COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC

PARTNERSHIP

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Comprehensive and Progressive Agreement for Trans-Pacific Partnership

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

is a regional free trade agreement between Canada and ten countries in Asian-Pacific (Australia,

Chile, New Zealand, Brunei, Mexico, Japan, Peru, Vietnam, Malaysia, and Singapore).

According to Li and Whalley, these nations represent 13.5% of the global economy, positioning

CPTPP amongst the most significant FTAs globally.1 The CPTPP came into effect after former

US president Trump’ withdrew the US from the Trans-Pacific Partnership (TPP) in 2017. 2 The

remaining members formed a new trade agreement known as the CPTPP that came into force in

2018. Without the US, the global income gains were reduced by 70%. However, the deal still

generates income for the members estimated to add to the worldwide income of over $100.3

Besides, the FTA positively impacts significant economic indicators, including exports, imports,

and GDP of member countries.

Impact of CPTPP on Member States’ Economic Growth

CPTPP provides member states access to key markets in Canada, Asia, and Latin

American. The members makeup 13.5% of the global GDP and represent 500 million consumers

that the agreement opens up to the members. Per Li and Whalley, two-way merchandise

commerce between Canada and CPTPP members who had ratified the deal rose by 3.36%,

1
Chunding Li, and John Whalley, “Effects of the comprehensive and progressive agreement for trans‐

pacific partnership.” The World Economy 44, no. 5 (2021): 1312.

2
Cyn-Young Park, Peter A. Petri, and Michael G. Plummer, “The Economics of Conflict and Cooperation

in the Asia-Pacific: RCEP, CPTPP and the US-China Trade War.” East Asian Economic Review 25, no. 3 (2021):

234.
3
Li and Whalley, “Effects if the Comprehensive and Progressive agreement,” 1312.
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totalling $45.67 billion.4 Equally, the other members have equal access to the vast economic bloc

and increase their opportunities to trade freely within the region and international markets.

With the contract’s provision, eliminating tariffs for 98% of export goods, members also

export goods and services at low prices. This advantage gives them a competitive price

advantage in Asia-Pacific and Canadian markets due to millions of dollars in tariff savings

compared to non-CPTPP traders. Correspondingly, the favourable trade tariff provisions give the

member states exporters, firms, SMEs, and other investors new opportunities in international

commerce. For example, Canada’s imports from member states increased by $1.5 billion from

2018.5 Similarly, analysts note significant expansions in Australia, Malaysia, and Vietnam's

exports and imports and investment entries within the region and internationally.6 Vietnam,

Brunei, Singapore, and Chile, specifically recorded gains in export growth despite the pandemic

trade disruptions regionally and globally. International trade is a crucial driver of a country's

economic growth.

CPTPP also increased foreign direct investment (FDI) in most member countries due to

favourable treatment and protections for investors. For instance, in 2019, Vietnam scored 7% and

Malaysia 3% growth in FDI entries.7 FDI is also positively correlated to developments in

productivity and service sectors. Both measures signify notable economic growth since most of

the members of CPTPP’s investments have registered growth. Notably, the direct investment

occurred between and amongst the CPTPP members and outside investors.

4
Li and Whalley, 1324.

5
Park, Petri, and Plummer, “The Economics of Conflict and Cooperation in the Asia-Pacific,” 249.

6
Kati Suominen. Two Years Into CPTPP. Center For Strategic & International Studies (CSIS).

https://www.csis.org/analysis/two-years-cptpp
7
Suominen, Two Years Into CPTPP, 6.
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Domestic e-commerce also grew following CPTPP ratification in member countries.

According to Suominen, Malaysia, Mexico, Peru, and Vietnam, recorded over 25% growth in

online trade by 2020.8 On the other hand, cross-border trade declined. This difference can be

attributed to the Covid-19 pandemic, which affected most countries regardless of their non-

membership or membership to CPTPP or any other FDA. Nonetheless, significant trade gains

existed between the CPTPP members than before the agreement because of its liberating

provisions for trade.

In summation, the CPTPP free trade agreement between Canada and 1I Asian countries

brought various economic gains for the member states. Studies on most member countries

register economic benefits, including increased export and import trades, international trade, e-

commerce, and foreign direct investments that are positively associated with economic growth.

8
Suominen, 9.
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Bibliography

Li, Chunding, and John Whalley. “Effects of the comprehensive and progressive agreement for

trans‐pacific partnership.” The World Economy 44, no. 5 (2021): 1312-1337.

Park, Cyn-Young, Peter A. Petri, and Michael G. Plummer. “The Economics of Conflict and

Cooperation in the Asia-Pacific: RCEP, CPTPP and the US-China Trade War.” East Asian

Economic Review 25, no. 3 (2021): 233-272.

Suominen, Kati. Two Years Into CPTPP. Center For Strategic & International Studies (CSIS).

https://www.csis.org/analysis/two-years-cptpp