Written By Valerie Hughes and Jessica Horwitz
The Government of Canada has invited members of the public to submit views on the potential admission of additional members to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, an international trade agreement otherwise known as the CPTPP. Countries or customs territories that wish to join the CPTPP must submit a written request to the existing member countries.
Although no formal requests to join have been received to date, South Korea, Taiwan, Thailand and the United Kingdom have announced their interest in acceding. The Canadian Government anticipates that accession negotiations with one or more of these countries could begin as early as fall 2019.
In anticipation of these negotiations, the Government has invited interested members of the Canadian public and business community to provide written submissions to Global Affairs Canada by August 25, 2019.
What is the CPTPP?
The CPTPP is a free trade agreement (FTA) between Canada, Japan, Australia, Mexico, New Zealand, Chile, Peru, Vietnam, Malaysia, Singapore and Brunei. Originally negotiated as the "TPP" and renamed after the United States dropped out in 2017, the agreement came into force for Canada, Japan, Australia, Mexico, New Zealand and Singapore at the end of 2018 and for Vietnam in January 2019. It will come into force for the remaining members once they have completed their domestic ratification procedures.
Although Canada already has other free trade arrangements with some of these countries (Mexico, Chile and Peru), the CPTPP is Canada's first free trade arrangement with Australia, Japan, Malaysia, Vietnam, New Zealand, Singapore and Brunei.
What Type of Trade is Covered in the CPTPP?
The CPTPP is a broad-ranging agreement that includes the full panoply of provisions often found in FTAs, as well as additional commitments and disciplines in new areas. In addition to providing for tariff elimination across a number of sectors (including notably agriculture, fish and seafood, forest products, industrial goods and consumer products), the CPTPP includes chapters on textile and apparel goods, services (including financial services), investment, intellectual property protection, anti-dumping, subsidies and safeguards, competition policy, electronic commerce, customs and border procedures, labour rights and obligations, environmental governance, sanitary measures for the protection of human health, technical barriers such as standards and conformity assessment measures, small- and medium-sized enterprises, and state-owned enterprises. Dispute settlement provisions, including for investor-State disputes, are also included.
What Impact Could the Admission of South Korea, Taiwan, Thailand or the United Kingdom to the CPTPP Have on Canada?
The CPTPP already covers about 13 percent of global GDP with its current members, representing a collective market of 503 million people. With the admission of all four identified candidate countries, these numbers would climb to nearly 20 percent of GDP and 714 million people. Although Canada has had an FTA in place with South Korea since 2015, the CPTPP includes more extensive provisions in certain areas such as electronic commerce, and includes disciplines on transparency, state-owned enterprises and corruption. Moreover, the labour and environment chapters of the CPTPP are fully enforceable under the agreement’s dispute settlement mechanism, which is not the case under the Canada-Korea FTA.
Canada currently has an FTA with the United Kingdom through the Comprehensive Economic and Trade Agreement (CETA) with the European Union, but the UK would cease to be a party to this agreement after Brexit. Canada does not currently have FTAs with either Thailand or Taiwan, both of which are important trading partners. Admission of these countries to the CPTPP could therefore be a useful mechanism to fast-track free trade negotiations with these partners.
What Are the Topics of Interest in the Consultation?
The Government of Canada has requested input on the following topics in particular:
- goods of export or import interest that would benefit from expedited or phased-in removal of tariffs and other barriers, as well as import sensitivities;
- rules of origin for specific products to determine the amount of processing required for a good to benefit from preferential treatment;
- border and customs issues that have an impact on movement of goods into and out of markets potentially seeking CPTPP membership;
- preferred approach to trade remedies to be applied to trade between the market of interest and Canada;
- temporary entry of business people from Canada into the market of interest and from the market of interest into Canada; and
- electronic commerce and restrictive measures currently faced by Canadian suppliers in this area in the markets of interest.
Why Is It Important to Have Your Say?
The CPTPP is a broad-ranging free trade agreement with potentially significant impacts on Canadian businesses. Many such impacts could be positive. For example, the agreement creates opportunities for Canadian export and service businesses to enter new markets. The agreement also streamlines and standardizes customs procedures in certain countries, which should bring much-needed efficiencies in trading relationships and offers protections for foreign investors to foster growth.
However, free trade agreements can also create negative consequences, such as exposing sensitive industries or sectors to foreign competition. It is therefore important that the Government of Canada be aware of all potential implications of expanding the membership of the CPTPP before it enters into negotiations.
Who Should Consider Providing Comments?
- businesses that import goods or services into Canada or export goods or services abroad;
- businesses facing competition from imports;
- businesses facing barriers when shipping goods abroad, such as high tariffs, customs delays, or onerous administrative procedures or regulatory requirements;
- businesses that would like to enhance export opportunities to new markets and gain preferential access;
- businesses that want to protect their foreign business ventures from discrimination abroad; and
- anyone with views on Canada’s trade diversification policy.
Bennett Jones’ trade experts have extensive experience in negotiating, interpreting and applying international trade agreements. We are available to assist in developing submissions to Global Affairs Canada on the potential benefits and drawbacks of adding countries to the CPTPP, or to provide general advice on opportunities and risks associated with the CPTPP or other Canadian free trade agreements.
For assistance, please contact Darrel Pearson, Senior Partner and Head of the International Trade and Investment Practice group, Valerie Hughes, Senior Counsel, or any other member of the Bennett Jones International Trade and Investment group.