On November 28 in Vancouver, ministers and representatives from the 12 members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) issued their annual communiqué at the conclusion of the eighth meeting of the CPTPP Commission, chaired this year by Canada. The agreement’s members include Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United Kingdom, and Vietnam.
In their communiqué, the commission members noted that:
“Amidst an increasingly fragmented and unpredictable international trading landscape, we affirmed the CPTPP’s importance as a high-standard agreement that upholds transparent, predictable, and rules-based trade.”
This is a laudable statement, but is it backed up by results?
The communiqué went on to identify three priority areas for ongoing work: “accessions” (dealing with aspirant economies that have indicated a desire to join the agreement); “progressive stewardship” (a fancy name for updating and broadening the agreement); and “comprehensive utilization” (meaning promoting the benefits of the agreement to under-represented groups such as small and medium enterprises, or SMEs, as well as women entrepreneurs and Indigenous groups through “inclusive trade”).
Canada was the commission chair in 2024, and now passes on that role to Australia for 2025. What has Canada been able to accomplish? How should it be graded?
At the beginning of its year as chair, Canada set out three priorities:
“Progressive stewardship of the agreement: The most significant endeavour under this priority will be the General Review of the CPTPP, which is a requirement for the CPTPP members to examine how the agreement is functioning, identify opportunities for potential improvement, and advance discussions in new areas of work such as digital trade. Canada also intends to further improve the functioning of the CPTPP by working with all parties to monitor the implementation of the agreement.
Comprehensive utilization of the agreement: Canada will seek to increase businesses’ utilization of CPTPP preferences across traditionally underrepresented groups in trade, including SMEs, women-owned firms, and Indigenous businesses. To this end, Canada will seek to engage with businesses and civil society throughout 2024, with a view to highlighting the benefits of the agreement as well as facilitating B2B connections.
Developing an effective path forward on accession: This final priority will be guided by the CPTPP “Auckland Principles,” which state that the CPTPP is open to accession by any economy that is willing and able to meet the CPTPP’s high standards, has a demonstrated history of compliance with their existing trade commitments, and can achieve the consensus of CPTPP parties.”
Updating the Agreement
Under the “progressive stewardship” rubric, no specific agreements have been reached, although work has apparently been ongoing throughout the year. The Vancouver Statement included an “Interim Report” from senior officials to ministers identifying several areas for strengthening the agreement (e.g. customs administration and trade facilitation, e-commerce, inclusive trade, and management of administrative work) as well as flagging current issues of concern, such as economic coercion, supply chain resilience, and the environment. It is clear that much remains to be done since the goals for 2025, as per the Vancouver Statement, include continuing “to work toward making recommendations in 2025 to establish parameters for negotiations to update and enhance existing chapters and to include emerging trade issues in the Agreement, as relevant.”
In other words, the CPTPP is a work in progress. It is not clear from the communiqué how much has been accomplished and how much remains to be done. I would give Canada a grade of ‘C’ in this area. It kept the ball rolling but did not achieve any substantive breakthroughs.
Inclusive Trade
“Comprehensive utilization,” also known as “inclusive trade,” was the second identified priority. Inclusive trade has been a Canadian priority from the beginning of Canada’s interest in joining the agreement. In fact, the mouthful of “Comprehensive and Progressive” added to the original title of “Trans-Pacific Partnership” was a Canadian innovation but the words mean little if there is no substance behind them. Canada, along with New Zealand and Chile, has been a leader of the inclusive trade agenda. It was a founding member of the Inclusive Trade Action Group (ITAG) in March 2018, a grouping that has subsequently grown to seven economies, both CPTPP and non-CPTPP members (Canada, Australia, Chile, Costa Rica, Ecuador, Mexico, and New Zealand). From the ITAG have sprung two other groupings The first is the Global Trade and Gender Arrangement (GTAGA), which now has 11 members. In the order in which they joined, they include Canada, Chile, New Zealand, Mexico, Colombia, Peru, Ecuador, Costa Rica, Argentina, Australia, and Brazil. Six of these are part of the CPTPP. The second grouping is the Indigenous Peoples Economic and Trade Cooperation Arrangement (IPETCA), whose members include Australia, Canada, New Zealand, and Taiwan (or Chinese Taipei to use its “APEC-speak” nomenclature).
All these groupings are loose “arrangements” whereby the members agree to co-operate in sharing experiences and best practices, exchanging views and facilitating relationships, and working toward establishing a range of non-discriminatory practices. There are no binding commitments or mechanisms through which to lodge complaints, but the arrangements provide a platform for willing participants to advance the inclusive trade agenda. The means identified to promote the gender and trade agenda include “dialogues, workshops, seminars, conferences, cooperation programs and projects, including internships, visits and research; technical assistance to promote and facilitate capacity building and training; exchange of experts and information; and sharing of experiences and best practices in designing, implementing, monitoring, evaluating and strengthening policies and programs to enhance women's participation in domestic, regional and global economies.” Canada has walked the talk on this agenda, having organized eight women’s trade missions to Asia over the last several years, managed by the Asia Pacific Foundation of Canada, and having rolled out a number of trade promotion, procurement, and financing initiatives to target under-represented groups.
The inputs have been impressive even if the outputs are challenging to measure. The issue of how to measure the results of various inclusive trade initiatives is important, and a challenge. In Vancouver, government experts bemoaned the relative lack of data and the difficulty of disaggregating inclusive trade data from general export statistics. While it can be demonstrated that firms that export, including firms owned by under-represented groups, have better economic outcomes in terms of jobs, growth, and incomes, it is difficult to show that inclusive trade initiatives have increased the number of exporters among the target groups. Anecdotal evidence and case studies exist, but at a macro level, the statistics needed to demonstrate progress and returns on investment are hard to come by.
This is not to invalidate the value of the inputs to the inclusive trade process outlined above, since without inputs there are unlikely to be outputs. Rather, it is simply to note that empirical evidence on the inclusive trade file, a Canadian priority especially in its year as chair, is difficult to produce. Without that evidence, it is more difficult to convince target groups and others that progress is being made. Canada’s grade: ‘B.’
Membership
The third priority area with which Canada had to deal as chair, and one that concerned all members, is that of membership. In the current climate of rising protectionism, the repatriation of supply chains, and the weakening of the rules-based international trading order, the CPTPP stands out as a high-level regional agreement committed to responsible international trade principles. Already, the CPTPP accounts for around 15 per cent of global trade but if it is to continue to play an important role as a bulwark against rising protectionism, it needs to expand its membership. Even with the admission of the United Kingdom on December 15, 2024, there are still seven aspirant economies waiting in line, with Indonesia the most recent applicant (September 2024). The others are, in order of date of application, China, Taiwan, Ecuador, Costa Rica, Uruguay, and Ukraine. The applications of China and Taiwan, both submitted in September of 2021, have now been pending for over three years.
The agreement contains a provision whereby additional states or customs territories can join (Article 5). The Accession Process, a document agreed upon by the existing members, lays out a road map for aspirant economies. Among the provisions is a requirement that the CPTPP Commission (i.e. “government representatives of each Party at the level of Ministers or senior officials”) shall determine “within a reasonable period of time after the date on which the aspirant economy made the Accession Request” whether to proceed with the establishment of an Accession Working Party. These provisions need to be read alongside the “Auckland Principles,” which were established in 2023. There are three principles that govern the accession of new members, namely:
- The aspirant economy must be willing and able to meet the CPTPP’s high standards;
- The aspirant economy must have a demonstrated history of compliance with their existing trade commitments; and
- There is a consensus among the CPTPP parties that negotiations with the aspirant can begin.
While not all the applicants are likely to meet the first and second criteria, it is the third condition that is the most problematic. Objectively, it should be evident that Taiwan, Costa Rica, and possibly some other aspirants are not only willing and able to meet the CPTPP standards and but also have a track record of abiding by their commitments in other agreements, such as the World Trade Organization. Yet, Taiwan’s application has been bedevilled by the China factor. China not only beat Taiwan to the punch by applying to join the CPTPP a few days before Taipei’s application was launched, but there is a widespread belief that China does not look favourably on Taiwanese accession (although to my knowledge this has never been stated publicly). As a result, it is difficult to get consensus on establishing a Working Party to begin negotiations with Taiwan without also addressing China’s membership. Given China’s track record of trade compliance and its current economic policies, it is questionable whether China is ready to meet the conditions for membership in the group. Thus, a lack of consensus on China leads to lack of consensus on Taiwan, with countries such as Singapore and Malaysia likely blocking Taiwan’s entry and countries such as Canada and Mexico, as well as Australia and New Zealand, likely blocking consensus on accepting China’s application. The position of Canada and Mexico is further complicated by the existence of Article 32.10 of the CUSMA, which would allow the U.S. to exit that agreement should either of the other two parties conclude a free trade agreement with a non-market economy, such as China. As a result, the only progress the CPTPP was able to make on the accession question during Canada’s year as Chair was to announce willingness to begin accession negotiations with Costa Rica.
This was a missed opportunity and a failure to make meaningful progress on a significant widening of the agreement’s membership. Taiwan ranks among the top 25 global economies, normally around 21st or 22nd. Costa Rica, by comparison, is a minnow. For the agreement to remain relevant it must move not only to update the text but expand membership significantly. It cannot be allowed to hobble itself with an ASEAN-like lowest common denominator consensus. Various creative solutions have been proposed to break the membership logjam, including opening negotiations with all aspirants, but then proceeding with those proven to be ready, to grouping aspirants into “readiness baskets,” with negotiations proceeding accordingly to creating an associate membership category through a “strategic partnership” arrangement. The strategic partnership offer would acknowledge the potential membership case for aspirant economies but would outline the specific steps each would need to take to achieve full accession.
Recognizing that the commission’s chair’s role in managing a consensus-based organization is limited, it is nonetheless disappointing that the only progress toward dealing with the membership issue, other than confirming the accession of the U.K., was to produce the ‘mouse’ of potential membership by Costa Rica. (While the U.K. will enter the CPTPP this year now that a minimum of six members have ratified its accession, Canada has still not taken this step). If the CPTPP is to be taken seriously the China/Taiwan stasis has to be resolved and the accession process has to begin to allow some movement for these two economies, one of which is clearly ready to meet the terms of the agreement and one of which would make an immeasurable contribution to rules-based international trade if it were to undertake commitments to meet CPTPP standards.
The fact that Canada as chair was unable to introduce any formula to make meaningful progress on this issue is a letdown. This results in a grade of ‘C.’ Not quite an ‘F,’ but not far from it.
Conclusion
Canada’s stewardship of the CPTPP process in 2024 helped complete the accession of the U.K. (although Canada itself has not been helpful, thus far withholding ratification of the U.K.’s entry) and helped bring about agreement that accession negotiations should begin with Costa Rica. No apparent progress was made on resolving the applications of other economies, in particular the difficult issue of China and Taiwan, despite the possibility of using various formulas to move discussions forward. This lack of action is starting to strain the credibility of the CPTPP process. Work to update the agreement in areas such as customs facilitation and digital trade appears to have proceeded at a cautious pace, with the only indication of a timeline being the statement that officials will “work toward making recommendations in 2025 to establish parameters for negotiations.” If there was ever an example of painfully contorted language to avoid making any firm commitments, this is it. Finally, on the inclusive trade front, Canada continued to push this agenda in partnership with several CPTPP members, although the proof of the pudding in terms of concrete results, underpinned with empirical data, remains elusive because of the difficulties of disaggregating “inclusive trade” statistics from broader trade data.
The overall result is acceptable but not inspiring. There were hopes that Canada, an established international trade leader in the past, would be able to achieve more. An overall grade of ‘C+’ would seem appropriate. This is a passing grade but does not represent the full potential of what could have been achieved. Let’s hope that Australia in its year as CPTPP Chair in 2025 does better.
• Edited by Erin Williams, Senior Program Manager, Vina Nadjibulla, Vice-President Research & Strategy, and Ted Fraser, Senior Editor, APF Canada
