The CPTPP is now a reality. For Australia, Canada, Japan, Mexico, New Zealand, and Singapore the massive trade deal has gone into effect. (It’s in force as of Dec. 30, which it now is in Asia.) The first round of tariff cuts will happen immediately. Vietnam will become the seventh member to join them on Jan. 14. The other four countries—Brunei, Chile, Malaysia, and Peru—still need their governments to ratify the deal.
CPTPP stands for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. It is the successor to the Trans-Pacific Partnership (TPP), a similar deal that included the US. Donald Trump withdrew the US from the TPP soon after he was elected. During his presidential campaign, Trump referred to the TPP as the “greatest danger yet” to the US economy, and has declared a preference for bilateral trade agreements since coming into office. Former US president Barack Obama pushed for the deal because he said it would let the US, not China, “lead the way on global trade.”
The other countries in the deal were undeterred by the US’s withdrawal. Even without the US, the new pact will be among the largest multilateral trade deals ever enacted (paywall). The CPTPP countries include 14% of world GDP. Beyond just lowering trade barriers between the countries, the deal also includes greater protection of intellectual property rights—a part of the deal the US fought for—and provisions to increase minimum labor standards for workers in participating countries.
My colleague Ana Campoy points out that the deal is likely to be particularly bad for US farmers. If the US had participated in the deal, pork, beef, and wheat exports to countries like Japan and Singapore would have risen. Now, instead, the US will be less competitive, as exports of those products from CPTPP member counties will now be less expensive in such markets.
The nonprofit Peterson International Institute for Economics estimates that the total GDP of participating countries will increase by about 1%, with the largest gains for Vietnam and Peru. They also estimate that while total US income would have increased by about $130 billion dollars due to the deal, the US is now set to lose about $2 billion in income because US exports will be less competitive in CPTPP nations.