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1 1 (October 17, 2022)

handle is hein.crs/govejcf0001 and id is 1 raw text is: Congressional Research Serico Informing the Iegitive debate since 1914 Updated October 17, 2022 CPTPP: Overview and Issues for Congress The Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) is a free trade agreement (FTA) formed by the 11 remaining members of the proposed Trans-Pacific Partnership (TPP) after the Trump Administration withdrew the U.S. signature from TPP in 2017. CPTPP, which retains most of TPP's provisions, reduces and eliminates tariff and non-tariff barriers, and establishes enforceable trade rules. CPTPP is currently in effect for nine members, entering into force for Australia, Canada, Japan, Mexico, New Zealand, and Singapore in late 2018; Vietnam in 2019; Peru in 2021; and Malaysia in 2022. Brunei and Chile have signed, but have not yet fully ratified the deal. The United Kingdom (UK), China, Taiwan, and Ecuador applied to join CPTPP in 2021, while others such as South Korea are considering applying. Members of Congress may have interest in monitoring and shaping the Administration's views on CPTPP, including with respect to * U.S. leadership in regional trade rules. U.S. leadership, including through negotiating objectives mandated by Congress, was largely reflected in CPTPP commitments. TPP was signed under 2015 Trade Promotion Authority (TPA) legislation (P.L. 114-26, now expired) that set negotiating objectives and congressional consultation and notification requirements for U.S. trade agreements. The Obama Administration viewed TPP as a tool to shape or update regional, and potentially global, trade rules to reflect U.S. priorities, especially on issues that existing multilateral agreements at the World Trade Organization (WTO) do not address substantively. Such issues include digital trade, state-owned enterprises (SOEs), labor, and the environment. * U.S. commercial competitiveness. CPTPP involves three of the top four U.S. trade partners and may expand to other major economies, potentially leading to greater economic integration and trade liberalization among the parties. CPTPP and other regional trade agreements not involving the United States, such as the Regional Comprehensive Economic Partnership (RCEP, see below), may disadvantage U.S. trade with members, as the participants lower their trade barriers to other members but not the United States, and possibly set rules that may not align with U.S. interests. * China's potential accession. China's economic heft and contrasting approach to some U.S. priority trade issues (e.g., SOE and digital trade disciplines) suggest its potential membership would have implications for U.S. interests in the region. The Biden Administration has stated it is not currently interested in joining CPTPP, but recognizes the region's economic importance, and in May 2022, launched the Indo- Pacific Economic Framework for Prosperity (IPEF, see below). Some Members of Congress, industry, and other stakeholders have urged the Administration to consider participation in CPTPP or other initiatives that seek to open markets further in the region. Previously, the Trump Administration cited a preference for bilateral trade talks and concerns over TPP provisions, such as on rules of origin, in its decision to withdraw from the agreement. U.S. Trade w -h CPTPP Merbers The United States has significant trade and investment with the 11 CPTPP members, which, combined, accounted for 41% of U.S. goods trade (2021) and 23% of both U.S. services trade and foreign direct investment (FDI) stock (2020). Including all 15 CPTPP signatories and current applicants, these shares rise to 61%, 39%, and 37%, respectively, with China accounting for 14% of U.S. goods trade and the UK accounting for 10% of services trade and 13% of FDI. As noted, CPTPP may disadvantage competition of U.S. firms in the region, especially in markets without existing U.S. FTAs, such as Japan and Vietnam (Figure 1); a limited U.S.-Japan agreement, in effect since 2020, has reduced some bilateral tariffs, including on some top U.S. exports, such as beef. Figure I. Current and Potential CPTPP Members without an Existing U.S. FTA 2021 Goods Trade U ud Avg. VFN 'w TarIftt CPTPP Japan 44% Members vietnam 9.5 Maayia rS2 5 7% New Zealand - 1.9% Signed* Brunei C 0 Accession China 7.5% Requested Taiwan 6.5% UK T57% Ecuador *signed, not ratified. Source: CRS with trade data from U.S. Census Bureau and tariff data from the WTO and the UK trade ministry. Note: MFN = most-favored nation tariff rates applicable on imports from WTO members (i.e., tariffs generally faced by U.S. exporters). CPT PP Commktments CPTPP incorporates by reference the 30 original chapters of the TPP text, including its dispute settlement (DS) mechanism. However, it suspends indefinitely 22 specific TPP commitments (see below), which had been U.S. priorities and which CPTPP parties may reinstate through consensus. CPTPP also establishes administrative procedures (e.g., accession) that replace those in TPP. Side letters to CPTPP clarify how specific commitments apply to certain parties (e.g., a five-year exemption from DS regarding data flow commitments and a three-year exemption related to labor obligations apply to Vietnam). Key provisions (with suspensions from TPP noted) include

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