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CPTPP: Can We Expect Additional Southeast Asian Members Soon?

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CPTPP: Can We Expect Additional Southeast Asian Members Soon?

Evaluating the chances of Thailand, the Philippines, and Indonesia joining the mega-trade pact.

CPTPP: Can We Expect Additional Southeast Asian Members Soon?

Ministers and delegates attend a joint press conference after a session of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) in Tokyo, Saturday, Jan. 19, 2019.

Credit: AP Photo/Eugene Hoshiko

Over the course of 2021, four economies – the United Kingdom, China, Taiwan, and Ecuador – formally applied to join the 11 countries that make up the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). South Korea has additionally sent strong signals that it hopes to join the agreement. Missing from this list is the United States, which withdrew from the pact in 2017 and, despite widespread recognition in Washington that the move was a strategic blunder, shows no signs of returning in the near term. Other countries in the Indo-Pacific region, however, have suggested they will pursue membership, including three countries in Southeast Asia: Thailand, the Philippines, and Indonesia.

These three countries have expressed varying degrees of interest in joining the CPTPP and have informally studied what it would take to formally accede to the trade pact. CPTPP membership for these countries should be especially attractive now, as preferential access to several large developed-country markets and the need to attract inward investment would facilitate economic recovery from the COVID-19 pandemic. In particular, China’s recent request to join the CPTPP has rekindled interest in the potential benefits of membership. Furthermore, due to the instability surrounding the future of the United States’ Generalized System of Preferences (GSP), of which Thailand, the Philippines, and Indonesia are major beneficiaries, the need to support their export sectors could accelerate political momentum necessary for them to join. (Arguably U.S. signals of a desire to return to the agreement would be an even more powerful incentive). Nevertheless, sequencing issues, opposing internal stakeholders, and other issues continue to delay the process of formally declaring an intent to join.

Thailand has long expressed a desire to join the CPTPP. The Thai ministries of commerce and finance undertook separate feasibility studies back when the agreement was still known as the Trans-Pacific Partnership (TPP) and the U.S. was included among the parties, but the government has been unable to counter strong internal opposition from interest groups worried about domestic access to medicines and a desire to protect domestic agricultural markets. In November 2021, Thailand made news when a government official stated that the country aims to join talks on membership; however, the spokesperson noted that some terms would need to be negotiated internally before officially declaring an intent to join.

Thailand’s ambassador to the U.S., Manasvi Srisodapol, recently told the U.S. Chamber of Commerce that Thailand “sees potential benefits from joining the trade pact. We are in the process of consulting with relevant stakeholders and comprehensively assessing Thailand’s readiness to ensure that we can meet the high standards and level of liberalization required to promote inclusive growth and innovation.” Manasvi further said that “a membership in the CPTPP would build on the Regional Comprehensive Economic Partnership (RCEP) Agreement [of which Thailand is already a member], which entered into force on  January 1 this year, in addressing new and emerging economic issues, and fostering economic integration and supply chain connectivity.”

Like Thailand, the Philippines’ interest in the CPTPP is clear, but the consultative process and legal analysis of the terms necessary for accession have been extensive and drawn out. In early 2021, Trade Secretary Ramon Lopez directed Filipino trade officials to re-explore the opportunities for entering the trade pact. On February 3 of that year he sent a letter to New Zealand Minister of Foreign Affairs and Trade Damien O’Connor, formally inquiring about the process to join. A year later, the country continues stakeholder engagement, including with CPTPP signatories and other interested parties such as the U.K.

In 2015 the U.S. Chamber of Commerce, along with AmCham Philippines and USAID, initiated a study to assess the Philippines’ readiness to join the then-TPP, reconciling TPP text to existing Philippine trade and investment law. The results were highlighted at a 2016 joint event in Manila. The Philippines has recently commissioned its own study headed by the Department of Trade and Industry and the University of the Philippines to understand the gaps between the CPTPP text and domestic law.

In a conversation with the U.S. Chamber of Commerce, Philippine Ambassador to the U.S. Jose Manuel Romualdez said that the news of China’s interest in acceding has now made CPTPP more attractive to the country. The Philippines signed on to RCEP, which includes the 10 ASEAN states, Australia, China, Japan, New Zealand, and South Korea, though the agreement has yet to be ratified by the Philippine Congress. The ambassador noted that the initial reason for the Philippines’ interest in joining CPTPP was to gain stable market access to the United States, which was leading the pact at the time.

Later, when the United States withdrew from the agreement, the Philippines began exploratory talks on a potential bilateral U.S.-Philippine free trade agreement, but these talks have not progressed due to various concerns from the U.S. side. The United States is the Philippines’ biggest merchandise export market but its trade benefits through the GSP program must be reauthorized every two to three years, and the program is currently suspended. Due to the lack of a stable trade deal with the U.S., according to Romualdez, “our timetable (for joining CPTPP) would hasten if the U.S. were to rejoin.”

Indonesia is the least likely of the three countries to join the CPTPP, at least in the near term. While President Joko Widodo told a business audience during a 2015 gala dinner at the U.S. Chamber headquarters in Washington, D.C. that his country planned to join the then-TPP agreement, Indonesia’s ability to meet the now-CPTPP’s standards remains far from a reality. Sequencing, too, is an issue, as Indonesia is more focused on ratifying the RCEP agreement. RCEP ratification discussions have progressed, but the agreement still requires plenary approval from Indonesia’s House of Representatives, which the government hopes to achieve this quarter.

Once RCEP ratification is complete, we can expect Indonesia’s further consideration of the CPTPP. While the government will certainly look at the pact primarily through an economic lens, the perception that the CPTPP would by design exclude China has raised geopolitical concerns (albeit ones that may now have shifted, given China’s interest in joining the agreement). In 2018, Indonesia also called on ASEAN countries that had not yet joined the TPP to collectively negotiate the terms of the agreement, but there is little sense of that collectivism today.

Indonesian Ambassador to the United States Rosan Roeslani, when recently asked about Indonesia’s current stance toward the CPTPP, left the door open, but seemed to agree that no specific progress was imminent. “In principle, Indonesia welcomes initiatives to spur inclusive economic growth and prosperity in the region,” the ambassador said. “We are following closely the development of the initiative and underscore our long-standing commitment to supporting international trade and investment.”

The coming year should offer additional clues from the three countries on the potential for CPTPP membership, and while domestic constituencies will be part of the story, external factors such as other countries’ interest in joining the pact, the details of the U.S. Indo-Pacific Economic Framework, and the hoped-for economic recovery from COVID-19 will also play a role.

The United States is politically hamstrung in its ability to pursue any new trade initiative, but competition with China, as well as this year’s Congressional elections, could change these dynamics. New opinion polling by the Singapore-based ISEAS-Yusof Ishak Institute, which shows Southeast Asia views China overwhelmingly as the most influential political, security, and economic partner in the region, might also spur reconsideration.