Comprehensive and Progressive Agreement for Trans-Pacific Partnership Goes into Effect

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force on December 30, 2018.

Following the United States’ January 2017 withdrawal from the CPTPP predecessor, the Trans-Pacific Partnership (TPP), the 11 remaining TPP signatory countries renegotiated the original agreement and signed the now valid CPTPP in March 2018.

The CPTPP establishes new free trade agreement (FTA) relationships and networks, such as supply chains between Asia and the Americas, upgrades existing arrangements between its members, and strengthens regional economic cooperation and integration.

The CPTPP represents the third largest trade bloc in the world with member countries accounting for 13 to 14 percent of the world’s gross domestic product (GDP).

The 11 signatories to the CPTPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam. Australia, Canada, Japan, Mexico, New Zealand, Singapore, and Vietnam have ratified the agreement. The CPTPP is currently effective for Australia, Canada, Japan, Mexico, New Zealand, and Singapore. It will take effect in Vietnam on January 14, 2019. The CPTPP will enter into force in Brunei, Chile, Malaysia, and Peru 60 days after their governments have ratified the agreement.

Elements of the CPTPP include:

• Tariff reductions or eliminations: The CPTPP will eliminate approximately 95 percent of tariffs on goods traded among member countries and will reduce tariffs on certain goods over a period of up to 20 years. Approximately 90 percent of tariffs were immediately removed for Australia, Canada, Japan, Mexico, New Zealand, and Singapore when the CPTPP entered into force. Goods especially impacted by tariff liberalization are agricultural, automotive, industrial, textile, and apparel products.

• Regional accumulation of rules of origin: The CPTPP will recognize labor, materials, parts, and components from all member countries as originating content and thus make them eligible for preferential tariffs or tariff concessions.

• Self-certification of origin: As a trade facilitation measure, importers, exporters, and producers can claim (self-certify) that they have satisfied rule of origin criteria but must maintain records substantiating the claim for at least five years.

• Advance rulings: Importers, exporters, and producers may obtain advance rulings on tariff classification, customs valuation, origin of goods, and other matters within 150 days of submitting a request so as to facilitate cross-border trade. Once issued, these rulings are effective for a minimum of three years.

• Express shipments: Member countries must adopt or maintain expedited customs procedures for express shipments. Such procedures include advance submission of necessary shipment information and release of express shipments within six hours of arrival once all applicable customs documents are submitted.

• Cross-border trade in services: Service suppliers in multiple sectors, such as entertainment, finance, retail, and telecommunications, are subject to new rules that allow greater market access, protect them from discrimination, and provide fair competition.

• Digital trade: Member countries are prohibited from imposing customs duties on products transmitted electronically. Also, they must adopt or maintain laws that protect online consumers from fraudulent and deceptive commercial activities.

• Environmental protections: The CPTPP requires member countries to implement measures controlling the production and consumption of and trade in substances that deplete the ozone layer and preventing pollution of the marine environment caused by ships. Member countries also must adopt, maintain, and implement legal authorities to fulfill obligations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) to help combat illicit wildlife trafficking.

• Labor rights and standards: Member countries are prohibited from weakening or reducing protections that are guaranteed in national labor laws in order to promote trade or investment. They must also adopt or maintain in their labor laws certain rights, including collective bargaining, freedom of association, the elimination of forced and child labor, and acceptable working conditions.

SECURUS monitors developments in the CPTPP and other FTAs in order to provide clients with precise information on how changes in trade rules affect them. For information on SECURUS services, please contact us at Info@SECURUSTrade.com.

Author: Emily Holub, Emily.Holub@SECURUSTrade.com, December 2018