The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It is one of the largest free trade agreements in the world - representing nearly 500 million people, with a combined GDP of $13.5 trillion, or 13.5% of global GDP. It will provide Canada significant export diversification opportunities to several important and fast-growing economies.
The first six countries to ratify the agreement were Canada, Australia, Japan, Mexico, New Zealand, and Singapore. Some have already completed their first round of tariff cuts (December 30, 2018) with the next scheduled for January 1, 2019. And Japan will be catching up on tariff cuts early in January 2019.
This new agreement has already peaked the interest of other countries who are showing interest in joining. These include; Columbia, Thailand, South Korea and even a post-Brexit UK.
So what does the CPTPP mean for Canadian Trade?
As with any trade agreement, many of the benefits will take years to materialize. But agri-food exporters could start to see benefits right away.
With the CPTPP, Canada's farmers, ranchers, food manufacturers and exporters will have competitive advantages against several competitors, including the U.S. and the European Union. It will secure access to such important markets for agri-food exporters as Japan, Malaysia, and Vietnam.
Upon entry into the agreement:
- Japan will eliminate 32% of tariff lines on agri-food products with additional cuts of 67% over 20 years
- Vietnam will eliminate 31% with additional cuts over 15 years
- Malaysia will eliminate 92% with additional cuts of 7% over 15 years
"This is a market of 500 million consumers that will be in addition to the 500 million through the European trade agreement and the nearly 500 million with the (revised NAFTA) so 1.5 billion consumers (are now) in Canada's free trade zone." - Jim Carr, International Trade Diversification Minister
This is a huge deal for Canada. And in these early days of the agreement we have to wonder...
Will US protectionism continue to drive countries to find alternatives? How will new agreements, like these, change international trade? How will they change international currency? Will this help Canada's economy be less dependent on the US for trade? Or will Canadian businesses choose to stick close to home? #timetodiversify
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