TPP resurrection positive signal on trade: HSBC Global Research

PETALING JAYA: The resurrection of the Trans-Pacific Partnership (TPP), now known as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), sends signal that significant trade liberalisation is still feasible despite current populist challenges, according to HSBC Global Research.
“Estimates indicate that by 2030 an accord among the ‘TPP-11’ could boost trade in the region by 6% and provide welfare gains on the order of US$157 billion (not taking account of the suspended provisions),” HSBC chief trade economist Douglas Lippoldt said in a research note today.
Non-members such as China, India, Korea, Thailand and the US, however, could face modest net losses totalling US$10 billion (RM41.9 billion) as trade is diverted to CPTPP members.
The CPTPP countries have a combined gross domestic product (GDP) of US$10.1 trillion and a population of 500 million. Its share in international trade is roughly comparable to that of the North American Free Agreement (Nafta).
By establishing a high-standards accord between developed and developing countries on four continents, Lippoldt said the CPTPP agreement provides a useful demonstration of the feasibility of inclusive trade liberalisation projects that span diverse groups of countries.
As the CPTPP will provide a large market with generous terms of access, he noted that it may well attract additional members.
Lippoldt highlighted that the CPTPP could also position its members in Asia to benefit from parallel trade liberalisation efforts underway across the continent.
“These parallel initiatives could help businesses in CPTPP countries to gain further economies of scale, facilitating connections with additional trade partners and helping businesses boost productivity.”
On Nov 11, 11 Pacific Basin countries announced an agreement in principle for a Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
CPTPP’s member countries include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Lippoldt said the CPTPP is a high standards agreement that will liberalise trade in goods (eg: removing most tariffs), services and trade-related investment. It also provides support for labour standards and the environment, intellectual property rights, and the handling of customs issues.
However, 20 sensitive provisions affect handling of express shipments, investor rights (eg: on dispute resolution with states), and intellectual property rights will be suspended.
By suspending rather than deleting these provisions, the CPTPP members hope to facilitate a possible return of the US at some point.
Meanwhile, four further CPTPP areas remain to be addressed, namely state owned enterprises, coal, trade sanctions, and cultural exceptions.
The CPTPP members hope to finalise and sign the accord next year and it will enter into force once six countries have ratified it.