The 11 countries of the Trans-Pacific Partnership (TPP) are set to sign their pact without an original partner, the United States, in March in Chile. The deal was reached on Tuesday (Jan 23) after two days of talks in Tokyo.
Here's a look at what the latest deal, renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after Washington's withdrawal, is about.
1. What is CPTPP?
In November 2017, ministers of the remaining 11 TPP countries agreed on the way forward to implement the TPP agreement without the US, and also renamed it as the CPTPP.
The CPTPP will incorporate the original TPP agreement, with suspension of a limited number of provisions, while still seeking to maintain the high standard of the agreement.
Tariffs schedules are kept as negotiated with custom duties on 95 per cent of trade in goods to be removed in the long run.
Commitments to liberalise in key areas such as textiles, technical barriers to trade and sanitary and phytosanitary measures, competition, state-owned enterprises and small- and medium-sized enterprises, labour, and dispute settlement, are still intact.
But the ministers also endorsed the List of Suspended Provisions. These provisions were part of the original TPP text. They suspended 20 provisions from chapters on trade facilitation, investment, services, public procurement, intellectual property rights (IPR), environment and transparency.
These rules - included earlier in the TPP at the US' insistence - have now been put on hold, but could be reinstated in the future.
From 40 per cent of global GDP, the latest trade deal - without the US - now covers about 14 per cent, and involves the livelihoods of 500 million people. It is estimated that the net benefit of CPTPP to all its members from liberalisation of trade in goods and services is roughly 0.3 per cent of their combined GDP or US$37.3 billion (S$49.2 billion), in the medium term.
So, the 11 members will still be better off with the CPTPP than without it.
The countries will now work towards inking the CPTPP by early March.
2. Which are the 11 countries that make up the CPTPP?
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
3. How were the sticking points resolved?
Canada, which has sought protection of its cultural industries, and Vietnam, which is worried about labour protection rules, will exchange separate side letters with other members on those respective topics at the time of the signing. The precise content of the letters will not be revealed until then.
4. How will Singapore benefit from CPTPP?
Minister for Trade and Industry (Trade) Lim Hng Kiang said that CPTPP will enhance trade among countries in the Asia-Pacific, resulting in more seamless flows of goods, services, and investment regionally.
"Singapore companies will gain from the substantial elimination of tariffs and non-tariff barriers for goods, improved access for service suppliers in a wide range of sectors, greater facilitation of investments, and improved access to government procurement contracts," he added.
5. What was the original TPP about?
In 2005, the Trans-Pacific Strategic Economic Partnership comprising four countries - Brunei, Chile, New Zealand and Singapore - was signed.
That pact was then expanded and became US-led during the Obama administration.
Dubbed the TPP12, it was initialled in February 2016, and member countries are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
The TPP would have covered 40 per cent of the global economy, as the members represent a market of 800 million people with a combined GDP of US$27.5 trillion (S$36.3 trillion).
The 12 countries signed the deal - which set a new standard for global trade - on Feb 4, 2016.
But on Jan 23, 2017, US President Donald Trump signed a Presidential Memorandum to withdraw the US from the TPP. The TPP could not enter into force without the US, as it accounts for 60 per cent of the combined GDP of the 12 TPP members.
Japan then led a scramble to keep the deal alive, with the hope of enticing the US to return at a later date.
6. How does the CPTPP compare with RCEP?
The 16-nation Regional Comprehensive Economic Partnership (RCEP) covers nearly 3.5 billion people and account for a third of the world's gross domestic product. It is almost completed and could be signed this year.
It is an Asean-led initiative that seeks to bring into its fold China, Japan, India, South Korea, Australia and New Zealand.
Seven of them are also CPTPP members, namely Australia, Brunei, Japan, Malaysia, Singapore, New Zealand and Vietnam.
The RCEP was conceived in 2012. If approved, the free trade agreement will be the largest trade bloc in terms of population. The RCEP countries make up 46 per cent of the global population and are worth 24 per cent of global GDP.
Like the CPTPP, the RCEP also does not include the US.
Unlike the CPTPP, the RCEP deal lacks protection for labour, human rights and the environment.
Sources: Malaysia Ministry of International Trade and Industry, RSIS, BLOOMBERG, REUTERS, CNN