What is Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)?

What’s in today’s article?

• Why in news?
• What is Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)?
• Why is the CPTTP so important to the UK?
• What do the critics say?

Why in news?

• U.K. government signed the accession protocol for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in New Zealand.
• It makes the United Kingdom the first new member and first European nation to join the bloc since it was created in 2018.

What is Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)?

About:

• The CPTPP is a landmark pact agreed upon in 2018 that cuts trade barriers among 11 countries.
  • Basically, it is a Free Trade Agreement (FTA) between these 11 countries.
• These countries were – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
• It was initially known as the Trans-Pacific Partnership (TPP) but was renamed after the United States withdrew from the agreement in January 2017.

Features

• The pact requires countries to eliminate or significantly reduce tariffs and make strong commitments to opening services and investment markets.
• It also has rules addressing competition, intellectual property rights and protections for foreign companies.
• Bulwark against China’s dominance
  • CPTPP is seen as a bulwark against China’s dominance in the region, although Beijing has applied to join, along with Taiwan, Ukraine, Costa Rica, Uruguay and Ecuador.
• Significance
  • Economic
    • Once fully implemented, CPTPP will form a trading bloc representing 500 million consumers and 13.5% of global GDP.
    • The agreement will provide the member countries with preferential access to key markets in Asia and Latin America.
  • High-standard free trade agreement
    • CPTPP is an ambitious and high-standard free trade agreement covering virtually all aspects of trade and investment. 
    • The agreement features ambitious market-access commitments in trade in goods, services, investment, labour mobility and government procurement.
  • Transparency in doing business
    • The agreement establishes clear rules that help create a consistent, transparent and fair environment to do business in CPTPP markets.
    • It has dedicated chapters covering key issues like technical barriers to trade, sanitary and phytosanitary measures, customs administration, transparency and state-owned enterprises.
  • Protection of the environment and labour right
    • CPTPP features chapters on the protection of the environment and labour rights, which are enforceable by dispute settlement.

Why is the CPTTP so important to the UK?

• CPTTP will cut tariffs for UK exports
  • CPTTP will cut tariffs for UK exports to Asia Pacific countries and with UK membership.
  • A government analysis said that the pact would boost 
    • UK exports by 1.7 billion pounds (€1.9 billion, $2.23 billion), 
    • imports to the UK by 1.6 billion pounds and 
    • gross domestic product (GDP) by £1.8 billion pounds in the long term.
• Economic weight of CPTTP
  • Once UK joins, the trading bloc will have a combined GDP of 12 trillion pounds and account for 15% of global trade.
  • Between the member countries, they generate 13% of the world’s income.
• Eagerness to deepen trade ties
  • Britain is keen to deepen trade ties in the Pacific after Brexit in 2020.
• Boost to country’s international geopolitical and economic clout
  • It has been seen as a chance for the U.K. to join other trading blocs with faster-growing economies than those closer to home.
  • It will boost the country’s international geopolitical and economic clout.

What do the critics say?

• Critics say it will struggle to compensate for the economic damage sustained by leaving the 27-member EU — the world’s largest trading bloc and collective economy.
• The UK already has trade deals with 10 of the 11 other CPTPP members, and analysts estimate the eventual economic boost to the country is £1.8 billion ($2.2 billion) — a 0.08 percent annual GDP increase.

Q)  What is Trans-Pacific Partnership?

The Trans-Pacific Partnership (TPP) was the centerpiece of U.S. President Barack Obama’s strategic pivot to Asia. Before President Donald Trump withdrew the United States in 2017, the TPP was set to become the world’s largest free trade deal, covering 40 percent of the global economy.

The TPP was a massive trade agreement signed by twelve Pacific Rim countries, including the United States, that together comprised 40 percent of the global economy.

Q) What is a Free Trade Agreement (FTA)? 

A Free Trade Agreement (FTA) is a bilateral or multilateral agreement between two or more countries that aims to facilitate trade by reducing or eliminating barriers and restrictions on the movement of goods and services across their borders. The primary objective of an FTA is to promote economic cooperation and foster stronger trade relations between the participating countries.

Source: The Hindu