Malcolm Cook

Asian Angle | The CPTPP is looking like good news for East Asia – and it’s looking better to everyone else

The larger the trade partnership gets, the better it is for its members and the more attractive it becomes for those left outside

And in the same way it replaced the TPP, the most significant effect of the CPTPP could be to propel an even larger East Asian alternative that would ultimately supersede it

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Reactions to the CPTPP coming into effect provide early indications of its implications and the likely development of the 21st century’s first mega-regional trade agreement. Photo: AP

Malcolm Cook

Published: 7:30am, 4 Jan 2019Updated: 1:13pm, 4 Jan 2019

The US-China trade war is bad news for the production chain-linked, trade-dependent economies of East Asia. The longer and broader the dispute becomes this year, the gloomier the headlines it will generate.

On the other hand, the tongue-twisting Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may emerge as the good news story for East Asia – albeit a more low-key one. The larger it gets, the better it is for its members and the more attractive it becomes for those left outside.

The CPTPP is a new market reality for Japan, Canada, Australia, Mexico, Singapore and New Zealand – and will be for Vietnam from January 14. These seven economies, which account for more than 92 per cent of the total GDP of the 11 signatories, ratified the agreement in 2018. Malaysia, Chile, Peru and Brunei signed but did not ratify the agreement last year. The first three of those countries experienced disruptive changes of government in 2018; Brunei did not.

Reactions to the deal coming into effect provide early indications of its implications and the likely development of the 21st century’s first mega-regional trade agreement.

The CPTPP is the smaller, narrower replacement for the earlier Trans-Pacific Partnership (TPP) signed by the current 11 CPTPP economies and the United States in February 2016. In January 2017, President Donald Trump killed the TPP agreement by withdrawing the US from it.

In 2008, influential US farm lobbies supported George W. Bush’s administration joining the negotiations that led to the deal, and subsequently the Obama administration making those negotiations the economic pillar of its “Asia rebalance” strategy.

Ministers from 11 countries gathered in Chile to sign the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) last year. Photo: Xinhua

Vince Peterson, head of US Wheat Associates, warned of an “imminent collapse” of the largest wheat export market for US growers. Japan is the largest export market for US and Australian beef, and has agreed to major tariff cuts for beef imports.