The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) stands as a pivotal regional free trade agreement for Singapore, significantly broadening its trading horizons across the Pacific rim. This agreement has facilitated the opening of numerous opportunities and enhanced Singapore’s trade connections with the member countries of the agreement.
Due to the preferential trade agreements under the CPTPP, Singaporean businesses gain access to a wider array of markets with greater ease, promoting increased exports and imports. As a result, this bolsters Singapore's position as a global trade hub and enriches the local economy by bringing in diversified products and services, enhancing consumer choice, and fostering innovation within its business sectors.
What is CPTPP?
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as TPP11, is a landmark free trade agreement that strives to foster economic integration across the Pacific Rim. Its key objectives centre around promoting trade and investment, enhancing economic growth and development, and supporting the creation and retention of jobs while promoting innovation, productivity, and competitiveness.
The CPTPP comprises 11 member countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. With a diverse cross-section of economies uniting intrade, this means countries with smaller economies can tap into larger supply chains and consumer bases that may have previously been inaccessible.
CPTPP vs TPP: What is the difference?
The CPTPP is essentially the successor of the TPP with significant modifications. The TPP, meaning Trans-Pacific Partnership, was an agreement that included the United States, however, the country backed down in 2017, according to the Council of Foreign Relations.
While the economic goals of the TPP remain, such as reducing tariffs and setting high standards for labour, what makes it different is that it suspended 22 provisions that were initially included at the behest of the United States. The most notable changes in the provisions are ones pertaining to investment and intellectual property (IP).
For example, in the investment section, the capacity for investors to resolve disputes through litigation under investment agreements and authorisations has been restricted compared to the TPP. Likewise, in the updated IP chapter, the duration of patent protection for innovative pharmaceuticals has been reduced. These changes also led to a narrowing of protections for technology and information, impacting businesses engaged in tech and digital sectors.
The current structure of the CPTPP agreement: main chapters and areas covered
The comprehensive structure of the CPTPP covers a number of areas to ensure that all aspects of the trade are harmonised to benefit the member countries. According to Australia’s Department of Foreign Affairs and Trade, a partner nation, the main chapters of the agreement include:
- National treatment and market access for foods
- Rules of origin and origin procedures
- Textiles and apparel
- Customs administration and trade facilitation
- Trade remedies
- Sanitary and phytosanitary measures
- Technical barriers to trade
- Investment
- Cross-border trade in services
- Financial services
- Temporary entry for business persons
- Telecommunications
- Electronic commerce
- Government procurement
- Competition policy
- State-Owned Enterprises and Designated Monopolies
- Intellectual Property
- Labour
- Environment
- Cooperation and Capacity Building
- Competitiveness and Business Facilitation
- Development
- Small and Medium-Sized Enterprises
- Regulatory Coherence
- Transparency and Anti-corruption
- Dispute Settlement
These provisions aim to reduce barriers to trade, streamline regulatory frameworks, and ensure that economic benefits are distributed equitably among the member countries. By addressing these key areas, the CPTPP not only supports economic integration but also ensures that trade expansion occurs fairly and responsibly.
Benefits of the CPTPP for member countries
The CPTPP offers a myriad of advantages to its member countries, fundamentally changing how they engage with each other and the rest of the world in terms of trade and economic collaboration.
1. Tariff reductions and eliminations across member countries
One of the most tangible benefits of the CPTPP is the significant reduction and elimination of tariffs across member countries. As per the Ministry of Trade and Industry, the CPTPP enables 94% tariff-free trade with partner countries. For Singapore, this excludes Canada and Mexico, with whom Singapore does not have individual trade agreements. Consequently, upon the implementation of the CTPP, Canada will eliminate 99% of its import tariffs, while Mexico will remove 88%.
This aspect of the agreement facilitates a more cost-effective cross-border trade environment, allowing products and commodities to be traded with lower customs duties. As such, the cost of imported goods and materials reduces, which increases the competitiveness of export goods in foreign markets.
2. Enhanced access to goods, services, and investment markets
Aside from tariff reductions, the CPTPP also improves member countries' access to goods, services, and investment markets. This creates a more open and competitive market environment, stimulating trade and investment opportunities. Businesses have the advantage of entering new markets with fewer barriers, which is particularly beneficial for small and medium-sized enterprises (SMEs) aiming to expand beyond their domestic borders. This increased market access also includes service sectors such as telecommunications, finance, and e-commerce, which are pivotal in today's digital economy.
3. Expected economic growth and sectoral benefits
The impact of the CPTPP as a major trade bloc is expected to be substantial, fostering overall economic growth within member countries. The agreement stimulates economic activity by creating jobs, enhancing skills in the workforce, and fostering innovation through increased competition and collaboration. Additionally, the CPTPP's emphasis on sustainable and inclusive trade practices promises to deliver long-term benefits, contributing to socio-economic development and higher standards of living across the member states.
Sector-specific impacts and opportunities of the CPTPP
The CPTPP significantly impacts various sectors, offering new opportunities for businesses to thrive in the global trade arena. These are some of the sectors that have benefitted from this agreement:
a. Agriculture
The CPTPP makes it cheaper and more feasible for member countries to export agricultural goods such as dairy, beef, and grains to other CPTPP nations. Additionally, the agreement's stringent standards on sanitary and phytosanitary measures ensure that agricultural products meet high safety and quality standards, thereby facilitating smoother market access.
b. Automotive
Reducing tariffs and non-tariff barriers allows automotive manufacturers and suppliers to tap into the supply chains and consumer markets of member countries more efficiently. It also supports the automotive sector’s growth by enhancing regulatory coherence, making it easier for businesses to comply with international standards and regulations
c. Digital trade
The digital trade provisions prevent data localisation, which mandates that companies store data within a country’s borders. This allows businesses to manage data across borders without facing unnecessary regulatory hurdles. Tech companies and e-commerce platforms can particularly benefit from these provisions, allowing them to expand internationally with ease. Furthermore, the protection of source codes and proprietary technology under the agreement assures businesses that their innovations are safeguarded.
d. Services
Certain service sectors, particularly financial services, telecommunications, and professional services, enjoy improved access to member markets through liberalised trade in services and a transparent regulatory environment. As a result, member countries can attract investments and enable service providers from other member countries to expand their offerings to new international markets.
