UNIVERSITY OF ECONOMICS AND FINANCE

International Economics

Lecturers: Nguyen Thi Cuc Hong

CPTPP – COMPREHENSIVE AND PROGRESSIVE

AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP

Group 4 includes: Tang Tuyet Nhi

Nguyen Ngoc Thanh Ngan
Hoa Nghi Tran
Le Phuoc Trung

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 ACKNOWLEDGEMENT
First of all, we would like to thank Ho Chi Minh City University of Economics and Finance for
including International Economics in the training program and creating conditions for students to
interact and learn how to do a scientific research paper. right.

In particular, we would like to send our sincere thanks to Ms. Thi Cuc Hong for wholeheartedly
guiding, helping, and giving us advice when we had difficulty learning and reading the charts in the
economy. Thank you for accompanying us throughout International Economics.

International Economics is a useful and highly practical subject. However, due to a lack of
experience and limitations in many aspects, the group's essay will certainly not avoid shortcomings.
We look forward to receiving your opinions and comments so that the group can accumulate
experience for future essays.

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TABLE OF CONTENTS
ACKNOWLEDGEMENT..............................................................................................................................2
I. Organization............................................................................................................................................4
II. Position................................................................................................................................................5
III. Impacts to International Trade...........................................................................................................10
1. Trade Liberalization..............................................................................................................................10
2. Economic Growth.................................................................................................................................10
3. Digital Trade..........................................................................................................................................10
4. Investment.............................................................................................................................................10
5. Strategic Positioning.............................................................................................................................10
IV. Conclusion.........................................................................................................................................11
REFERENCE............................................................................................................................................... 12

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 I. Organization
The CPTPP's efficient framework serves as a model for enhancing international trade by fostering
collaboration and reducing trade barriers among its member countries. By promoting fair competition,
protecting intellectual property rights, and establishing transparent rules, the agreement creates a level
playing field for businesses to thrive and innovate. This not only benefits the economies within the Indo-
Pacific region but also sets a positive example for other countries looking to engage in global trade.
Through its provisions on labor rights and environmental protection, the CPTPP emphasizes sustainable
growth practices, ensuring that economic development is inclusive and respectful of social and
environmental concerns. Overall, the CPTPP's impact extends far beyond its member countries, shaping
the future of international trade with its efficient and well-structured approach.

Initially, CPTPP was called P4, then changed its name to TPP when the United States, Australia,
Vietnam and Peru joined negotiations with P4 members. TPP negotiations ended in 2015 and all 12
members signed the agreement in 2016. However, in 2017, the United States left the TPP, stalling the
agreement's ratification process. After many meetings throughout 2017, officials decided to change the
official name to CPTPP in early 2018. In March 2018, all 11 countries signed the updated agreement.
CPTPP takes effect at the end of 2018. The CPTPP creates a formidable bloc spanning the Asia-Pacific
region and beyond. This partnership not only enhances economic growth among member countries but
also promotes increased trade with global partners. By including a blend of advanced and emerging
economies, the CPTPP establishes a level playing field that benefits all nations involved, setting the stage
for mutual prosperity and sustainable development.

The main principle of the CPTPP centers around free trade. This agreement notably decreases tariffs and
removes non-tariff obstacles, enabling smoother movement of goods and services among member nations.
This translates to:
 Lower Prices for Consumers: Reduced tariffs create heightened competition and lower prices for
consumers, enhancing purchasing power and economic activity.
 Expanded Markets for Businesses: With access to a vast market of over 500 million people,
businesses can expand their reach, fostering growth and employment opportunities.
 Enhanced Efficiency: Uniform regulations among member countries simplify trade procedures,
diminishing administrative complexities and delays.

Advancing Sustainable Development Goals Through Trade. The CPTPP goes beyond economic
benefits by incorporating sustainable development goals into its framework. Member countries are
committed to upholding environmental protections, labor rights, and fair business practices. By promoting
sustainable development alongside trade liberalization, the agreement strives to create a more inclusive
and equitable trading environment. This dual focus on economic growth and social responsibility sets a
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positive example for other trade agreements worldwide, encouraging a shift towards more sustainable and
ethical trade practices.

Fostering Innovation and Digital Economy. In the digital age, the CPTPP recognizes the importance
of fostering innovation and facilitating e-commerce within the trade bloc. Provisions are in place to
support digital trade, protect intellectual property rights, and enhance cooperation on technological
advancements. By embracing the opportunities presented by the digital economy, member countries can
boost productivity, create new job opportunities, and drive economic growth through innovation. This
forward-thinking approach positions the CPTPP as a trailblazer in adapting to the evolving landscape of
global trade in the 21st century.

II. Position
As of 2021, the latest year for which data is available at the time this analysis was conducted, total
intra-CPTPP trade reached $US308.9 billion, an increase of 5.5% from 2018, the year prior to the
Agreement entering force. In comparison, extra-CPTPP trade grew 7.4% over the same period. However,
many ratified CPTPP Parties already had existing free trade agreements (FTAs) with each other, which
means that the impact of CPTPP would likely be less in the cases of pre-existing FTA relationships. Of the
21 trading relationships among ratified CPTPP Parties, 10 can be classified as “new” FTA relationships.

Separating intra-CPTPP trade into “new” and “existing” FTA relationships shows the benefit of
CPTPP. In 2021, “new” intra-CPTPP trade reached $US61.6 billion, which was an increase of 13.2% from
2018. “Existing” intra-CPTPP trade, on the other hand, had an increase of 3.7% over the same period to
reach $US247.2 billion.

Figure 1: Intra- and extra-CPTPP trade growth (%) between 2018 and 2021

The type of goods driving intra-CPTPP trade growth are different for “new” and “existing” FTA
relationships. Between 2018 and 2021, “existing” intra-CPTPP trade increased 3.7% but this was almost
entirely driven by primary intermediates which contributed 4.3 percentage points to growth. All other
types of goods (consumption, capital, GIGs, SIGs) contributed close to zero or negatively to “existing”
intra-CPTPP trade growth. In contrast, the contribution to growth of “new” intra-CPTPP trade (+13.2%) is
more diversified, with the largest contributor being consumption goods which contributed 6.7 percentage
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points to the growth. In second place is SIGs (or supply chain trade) which grew 16.1% between 2018 and
2021 to contribute 3.8 percentage points to growth. Capital goods grew 14.8% which is a 2.5 percentage
points contribution and primary intermediates grew 9.0% which is a 1.1 percentage points contribution.
To summarise from a supply chain trade perspective, SIGs trade improved by 16.1% between 2018
and 2021 among “new” FTA relationships within CPTPP, compared to a 1.8% increase in total intra-
CPTPP supply chain trade. It is even more notable the strong growth in supply chain trade among “new”
CPTPP FTA relationships given that this period includes the impact of the global pandemic suggesting the
contribution of CPTPP to increased resiliency of supply chains in the region.
Figure 2: Intra-CPTPP supply Chain Trade Growth between 2018 and 2021 (%)

Figure 3: Trade growth (%) and contribution (percentage points) to the growth, by “new” vs
“existing” FTA relationship within CPTPP and by BEC

“Affected” products trade-in “new” FTA relationships grew the fastest (+16.8%) between 2018 and
2021 to reach $US16.4 billion, and within this intersection of FTA relationship and tariff preference
margins, supply chain trade (SIGs trade) grew 32.9% over the same period.

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 The results here show that intra-CPTPP supply chain trade performed the best where the expected
impact of CPTPP on trade was the strongest, which is in the intersection of “new” FTA relationships and
“affected” by CPTPP products. It is important to note that these results are for a period impacted by the
global pandemic, in particular widespread supply chain disruptions, and thus should be interpreted with
caution.

Figure 4: Intra- CPTPP trade growth between 2018 and 2021 (%), by the intersection of FTA
relationship and tariff preference margins

Figure 5: Intra-CPTPP supply Chain Trade Growth between 2018 and 2021 (%)

Transport equipment is the second largest product group within intra-CPTPP trade, reaching
$US43.1 billion in 2021, of which $US26.6 billion was products “affected” by CPTPP tariff reductions,
making transport equipment the largest product group to be “affected” by CPTPP. Of the $US43.1 billion,
$US13.7 billion was supply chain trade (SIGs), also making the transport equipment product group the
largest category of supply chain trade within CPTPP.

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 Figure 6: Intra-CPTPP trade in 2021, by tariff preference margins and BEC’s broad categories of
products

Similar to total intra-CPTPP trade, intra-CPTPP trade in the transport equipment product group grew
the fastest where the impact of CPTPP on trade was expected to be the strongest, which is within the
intersection of “new” FTA relationship and “affected” by CPTPP products. In this intersection, the intra-
CPTPP trade of the transport equipment product group grew by 8.2% between 2018 and 2021, outpacing
the growth of the transport equipment product group in other intersections. Supply chain trade of transport
equipment product group performed well within this intersection of “new” FTA relationship and
“affected” by CPTPP products, growing 38.7% over the same period.

Figure 7: Intra-CPTPP supply Chain Trade Growth between 2018 and 2021 (%) – Transportation
equipment product group

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 Construction and housing materials are the fourth largest product group within intra-CPTPP trade,
accounting for $US30.8 billion in 2021, of which $US10.6 billion was supply chain trade (SIGs), making
it the second largest supply chain trade within intra-CPTPP trade after the transport equipment product
group.

Figure 8: Intra-CPTPP trade in 2021, by end use categories and BEC’s broad categories of products

Once again, the intra-CPTPP trade of construction and housing materials product group grew the
fastest where the impact of CPTPP on trade was expected to be the strongest, which is within the
intersection of “new” FTA relationship and “affected” by CPTPP products. In this intersection, the intra-
CPTPP trade of construction and housing materials product group grew 20.4% between 2018 and 2021.
As for supply chain trade, SIGs trade of construction and housing materials product group performed well
in the intersection of “new” FTA relationship and “affected” by CPTPP products, growing 34.6% over the
same period.

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 Figure 9: Intra-CPTPP supply Chain Trade Growth between 2018 and 2021 (%) – Construction and
housing materials product group

Overall intra-CPTPP trade grew 5.5% between 2018 and 2021, but in the case where a new free trade
relation was created and for products benefiting from CPTPP tariff reductions, intra-CPTPP trade grew
16.8%, outpacing overall intra-CPTPP trade growth as well as extra-CPTPP trade growth. From a supply
chain perspective, where products benefited from a “new” FTA relationship and from tariff reductions,
supply chain trade grew 32.9% between 2018 and 2021. CPTPP has been a major player in international
trade, according to data on trade, investment, and economic growth. In addition to attracting investment
and fostering high-quality free trade, the CPTPP helps member nations achieve sustainable economic
growth. Future international trade norms and regulations are shaped in part by the CPTPP.

III. Impacts to International Trade

1. Trade Liberalization
As soon as the Agreement goes into force, countries agree to remove import levies on 65–95% of
tariff lines and all 97–100% of tariff lines. Tariffs on the remaining items will be phased out over the
course of five to ten years.

Vietnam has committed to removing high tariff lines under the CPTPP. As a result, 65.8% of tariff
lines will have no tax applied to them as soon as the Agreement becomes effective; 86.5% of tariff lines
will have no tax applied to them in the fourth year after the Agreement becomes effective; and 97.8% of
tariff lines will have no tax applied to them in the eleventh year. In terms of export duties, Vietnam
pledges to do away with most products that are now liable to them within a timeframe of five to fifteen
years after the Agreement's implementation.

2. Economic Growth
The CPTPP Agreement will establish the largest free trade area in the world, covering a vast and
varied market across several continents, with a total GDP value of roughly 10,567 billion USD, or 13.5%
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of the world's GDP. Specifically, with 4,872 billion USD, Japan is the nation that contributes about 50% of
the CPTPP Agreement's economic scope. The other three members with the highest GDPs are Australia
(1,323 billion USD), Mexico (1,150 billion USD), and Canada (1,653 billion USD). Vietnam's GDP
stands at USD 255 billion, or almost 2% of the world's total, placing it in tenth place economically.

Calculation results show that the net benefits that CPTPP Agreement members receive from trade
liberalization will only be about 0.3% of the members' total GDP, equivalent to 37.3 billion USD in the
middle. term. Of these, Malaysia will be able to gain the most benefits (equal to 2% of GDP), followed by
Vietnam and Brunei with about 1.5% of GDP.

The impact of the CPTPP Agreement on the financial services industry is not large. The main reason
is probably that the commitment to open services is not too large compared to the commitment in the
WTO. Specifically, the CPTPP Agreement creates an additional 0.01-0.03% of growth, and also increases
imports of these services at a fairly high level (2.4-3.6%), while exports will increase. decreased by 2.8%
to 3.2%. Most light and labor-intensive industries still benefit from the CPTPP Agreement. The agreement
can create additional growth for this industry group of 4-5%, and export growth can reach 8.7-9.6%...

3. Digital Trade
Digital trade, facilitated by digital technologies, is a cornerstone of the CPTPP. The agreement
acknowledges its transformative potential and aims to create an environment conducive to its expansion.

One of the CPTPP’s key provisions is the elimination of customs duties on electronic transmissions,
facilitating cross-border digital transactions. In 2020, digital trade among CPTPP countries amounted to
over $100 billion, illustrating its substantial economic impact.

Moreover, the agreement includes measures to promote e-commerce, enhance consumer protection,
and facilitate data flow. These initiatives aim to reduce regulatory barriers and foster trust among
businesses and consumers. For instance, between 2018 and 2020, e-commerce sales in CPTPP countries
increased by 30%, reaching $3.5 trillion.

4. Investment
The CPTPP also addresses digital investment, recognizing its importance in driving innovation and
economic growth. Provisions related to investment protection, dispute resolution, and intellectual property
rights are included to attract and safeguard digital investments.

For example, CPTPP member countries commit to providing national treatment and most-favored-
nation treatment to investors, ensuring a level playing field. Between 2018 and 2020, foreign direct
investment (FDI) inflows into digital industries in CPTPP economies grew by 15%, surpassing $50
billion.
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 The agreement also safeguards intellectual property rights, essential for fostering innovation in the
digital economy. Patent applications in CPTPP countries increased by 20% between 2018 and 2020,
reflecting the robust protection provided by the agreement.

5. Strategic Positioning
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) strategically
positions member countries to benefit from increased trade and investment opportunities across the Asia-
Pacific region. By lowering tariffs and harmonizing regulations, it aims to create a more integrated
market, fostering economic growth and development among its members. Additionally, the agreement
serves as a counterbalance to China's influence in the region, offering an alternative framework for trade
and economic cooperation. This strategic positioning enables member countries to diversify their export
markets, enhance competitiveness, and strengthen geopolitical alliances.

IV. Conclusion
The impact of the CPTPP goes beyond economic advantages. It sets a precedent for future trade
deals by advocating for fair trade, sustainable development, and a rules-based trading environment.
Through its emphasis on labor rights, environmental conservation, and intellectual property rights, it
shows a dedication to balancing economic gains with social and environmental obligations. As more
nations join and uphold the CPTPP principles, the potential for enhanced collaboration, innovation, and
collective advancement grows. These joint efforts can contribute to creating a more prosperous and
unified world where the benefits of trade are fairly shared among all nations and individuals.

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 REFERENCE
1. Canada, G. A. (2024, February 23). Government of Canada. GAC.
https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/
cptpp-ptpgp/2023-cptpp-supply-chains-analysis-ptpgp.aspx?lang=eng

2. TTWTO VCCI - CPTPP. (n.d.). https://trungtamwto.vn/fta/175-cptpp/1

3. Bài đăng trên Tạp chí Tài chính kỳ 2 Tháng 5/2020. (2020, October 23). Tác động TỪ Hiệp định
CPTPP tới Fdi và Ngoại Thương Của Việt Nam. Tạp chí Tài chính. https://tapchitaichinh.vn/tac-
dong-tu-hiep-dinh-cptpp-toi-fdi-va-ngoai-thuong-cua-viet-nam.html

4. TTWTO VCCI - (FTA) Văn Kiện Hiệp định CPTPP và Các Tóm Tắt. (n.d.).
https://trungtamwto.vn/chuyen-de/10835-van-kien-hiep-dinh-cptpp

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