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11 countries, including S’pore, sign landmark Asia Pacific trade pact

SINGAPORE — The remaining 11 countries have signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Friday (Mar 9, Singapore time), some 14 months after the United States formally withdrew from the pact.

Trade officials from the 11 countries met in Tokyo in January. Reuters file photo

Trade officials from the 11 countries met in Tokyo in January. Reuters file photo

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SINGAPORE — The remaining 11 countries have signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Friday (Mar 9, Singapore time), some 14 months after the United States formally withdrew from the pact.

Following the signing ceremony in Chile, the member countries — which include Japan, Australia, Canada, Chile, Singapore and Malaysia — will begin their respective domestic processes to ratify the agreement, which was renamed as the CPTPP from the Trans-Pacific Partnership (TPP).

The CPTPP will enter into force after at least half of the member countries ratify the document — a less onerous requirement compared to the TPP which needed ratification by a minimum of six countries accounting for 85 per cent of combined gross domestic product of the 12 original members.

Due to the TPP’s legal requirements, the agreement cannot enter into force without the US. Japan took the lead in forging the revised trade pact after President Donald Trump pulled the US out of the TPP in January last year, saying he wanted to seek one-on-one deals that would be more beneficial to his country.

The remaining countries concluded negotiations on the revised pact on Jan 23 this year in Tokyo, Japan. The revised agreement eliminates some requirements of the original TPP demanded by US negotiators. These include rules ramping up intellectual property (IP) protection of pharmaceuticals, which governments and activists of other member nations worried would raise the costs of medicine, CNBC reported.

A total of 20 provisions from the text have been suspended temporarily — a majority of which relate to IP protection — which means that they will not take effect under the CPTPP. The revised pact “includes provisions to address how it might interact with the original agreement”, Singapore’s Ministry of Trade and Industry (MTI) said in press release.

Without the US, the agreement’s share of world gross domestic product drops from 40 per cent to about 13.5 per cent. Nevertheless, trade experts have said the CPTPP will still create a free trade area with a high-standard of market liberalisation.

Describing the CPTPP as a “comprehensive and high-standard regional free trade agreement”, the MTI said the pact will “boost trade and investment flows and integrate the region into a single manufacturing base and market, which will allow Singapore companies to operate more seamlessly across the CPTPP countries”.

It added that the Republic’s companies will gain from the “substantial elimination of tariffs and non-tariff barriers for goods, improved access for service suppliers in a wide range of sectors, greater facilitation of investments, and improved access to government procurement contracts”.

The ministry reiterated that businesses and consumers today face new and emerging concerns due to technological advances and evolving business models. These include challenges relating to the digital economy and e-commerce, as well as intellectual property protection.

“The CPTPP addresses these issues by establishing enforceable rules to help the digital economy, innovative industries, companies and workers compete fairly in the global marketplace. It will pioneer new and updated rules for cross-border trade and investment.” said the MTI. These will bring benefits for Singapore, amid its efforts to attract research and development, grow innovative businesses, and create higher-value employment opportunities.

Last month, Mr Trump told the World Economic Forum in Switzerland that it was possible Washington might return to the pact if it got a better deal.

But Japan’s chief negotiator Kazuyoshi Umemoto said that agreeing on a new version of the trade pact with the US would “not be so easy” and any such process is unlikely to start soon. Nevertheless, Japan welcomed a positive stance by the United States toward an Asia-Pacific trade pact, he said. “We have been working, motivated by hopes that the United States would return to the trade pact soon… (but) in practical terms, as a negotiator… I don’t think we will be able to do that in the near future.”

Experts in Singapore hailed the signing of the CPTPP, and held out hopes that the US will rejoin the pact.

Associate Professor Lawrence Loh from the National University of Singapore (NUS) Business School noted that governing multilateral trade is a “most fundamental foundation for international economic relations now”. He said: “At a time when the US is going against the grain of free trade by imposing tariffs on steel and aluminium, it is all the more urgent that the revised trade pact be revived.”

Assoc Prof Loh said the signing of the CPTPP “could not have been more timely and critical to uphold the good trade order in the world”. “It will even be better if the US now sees that it is in its own interest to rejoin the pact,” he added.

NUS Business School visiting senior fellow Alex Capri felt the signing was “as much a repudiation of China’s regional ambitions as it is a validation” of the need for a rules-based trading system that reflects a “progressive” agenda.

While he believed there is still a possibility of the US rejoining the agreement, “it will be tricky, as there will be no appetite to renegotiate terms and some areas (IP protection) would have to be restored”.

 

 

 

 

 

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