The ‘CPTPP’ stands for ‘Comprehensive and Progressive Agreement for Trans-Pacific Partnership’. It is a trade agreement signed on 8 March 2018 between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. It is also known as TPP11 or TPP-11 simply because there are 11 signatories involved in the agreement.
The CPTPP, which covers about 14 percent of global GDP, is the third largest free trade area in the world after the North American Free Trade Agreement and European Single Market. While it incorporates most of the Trans-Pacific Partnership (TPP) provisions, it suspended 22 provisions the United States favoured because they were not priorities of other participating countries. With the withdrawal of the U.S. subsequently, all original TPP signatories agreed in May 2017 to revive it and reached agreement in January 2018 to conclude the CPTPP.
The CPTPP specifies that its provisions enter into effect 60 days after ratification by at least 50% of the signatories i.e. six of the eleven participating countries. With the ratification of the agreement by Australia on 31 October 2018, the CPTPP came into force for the initial six ratifying countries (New Zealand, Australia, Canada, Japan, Mexico and Singapore) on 30 December 2018. Vietnam has recently completed ratification, while Chile, Peru, Brunei, and Malaysia are set to ratify in the coming months.
Key benefits / features of the CPTPP
Generally, two-thirds of the provisions in the signed CPTPP are identical to the TPP draft. In particular, the chapter on state-owned enterprises (SOEs) remains the same, requiring signatories to share information about SOEs with each other, so as to engage with the issue of state intervention in markets. It includes the most detailed standards for intellectual property of any trade agreement, including protections against intellectual property theft against corporations operating abroad.
Potential relevance to businesses
The CPTPP offers several benefits to businesses:
- It removes tariff elimination on an estimated 90 per cent of tariff lines across all members.
- Non-tariff enablers such as pre-arrival customs clearance and self-certification of origin will reduce administration and compliance costs for businesses.
- It allows for full cumulation, so businesses in CPTPP markets can use inputs sourced from other member countries to qualify for preferential tariffs within the region. This is good news for Singapore as CPTPP countries accounted for S$214 billion – a fifth – of the Republic’s total goods trade last year, according to Singapore’s Ministry of Trade and Industry.
- It provides liberalisation of services sectors and prevention of cross-border data restrictions. This is another advantage for SMEs.
- In terms of services, firms in one CPTPP country will receive the same treatment as firms in another. This includes lifting restrictions on hiring local or foreign professionals, or having the freedom to have either physical or virtual operations in a target country.
- The CPTPP will also restrict member countries from forming their own data localisation laws. By establishing shared rules on data, SMEs will not be affected by data localisation laws. This is, again, another benefit for many SMEs here.
Some measures businesses can take to benefit from the CPTPP:
- Determine what documentation is required in the importing country such as customs declarations and certificates of origin, and how to obtain these.
- Seek information on preferential rules of origin and documentation requirements through national customs authorities.
- Seek expert advice from state-supported advisory services like the Singapore Business Federation and various Singapore-based chambers of commerce.
How we can help
Our lawyers at I.R.B. Law LLP are experienced in the commercial and legal aspects of conducting business, including international trade and corporate matters. We will be glad to assist you in:
- Setting up the appropriate business vehicle to conduct international trade;
- Reviewing and drafting import, export, distributorship contracts, and licenses;
- Advising on how you may wish to protect or commercialise your intellectual property rights, confidential information, and know-how; and
- Ensuring your compliance with applicable Singapore laws.
Please feel free to drop us an email for a friendly, non-obligatory chat over the phone.