The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, took effect on Sunday, covering 13% of the global economy and heralding the latest initiative by Japanese Prime Minister Shinzo Abe to throw open the gates to the previously closed Japanese economy.
The CPTPP includes 11 Pacific Rim countries, with Japan as the major economy and one of the countries which played a lead role in the grouping.
Six members – Australia, Canada, Japan, Mexico, New Zealand and Singapore – have ratified the pact, enabling it to take effect. Vietnam was expected to ratify it in January, while related administrative processes are underway in Brunei, Chile, Malaysia and Peru.
Signed in March 2018, the deal slices tariffs on agricultural and industrial products, eases investment restrictions and upgrades intellectual property protection. However, it not as inclusive or as powerful as it could have been.
The CPTPP is a revision of the TPP, on which negotiations started in 2010. It originally included the United States, but US President Donald “America First” Trump – a believer in bilateral, but not multilateral free-trade pacts – pulled out in 2017 in one of his first acts in office.
That was seen as a major blow to free-trader Abe. However, the prime minister is proceeding with other moves that will open Japan’s markets to a wider-than-ever flow of global goods and services, but which have not been implemented in the past due to resistance from a powerful national farmers’ lobby.
Under the CPTPP, Tokyo will reportedly eliminate import duties on 95% of items, though sensitive sectors including rice and beef will still benefit from tariff protection, and the government has prepared subsidies to assist the agricultural sector.
A Japanese free trade pact with the European Union, which was concluded in 2018, is set to take effect on February 1, 2019. When the impact of the EU pact and the CPTPP are combined, Japan’s economy anticipates a long-term boost of ¥13 trillion (US$117 billion), according to the Japan Times.
Colombia, Indonesia, South Korea and Thailand, as well as the UK, post-Brexit, have stated an interest in joining the CPTPP. A meeting to discuss procedures to accept new members will take place on January 19 in Tokyo.
In another move to open the economy, Tokyo announced a new visa in October that would open the country’s labor sector to skilled immigrant workers as part of efforts to combat a declining birth rate. Historically, Japan has had high barriers to immigration and immigrant workers.
In September, Japan and the US – at the insistence of Washington, which runs a trade deficit with Japan – also agreed to begin free trade agreement talks.
Meanwhile, negotiations proceed on the 16-member Regional Comprehensive Economic Partnership. Led by China, and including Japan, the RCEP could become the world’s biggest trade bloc.