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

Definition

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade agreement among several Pacific Rim countries aimed at promoting economic integration and reducing trade barriers. This agreement emerged from the original Trans-Pacific Partnership (TPP) after the United States withdrew, incorporating a commitment to lower tariffs and enhance trade and investment among its member nations.

5 Must Know Facts For Your Next Test

1. The CPTPP includes 11 countries, such as Canada, Japan, Australia, and Mexico, covering approximately 13.4% of the global economy.
2. The agreement aims to eliminate tariffs on 95% of goods traded between member countries, encouraging increased trade flows.
3. CPTPP includes provisions on labor rights, environmental standards, and intellectual property protection to ensure fair trade practices.
4. The agreement was signed in March 2018 and entered into force in December 2018 for its initial members.
5. CPTPP serves as a strategic economic alliance that aims to counterbalance the influence of larger economies, particularly China, in the Asia-Pacific region.

Review Questions

• How does the CPTPP contribute to reducing trade barriers among its member countries?
  • The CPTPP significantly contributes to reducing trade barriers by aiming to eliminate tariffs on about 95% of goods traded among its member countries. This reduction in tariffs allows for easier access to markets, promoting increased exports and imports among the participating nations. Additionally, the agreement includes provisions that enhance cooperation in areas such as customs procedures and regulatory practices, further facilitating smoother trade flows.
• Evaluate the significance of including labor rights and environmental standards in the CPTPP agreement.
  • Including labor rights and environmental standards in the CPTPP is significant as it promotes sustainable trade practices while safeguarding workers' rights. These provisions aim to prevent member countries from undercutting labor standards to gain a competitive advantage through lower costs. Furthermore, by addressing environmental concerns, the CPTPP encourages responsible resource management and aligns trade practices with global sustainability goals, fostering a more equitable trading environment.
• Analyze the potential implications of the CPTPP on global trade dynamics, particularly concerning major economies like China.
  • The CPTPP could have far-reaching implications for global trade dynamics, particularly as it positions itself as a counterweight to China's growing economic influence in the Asia-Pacific region. By establishing strong trade ties among its member nations through reduced tariffs and comprehensive standards, the CPTPP may encourage other countries to align with its rules, creating a bloc that potentially isolates non-member economies like China. This could lead to shifts in global supply chains and investment patterns as countries reassess their trading relationships in light of the CPTPP's favorable conditions for member states.

Related terms

Free Trade Agreement: An arrangement between countries to reduce or eliminate tariffs and other trade barriers on goods and services exchanged between them.

Tariffs: Taxes imposed on imported goods and services, often used to protect domestic industries from foreign competition.

Trade Liberalization: The process of reducing or eliminating government restrictions on international trade, facilitating a more open market.