CANBERRA • Australia is on track to ratify a new Pacific trade deal by Nov 1, the country's Trade Minister said, a move that would trigger the first tariff cuts in an 11-nation accord that survived an exit by US President Donald Trump.
The Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, will take provisional effect 60 days after six countries ratify it.
Singapore, Japan, Mexico and New Zealand have already ratified the pact, and Canada is set to do so on Monday.
Should Australia do so by next Thursday, the initial six signatories will enjoy two rounds of tariff cuts by April 1.
"We believe that we are on track to be able to ratify and lodge notification with New Zealand by Nov 1," Australian Trade Minister Simon Birmingham said on the sidelines of the World Trade Organisation reform ministerial meeting in Ottawa, Canada.
"From all that we can tell, that puts us in good company with Mexico, Singapore, Japan, Canada and New Zealand to ensure there are the requisite six to bring it into force at the earliest possible opportunity," he said.
The deal's enactment would be hailed by supporters as a victory for the global trading system bemoaned by Mr Trump, who quit the original TPP deal.
The CPTPP nations, representing 14 per cent of global gross domestic product (GDP), are trying to expand the status quo view of free trade amid a tariff fight between Washington and Beijing and a simmering Brexit battle in Europe.
"CPTPP is the most important global trade arrangement in two decades," said Ms Deborah Elms, executive director of the Singapore-based Asian Trade Centre. At a time of increasing protectionism, "it is striking how these governments grasp the importance of pushing ahead with transparent, rules-based trade that benefits large and small firms".
Some CPTPP members had hoped the first six nations would meet a Nov 1 target deadline, which would allow the deal to enter into force by Dec 31.
That is important because subsequent annual tariff cuts for 10 of the 11 nations can occur only every Jan 1 - Japan's reductions come on April 1 of each year. If the deal kicks in on Dec 31, the second round of tariff reductions for most countries can come the next day. Otherwise, they would wait a year.
Canada's Senate passed the law enacting the CPTPP on Thursday and expects to ratify it on Monday, a Canadian government official said. It would be the fifth country.
Australia is "going through the final i-dotting, t-crossing stages, which we hope will be completed within the next few days", Mr Birmingham said on Thursday.
Tariff reductions are carried out over years, and differ by product. Countries are racing to be in the first group because they would get a head start on other member nations, an advantage that cascades for years.
Japanese Prime Minister Shinzo Abe and Canadian Prime Minister Justin Trudeau - representing the two biggest economies in the deal - discussed the pact this week, and "reiterated their commitment to ensuring an early entry into force", said Mr Trudeau's office.
"The modelling that has been done shows the longer the agreement is in force, the greater the benefits," said Mr Heath Baker, head of trade policy at the Export Council of Australia. "The faster you can get it started, the greater the returns will be down the track."
Australia played a key role in reviving the Trans-Pacific Partnership after Mr Trump withdrew support for the initial pact shortly after taking office. The 11 remaining members of the CPTPP agreed to a new deal in Chile in March, and aimed for it to be implemented through individual ratification by the end of this year.
The pact will link nations with a collective GDP of US$10.6 trillion (S$14.7 trillion).
BLOOMBERG
