Trans Pacific Partnership 11 TPP 11

In 2018, the 11 remaining nations of the Trans-Pacific Partnership (TPP) resolved to continue with the agreement, despite the United States' withdrawal. This decision, made during the APEC summit in Vietnam, led to the renaming of the agreement to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP). The original TPP was a free trade agreement involving the USA and 11 other Pacific Rim countries: Australia, New Zealand, Singapore, Malaysia, Brunei, Vietnam, Japan, Canada, Mexico, Peru, and Chile. It was initially signed in 2016, but the USA subsequently withdrew.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP), born from the ashes of the original Trans-Pacific Partnership (TPP) after the United States' dramatic withdrawal, represents a pivotal moment in the evolution of international trade and geopolitics. The decision by the remaining 11 nations – Australia, New Zealand, Singapore, Malaysia, Brunei, Vietnam, Japan, Canada, Mexico, Peru, and Chile – to salvage the agreement underscores their unwavering commitment to free trade principles and regional economic integration. This move, finalized on the sidelines of the APEC summit in Vietnam in 2018, wasn't merely a cosmetic exercise in rebranding; it signified a strategic recalibration in the face of shifting global power dynamics and protectionist headwinds.

The Genesis of TPP: A US-Led Vision

To fully grasp the significance of the CPATPP, it's essential to understand the origins and initial ambitions of the TPP. The TPP was conceived as a landmark free trade agreement encompassing 12 Pacific Rim nations, spearheaded by the United States under the Obama administration. It was envisioned as a cornerstone of the US's "pivot to Asia," a strategic rebalancing aimed at strengthening economic and security ties in the Asia-Pacific region. The agreement sought to establish a comprehensive set of rules governing trade, investment, intellectual property, and labor standards, among other areas.

The TPP's underlying rationale was multifaceted. Economically, it aimed to reduce tariffs and other trade barriers, fostering greater trade and investment flows among member countries. This, in turn, was expected to boost economic growth, create jobs, and enhance competitiveness. Strategically, the TPP was seen as a counterweight to China's growing economic and political influence in the region. By establishing a high-standard trade agreement with like-minded countries, the US sought to shape the rules of the game and maintain its leadership role in the Asia-Pacific.

The negotiations leading to the TPP were complex and protracted, spanning several years and involving numerous rounds of talks. The agreement covered a wide range of issues, including tariffs, non-tariff barriers, intellectual property rights, investment rules, government procurement, and state-owned enterprises. One of the key objectives was to address "behind-the-border" barriers to trade, such as regulatory differences and discriminatory practices.

The US Withdrawal: A Paradigm Shift

The political landscape shifted dramatically with the election of Donald Trump as President of the United States in 2016. Trump campaigned on a platform of economic nationalism and protectionism, vowing to prioritize American jobs and industries. One of his first acts in office was to withdraw the United States from the TPP in January 2017, fulfilling a key campaign promise.

The US withdrawal sent shockwaves throughout the region and beyond. It dealt a major blow to the TPP, which had been painstakingly negotiated over several years. The absence of the US, the world's largest economy, significantly diminished the economic and strategic value of the agreement. Many observers questioned whether the TPP could survive without US participation.

Trump's decision to withdraw from the TPP was driven by a number of factors. He argued that the agreement would harm American workers and businesses by exposing them to unfair competition from countries with lower labor costs and weaker environmental standards. He also criticized the TPP for its complex and opaque negotiation process, which he claimed did not adequately protect American interests.

More broadly, Trump's withdrawal from the TPP reflected a broader shift in US trade policy towards bilateralism and protectionism. He favored negotiating individual trade deals with countries on a one-on-one basis, believing that this would give the US more leverage and allow it to secure better terms. He also imposed tariffs on imports from several countries, including China, in an effort to reduce trade deficits and protect domestic industries.

CPATPP: A New Chapter

Despite the US withdrawal, the remaining 11 TPP countries were determined to salvage the agreement. They recognized the potential benefits of free trade and regional economic integration and were unwilling to abandon the years of effort that had gone into negotiating the TPP.

In the months following the US withdrawal, the 11 countries engaged in intensive negotiations to revise the TPP and make it viable without US participation. They agreed to suspend or modify some of the provisions that had been particularly important to the US, while maintaining the core elements of the agreement.

The revised agreement was renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP), reflecting its more limited scope and the compromises that had been made to accommodate the US withdrawal. The CPATPP was signed in March 2018 and entered into force in December 2018, after being ratified by the required number of member countries.

Key Features of CPATPP

The CPATPP retains most of the original TPP's provisions, covering a wide range of issues related to trade and investment. Some of the key features of the agreement include:

• Tariff reductions: The CPATPP eliminates or reduces tariffs on a wide range of goods and services traded among member countries. This is expected to boost trade and investment flows and enhance competitiveness.

• Rules of origin: The CPATPP establishes rules of origin to determine which goods are eligible for preferential tariff treatment. These rules are designed to prevent countries outside the CPATPP from taking advantage of the agreement by simply routing their goods through member countries.

• Investment protection: The CPATPP includes provisions to protect foreign investments from expropriation and other forms of unfair treatment. This is intended to encourage foreign investment and promote economic growth.

• Intellectual property rights: The CPATPP strengthens intellectual property rights protection, including patents, trademarks, and copyrights. This is intended to encourage innovation and creativity.

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• Government procurement: The CPATPP opens up government procurement markets to foreign suppliers, allowing companies from member countries to bid on government contracts. This is intended to promote competition and efficiency.

• State-owned enterprises: The CPATPP includes rules to ensure that state-owned enterprises compete fairly with private companies and do not receive unfair advantages.

• Labor and environmental standards: The CPATPP includes provisions to promote labor rights and environmental protection. These provisions are intended to ensure that trade and investment do not come at the expense of workers' rights or the environment.

Suspended Provisions

While the CPATPP largely mirrors the original TPP, certain provisions were suspended or modified to facilitate the agreement's continuation without the United States. These suspensions primarily target areas where the US had pushed for specific regulations or protections, often related to intellectual property. Some key suspended provisions include:

• Patent protection for pharmaceuticals: The original TPP included provisions that would have extended patent protection for pharmaceuticals, potentially delaying the entry of generic drugs into the market. These provisions were suspended in the CPATPP, making it easier for member countries to access affordable medicines.

• Copyright protection: The original TPP included provisions that would have extended copyright protection terms. These provisions were also suspended in the CPATPP.

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• Investor-state dispute settlement (ISDS): The original TPP included provisions that would have allowed foreign investors to sue governments in international tribunals over alleged violations of the agreement. These provisions were controversial, as they were seen as undermining national sovereignty. While the CPATPP retains ISDS, some of the provisions were modified to address concerns about its potential impact.

The suspension of these provisions reflects the willingness of the remaining 11 countries to compromise in order to keep the TPP alive. It also demonstrates that the US withdrawal had a significant impact on the substance of the agreement.

Implications for India

India was not a part of the original TPP negotiations, nor is it a member of the CPATPP. However, the CPATPP has significant implications for India's trade and economic policies.

Economic Implications:

• Competitive Disadvantage: The CPATPP creates a free trade zone among its member countries, giving them a competitive advantage over countries that are not part of the agreement. This could put Indian exporters at a disadvantage in CPATPP markets, as they would face tariffs and other trade barriers that CPATPP members do not.

• Trade Diversion: The CPATPP could lead to trade diversion, as CPATPP members shift their imports from non-member countries like India to other CPATPP members. This could reduce India's exports to CPATPP markets.

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• Investment Diversion: The CPATPP could also lead to investment diversion, as foreign investors shift their investments from non-member countries like India to CPATPP members. This could reduce foreign investment in India.

• Opportunity for Engagement: While the CPATPP presents challenges, it also offers opportunities for India. India could seek to negotiate bilateral trade agreements with CPATPP members to reduce trade barriers and enhance trade and investment flows. India could also consider joining the CPATPP in the future, although this would require significant reforms to meet the agreement's high standards.

Strategic Implications:

• Regional Balance: The CPATPP is part of a broader trend towards regional economic integration in the Asia-Pacific. This trend is driven by a desire to promote economic growth and enhance competitiveness, but it also has strategic implications. The CPATPP could strengthen the economic and political influence of its member countries, potentially shifting the balance of power in the region.

• China's Role: The CPATPP is seen by some as a counterweight to China's growing economic and political influence in the Asia-Pacific. China is not a member of the CPATPP, and the agreement could limit China's ability to shape the rules of the game in the region.

• India's Strategic Interests: India has a strong interest in maintaining a stable and balanced regional order in the Asia-Pacific. The CPATPP could contribute to this goal by promoting economic integration and strengthening ties among like-minded countries. However, India also needs to be mindful of the potential implications of the CPATPP for its own economic and strategic interests.

India's Options and Challenges

Given the evolving trade landscape in the Asia-Pacific, India faces several strategic choices:

• Bilateral Agreements: India can actively pursue bilateral trade agreements with CPATPP member countries. This allows India to tailor agreements to its specific needs and priorities, addressing key trade barriers and promoting specific sectors. However, negotiating multiple bilateral agreements can be time-consuming and resource-intensive.

• Regional Comprehensive Economic Partnership (RCEP): India has been a participant in the negotiations for the Regional Comprehensive Economic Partnership (RCEP), a proposed free trade agreement among the 10 ASEAN countries plus Australia, China, Japan, New Zealand, and South Korea. RCEP is seen as an alternative to the CPATPP, and it could provide India with access to a large regional market. However, the RCEP negotiations have been complex and protracted, and it is unclear whether India will ultimately join the agreement.

• Joining CPATPP: India could consider joining the CPATPP in the future. This would give India access to the CPATPP market and allow it to participate in shaping the rules of the game in the Asia-Pacific. However, joining the CPATPP would require significant reforms to meet the agreement's high standards, including reforms related to intellectual property rights, labor standards, and environmental protection. This is politically challenging.

• Enhancing Domestic Competitiveness: Regardless of which trade strategy India pursues, it is essential to enhance domestic competitiveness. This requires reforms to improve infrastructure, reduce transaction costs, and promote innovation. It also requires investments in education and skills development to ensure that Indian workers are equipped to compete in the global economy.

The Broader Context: A Shifting Global Trade Landscape

The CPATPP is not an isolated event. It is part of a broader trend towards regionalism and bilateralism in the global trade landscape. The rise of protectionism in the United States and other countries has led to a decline in support for multilateral trade agreements, such as those negotiated under the auspices of the World Trade Organization (WTO).

In this environment, countries are increasingly turning to regional and bilateral trade agreements to promote trade and investment. These agreements can be easier to negotiate than multilateral agreements, and they can be tailored to the specific needs and priorities of the countries involved.

However, the proliferation of regional and bilateral trade agreements also raises concerns about fragmentation and complexity in the global trade system. It can be difficult for businesses to navigate the complex web of rules and regulations that govern trade in different regions and countries.

Challenges and Criticisms of CPATPP

Despite its potential benefits, the CPATPP has faced criticisms from various quarters:

• Lack of Transparency: Critics argue that the CPATPP negotiations were conducted in secret, with limited public input. This lack of transparency has raised concerns about the agreement's potential impact on public health, environmental protection, and other important issues.

• Investor-State Dispute Settlement (ISDS): The ISDS provisions in the CPATPP have been criticized for undermining national sovereignty and giving foreign investors too much power to challenge government regulations.

• Impact on Developing Countries: Some critics argue that the CPATPP could harm developing countries by forcing them to open up their markets to competition from developed countries.

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• Labor and Environmental Standards: While the CPATPP includes provisions to promote labor rights and environmental protection, some critics argue that these provisions are weak and unenforceable.

The Future of CPATPP

The CPATPP is still a relatively new agreement, and its long-term impact remains to be seen. However, it is clear that the agreement has the potential to significantly boost trade and investment among its member countries. It could also serve as a model for other regional trade agreements.

One key question is whether the United States will eventually rejoin the CPATPP. While the Trump administration was strongly opposed to the agreement, there is some support for rejoining the CPATPP in the US business community and among some policymakers. However, any decision to rejoin the CPATPP would likely be contingent on significant changes to the agreement.

Another key question is whether other countries will join the CPATPP in the future. Several countries, including the United Kingdom, have expressed interest in joining the agreement. The addition of new members could further enhance the CPATPP's economic and strategic significance.

The APEC Context

The fact that the CPATPP decision was made on the sidelines of the APEC summit is also significant. APEC, or the Asia-Pacific Economic Cooperation, is a regional economic forum that brings together 21 member economies from across the Asia-Pacific region. APEC's goal is to promote free trade and investment in the region.

APEC summits provide a valuable opportunity for leaders from member economies to meet and discuss trade and economic issues. The CPATPP decision demonstrates the importance of APEC as a forum for advancing regional economic integration.

India's Broader Foreign Policy Objectives

India's approach to the CPATPP and other regional trade agreements is shaped by its broader foreign policy objectives. India is seeking to play a larger role in the global economy and to promote its economic and strategic interests in the Asia-Pacific region.

India's foreign policy is guided by a number of principles, including:

• Strategic Autonomy: India seeks to maintain its independence in foreign policy decision-making and to avoid being drawn into alliances or blocs.

• Multilateralism: India is a strong supporter of multilateralism and believes that global challenges should be addressed through international cooperation.

• Peaceful Resolution of Disputes: India is committed to resolving disputes through peaceful means and to promoting stability and security in the region.

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• Economic Development: India places a high priority on economic development and seeks to promote trade and investment to support its economic growth.

Conclusion

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP) represents a significant development in the global trade landscape. It demonstrates the commitment of 11 Pacific Rim countries to free trade and regional economic integration, even in the face of US withdrawal. The CPATPP has implications for India's trade and economic policies, and India needs to carefully consider its options in light of the evolving trade landscape in the Asia-Pacific region. The CPATPP, born out of the original TPP's ambition and reshaped by geopolitical shifts, is a testament to the enduring pursuit of economic integration in a world of increasing complexity. The future trajectory of the CPATPP, its potential expansion, and its interaction with other regional trade initiatives will continue to shape the economic and strategic landscape of the Asia-Pacific, with significant implications for India and the broader global order. The evolving dynamics require careful navigation and strategic choices from all stakeholders involved.