One year after President Donald Trump pulled the United States out of the Trans-Pacific Partnership (TPP) trade deal, the pact is back. The 11 remaining members expect to sign the final deal in March and hope to ratify it by 2019. Though significantly smaller since the United States pulled out, as measured by GDP and trade, the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is still a powerful pact in its own right.
In the first executive action of his presidency, Trump withdrew from the TPP, signaling to the world his commitment to his “America First” campaign promises. Since then, his administration has been seeking (with scant success) to promote bilateral trade deals, renegotiate existing trade deals, and impose trade restrictions to “level the playing field” for American businesses. Such actions have left the United States isolated on global trade, as the rest of the world has continued on with multilateral deals, notably the Japan-EU and EU-Mercosur agreements. The Trans-Pacific Partnership was meant to be the crowning jewel in a new age of global trade, writing “the rules of the road for trade in the 21st century.” Since Trump’s reversal, that new age of global trade had been called into question.
But now the TPP is back and, barring a few bumps along the way, seems to have everyone’s commitment. So what is new about it, and what has stayed the same?Enjoying this article? Click here to subscribe for full access. Just $5 a month.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership includes all the original members of the TPP except the United States: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The total combined gross domestic product of the CPTPP would be $13.5 trillion or 13.4 percent of global GDP. While this is significantly less than the TPP’s combined $28 trillion and 36 percent of global GDP, it will still be one of the biggest trade agreements in the world. The North American Free Trade Agreement (NAFTA) totals about $20 trillion; the European Union $19 trillion; South America’s Mercosur $3.5 trillion; the Association of Southeast Asian Nations Free Trade Area (AFTA) $2.5 trillion; and the Common Market for Eastern and Southern Africa (COMSEA) $655 billion. Even though it is smaller than it was, the CPTPP is clearly one of the largest trading agreements in the world.
When Trump withdrew from the TPP he also withdrew two of the most controversial provisions for which the United States had been advocating. One of the most ridiculed provisions in the TPP, the investor-state dispute settlement (ISDS) provision, has been scaled back while a government’s right to regulate its markets has been afforded increased protections. This was only possible after the United States withdrew from the deal: U.S. companies are the most frequent users of the measure, which allows companies to sue foreign governments over arduous regulations.
Another key provision the United States pushed for that has fallen to the side is the extension of copyright, or intellectual property, protections. Washington had negotiated for copyright to exist for the author’s lifetime plus an additional 70 years. While this is standard in the United States, it is not in the other TPP members, and with Washington out of the deal, copyright lengths will be shorter.
The removal of these two provisions highlights what happens when the United States is not involved in regional affairs: the region moves on without it. The United States under Presidents George W. Bush and Barack Obama was the prime advocate for the two heavily unpopular provisions. Under President Trump, the remaining 11 members of the TPP were able to cast off policies they considered harmful to their economies and governments.
The CPTPP, though large when compared to other such agreements, is not large enough to rewrite the rules of global trade, as the original TPP would have been. Yet it is significant for its potential. It is a high-standard trade agreement in one of the most economically diverse and dynamic regions of the world. It has attracted attention from nonmembers, such as South Korea, Indonesia, and even the United Kingdom. It presents a tempting opportunity to China, as the Middle Kingdom seeks to take on a more central and more public role in leading global trade, though admittedly many of the provisions of the CPTPP would need to be weakened to accommodate China.
Finally, it remains attractive to the United States. Washington could rejoin the agreement, though it remains to be seen if the 11 signatories would accept possible U.S. demands to reinstate the IP and ISDS provisions or if they would make the United States bend to their will. That possibility alone presents a significant reversal in global trade.
When Trump pulled out of the TPP last January, the deal was widely panned as doomed. Yet now the deal is back and less controversial to its signing members. Far from being dead, the CPTPP perhaps signals a new chapter in global trade, one without the United States.
Zachary Torrey is an analyst focused on Asian security and economics. He holds an MSc from the London School of Economics.