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CPTPP Overview

Overview of the CPTPP and the CPTPP accession process

Eleven countries signed the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) Free Trade Agreement (FTA) in March 2018. All eleven (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Viet Nam) were involved in negotiating the Agreement. The CPTPP is now in force for seven of its members – Australia, Canada, Japan, Mexico, New Zealand, Singapore and Viet Nam. The remaining four (Brunei, Chile, Malaysia and Peru) are undergoing their domestic processes prior to ratification.

We are now discussing the future membership of CPTPP.

There are important differences between an accession process – in which new members apply to join an existing agreement – and negotiations on a new FTA agreement. Importantly, in an accession process, the Agreement itself does not change. Rather, any economy wanting to join the CPTPP will need to show how it will comply with the existing obligations already contained in the Agreement and how it will meet the high standard market access objectives agreed by CPTPP members.

Accession negotiations can be expected to focus on ensuring that the commitments new members make on access for goods, services, investment, government procurement and temporary entry for business persons meet the high standards already agreed by existing CPTPP members.

What is the CPTPP?

The CPTPP is a high quality, comprehensive free trade agreement that aims to support sustainable and inclusive economic development. It brings together eleven economies that together account for 13.5% of world GDP and encompass markets with a combined population of 480 million people.

For New Zealand, the CPTPP economies are the destination for 30% of New Zealand’s goods exports (NZ$15 billion) and 31% of our services exports (NZ$6.8 billion) annually, and were the source of 64% of total foreign direct investment (NZ$66 billion) in New Zealand in 2017.

CPTPP currently includes four of New Zealand’s top ten trade partners, and four new FTA partners – Canada, Japan, Mexico and Peru. Three of these new FTA partnerships are now in effect, including with Japan — the world’s third-largest economy and our fifth-largest export market - as well as Canada and Mexico.

Across its 30 chapters, the CPTPP helps support the integration of New Zealand business into regional supply chains and provides greater certainty to traders and investors in CPTPP markets.

CPTPP provides for the elimination of tariffs on all New Zealand’s goods exports to CPTPP economies within 16 years, with the exception of certain beef and dairy exports (where tariff reductions and/or duty-free quota access were agreed).

As a result, the CPTPP has the potential to deliver an estimated NZ$222.4 million in tariff savings annually, once fully implemented. The CPTPP also helps support the growing services and digital sectors through increased openness and certainty over the conditions under which New Zealand businesses can provide services across a range of sectors. CPTPP also provides greater opportunities for New Zealand businesses to bid for government contracts in CPTPP markets. Further details on CPTPP is available at this link:

Comprehensive and Progressive Agreement for Trans-Pacific Partnership text and resources | New Zealand Ministry of Foreign Affairs and Trade (mfat.govt.nz)

At the same time as supporting New Zealand’s trade ambitions, the CPTPP protects the unique status of the Treaty of Waitangi and preserves the Government’s right to regulate for legitimate public policy purposes, including in public health, public education, social welfare, the environment and taxation policy. As with all of New Zealand’s contemporary trade agreements, the CPTPP includes a specific ‘Treaty of Waitangi’ provision ensuring that nothing in the CPTPP would prevent the Crown from meeting its obligations to Māori and that New Zealand’s interpretation of the Treaty of Waitangi will not be subject to dispute settlement.

The CPTPP also sets new standards in the promotion of sustainable and inclusive economic development. For example, the CPTPP contains a world-first provision to prohibit subsidies that contribute to illegal, unreported or unregulated fishing or that negatively affect over-fished stocks The labour and environment outcomes in the CPTPP are the most comprehensive New Zealand has achieved in a free trade agreement, with labour and environmental standards made legally enforceable for the first time. The CPTPP is also New Zealand’s first free trade agreement to include a dedicated Small- and Medium-Sized Enterprises chapter aimed at ensuring that businesses of all sizes can benefit from enhanced trade.

On investor-state dispute settlement (ISDS), New Zealand has negotiated bilateral side letters (agreements in addition to the main text) with Australia, Brunei, Malaysia, Peru and Viet Nam that mean that more than 80% of investment in New Zealand from within the CPTPP grouping is not subject to CPTPP mandatory ISDS provisions. The government has been clear that it will not support inclusion of ISDS in existing or future trade agreements.

The CPTPP Accession Process

Accession is the process of joining an international treaty that is already in force. Importantly, the Agreement is not re-opened: those who want to join an existing international treaty must meet and agree to comply with the existing obligations it contains.

The focus of the accession process will be on ensuring that the accession candidate is able to comply with all the existing obligations of the CPTPP; and that its commitments on access for goods, services, investment, government procurement and temporary entry for business persons meet the high standards agreed by existing CPTPP members.

CPTPP members have agreed a process for accessions to the Agreement which has four key stages:

Informal

Before lodging a request to accede, interested economies can engage informally with members to better understand the Agreement.

This stage enables interested economies to ask for information on the Agreement and about the accession process.

Formal consultations

After an economy submits a formal request to accede, it is encouraged to have consultations with each Party, to address each Party’s questions or concerns on areas of interest. This happens before the CPTPP Commission (the Agreement’s peak decision-making body) decides whether to commence the accession process with a specific applicant.

Having lodged a formal request to accede, the UK is in this phase

Formal Working Group

If the CPTPP Commission makes a decision to proceed, it will set up a Working Group made up of participants from all the CPTPP Parties.

The economy that wants to join will have to demonstrate the efforts it has made, and any additional changes needed, to comply with the obligations set out in the CPTPP. It must also table and negotiate its market access offers. These have to meet the CPTPP benchmarks, guided by the objective of comprehensive market access through the elimination of tariffs and other barriers to goods and services trade and investment.

No economy has yet entered this phase.

When the Working Group concludes, it will report back to the CPTPP Commission on the terms and conditions required for the aspirant economy’s accession to CPTPP.

Formal Commission Decision on accession

The CPTPP Commission will determine, by consensus, whether to approve the terms and conditions for the accession by the aspirant economy, as submitted by the Accession Working Group.

The aspirant economy is then able to accede by accepting the terms and conditions decided by the CPTPP Commission


What are the benefits of further CPTPP members for New Zealand

The addition of further members to the CPTPP offers New Zealand the chance to grow, develop and modernise its trade and economic relationship with other trading partners. Through the CPTPP, New Zealand’s FTA network of legally enforceable rules and market access covers 65% of New Zealand’s exports; the addition of further members to CPTPP would expand that coverage even further.

The CPTPP promotes closer alignment in regional and international trade rules, including those covering rules of origin, technical barriers to trade, investment, government procurement, intellectual property and state-owned enterprises. The expansion of the CPTPP through accession by new members amplifies this to help facilitate trade and simplify the cost and compliance burden for business.

The Agreement is called comprehensive and progressive because it goes beyond reducing costs for businesses. It supports job creation to help generate a better standard of living for New Zealanders, preserves New Zealand's right to make laws to protect our people and our environment, upholds the Treaty of Waitangi, and includes commitments to safeguard high labour and environmental standards across the region.

The CPTPP also encompasses a number of areas that contribute to facilitate economic efficiency, ease of doing business and consumer welfare. These include provisions on competition, competitiveness and business facilitation, Small and Medium Enterprises, and regulatory coherence. Expansion of the CPTPP will further increase the opportunities for New Zealand businesses, including through facilitating their involvement in regional and international supply chains.

New Zealand’s objectives in the accession process

CPTPP provides a modern, high-standards set of trade rules and delivers high quality market access.

The key elements that will form part of the accessions process will include:

  • Clear indications by the accession candidate of how it is able to comply with existing CPTPP rules;
  • Commitments by the accession candidate to eliminate tariffs and other barriers to goods and services trade and investment with CPTPP members;
  • Commitments by the accession candidate to facilitate temporary entry for business persons from CPTPP members;
  • Commitments by the accession candidate to provide access to its government procurement market for CPTPP members; and
  • Ways to strengthen cooperation and dialogue with the accession candidate across the range of trade and economic areas covered by CPTPP.

To have your say, send us an email at cptppconsultations@mfat.govt.nz.

Additional resources

The full CPTPP text and associated commitments are available online.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership text and resources | New Zealand Ministry of Foreign Affairs and Trade (mfat.govt.nz)

Commission decisions, including on the accessions process, and some committee reports can also be viewed online.

For more information on New Zealand’s other FTAs click here.
For details on upcoming trade policy events, see our public engagement on trade page.