister for Trade and Industry, Mr Gan Kim Yong, said that discussions were underway regarding the UK's application to join the CPTPP.
Will the UK be made into a "model project"?
Not much is known about the negotiations for the UK to join the CPTPP. In fact, the UK has done a lot of work to join the CPTPP, and in February 2021 the UK formally applied for membership, and in September of the same year all 11 full members of the CPTPP began a review of the UK's compliance.
Current CPTPP members include Singapore, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Vietnam, with the agreement already in force in nine of these countries and Brunei and Chile yet to complete their domestic approval processes.
The current members of the CPTPP are all countries in the Asia Pacific region. Geographically, the UK is not part of the Asia Pacific region and it is the first non-Asia Pacific country to apply for membership of the CPTPP. The UK's membership will have multiple implications for the world economy and global economic governance. As one of the world's largest economies, the UK's accession to the CPTPP is driven by its need to seek new global markets during and after Brexit, and will bring about a restructuring of the world economic order, with multiple implications for the CPTPP itself, other countries or economies applying to join it, and the reform of the World Trade Organisation (WTO). The implications for the CPTPP itself, for other countries or economies applying for membership, and for the reform of the World Trade Organisation (WTO) are manifold.
The CPTPP has shown its intention to use the UK's accession as a model project for other countries to join in the future. As the UK is the first (extra-regional) economy interested in joining the CPTPP, it must be handled well and the right procedures must be put in place to maintain the CPTPP's high standards and level of market access," said Gan Kim Yong. We discussed the approach that acceptance of new members should generally take and concluded that the outcome of the UK negotiations would pave the way for a more robust and smooth process for the next applications", he said. Other countries joining the agreement will probably have to follow the UK's accession model.
The Joint Communiqué issued by the CPTPP Committee at its sixth meeting concludes with a reference to "raising the bar for CPTPP expansion", suggesting that all economies wishing to join the CPTPP would need to go through a rigorous process.
Helping to give more weight to the CPTPP
The accession of the UK, and potentially other countries, may help to significantly increase the weight of the CPTPP in future global trade governance. In the midst of major global economic changes, reform of the nearly 30-year-old WTO has long been on the agenda, but has been faltering and uncertain. If WTO reform continues to lag in the coming period and fails to play a role in the world economy worthy of its name, the CPTPP provides a much-needed important and effective international trade regime for the participating parties.
Virtually all of the world's regional trading arrangements (RTAs), including the CPTPP, state at the outset in their agreements that they will abide by or respect WTO rules. This is not only an affirmation of the WTO's position in the international trading system, but also an attempt to push it towards reform in favour of global interests. A consolidated CPTPP with an expanded membership that includes "one of the largest economies" such as the UK will continue to collectively abide by WTO rules and, at the same time, will act as a stronger collective to push for, and provide direction and pathways to, WTO reform. Of course, if WTO reform continues to stall, regional trade arrangements such as the CPTPP could take its place.
In comparison, competition and coordination with other regional arrangements, the CPTPP may further "win" and become the "unattainable" leader of other regional trade arrangements or economic arrangements.
At present, in addition to the CPTPP, the ASEAN-led Regional Comprehensive Economic Partnership (RCEP), the Digital Economy Partnership Agreement (DEPA) in the digital economy, and the Indo-Pacific Economic Framework (IPEF), which will be formally negotiated in September 2022, have a cross-cutting and overlapping relationship with each other. The interaction, competition and coordination between these regional arrangements will determine the world economic order of the 21st century.
The CPTPP is a step ahead with its digital trade provisions, which are contained in Chapter 14 of the agreement. However, the CPTPP agreement is limited to digital trade and not to the digital economy as a whole, and the provisions of the CPTPP provide an important basis for DEPA and an important guiding standard for the WTO's Joint Announcement initiative on e-commerce.
The US TPP dilemma will come to the fore
If the weight of the CPTPP is consolidated and enhanced during and after the UK's accession, the US's TPP (Trans-Pacific Partnership Agreement) dilemma will become more pronounced. Here, I put forward the idea of "the US TPP dilemma".
As we all know, during the Obama era, the US was the main "leading country" in the TPP negotiations, but during the Trump era the US withdrew from the TPP, and after Biden came to power it faced the question of whether to return to the TPP, i.e. to join the current CPTPP. This is a prominent exception to the Biden administration's domestic and foreign policy under the banner of "Build back better".
In fact, returning to the CPTPP is the best policy for the US, and is expected to be a fundamental solution to the US trade dilemma in the Asia-Pacific region.
In the absence of a return to the CPTPP, the Biden administration has introduced an alternative, seemingly larger, Indo-Pacific Economic Framework (IPEF) to complement its Indo-Pacific Strategy (IPS) in regional economic terms. In May 2022, 14 Indo-Pacific countries, including the US, announced the formation of the IPEF, including most of the CPTPP members.
The IPEF is not as "loud" as the TPP, but even more so than the TPP, it is "less rainy". The IPEF is not a regional FTA like the CPTPP, but rather a "trade" framework with two main components: trade and economy, divided into four pillars. The "trade" component is its first "pillar". The Office of the United States Trade Representative (USTR) and the US Department of Commerce are also responsible for the IPEF, but the IPEF's heart is not in "trade". The other three pillars of the IEPF focus on the digital economy, regional industrial chains, supply chains and even international cooperation on taxation and anti-corruption.
Regarding the IPEF, my general observation is that it is indeed a "four-way street", which cannot solve the regional trade dilemma faced by the US. The CPTPP is essentially a free trade agreement, which is not compatible with the IPEF, which is not a free trade agreement. One might think that the IPEF is "economic" in nature, "framing" an unprecedented "Indo-Pacific economy", but in fact the IPEF is The "economy" of the IPEF is very "incomplete" and is no match for formal regional trade agreements such as the CPTPP and RCEP. It is for this reason that the Biden administration suffered a minor setback when India announced in September 2022, the official launch of the IPEF negotiations, that it was withdrawing from the "trade" part of the IPEF and maintaining only the "economic" part of the IPFE negotiations.
The implications for other applicant countries are also significant
"The post-Brexit UK has had to face the reality of looking to the CPTPP, and the latter's "high standards" for the UK's accession to the CPTPP are also significant for countries or economies that have applied to join, such as China. In September 2021, China formally submitted its written application to join the CPTPP. At a time when globalisation is suffering setbacks, it is important for major world economies such as the UK and China to join the CPTPP. The text of the CPTPP agreement sets out how new members can join, but in practice, the CPTPP uses the UK's accession to establish the rules for new members to join in the future, and applications from countries such as China Even if they are accepted and formal negotiations begin, they will likely face a more complex, rigorous and time-consuming process.