How to read the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The CPTPP is a short-form treaty that incorporates by reference all of the provisions of the Trans-Pacific Partnership (TPP) agreement except those explicitly identified for suspension. This means that all chapters contained in the TPP are part of the CPTPP. In addition to suspending certain sections of the TPP text, the CPTPP also contains some unique provisions that affect aspects of the Agreement such as its administration and rules regarding entry into force, withdrawal and accession. Additionally, a number of side letter agreements signed bilaterally between CPTPP members are important to read in conjunction with the overarching text of the Agreement.
Table of Contents
- General Definitions and Initial Provisions
- National Treatment and Market Access for Goods
- Rules of Origin and Origin Procedures
- Textiles and Apparel Goods
- Customs Administration and Trade Facilitation
- Trade Remedies
- Sanitary and Phytosanitary Measures
- Technical Barriers to Trade
- Cross-Border Trade in Services
- Financial Services
- Temporary Entry for Business Persons
- Electronic Commerce
- Government Procurement
- Competition Policy
- State-Owned Enterprises and Designated Monopolies
- Intellectual Property
- Cooperation and Capacity Building
- Competitiveness and Business Facilitation
- Small and Medium-Sized Enterprises
- Regulatory Coherence
- Transparency and Anti-Corruption
- Administrative and Institutional Provisions
- Dispute Settlement
- Exceptions and General Provisions
- Final Provisions
The preamble is the introductory statement in the Agreement. It outlines the joint aspirations of the CPTPP parties and provides a basis for the interpretation of the Agreement. It reflects the parties’ commitment to promoting economic integration and cooperation between themselves and to maintaining open markets, increasing world trade, and creating new economic opportunities for people of all incomes and economic backgrounds. It provides recognition of inclusive values, including the importance of corporate social responsibility, environmental protection and enforcement, sustainable development, labour rights, cultural identity and diversity, and the elimination of bribery and corruption. Parties also resolve to support the growth and development of micro, small and medium-sized enterprises by enhancing their ability to participate in and benefit from the opportunities created by the Agreement.
In addition to incorporating by reference the preamble of the original TPP, the CPTPP preamble reaffirms the importance of gender equality, indigenous rights, inclusive trade, and traditional knowledge.
1. General definitions and initial provisions
Many CPTPP parties have existing agreements with one another. The initial provisions and general definitions clarify the relationship between the CPTPP and other existing international trade agreements between the parties, including World Trade Organization (WTO) agreements and bilateral and regional agreements. It also provides definitions of terms used in more than one chapter of the Agreement.
2. National treatment and market access for goods
Comprehensive market access for goods is a key element of any free trade agreement. This access is achieved by a commitment of the parties to reduce or eliminate tariffs, to not apply restrictions or prohibitions on the import or export of goods, and to treat imported products no less favourably than similar goods produced domestically. Such commitments are contained in the CPTPP chapter on national treatment and market access for goods and the accompanying tariff elimination schedules.
The CPTPP enhances market access for exports of Canadian goods through the commitment by all parties to reduce or eliminate tariffs across all sectors of their economies. Upon entry into force of the Agreement, 86% of CPTPP parties’ tariff lines will be duty-free for originating goods. This amount will reach 99% within 15 years through the gradual phase-out of remaining duties, subject to each party’s specific commitments.
National treatment: Each party has committed to the obligation to treat imported and domestically produced goods equally. This means that a good imported from another party cannot be subject to more burdensome conditions such as higher taxes, stricter product regulation, or broader restrictions on its sale than for a similar domestically produced good. Consistent with the multilateral trade rules of the WTO, national treatment under the CPTPP applies once a good has entered the market of another party.
This article also provides clarification that national treatment principles apply to regional levels of government (e.g. in the case of Canada, at the provincial or territorial level).
Elimination of customs duties: Under the CPTPP, all parties have committed to eliminating or reducing tariffs on goods imported from other parties, provided they qualify as originating under the CPTPP chapter on rules of origin and origin procedures, including its product-specific rules of origin annex. Most tariffs will be duty-free upon entry into force of the Agreement, while tariffs on some goods will be eliminated gradually over specific phase-out periods that vary by party and tariff line. The precise timing and value of reductions for all tariff lines is set out in the tariff elimination schedule of each party that is appended to the chapter on national treatment and market access for goods. These schedules are available online.
For Canada, market access gains due to tariff elimination are significant in Japan, as well as in Vietnam and Malaysia, countries with which Canada did not previously have free trade agreements (FTAs) and where tariffs remain high.
Canadian exporters will benefit from tariff elimination across a number of sectors, for example:
- Agriculture: This is a key export interest for Canada, particularly in Japan and Vietnam, where Canadian agricultural exports currently face high tariffs. Upon entry into force of the CPTPP, more than three quarters of Canada’s agriculture and agri-food products will benefit from immediate duty-free access.
- Fish and seafood: Under the CPTPP, 100% of tariffs will be eliminated for exports of Canadian fish and seafood products. Upon entry into force of the Agreement, the vast majority of these products will be duty-free, with remaining tariffs to be phased out over periods of up to 15 years.
- Forest products and value-added wood products: Under the CPTPP, tariffs will be eliminated on forestry and value-added wood products, which will create new opportunities in key markets such as Japan, Malaysia and Vietnam.
- Industrial goods: Under the CPTPP, 100% of tariffs will be eliminated on industrial goods and consumer products. The majority of Canadian industrial goods exported to CPTPP countries will be duty-free immediately upon entry into force, with most remaining tariffs on industrial goods to be eliminated within 10 years.
Waiver of customs duties: The CPTPP prohibits a party from making the waiving of customs duties applied to imports into its territory conditional upon additional requirements such as export levels, supply or production of other goods or services, and foreign exchange flows. The prohibition of such conditions is included in the Agreement to prevent the creation of indirect and unnecessary barriers to trade.
Goods re-entered after repair and alteration: A good of a party, regardless of its origin, can re-enter that party on a duty-free basis after having been exported to the other party for repair or alteration. However, for ships, boats and floating structures that re-enter Canada, the value of the repair or alteration to these goods is subject to customs duties according to Canada’s tariff elimination schedule.
Duty-free entry of commercial samples of negligible value and printed advertising material: This article provides for duty-free trade of commercial samples of negligible value and printed advertising material of any origin among parties. This will assist traders in carrying out market development activities in a more cost-efficient manner.
Temporary admission of goods: Parties are required to provide duty-free admission for goods of any origin temporarily imported from another CPTPP party related to broadcasting, display at conventions, sports activities, and transporting other materials without adding measures that are unnecessarily burdensome or restrictive.
Ad hoc discussions: This article establishes a mechanism to facilitate discussion between parties related to any issues arising under the chapter on an as-needed basis. The article also outlines the associated time frames and notification requirements for initiating such a discussion to further support transparency and communication between parties.
Import and export restrictions: Beyond tariffs, a party may not maintain or adopt prohibitions or restrictions on the import or export of any good from or to the other party, except under the specific circumstances set out in the text of the Agreement. These include situations of short supply, conservation of natural resources where domestic consumption or production is also restrained, and restrictions imposed in conjunction with domestic price stabilization schemes.
Also, to the extent that a party maintains an import or export prohibition or restriction on a good (e.g. dangerous materials) of a non-party, that party may continue to do so. This includes cases where a party restricts or prohibits imports of goods of the non-party that have arrived via the other party, as well as exports intended for a non-party that would have been shipped indirectly through the other party.
For Canada, the provisions on import and export restrictions under the CPTPP do not apply to measures concerning:
- export of logs
- export of unprocessed fish pursuant to applicable provincial legislation
- use of ships in the coasting trade of Canada
- Canadian excise duties on high-strength ethyl alcohol
- internal sale and distribution of wine and distilled spirits
- importation of used vehicles that do not meet Canada’s safety and environmental requirements
Remanufactured goods: This article provides clarification that remanufactured goods are distinct from used goods and that they are not to be subjected to import prohibitions or restrictions as outlined in Article 2.10.1. Remanufactured goods are distinct from used goods in that they undergo significant processing beyond cleaning, repair and maintenance and are thus restored to a much higher level of functionality than a repaired or used good.
Import licensing: Parties are permitted to require that importers possess a licence as a prior condition for importation into their customs territory. Such licences may be required for otherwise restricted goods or in some cases to help monitor and allocate the quantity of imports. In order to ensure that import licensing procedures are not implemented in a manner that creates an unnecessary barrier to trade, the CPTPP requires that parties abide by the WTO agreement on import licensing as well as additional notification, publication and consultation requirements.
Transparency in export licensing procedures: Similar to the chapter’s article on import licensing, the article on export licensing procedures requires parties to comply with certain notification, publication and consultation requirements. Whereas the CPTPP incorporates import licensing requirements through reference to the WTO agreement on import licensing, there is not a similar WTO agreement on export licensing. Therefore, this article is designed to provide enhanced transparency for CPTPP parties’ export licensing procedures.
Administrative fees and formalities: The CPTPP prohibits the imposition of fees and other charges by a party in connection with the import from or export of goods to another party, unless the fee or charge is commensurate with the cost of services provided. This prevents a party from using such fees or charges as an indirect barrier to trade and thus ensures that the tariff elimination outcomes are not undermined. An example of a permissible fee would be one for conducting an inspection of imports before they are cleared to enter the market; in this case, a party may charge a fee that reflects the cost of actually carrying out that inspection. This article also requires that each party publish the fees imposed on importation and exportation online to increase the transparency of such costs.
Export duties, taxes or other charges: This article prohibits the imposition of additional duties, taxes or other charges on exports destined to another party that are not also imposed on that good when sold domestically.
Publication: Parties are required to publish information related to various customs procedures and associated fees in order to further enhance the transparency of such obligations.
Trade in information technology products: CPTPP parties are required to participate in the WTO Information Technology Agreement (ITA). The WTO ITA requires the elimination of customs duties on a most favoured nation (MFN) basis for high-technology products such as computers, telecommunication equipment, and related components. Notwithstanding this obligation, Mexico and Chile are required to endeavour to become participants subject to the completion of their respective internal legal procedures.
Committee on trade in goods: The CPTPP establishes a committee to address, at the request of any party, all issues arising during the implementation and application of the Agreement pertaining to the trade in goods. A separate committee is also established to deal specifically with issues related to agricultural goods.
Agricultural export subsidies: Export subsidies are subsidies contingent on export performance. This article prohibits parties from utilizing export subsidies for agricultural goods exported to another party.
Export credits, export credit guarantees or insurance programmes: This article commits parties to work multilaterally through the WTO to develop new disciplines on the use of government financial support in the form of export credits and export credit guarantees or insurance programs provided to foreign buyers to assist in the financing of the purchase of agricultural goods from national exporters.
Agricultural export state trading enterprises: State trading enterprises are governmental and non-governmental enterprises that have been granted exclusive or special rights or privileges regarding how they influence the level or direction of imports or exports through their purchases or sales. This article commits parties to working together through the WTO to address the trade distorting privileges of state trading enterprises responsible for exports in the agricultural sector.
Export restrictions—food security: This article permits parties to temporarily impose an export restriction on agricultural goods to prevent or relieve a critical food shortage. The article outlines the criteria for imposing such an export restriction as well as notification, consultation and timing requirements.
Committee on agricultural trade: This article establishes a committee on agricultural trade to address, at the request of any party, all issues pertaining specifically to trade in agricultural goods, including issues arising in the implementation and application of the Agreement.
Agricultural safeguards: Under the WTO agreement on agriculture, parties are permitted to temporarily impose additional tariffs, known as special safeguards, on specific agricultural products if import volumes exceed defined volumes or if import prices fall below defined prices. In the CPTPP, parties have committed to exempting imports of agricultural goods from other parties that are subject to preferential treatment from increased tariffs in the event they were to apply a special safeguard. However, Japan may apply a separate safeguard measure, known as an agricultural safeguard measure, to imports of specific agricultural goods from other parties. This measure must be applied in accordance with certain timing and transparency conditions.
Trade of products of modern biotechnology: This article provides a more transparent and predictable trading environment for products of modern biotechnology. It contains provisions specifically aimed at facilitating the management of unintentional occurrences of low level presence for plant products of modern biotechnology and at reducing the likelihood of such occurrences. It also establishes a working group as part of the committee on agriculture trade dedicated to information exchange and cooperation on trade-related matters associated with products of modern biotechnology.
Tariff-rate quota administration
Scope and general provisions: Tariff-rate quotas (TRQs) involve the application of a preferential tariff rate for a defined quantity of imports and a higher tariff rate applied for imports above that quantity. The CPTPP acknowledges each party’s right to administer TRQs in accordance with WTO obligations and incorporates the TRQs of all parties into their respective tariff elimination schedule. Parties must also ensure that their respective TRQs are administered in a transparent manner.
Administration and eligibility: Parties are permitted to modify elements of their TRQ administration, such as the size of quotas and the eligibility of allocation recipients, only if changes are made pursuant to certain transparency and consultation requirements and if no other party objects to such changes.
Allocation: An important element in administering a TRQ is determining the allocation policies and eligibility criteria for preferential access. This article provides specific conditions related to how CPTPP parties allocate their TRQs.
Return and reallocation of TRQs: In the event that a TRQ allocation is not fully utilized, the CPTPP requires that parties establish a mechanism to reallocate the remaining share in a timely manner so that the TRQ can be filled to the maximum extent possible.
Transparency: This article provides additional transparency requirements related to TRQ administration to ensure that TRQs are administered in a manner that encourages free and fair trade between CPTPP parties.
3. Rules of origin and origin procedures
Rules of origin and origin procedures are an essential part of any free trade agreement (FTA). They provide the basis for traders and the parties to determine whether a good is entitled to receive preferential tariff treatment under the Agreement.
The rules of origin ensure that only goods that have undergone sufficient production within the CPTPP free trade area are eligible for preferential tariff treatment. Goods that do not satisfy the CPTPP rules of origin are considered non-originating and are not eligible for preferential tariff treatment under the CPTPP. Canada and the CPTPP countries aimed for rules of origin that are clear, are as simple as possible and leave little room for administrative discretion. The rules of origin are also intended to reflect Canadian and CPTPP country supply chains and production processes to enable to the fullest extent possible eligibility for preferential tariff treatment, while advancing each party’s respective sectoral interests.
The origin procedures are used to ensure that the preferential tariff treatment under the Agreement only applies to goods that meet the CPTPP rules of origin. They contain obligations for importers, exporters and producers if the importer wants to take advantage of the reduced or free rate of duty offered on importations of goods under the CPTPP and include common approaches for importers, exporters, and the parties with regard to areas such as certification of origin, record keeping, and origin verification.
Key provisions—Section A: Rules of origin
Originating goods: The originating goods article sets out three basic rules for determining whether a good is originating:
- Goods are originating if they are wholly obtained, such as goods that are grown, raised, caught, or extracted in Canada or a CPTPP country.
- Goods are originating if they are produced in Canada or a CPTPP country entirely from originating materials.
- Goods are originating if they are produced in Canada or a CPTPP country from non-originating materials that undergo production in Canada or a CPTPP country, such that the resulting good satisfies the applicable product-specific rule of origin (PSRO) set out in Annex 3-D.
Product-specific rules of origin: All of the CPTPP PSROs in Annex 3-D describe the required changes that non-originating materials must undergo in order for a good produced from such materials to be considered originating. For many goods, the PSRO provides two options: 1) one that requires a change to the tariff classification of the good, but that excludes the use of certain non-originating materials, and 2) an alternative that allows for the use of the excluded non-originating materials, provided that a regional value content (RVC) requirement is fulfilled. The Agreement provides four calculation methodologies for determining if a good satisfies an RVC requirement:
- Build-down method: based on the value of all non-originating materials used in production, relative to the value of the good
- Focused value method: based on the value of certain non-originating materials used in production, relative to the value of the good
- Build-up method: based on the value of originating materials used in production, relative to the value of the good
- Net cost method: based on the cost of all non-originating materials used in production, relative to the total cost of the good. Net cost only applies to certain automotive goods. Article 3.9 includes additional details and definitions associated with the net cost method.
Three articles (materials used in production, value of materials used in production, and further adjustments to the value of materials) set out the requirements relating to PSROs with value requirements. They also make clear that materials that qualify as originating will be treated as originating when they are used in the production of another good in a CPTPP party.
The CPTPP PSRO annex also includes an appendix setting out provisions related to the rules of origin for passenger cars, light trucks and parts. Under these provisions certain parts can obtain originating status based on having undergone specific manufacturing operations. For example, an engine may be considered originating if it undergoes a complex assembly operation in a CPTPP party, and a body panel may be considered originating if it is stamped in a party. This appendix also sets out limits on the value of materials that can be counted toward the RVC of a vehicle based on these operations.
Accumulation: Materials that qualify as originating based on production in any CPTPP country will be treated as originating when those material are used to produce a good in another CPTPP country. In addition, any production undertaken in a CPTPP country on a non-originating material may be counted toward the originating status of goods subsequently produced with the material.
De minimis: A good that does not qualify as originating is to be treated as originating if the value of the non-originating materials used in production is less than 10% of the value of the good.
Fungible goods or materials: In cases in which originating and non-originating fungible materials (i.e. materials that cannot be distinguished from one another for origin purposes such as oil or grains) are stored together, the Agreement allows producers to use an inventory management system to determine the proportion of materials that are originating for the purposes of ultimately determining the originating status of goods made using such materials. Similarly, for goods, an inventory management system can be used to demonstrate that certain goods are originating, even if those goods are stored in a manner that led to the commingling of originating and non-originating goods.
Transit and transshipment: Under the transit and transshipment article, goods that qualify as originating under the CPTPP rules of origin may transit through a non-party provided that they do not undergo any production outside Canada or a CPTPP country, other than unloading, reloading, or an operation necessary to preserve them in good condition or to transport them to the other party. In addition, to retain their originating status, goods that transit through a non-party, or are stored outside of Canada or a CPTPP party, must be under customs control at all times.
Other provisions: Materials such as accessories, spare parts, tools and instructional materials, packaging materials, and packing materials are disregarded for origin purposes if the good is subject to a tariff shift PSRO. However, if a good is subject to a PSRO with a value requirement, the value of these materials, if non-originating, is taken into account in determining whether the good is originating.
Key provisions—Section B: Origin procedures
Certification of origin: The proof of origin that is used to certify that the good meets the rules of origin is referred to as a certification of origin and consists of a set of minimum data requirements that are provided in an annex of the origin procedures. The certification of origin may be placed on any document, including an invoice, and does not need to follow a prescribed format. Unlike Canada’s other FTAs in which the exporter completes the certification of origin, the CPTPP allows the importer, the exporter or the producer to choose to complete the certification of origin. The parties are obligated to allow the certification of origin to be provided electronically and in no prescribed format, but it must contain the minimum data requirements set out in the origin procedures. The trader may also choose to complete a single certification of origin for multiple shipments of identical goods for a period of up to one year.
The parties have agreed to waive the requirement for the certification of origin where the value of the goods is under US$1,000 or its equivalent in the importing party’s currency. In Canada, the prescribed certification of origin is waived for commercial goods valued at Can$1,600 or less. However, the importer is required to have a commercial invoice with a statement that the good is originating. The importing party may also waive the requirement for or not require the importer to present a certification of origin for a good. The Canada Border Services Agency (CBSA) does not require the certification of origin to be presented at the time of importation. In Canada, for casual goods (i.e. non-commercial goods acquired in a CPTPP country that are not intended for resale), the requirement to have a certification of origin is waived.
Importer obligations: If an importer chooses to claim the preferential tariff treatment upon importation, the importer must declare that the required certification of origin is in their possession and provide, upon request, a copy of the certification of origin. Should the importer become aware of incorrect information in the certification of origin affecting the originating status of the good, they are required to immediately notify, in Canada, the CBSA by correcting their import declaration and paying any duties owing. An importing party shall not subject an importer to a penalty for making an invalid claim for preferential tariff treatment if the importer voluntarily corrects the claim and pays any applicable duty.
Exporter obligations: When an exporter or producer chooses to complete a certification of origin, they must provide it upon request by the exporting party. Furthermore, the exporter or producer also has an obligation to notify every person and party to which they provided the certification of origin of any change that could affect the accuracy or validity of the certification of origin, once they become aware of any incorrect information contained in the certification of origin. It should also be noted that a false certification of origin or other false information provided by the exporter or producer will result in similar legal consequences as would apply to an importer.
Record keeping: It establishes the type of documentation and records, as well as the time period for their maintenance, for the exporter, producer, or importer related to proving the originating status of the good and with respect to claiming the preferential tariff treatment under the CPTPP. The importer, exporter, or producer may choose to maintain these records in any medium provided they can be promptly retrieved.
Origin verification: The origin procedures also set out a process for the importing party to determine whether a good meets the rules of origin and is entitled to preferential tariff treatment. The origin verifications shall be conducted by communicating directly with the importer and whoever certified the origin of the good and by the following means: a written request for information from the importer, exporter, or producer of the good or a verification visit to the premises of the exporter or producer. In addition, the CPTPP allows a party to choose to conduct verification visits of textiles and apparel goods in an alternative manner as provided under the textiles and apparel goods chapter (Chapter 4).
The verification procedures also identify the information that must be included in the request for information or in the notice to conduct a verification visit. This includes the identity of the government authority issuing the request, the reason for the request, and in the case of a verification visit, a request seeking consent from the exporter or producer whose premises the government authority wishes to visit.
Once the verification of origin is concluded, the importing party is required to provide the importer, exporter or producer who provided information or certified the origin of the good with the results of the verification. If the importing party intends to deny preferential tariff treatment prior to issuing a written determination, it must provide those persons who provided information a period of at least 30 days to submit additional information related to the origin of the goods.
Refunds: An importer may apply for a refund of excess duties paid after importation if the importer did not claim preferential tariff treatment at the time of importation. In order to apply for a refund, the importer must make a claim for preferential tariff treatment and provide a copy of the certification of origin and if required other documents related to the importation of the good no later than one year after the date of importation. Canada will go beyond that minimum requirement and allow four years from the date of accounting for importers to claim a refund.
Confidentiality: The origin procedures require that any information gathered pursuant to the administration of the rules of origin shall be protected in accordance with the provisions and shall be limited from disclosure that could prejudice the competitive position of the person providing the information.
4. Textiles and apparel goods
The CPTPP includes a stand-alone chapter that includes specific provisions related to textiles and apparel goods. In addition, many of the provisions within the rules of origin chapter (Chapter 3) also apply in determining the originating status of textiles and apparel goods. The textiles and apparel goods chapter also includes a product-specific rules of origin (PSRO) annex (Annex 4-A) as well as a short supply appendix (Appendix 1) for textiles and apparel goods. This chapter includes unique enforcement provisions to effectively administer the rules of origin specific to the textiles and apparel industry. As well, the chapter includes an alternative approach to origin verification visits and enhanced cooperation among the parties. The approach is designed to promote compliance and to allow the parties to prevent fraudulent acts related to this particular sector from going undetected.
Rules of origin and related matters: The rules of origin and related matters article sets out rules of origin provisions specific to textiles and apparel. For example, it includes a de minimis provision that allows textile goods that do not qualify as originating under the PSROs to be originating if the total weight of the non-originating materials is less than 10% of the total weight of the textile good. The de minimis provision for apparel and made-up textile goods (e.g. bedsheets) requires that the total weight of all the non-originating fibres and yarns in the component that determines the tariff classification of the good be less than 10% of the total weight of that component. For example, in the case of men’s shirts, the fabric that makes up the main body of the shirt would be considered the component that determines the tariff classification of the shirt, and not any other different fabrics, such as the collar or a pocket.
This article includes a provision for textile and apparel sets, which requires that each of the goods in a set of apparel be originating or that the total value of the non-originating component goods in the set be less than 10% of the total value of the set.
This article also establishes a short supply list of textile and apparel materials (Appendix 1 to Annex 4-A). These are materials that the parties agree are not being produced in commercial quantities in any of the CPTPP parties and that may be imported from a non-CPTPP country and used to produce an originating textile and apparel good.
Finally, the article establishes that certain hand-crafted folklore and cottage industry goods exported to another CPTPP party be eligible for duty-free or preferential tariff treatment. This provision is meant to facilitate trade and make it more inclusive for certain groups that may not otherwise take advantage of an FTA.
Cooperation: The textiles and apparel goods chapter provides for cooperation among the parties for the purposes of assisting each other in the enforcement of laws and regulations related to customs offences and to ensure the accuracy of claims for preferential duty rates under the CPTPP. The type of cooperation that a party can request, and the method to request such cooperation, are also identified.
Verification: Under this chapter, the importing party may verify the origin of a textile or apparel good or whether any customs offences have been committed. A party may conduct a verification of origin in accordance with the procedures set out in the rules of origin and origin procedures chapter (Chapter 3) or this chapter to verify whether the good meets the rules of origin and is entitled to the CPTPP preferential tariff treatment. The textiles and apparel goods chapter sets out an alternative approach for a party to conduct verification visits that relate specifically to site visits to an exporter or producer of textiles or apparel goods.
This chapter also requires that when requesting a site visit, the importing party must notify the other party of the proposed dates, indicate the number of exporters or producers to be visited and identify whether any assistance is required by the other party. A period to consent will not be provided; however, the importing party must request permission from the exporter or producer to access the relevant records or facilities.
Confidentiality: Any information gathered pursuant to the administration of the chapter must conform to confidentiality standards under the domestic laws of the parties. This information cannot be used for purposes other than the administration and enforcement of this chapter, except with the permission of the provider of the confidential information.
5. Customs administration and trade facilitation
Trade facilitation is a component of broader trade liberalization and ensures that traders can take advantage of the market access benefits in an FTA. Governments, with the support of their trade and business communities, increasingly recognize that the transaction costs associated with international trade can be reduced through the harmonization, modernization, simplification and standardization of customs and border procedures. The trade facilitation measures Canada and the parties to the CPTPP have set out in this chapter apply to all trade in goods.
Customs cooperation: The Agreement commits Canada and the other CPTPP parties to cooperate, through information sharing, to promote the application of and compliance with trade facilitation measures, including providing other parties with advance notice of any administrative, legal, or regulatory implementation, change, or modification applicable to this chapter. This article also provides that parties may request specific confidential information from another party should the requesting party have a reasonable suspicion of unlawful activity based on relevant factual information obtained from public or private sources.
Advance rulings: The CPTPP requires each party to provide advance rulings on tariff classification, the origin of a good, as well as the application of customs valuation criteria within 150 days of receiving the request and the necessary information. For Canada, advance rulings are provided for inquiries concerning tariff classification and the origin of a good, while national customs rulings are issued in response to valuation inquiries. Rulings must remain in effect for at least three years, but may be revoked or modified if there is a change in the law, facts, or circumstances on which the ruling was based, or if it was based on inaccurate or erroneous information. The CPTPP parties will endeavour to make advance rulings publicly available, subject to any domestic confidentiality requirements.
Response to requests for advice or information: The CPTPP parties have committed to providing advice or information to traders on issues such as the requirements to qualify for quotas, the application of duty drawback and duty relief, the eligibility requirements for goods under the goods re-entered after repair and alteration article (Article 2.6), country of origin marking, or other matters the parties may agree upon.
Review and appeal: Ensures that any person receiving a customs determination has access to recourse through administrative or judicial review.
Automation: CPTPP parties shall endeavour to use international standards related to the release of goods, including making electronic systems accessible, employing electronic systems for risk analysis and targeting, and implementing common standards and elements for import and export data based on the World Customs Organization’s data model. Each party will also work toward the establishment of a facility that allows importers and exporters to electronically complete import and export requirements at a single entry point.
Express shipments: Commits each party to adopting or maintaining customs procedures for express shipments while upholding appropriate customs control. These procedures will allow for single submissions of information to cover multiple goods in an express shipment and for this information to be submitted and processed before the arrival of the goods to facilitate expedited release.
Penalties: Outlines commitments from each CPTPP parties to adopt or maintain measures allowing for the imposition of proportionate and non-discriminatory penalties in case of breach of a party’s customs laws and for the voluntary disclosure of an error to be treated as a mitigating factor when establishing a penalty.
Risk management: The Agreement requires parties to adopt or maintain a risk assessment system that enables its customs administration to focus on high-risk goods and to simplify the release process for low-risk goods.
Release of goods: Establishes commitments to maintain procedures allowing for the efficient release of goods prior to the final determination of payment of duties, taxes and fees based on simplified electronic measures.
Publication: Stipulates that Canada and the other CPTPP parties shall publish information relevant to the import and export of goods, maintain enquiry points to receive inquiries regarding customs matters, and provide the informed public with opportunities to comment on proposed changes to regulations and policies related to customs matters.
Confidentiality: Requires each party to ensure that confidential information, or information that is provided on a confidential basis, is kept confidential. Parties must also protect against the disclosure of information that could prejudice the competitive position of the person providing the information. When information is shared between CPTPP parties, the country providing the information may require written assurance that it will be held in confidence and only used for the reason specified in the request.
6. Trade remedies
Countries use trade remedies to protect their industries from unfair, trade-distorting practices of other trading partners and from surges in imports that cause harm to domestic producers. There are three main types of trade remedies:
- Safeguard measures: temporary duties applied in response to sudden increases of imports in a specific sector
- Anti-dumping duties: imposed when exporters sell goods to importers at a lower price than the domestic price, or at unprofitable prices
- Countervailing duties: imposed to protect domestic producers from subsidy-aided foreign exports
Canada has long held the view that trade remedies should be applied consistently from country to country and that the WTO’s multilateral framework is therefore best suited to develop trade-remedy disciplines. Accordingly, the trade remedies chapter of the CPTPP is structured mainly as a reaffirmation of the rights and obligations of Canada and the CPTPP countries with respect to WTO agreements covering trade remedies.
The trade remedies chapter reaffirms Canada and CPTPP parties’ WTO rights and obligations concerning anti-dumping, countervailing and global safeguard measures. This chapter also reinforces certain international best practices related to transparency and procedural fairness in anti-dumping and countervailing duty investigations. Furthermore, the chapter provides for transitional safeguard measures to protect a domestic industry from injury following a surge in imports resulting from the elimination of duties pursuant to the Agreement.
Safeguard measures: For global safeguard measures, the parties’ WTO rights and obligations are affirmed, and the chapter simply contains an additional notification requirement among parties. The chapter also provides for a party’s right to apply a transitional safeguard under exceptional circumstances only, that is, during the time tariffs are reduced or eliminated under the CPTPP. A safeguard can be applied provided that, as a result of the tariff liberalization, imports from one or multiple parties are being imported in such quantities as to cause or threaten to cause serious injury to a party’s domestic industry. Transitional safeguards may take the form of a suspension of further tariff reductions or a tariff increase.
Anti-dumping and countervailing duties: The parties’ WTO rights and obligations under GATT 1994, the Anti-Dumping Agreement and the Agreement on Subsidies and Countervailing Measures, are reaffirmed. An annex recognizes certain best practices related to transparency and procedural fairness in the conduct of anti-dumping and countervailing duty investigations.
7. Sanitary and phytosanitary measures
The CPTPP chapter on sanitary and phytosanitary measures (SPS) affirms the parties’ rights and obligations under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement). This maintains the rights of parties to take measures necessary for the protection of human, animal or plant life or health, provided that such measures are based on scientific principles, are no more trade restrictive than necessary, and are not applied in a manner that would constitute a disguised restriction on trade.
The CPTPP SPS chapter is intended to help ensure that CPTPP market access gains for Canadian agricultural and agri-food, fish, seafood and forestry exports are not undermined by unnecessary or unjustified SPS-related trade restrictions; at the same time, the chapter maintains Canada’s ability to establish the necessary measures to address risks to human, plant or animal life or health.
Building on the WTO SPS Agreement, the SPS chapter establishes a series of new commitments, including those concerning regionalization, equivalence, science and risk analysis, import checks and transparency. In addition, the SPS chapter establishes an SPS committee (Committee on SPS Measures) to foster better communication and cooperation among parties and a cooperative technical consultation (CTC) mechanism to allow parties to discuss any matter arising under the SPS chapter.
Overall, the SPS chapter provides greater transparency regarding a party’s SPS regulations and enhances predictability of trade between the parties.
Committee on SPS measures: The Committee on SPS Measures is composed of each party’s government representatives responsible for SPS. It serves as a forum where SPS-related issues can be discussed by experts with a view to facilitating trade; enhancing each party’s implementation of the SPS chapter; facilitating information-sharing and exchange and cooperation among parties; and resolving issues at an early stage.
Adaptation to regional conditions: The adaptation to regional conditions article recognizes the importance of the adaptation of an importing party’s SPS measures to an exporting party’s differing regional conditions as a means to facilitate trade. This means adapting measures based on disease/pests present in a region of a country rather than applying them to the whole country. This article includes provisions for the parties to communicate and share information with respect to their decision-making process for determining regional conditions.
Equivalence: The Agreement’s article on equivalence includes provisions for the importing party to recognize, when feasible and appropriate, the exporting party’s SPS measures as meeting the same level of protection as the importing party’s level of protection. This article establishes a process for the assessment of the equivalence of measures, with the goal being to improve transparency of the decision-making process and thereby enhance predictability of trade.
Science and risk analysis: The science and risk analysis article encourages the parties to conform to international standards, guidelines and recommendations when taking SPS measures that should be science-based and adopted in a transparent manner. The article includes provisions that set out a process for parties when conducting risk analysis and requires that parties consider and select risk management options that are not more trade restrictive than required to meet their appropriate level of protection.
Import checks: The import checks article requires that import checks be carried out without undue delay. If an importing party prohibits or restricts an import on the basis of an adverse result of an import check, it must notify the importer or its agent, the exporter, the manufacturer or the exporting party of the restriction. The importing party must also provide the opportunity for a review of the decision it has made.
Transparency: The transparency article provides for greater transparency in the application of each party’s SPS regulations, including requirements that parties notify all regulations that may have an effect on trade; normally provide a minimum 60-day comment period on proposed measures; and notify and publish adopted SPS measures. Also new is the requirement to allow for comments from interested persons (and not just governments) on proposed SPS measures, and for the setting of reasonable deadlines in the event interested persons request an extension to comment; in addition, there is an obligation to make available written comments, or a summary of written comments, that a party has received from the public.
Cooperative technical consultations: The SPS chapter establishes a cooperative technical consultations (CTC) mechanism as an alternative means for parties to pursue any outstanding issues arising from the CPTPP SPS chapter. The CTC mechanism helps to ensure that technical discussion takes place on an issue prior to the issue being taken to dispute settlement. If required, for the majority of the chapter provisions, the parties have recourse, under the SPS chapter, to the CPTPP dispute resolution provisions.
8. Technical barriers to trade
The protection of health, safety and the environment is accomplished through regulatory measures such as technical regulations, standards and conformity assessment. For instance, electrical devices such as cellphones must conform to a standard for radiation levels in order to ensure they are safe for use. In an international trade context, measures that are discriminatory or that create unnecessary obstacles to trade are referred to as “technical barriers to trade” (TBT). Trading partners negotiate commitments related to TBT in trade agreements to ensure regulations are no more restrictive of trade than necessary to meet a party’s legitimate objectives.
The TBT chapter incorporates and builds on the key provisions of the WTO Agreement on Technical Barriers to Trade and sets out provisions that help prevent and address disruptions created by regulations and associated testing or certification requirements in Canada and the other CPTPP parties. The chapter complements the commitments made by the CPTPP parties by helping to ensure that the market access gains made in other parts of the Agreement are not eroded.
Specifically, the TBT chapter encourages the use of internationally accepted standards and acknowledges their role in supporting greater regulatory alignment and in reducing unnecessary barriers to trade; provides national treatment for conformity assessment bodies between the CPTPP parties to help streamline duplicative testing requirements; allows persons of another party to participate in the development of technical regulations, standards and conformity assessment procedures by its central government bodies on terms no less favourable than those that it accords to its own persons; and promotes information exchanges and technical discussions between the parties so that any potential trade concerns are addressed and dealt with as soon as possible. Finally, the chapter is subject to dispute settlement.
In addition to the TBT chapter, the CPTPP includes disciplines in seven specific sectors (cosmetics, medical devices, pharmaceuticals, wines and spirits, information and communications technologies, proprietary formulas for certain food products/additives, and organic products). These sectoral outcomes build on and complement obligations in the TBT chapter, which promote regulatory transparency and predictability while preserving each party’s right to regulate in the public interest to achieve legitimate public policy objectives.
Investment is a key driving force for economic growth and competitiveness in Canada. It spurs innovation, creates jobs and connects Canada to global value chains. Canada has a clear interest in ensuring that Canadian individuals and companies are well protected when they invest abroad, and the CPTPP provides a strong, rules-based framework through which to grow our investment relationship with key Asia-Pacific economies.
The CPTPP sets out clear rules requiring fair and non-discriminatory investment treatment of each other’s investors, while at the same time preserving the parties’ ability to achieve legitimate public policy objectives. The CPTPP provides the basic investment protections found in other trade agreements, including protections against discrimination (national treatment and most-favoured nation commitments); a prohibition on expropriation not for public purpose, without due process and without compensation; protections from abusive treatment, denial of justice and other forms of treatment below the standard of customary international law (“minimum standard of treatment”); and prohibitions on trade-distorting “performance requirements,” such as forced technology transfer or requirements to buy local products. In addition, the CPTPP ensures investors are able to transfer funds related to their investment into and out of the host country and to appoint senior managers without regard to nationality. These commitments can be enforced by investors through a neutral and transparent dispute resolution mechanism.
Scope: Establishes that the disciplines set out in the investment chapter apply to the measures of CPTPP parties in relation to Canadian investors and their investments in CPTPP markets, and vice versa.
National treatment: An obligation that trading partners should not discriminate against each other’s investors to favour their own investors.
Most-favoured nation (MFN): An obligation that trading partners should not discriminate against each other’s investors to favour investors from any other country.
Minimum standard of treatment: An obligation for countries to provide treatment of investments based on customary international law, including fair and equitable treatment, due process, and full protection and security.
Expropriation and compensation: An obligation that protects covered investments from expropriation or nationalization, except in specific circumstances and where accompanied by adequate compensation.
Performance requirements: An obligation that prevents conditions from being placed on covered investments that favour domestic industry, such as requirements that the investor purchase local goods, export a certain percentage of goods the investment produces, or transfer technology to the host country.
Transfers: An obligation that allows investors to freely transfer capital and profits related to an investment into and out of the host country, subject to some exceptions (for instance, in the event of a financial crisis).
Investor-state dispute settlement (ISDS): The investment chapter also includes a mechanism to resolve disputes between states and investors. The CPTPP investor-state dispute settlement mechanism can be found in Section B in the CPTPP investment chapter, and is the enforcement mechanism for the chapter’s rules.
Reservations and exceptions
The CPTPP includes carefully tailored reservations, exceptions and scope limitations to preserve the parties’ ability to regulate in the public interest. Any non-conforming laws and regulations (“measures”) are listed in a party’s Annex I to the Agreement, and sectors or activities where the government wishes to retain future flexibility are listed in Annex II.
A specific exclusion is included for any decisions made by Canada following a review under the Investment Canada Act. And Chapter 29 (Exceptions and General Provisions) includes a novel exception allowing the parties to dismiss claims that challenge a tobacco control measure.
The chapter also includes strong safeguards to prevent abusive and frivolous claims, and general exceptions to ensure the right of governments to regulate in the public interest, including on health, safety and environmental protection.
10. Cross-border trade in services
Services are a key component of global value chains as they help to promote value-added commercial activities. Services represent a high proportion of the value of trade, particularly when accounting for services embodied and embedded in goods, as well as services bundled with goods.
Cross-border trade in services (CBTS) refers to the production, distribution, marketing, sale and delivery of a service, as well as payment for and use of that service. It also applies to measures affecting the access to and use of distribution, transport or telecommunications networks and services in connection with the supply of a service, the presence in the party’s territory of a service supplier of another party, and the provision of a bond or other form of financial security as a condition for the supply of a service. This chapter does not apply to services provided under government authority, financial services, air services (other than those specifically included in Article 10.2), government procurement, and any measure related to subsidies or government support.
Provisions of the CBTS chapter include core obligations found in the WTO and other trade agreements, which maintain a level-playing field for service suppliers by ensuring that Canadian service suppliers will be provided the same treatment granted by other CPTPP partners to third parties and to domestic service suppliers, and that CPTPP partners do not impose quantitative restrictions or require a specific type of legal entity or joint-venture as a condition for the supply of services. CPTPP parties accept these obligations on a “negative-list basis,” meaning that their markets are fully open to service suppliers from CPTPP parties except where they have taken explicit reservations (non-conforming measures) in one of two country-specific annexes.
While maintaining their ability to exercise discretion in the public interest, CPTPP parties agree to ensure that all measures of general application (domestic regulations) affecting trade in services (e.g. relating to qualification requirements and procedures, technical standards and licensing requirements) are administered in an objective and impartial manner; and agree to encourage designated regulatory bodies to work with their counterparts in order to recognize the education, experience, requirements, licenses or certifications in the jurisdictions of the other party via harmonization or mutual recognition agreements/arrangements. Benefits of the chapter can be denied to “shell companies” and to a service supplier owned by non-parties with which a CPTPP party prohibits certain transactions. CPTPP parties furthermore agree to permit the free transfer of funds related to CBTS, subject to certain exceptions. In addition, the chapter includes annexes on the recognition of professional services and express delivery services, and provides for a transition period of three years for the application of the ratchet mechanism to Vietnam (see below for more information on the ratchet mechanism).
National treatment: The national treatment obligation of the CBTS chapter obligates each party to treat service suppliers of the other party no less favourably than it treats its own service suppliers in like circumstances.
Most-favoured nation treatment: Under the most-favoured nation treatment obligation of the CBTS chapter, each party must treat service suppliers of the other party no less favourably than it treats service suppliers of any other country in like circumstances. This ensures that the Agreement continues to grow and modernize as the conditions of trade further liberalize between CPTPP partners.
Market access: The market access obligation of the CBTS chapter prohibits the imposition of certain types of regulatory measures that would restrict the supply of services. Specifically, this obligation prohibits quantitative limitations on the number of service suppliers, the total value of services transactions or assets, the total number of service operations or the total quantity of service output, or the total number of persons who may be employed in a certain service sector. It also prohibits a party from restricting or requiring a specific type of legal entity or joint venture as a condition to supply a service.
Local presence: The local presence obligation of the CBTS chapter prohibits a party from requiring a service supplier of another party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition to supply a service.
Reservations: Reservations are domestic regulatory measures that each party has listed as not conforming to the key obligations of the CBTS chapter. Annex I lists specific existing measures that are captured by the standstill and the ratchet mechanisms. Annex II generally relates to future measures and grants partial or full exclusion of specific sectors or activities from the obligations of the CBTS chapter, allowing parties to preserve policy flexibly in sensitive sectors.
Standstill mechanism: The standstill mechanism ensures that neither party will impose future measures that are new or more restrictive than those that were in place when the CPTPP came into force. The standstill mechanism only applies to measures listed in Annex I.
Ratchet mechanism: The ratchet mechanism ensures that any future regulatory or legal change that makes it easier for service suppliers from one party to access the other party’s market will automatically be locked-in under the Agreement and therefore cannot subsequently be made more restrictive. Like the standstill, the ratchet mechanism only applies to measures listed in Annex I.
Exclusions/exceptions: As in all of Canada’s international trade agreements, Canada has excluded from the CBTS chapter coverage of certain types of services. For example, public services such as health, public education and other social services, fisheries, maritime cabotage, and Aboriginal and minority affairs have been excluded from the obligations of the CBTS chapter accepted by Canada, ensuring that Canadian governments remain free to enact policies and programs based on Canadian priorities and objectives. Similarly, under the CBTS chapter, Canada preserves policy space for cultural policies and programs at all levels of government, recognizing the importance of the preservation and promotion of Canadian culture as well as its various forms of expression.
11. Financial services
The financial services chapter provides a level-playing field between Canada and other CPTPP parties through a framework of general rules tailored to the unique nature of the financial sector.
This includes core obligations such as market access, national treatment and most-favoured-nation treatment and new cross-border commitments on electronic-payment-card services and portfolio management. The chapter also includes protections for financial service investors and dispute settlement provisions tailored to the unique nature of the financial services sector. Finally, the chapter includes a robust prudential exception, ensuring the right of financial sector regulators to take measures to preserve the safety and soundness of the financial system.
Under the CPTPP, references to the minimum standard of treatment (see investment section, key provisions) found in the original TPP financial services text have been suspended. This means that there can be no investor-state dispute settlement (ISDS) claims in respect of this obligation under the financial services chapter.
National treatment: The national treatment article specifies that CPTPP parties must provide equal treatment for domestic and foreign financial institutions.
Most-favoured-nation treatment: Under the most-favoured-nation treatment article, CPTPP parties agree to extend the best terms granted by a party to financial institutions of all other parties.
Market access for financial institutions: The market access article prohibits CPTPP parties from imposing measures that restrict or limit access of financial institutions to a foreign market.
Cross-border trade: This article commits CPTPP parties to allow certain financial services on a cross-border basis. These services include reinsurance and auxiliary financial services (the full list of committed financial services is contained in the annex on cross-border trade in financial services).
Specific commitments: CPTPP parties agreed to allow for the provision of portfolio management and electronic payment services on a cross-border basis, as described in Annex 11-B to the financial services chapter.
Exceptions: The financial services chapter includes a strong prudential carve-out, which safeguards the right of CPTPP parties to take prudential measures to protect investors, depositors and policyholders and to maintain the integrity and stability of the financial system as a whole, without violating the relevant chapters of the Agreement.
Financial services committee: This article establishes a financial services committee, which has responsibility for supervising the implementation of the financial services chapter, considering financial services issues referred to it by a CPTPP party, and participating in the chapter’s investor-state dispute settlement process in respect of prudential measures.
Dispute settlement: The dispute settlement article tailors the CPTPP dispute settlement chapter to address the unique character of disputes between parties in the financial services sector, including financial services expertise requirements for arbitrators when there is a dispute.
Investment disputes in financial services: This article provides tailored investor-state dispute settlement provisions for the financial services sector, including special expertise requirements for panelists, a more limited scope of obligations where investors may utilize investor-state dispute settlement compared to other sectors of the economy, and a special filter mechanism to assess claims where the prudential carve-out is raised as a defence.
12. Temporary entry for business persons
Canada’s temporary-entry commitments in free trade agreements give businesses the ability to move key personnel from one location to another and access highly skilled global talent on a temporary basis. In an increasingly integrated global economy, investors want to see their investments, talk to their partners and get to know the local business environment. Companies operating in Canada need the right person in the right place at the right time to grow their businesses and fulfill contracts.
In the temporary-entry chapter of the CPTPP, Canada’s commitments cover only certain types of business persons and were taken on the principle of reciprocity, meaning that Canada extended these commitments when the same treatment was offered to Canadians. Business persons seeking entry under the Agreement are not subject to numerical restrictions, like quotas, and do not require an economic needs test (for Canada, a labour market impact assessment).
Chapter 12 of the CPTPP includes temporary-entry commitments for four categories of business persons: business visitors, intra-company transferees, investors, and professionals and technicians. Business persons must meet all necessary conditions and requirements designed to protect the Canadian labour market and have to fulfill any applicable licencing or certification requirements to perform their work. The provisions do not allow foreign nationals to enter Canada to look for employment and do not apply to measures regarding citizenship, nationality, residence (including Canadian visa requirements) or permanent employment.
Scope: Establishes the application of the chapter and clarifies that the provisions do not apply to measures related to permanent employment, citizenship, nationality, or residency and that parties maintain the right to regulate the entry of persons into their territory.
Application procedures: Outlines obligations for processing applications, including expeditious processing, providing information to applicants and ensuring fees are reasonable. These obligations ensure administrative procedures do not constitute barriers to entry.
Provision of information: Requires Canada and the other CPTPP parties to make information publicly available about temporary-entry requirements.
Temporary entry for business persons: Each CPTPP party’s market access commitments are described and listed in alphabetical order by CPTPP party in Annex 12-A. Conditions and limitations are specified in Canada’s schedule for business visitors, intra-corporate transferees, investors, professionals and technicians, and spouses. The conditions and limitations for Canadian business persons seeking entry to a CPTPP party are found in the party’s schedule in Annex 12-A. In practice, this means:
- Business visitors: Eligible for up to a six-month length of stay with possible extension. Canada took reciprocal commitments with all CPTPP parties, with different levels of ambition with each party.
- Intra-corporate transferees: Eligible for up to a three-year length of stay with possible extension. Canada took reciprocal commitments for executives and managers with Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand and Peru. Canada took reciprocal commitments for specialists with Australia, Brunei, Chile, Japan, Mexico, New Zealand and Peru. Canada took a reciprocal commitment with Chile for management trainees. Canada took reciprocal commitments for the entry and work authorization of the spouses of intra-corporate transferees with Australia, Brunei, Chile, Japan, Malaysia and Mexico.
- Investors: Eligible for up to a one-year length of stay with possible extension. Canada took reciprocal commitments with Australia, Brunei, Chile, Japan, Mexico, Peru, Singapore and Vietnam. Canada took reciprocal commitments for the entry and work authorization of the spouses of investors with Australia, Chile, Japan and Mexico.
- Highly skilled professionals and technicians: Eligible for up to one-year length of stay with possible extension. Canada took reciprocal commitments for professionals with Australia, Brunei, Chile, Japan, Malaysia, Mexico and Peru; these commitments do not cover occupations in the fields of public health or social services. Canada took reciprocal commitments for a limited list of technicians with Australia, Chile, Japan, Mexico and Peru. Canada’s CPTPP commitments for professionals and technicians are subject to knowledge, education, experience and wage requirements as specified in Canada’s schedule in Annex 12-A. Canada took reciprocal commitments for the entry and work authorization of the spouses of professionals and technicians from Australia, Chile, Japan and Mexico.
To see what specific commitments were made to various CPTPP countries, including by occupation for professionals and technicians, click here. More information about offers extended between other TPP parties is available in Annexes 12-A of all CPTPP parties.
Telecommunications services are vital to the functioning of national economies and the facilitation of international trade. They connect businesses and citizens to each other and countries and regions to the rest of the world. Information and communication technologies play an integral role in improving connectivity and quality of life by providing access to services such as online education, e-government and e-health.
The CPTPP also recognizes the importance of the telecommunications sector to Canada’s economy, workers and families. Not only is telecommunications an ever-growing service sector, it is also one of the most important enablers in the modern economy, providing the means of delivering other services that Canadians depend on.
The telecommunications chapter includes key obligations regarding access to and use of telecommunications services, competitive safeguards, interconnection of telecommunications networks, telecommunications regulatory bodies, resolution of domestic telecommunications disputes and transparency.
The chapter also includes commitments on:
- unbundling of telecommunications networks
- provision of private leased circuits
- co-location of telecommunications equipment
- approaches to regulation
- universal services
- number portability
The chapter does not apply to broadcasting services, except to ensure that broadcasters will have access to and use of telecommunications services.
14. Electronic commerce (e-commerce)
In the past 25 years, the expansion of the Internet has had a dramatic effect on our everyday lives. Modern communication tools give even small and medium-sized enterprises (SMEs) a global reach. Digital products such as video games, music and movies can be accessed online, directly by the consumer. Physical goods can be ordered online and couriered or mailed to virtually anywhere the buyer requests. The digital economy has transformed the way trade is conducted, and it is important that modern trade agreements reflect this reality. The CPTPP electronic commerce chapter supports the viability of the digital economy by ensuring that potential impediments to both consumers and businesses embracing this medium of trade are addressed.
Through the CPTPP, member countries have agreed to a set of rules that will facilitate economic growth and trade opportunities through the use of the Internet and address potential barriers to electronic trade. These rules include, but are not limited to, commitments to not apply duties to products transmitted electronically, to protect personal information, and to cooperate on important security issues in electronic communications. The CPTPP electronic commerce chapter ensures that Canadian companies, including SMEs, will be able to take advantage of expanding online commercial opportunities; at the same time, the chapter seeks to ensure an online environment that builds consumer confidence and trust.
The chapter also includes commitments to:
- ensure that the parties will not discriminate against or impose custom duties or other charges on online digital products
- ensure that Canadian firms can capitalize on the data and digital opportunities both here at home and globally through commitments that protect the free flow of information across borders and minimize data localization requirements, while preserving Canada’s right to protect data for compelling public policy purposes
- prevent governments from demanding access to an enterprise’s proprietary software source code
- maintain measures to protect users from the unauthorized disclosure of their personal information, online fraudulent and deceptive commercial practices, and spam in order to build trust and confidence to engage in digital trade
The commitments in the chapter do not affect Canada’s right to establish and maintain domestic laws, policies and regulations pertaining to net neutrality.
15. Government procurement
Government procurement (GP) of goods and services—from the purchase of office supplies to large construction projects—accounts for approximately 15% of a country’s gross domestic product, according to the WTO. While government purchases represent a significant potential market for Canadian firms, many face significant barriers when it comes to selling to foreign governments. The CPTPP GP provisions aim to address these barriers.
Under the CPTPP, Canadian businesses will benefit from guaranteed and expanded market access with existing trading partners, and new opportunities in Australia, Brunei, Malaysia and Vietnam. The CPTPP GP chapter is largely based on the revised WTO Agreement on Government Procurement(GPA), to which Canada, Japan, New Zealand and Singapore are also party. The CPTPP builds on the WTO GPA’s rules regarding non-discrimination, transparency and procedural fairness for covered government procurement activities.
The Agreement does not automatically apply to all government procurement. Coverage varies according to the market access schedules (i.e. annexes) of each party. These identify the covered entities at the central and sub-central government level, other covered entities such as Crown corporations, the applicable contract-value thresholds, the specific goods, services and construction services covered, general exceptions, and applicable transitional measures.
Canada’s commitments under the CPTPP government procurement chapter cover purchases made by federal entities (e.g. departments and agencies), a number of federal Crown corporations, as well as specified sub-central (i.e. provincial and territorial) entities.
Only purchases by covered entities that fall above certain monetary thresholds are subject to the provisions of the CPTPP government procurement chapter. Canada’s thresholds differ depending on the procuring entity (central or sub-central government) and the type of procurement (goods, services or construction services). These thresholds are the same as those adopted by Canada in the WTO GPA.
Canada adopted certain exclusions which serve to maintain the country’s ability to meet public-policy objectives, such as promoting environmental sustainability, providing preferences to Aboriginal businesses, and ensuring the safety of the Canadian public.
Commitments by other parties
As part of the CPTPP government procurement chapter, Canadian businesses will gain expanded access to government procurement opportunities (including from sub-central governments) from existing partners (Chile, Japan, New Zealand, Peru and Singapore), as well as access to new government procurement opportunities in Australia, Brunei, Malaysia and Vietnam. In fact, this is the first time that Malaysia and Vietnam have taken on international government procurement commitments.
All CPTPP parties have committed to carrying out their procurement in a non-discriminatory, impartial and transparent manner, and to adhere to robust procedural rules. Canadian businesses will benefit from this as they will be able to compete equally with domestic suppliers in CPTPP countries for covered government procurement contracts.
General principles: The CPTPP government procurement chapter establishes a number of general principles governing the parties’ procurement activities, including non-discrimination, transparency, fairness and impartiality. These principles provide assurances that suppliers from all CPTPP countries are able to compete on an equal footing in the other parties’ covered government procurement markets.
Transitional measures: The government procurement chapter allows parties that are identified as developing countries to adopt transitional measures in their application of certain commitments under the GP chapter. Brunei, Malaysia and Vietnam have adopted such measures, which include, for instance, the delayed application of certain obligations of the chapter and the use of transitional thresholds that are higher than the permanent thresholds.
Transparency: The chapter contains a number of key transparency provisions with regard to the publication of information on government procurement covered under the CPTPP. For instance, parties are required to make information on individual procurement opportunities readily available to the public through paper or electronic means, and to answer requests for information regarding their procurement regimes. Importantly, parties must also publish information on contract awards so that unsuccessful bidders can better position themselves for future procurements.
Access to procurement notices: Further to the transparency provisions described above, when notices of intended procurement are published electronically, parties have committed to making them accessible through a single point of access (for central government procurements) or through links in a single electronic portal (for all other entities covered).
Conditions for participation: The chapter establishes parameters on the conditions that can be used to determine the eligibility of a supplier to participate in a procurement process. For example, while parties can require that suppliers have prior experience, they cannot require prior experience in the territory of the procuring entity. In addition, parties cannot require suppliers to have been previously awarded a contract by the procuring entity.
Qualification of suppliers: The chapter permits parties to maintain registries of qualified suppliers to reduce the time needed to complete procurement processes. However, the use of such registration systems should not create unnecessary obstacles to the participation of suppliers from the other parties.
Limited tendering: CPTPP parties committed to using open tendering procedures for covered procurements, except in specific circumstances. These include cases where no suppliers satisfied the conditions for participation; cases where patents or other exclusive rights must be protected; and situations of extreme urgency. Limited tendering cannot be used to restrict competition.
Technical specifications and tender documentation: Procuring entities must ensure that prospective suppliers have all the information necessary to prepare and submit bids for a procurement opportunity. This information includes a description of the nature and quantity of goods or services being procured, conditions for the participation of suppliers, and the criteria used to evaluate bids. The chapter sets out parameters for technical specifications, to ensure that they are not used to create an obstacle to trade between the parties.
Time periods: The chapter mandates minimum time periods for procurement processes, to ensure that suppliers have enough time to prepare and submit their offers. Some flexibility in terms of timelines is provided, for instance when using electronic procurement tools or in urgent situations.
Domestic review procedures: Parties are required to establish or maintain domestic review procedures enabling suppliers to challenge procurement decisions that they believe run contrary to the obligations of this chapter. This increases suppliers’ confidence that procurements will be conducted fairly and impartially.
Ensuring integrity in procurement practices: The CPTPP government procurement chapter requires parties to ensure that they have the proper criminal or administrative measures in place to address corruption in government procurement as well as the proper measures to deal with conflicts of interest related to government procurement.
Exclusions: Canada and the other CPTPP parties have maintained their ability to protect human health, the environment, national security and public safety. Parties have also adopted a number of specific exclusions and limitations for strategic sectors in their individual market access schedules. The most common exceptions are for certain types of defence procurements, shipbuilding and repair services, set-asides to benefit micro, small and medium-sized enterprises, measures adopted or maintained with respect to Aboriginal peoples, and procurements related to historical or cultural heritage.
16. Competition policy
Competition is good for both consumers and businesses. For consumers, competition improves the selection and quality of products and services while lowering prices. For businesses, competition strengthens the ability to succeed in global markets by ensuring that the benefits of trade liberalization are not offset by anticompetitive business conduct.
The CPTPP competition policy chapter furthers the parties’ goal of creating a fair, transparent, predictable and competitive business environment that ultimately benefits consumers and businesses. It includes measures that target anticompetitive business practices and that protect consumers from fraudulent and deceptive commercial activities. It also introduces obligations for procedural fairness that ensure that competition authorities remain transparent and respect the rights of defendants during competition enforcement proceedings.
Preventing anticompetitive business conduct: Canada and the CPTPP parties agree to maintain competition laws that prohibit anticompetitive business conduct, and to maintain authorities to enforce those laws.
Procedural fairness in competition law enforcement: Canada and CPTPP parties are required to adhere to procedural fairness principles in the administration and enforcement of their competition laws.
Private rights of action: Canada and the CPTPP parties are encouraged to maintain laws that enable private rights of action. In other words, a person can seek redress from a court or tribunal for injury to that person’s business or property due to conduct that would be a violation of competition laws.
Cooperation: Canada and the CPTPP parties recognize the importance of cooperation and coordination between competition authorities. This cooperation can help address anticompetitive business conduct that crosses borders. The parties also agree to engage in technical cooperation to help more newly established competition authorities implement competition laws and strengthen their enforcement capacity through activities like training.
Consumer protection: Canada and the CPTPP parties are required to maintain consumer protection laws or other laws that prohibit fraudulent and deceptive commercial activities. Parties are encouraged to cooperate and coordinate in this area as these types of activities can also cross borders.
Transparency: Canada and the CPTPP parties agree to be transparent in the enforcement of their competition laws, including by setting out final decisions for competition law cases in writing. They also agree to be transparent with the other parties about their enforcement policies and practices.
Dispute settlement and consultations: The chapter is not subject to dispute settlement under the Agreement, but Canada and the CPTPP parties may consult each other on concerns related to this chapter.
17. State-owned enterprises and designated monopolies
State-owned enterprises (SOEs) are commercial entities that are owned or controlled through ownership interests by governments. They differ from entities that operate on a cost-recovery or not-for-profit basis (for example, mass transit systems). Some SOEs deliver public services, but many others operate in competition with private companies and are motivated by profit.
SOEs may receive various forms of commercial advantage from government, such as regulatory or financial preferences. These advantages can have trade-distorting effects and can give these entities an unfair advantage when they compete with private companies in the market. Governmental conduct can also affect international trade when the state grants an exclusive right to buy or sell a good or service.
The CPTPP acknowledges the right of governments to establish monopolies or SOEs to further specific public policy objectives, but also seeks to ensure that they do not unduly hamper the free flow of trade. Accordingly, the state-owned enterprises and designated monopolies chapter establishes rules to promote fair competition and prevent market distortion by governments.
Commercial considerations: Each party is to ensure that within the free trade area, an SOE acts in accordance with commercial considerations except when providing a public service. This rule applies only when the SOE is engaged in commercial activities, which excludes activities undertaken on a cost-recovery or not-for-profit basis. Similarly, each party is to ensure that designated monopolies act in accordance with commercial considerations, except when they are fulfilling the terms of their designation.
Non-discriminatory treatment: Each party is to ensure that within the free trade area, an SOE, when purchasing a good or a service, does not discriminate between goods or services sold by an enterprise of another party or an enterprise of a non-party. Similarly, when an SOE is selling a good or a service, a party is to ensure that the SOE does not discriminate against another party’s company. This rule applies only when the SOE is engaging in commercial activities. Similar rules apply for a designated monopoly when buying or selling a monopoly good or service.
Non-commercial assistance: No party is to cause adverse effects or injury to the interests of another party through the use of non-commercial assistance (such as debt forgiveness or loan guarantees) provided to its SOE by virtue of that company’s government ownership or control. This rule does not apply to services supplied at home.
Transparency: Parties agreed to rules that encourage good corporate governance of SOEs while protecting confidential and commercially sensitive information.
18. Intellectual property
Intellectual property (IP) rights are the rights given to persons over the creations of the mind, which can include inventions (can be protected by patents); literary and artistic works (protected by copyright and related rights); designs (protected by industrial design rights); symbols, names and images used in commerce (such as trademarks); and trade secrets. IP often underlies the products, works, technologies and services that we rely on daily and that have an impact on the way we live. Almost all businesses have some form of IP, whether it is a brand, a design, a trade secret or an invention. IP is also an increasingly important aspect in international trade agreements, providing Canadian businesses, exporters, entrepreneurs and investors with a predictable and transparent framework of rules in the markets in which they do business.
The CPTPP contains a comprehensive chapter on IP, and establishes a transparent and predictable standard for the protection and enforcement of IP rights in the Asia-Pacific region. This will give Canadians confidence that they will encounter a consistent minimum standard of rules across all CPTPP markets. The CPTPP IP chapter includes provisions in almost all categories of IP rights protection and enforcement (such as trademarks, geographical indications, industrial designs, copyright and related rights, patents, agricultural chemical products, trade secrets, and civil, criminal and border enforcement). The IP chapter builds on several existing international IP agreements, such as the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and certain treaties administered by the World Intellectual Property Organization (WIPO).
General obligations: The CPTPP commits parties to a number of international IP treaties, such as the Patent Cooperation Treaty, and the WIPO “Internet treaties” dealing with copyright and related rights in the digital environment. This section also includes obligations on national treatment (e.g. that parties treat foreign nationals the same as their own), and suspends part of the original TPP obligation dealing with the definition of “protection” in the context of copyright and related rights. Also, with respect to access to medicines, the CPTPP IP chapter ensures that exceptions under the WTO Doha Declaration on the TRIPS Agreement and Public Health continue to be available.
Trademarks: The CPTPP provides rules on protection against infringing uses of trademarks, such as brand names and symbols, as well as rules in respect of non-traditional marks such as sound marks and scent marks. The IP chapter also includes obligations to ensure transparent and efficient rules and procedures across the CPTPP region, in line with Canada’s existing regime.
Geographical indications: The CPTPP includes rules on transparent and fair administrative systems for the protection of geographical indications (GIs), including rules on opposition and cancellation of future GIs. These obligations are in line with Canada’s regime, including the GIs outcome secured in the Canada-EU Comprehensive Economic and Trade Agreement (CETA).
Industrial designs: The Agreement contains rules on the protection of designs against unauthorized use, in line with Canada’s recent efforts to make Canada’s legal framework consistent with the Hague Agreement.
Patents: The CPTPP contains rules on patent protection for inventions in all fields of technology, and rules on transparency and efficiency of patent administration systems, in line with Canada’s current regime. The Agreement also suspends certain TPP obligations on patentable subjects dealing with new uses, new methods and new processes of using a known product, and inventions derived from plants, as well as an obligation on patent term adjustment. The chapter also contains a 10-year obligation on data protection for agricultural chemical products, and pharmaceutical obligations relating to patent linkages and regulatory review exceptions, consistent with Canada’s domestic regime. The Agreement suspends certain TPP provisions on data protection for small molecule and biologic drugs, as well as on patent term restoration.
Copyright and related rights: The Agreement contains rules reflecting and building upon the WIPO “Internet treaties”, which Canada ratified in 2014. The CPTPP suspends certain copyright provisions under the original TPP Agreement, such as terms of protection for copyright and related rights; technological protection measures (TPMs); rights management information (RMI); and provisions dealing with legal remedies and safe harbours for Internet service providers (ISPs).
IP rights enforcement: The CPTPP provides rules for the civil, criminal and border enforcement of IP rights, including the application of these rules to the online environment. This includes comprehensive rules on civil procedures and remedies available to IP rights holders, as well as criminal measures to address counterfeiting and piracy. On border measures, the Agreement includes requirements to establish means for border officials to work with rights holders, as well as legal authority to detain suspected counterfeit or pirated goods, in a manner consistent with Canadian law. The CPTPP also contains a new obligation for Canada with respect to applications to detain goods suspected of being confusingly similar to registered trademark goods upon import. The CPTPP also suspends the original TPP obligation with respect to encrypted program-carrying satellite and cable signals.
Cooperation: The CPTPP includes provisions on further cooperation between the CPTPP Parties in the areas covered by the chapter, including in respect of issues related to SMEs and on traditional knowledge.
CPTPP provides the opportunity to raise and improve labour standards and working conditions in CPTPP member countries through an ambitious level of obligations. The CPTPP contains enforceable labour rights and obligations, and reaffirms the commitments of the 11 parties to respect internationally recognized labour rights and principles and to effectively enforce their domestic labour laws. CPTPP’s labour provisions encourage public participation and allow the public to raise concerns. The Agreement also foresees cooperation between the parties and is subject to the Agreement’s dispute settlement mechanism.
Labour rights: All CPTPP parties are International Labour Organization (lLO) members and recognize the linkage between labour rights and trade. In CPTPP, parties agree to adopt and maintain in their laws and practices the fundamental labour rights as recognized in the ILO 1998 Declaration, namely freedom of association and the right to collective bargaining; elimination of forced labour; abolition of child labour and a prohibition on the worst forms of child labour; and elimination of discrimination in employment. They also agree to have laws governing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.
Non-derogation and enforcement of labour laws: The 11 parties agree to not waive or derogate from laws implementing labour rights in order to attract trade or investment, and not to fail to effectively enforce their labour laws.
Forced or compulsory labour: The parties commit to discourage the importation of goods that are produced in whole or in part by forced labour, regardless of whether the source country is a CPTPP country.
Public awareness and procedural guarantees and public submissions: Each of the 11 CPTPP parties commits to ensure access to fair, equitable and transparent administrative and judicial proceedings and to provide effective remedies for violations of its labour laws. They also agree to public participation in the implementation of the labour chapter, including by establishing mechanisms to obtain public input and to accommodate requests for information.
Labour Council: The Agreement establishes a Labour Council (Council) to meet within the first year that the CPTPP is in force, and every two years after. The Council will consider matters related to the labour chapter, including by facilitating public participation and implementation of the chapter.
Cooperation: The parties recognize the importance of cooperation as a mechanism for effective implementation of the labour provisions. Accordingly, the Agreement establishes a mechanism for cooperation on labour issues, including opportunities for stakeholder input in identifying areas of cooperation and participation.
Dispute resolution: To promote the resolution of labour issues between CPTPP parties, the Agreement establishes a labour dialogue that parties may choose to use to try to resolve any labour issue between them that arises under the chapter. This dialogue allows for consideration of matters and for CPTPP parties to agree mutually to a course of action to address issues. A party can also request labour consultations with another party to deal with any matter arising under the Agreement. If the consulting parties fail to resolve the matter, the requesting party can request, within 60 days of submitting its request for consultations, the establishment of a panel under the Agreement’s dispute settlement procedures, which can result in the imposition of trade sanctions if the panel confirms the non-compliance.
As in Canada’s other free trade agreements, ensuring that environmental protection is upheld as trade is liberalized and not lowering environmental standards to promote trade or attract investment is central to the CPTPP environment provisions.
The CPTPP includes core commitments for parties to maintain robust environmental governance by upholding high standards of environmental protection and effectively enforcing environmental laws in the context of liberalized trade.
The Agreement also builds on Canada’s existing agreements with commitments in new areas to address key global environmental challenges, and establishes a binding and enforceable dispute resolution process to address questions regarding compliance. This includes recourse to the broader CPTPP dispute settlement mechanism if countries are unable to resolve the matter through consultation and cooperation. The enforcement of the environment chapter’s obligations through the Agreement’s dispute settlement mechanism is a first for Canada.
Right to regulate and levels of protection: The CPTPP recognizes the right of parties to set their own environmental priorities and corresponding levels of protection. With this in mind, the parties commit to strive for high levels of protection in their domestic laws and policies, and to continue to improve their respective levels of environmental protection.
Effective enforcement and non-derogation: The parties commit to effectively enforce their respective domestic environmental laws, and not to waive or derogate from those laws in order to encourage trade or investment.
Multilateral environmental agreements: Recognizing the value of international environmental agreements as a response to global environmental problems, CPTPP parties affirm their commitments to implement the multilateral environmental agreements (MEAs) they have ratified. CPTPP parties also commit to take measures to protect the ozone layer and protect the marine environment from ship pollution in accordance with relevant MEAs.
Procedural matters and public participation: The Agreement contains provisions to ensure that domestic proceedings are available to remedy violations of environmental law. The CPTPP requires the parties to ensure that information regarding environmental laws and policies is made available to the public. The CPTPP also allows for interested persons to request investigation of alleged violations of environmental laws. Parties also commit to respond to public submissions regarding implementation of the Agreement, including submissions asserting that a party is failing to effectively enforce its law.
Corporate social responsibility and voluntary mechanisms to enhance environmental performance: Parties agree to encourage business to adopt corporate social responsibility principles into their policies and practices. Parties also agree to encourage the use of flexible and voluntary mechanisms, in a manner that is transparent and does not create unnecessary barriers to trade.
Cooperation frameworks: Recognizing that cooperation can play an important role in advancing the objectives of the CPTPP, the parties commit to cooperate to address matters of joint or common interest.
Trade and biodiversity: The parties agree to promote and encourage conservation and sustainable use of biological diversity as well as recognize the importance of respecting, preserving and maintaining knowledge and practices of Indigenous peoples and local communities relevant to the conservation and sustainable use of biological diversity. Parties also agree to the importance of public participation and consultation related to conservation and the sustainable use of biological diversity.
Invasive alien species: The parties commit to work together to identify ways to address the risks and adverse impacts of invasive alien species.
Transition to a low emissions and resilient economy: The parties agree to cooperate on matters of mutual interest related to climate change (transitioning to low-emission economies), ranging from clean and renewable energy, low-emissions technologies, sustainable transport and sustainable urban infrastructure, and deforestation and market and non-market mechanisms.
Marine capture fisheries: The parties commit to combat illegal, unreported and unregulated (IUU) fishing and promoting sustainable fisheries management, including through substantive obligations to prohibit subsidies that negatively affect fish stocks.
Conservation and trade: Each party commits to combat the illegal take of, and illegal trade in, wild fauna and flora, including by fulfilling its obligations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) , as well as through joint activities on conservation issues, including through cooperation activities among law-enforcement networks.
Environmental goods and services: The parties recognize the importance of the CPTPP in promoting trade and investment in environmental goods and services and commit to considering issues, such as non-tariff barriers, relevant to trade in environmental goods and services.
Environment committee: An environment committee composed of senior government representatives is established to oversee the implementation of the provisions on the environment.
Enforceable dispute resolution: The CPTPP provides for consultations between the parties regarding any issue arising under the Agreement. Should consultations be unsuccessful in resolving the issue, the Agreement allows for the recourse to the broader CPTPP dispute settlement mechanism.
21. Cooperation and capacity building
Trade is critical to boosting a country’s development and securing its economic future. With the appropriate development measures in place, trade facilitation can provide concrete benefits to developing economies.
The joint cooperation and capacity-building activities promoted in the CPTPP will help unlock the economic potential of less-developed members by creating opportunities for businesses, including SMEs, to gain access to the global market, while promoting high environmental and labour standards, and human rights principles. The CPTPP development and cooperation & capacity building chapters are in line with Canada’s support for the core principles and objectives of broad-based and sustainable economic development.
22. Competitiveness and business facilitation
In today’s global environment, Canadian businesses must adapt to the ever-increasing competition and complexity that are inherent in international business. Canada’s participation in the CPTPP will help ensure that Canadian businesses are not disadvantaged with respect to global competitors. The competitiveness and business facilitation chapter of the CPTPP will contribute to the success of Canadian companies and workers in international markets.
The competitiveness and business facilitation provisions aim to help CPTPP reach its potential to improve the competitiveness of the participating countries, and the region as a whole. The Agreement creates formal mechanisms to review the impact of CPTPP on its parties' competitiveness, through dialogues among governments and between government, business, and civil society, with a particular focus on deepening of regional supply chains, to assess progress, take advantage of new opportunities, and address any challenges that may emerge as the CPTPP Agreement goes into effect. Among these will be the committee on competitiveness and business facilitation, which will meet regularly to review the CPTPP Agreement's impact on regional and national competitiveness, and on regional economic integration. The committee will consider advice and recommendations from stakeholders on ways the CPTPP Agreement can further enhance competitiveness, including enhancing the participation of micro, small-and medium-sized enterprises in regional supply chains. The CPTPP also establishes a basic framework for the committee to assess supply chain performance under the Agreement, including ways to promote SME participation in supply chains; and review of stakeholder and expert input.
A first in Canada’s FTAs, the CPTPP contains dedicated provisions on development, which recognize the important role that open trade and investment and inclusive growth play in improving welfare, reducing poverty, raising living standards and creating new employment in support of development.
The Agreement includes three specific areas to be considered for collaborative work on development once the CPTPP enters into force for each party: (1) broad-based economic growth, including sustainable development, poverty reduction, and promotion of small businesses; (2) women and economic growth, including helping women build capacity and skill, enhancing women’s access to markets, obtaining technology and financing, establishing women’s leadership networks, and identifying best practices in workplace flexibility; and (3) education, science and technology, research and innovation. Two or more parties may undertake joint activities with the view of helping ensure that the benefits and opportunities of this agreement are more widely shared and contribute to the advancement of each party’s development goals.
The CPTPP also establishes a development committee, which will meet within one year of the date of entry into force of the Agreement and thereafter as necessary. The role of the committee is to facilitate the exchange of information and best practices and promote cooperative work related to the objectives of the Agreement and new opportunities as they arise.
24. Small and medium-sized enterprises
For the first time in any of Canada’s FTAs, the CPTPP will have a dedicated chapter with specific measures to assist SMEs, to help them take full advantage of the opportunities that this agreement will create. This reflects the Government of Canada’s commitment to significantly increasing the number of Canadian SMEs exporting to emerging markets. SMEs make up the vast majority of Canadian businesses and employ more than 7.5 million Canadians, about 70% of the private sector labour force.
Complementing the commitments throughout the CPTPP on market access, paperwork reduction, Internet access, trade facilitation, express delivery and others, each CPTPP party must establish a user-friendly website targeted at SMEs to provide easily accessible information on the CPTPP and ways small firms can take advantage of it. Information on these sites shall include descriptions of the provisions of CPTPP relevant to SMEs; regulations and procedures concerning intellectual property rights; foreign investment regulations; business registration procedures; employment regulations; and taxation information. In addition, the Agreement establishes an SME committee that will meet regularly to review how well the CPTPP is serving SMEs; to consider ways to further enhance its benefits; and to oversee cooperation or capacity building activities to support SMEs through export counselling, training programs, information sharing, trade finance, and other activities.
The CPTPP will support Canadian businesses by providing enhanced access to the dynamic Asia-Pacific region, directly benefiting Canada’s SMEs. Specifically, the Agreement provides access to new markets, customers and partnerships, resulting in stronger supply and production chains. The CPTPP Agreement will make it easier and less costly for Canadian SMEs in a wide range of sectors to do business in the Asia-Pacific market, including through streamlined customs and origin procedures and greater transparency in CPTPP government regulations.
25. Regulatory coherence
Governments use regulations to achieve a range of policy objectives, such as ensuring the health and safety of their citizens, protecting the environment and protecting consumers. While the vast majority of regulations are designed to achieve non-trade-related objectives, they can also have the unintended effect of restricting or distorting trade. As tariffs have decreased globally, regulatory and other non-tariff barriers are the hurdles that Canadian exporters are increasingly facing when attempting to gain access to foreign markets.
The Agreement aims to facilitate regulatory coherence by encouraging widely accepted good regulatory practices, such as the use of regulatory impact assessments to help inform interested stakeholders of the nature of a regulation, the problems being addressed and alternatives; ensuring that new regulatory measures are easy to understand and publicly available where appropriate; periodically reviewing existing regulatory measures to determine if they remain the most effective means of achieving the desired objective; and, public notice of future regulatory measures. The CPTPP will also help to facilitate coordination within government (e.g. the establishment of a central coordinating body), which will prevent conflicting or duplicate regulations from being developed by regulators. The chapter represents a new approach for trade agreements in helping to deal with the growing challenge posed by non-tariff barriers. Greater transparency and increased central coordination will help provide Canadian exporters, including SMEs, with greater predictability regarding foreign regulatory frameworks and their enforcement.
Pursuant to CPTPP Article 25.3: Scope of Covered Regulatory Measures, Canada has determined that the scope of its covered regulatory measures is as follows.
For Canada, a regulatory measure means a measure of general application related to any matter covered by this Agreement adopted by regulatory agencies with which compliance is mandatory. For Canada, a regulatory agency is an administrative authority or agency at the Party’s central level of government that develops, proposes or adopts a regulation, and does not include legislatures, courts, or the Governor in Council. For Canada, the following are not covered regulatory measures for the purposes of this Chapter:
- a measure concerning:
- general statements of policy or guidance that do not prescribe legally enforceable requirements;
- a military, foreign affairs, or national security function of the Government of Canada;
- public sector management, personnel, pensions, public property, loans, grants, benefits, or contracts;
- departmental organization, procedure, or practice;
- taxation, financial services or anti-money laundering measures, or;
- federal, provincial, territorial relations and agreements and relations with Aboriginal Peoples, or;
- a measure that does not constitute a regulation under the Statutory Instruments Act.
26. Transparency and anti-corruption
Navigating different regulatory environments is burdensome for businesses, and can be a major stumbling block for those looking to expand into new markets. The introduction of new regulations and policies can also directly affect the viability of businesses in a specific market by creating barriers to trade, restricting investment and stifling innovation.
The transparency and anti-corruption provisions in Canada’s free trade agreements are important for business as they provide for a more open and transparent legislative and regulatory system. They also reinforce the parties’ collective commitment to fighting corruption in matters that affect trade and investment. Businesses have come to rely on Canada’s regulatory system for its openness and transparency. The CPTPP sets strong transparency and ethical standards for the regulatory systems of our trading partners. Such provisions will create a more transparent and fair environment for Canadian suppliers to do business in CPTPP markets.
27. Administrative and institutional provisions
The administrative and institutional provisions set out how the Agreement will be managed and implemented by its parties. They establish the structure, function, processes and procedures of the Agreement’s commission, which will oversee the implementation and operation of the Agreement. The commission will also review the operation of the Agreement with a view to updating and enhancing it to ensure it continues to address the trade and investment issues and challenges faced by the parties in a relevant manner.
28. Dispute settlement
Dispute resolution mechanisms provide recourse to an impartial panel of experts, allowing governments to effectively settle issues between them. This ensures predictability and fairness in the resolution of these disputes. It is that predictability and fairness in the trading system that provides Canadian companies with the ability and confidence to expand abroad, creating jobs and prosperity in Canada.
Trade disputes often harm both parties’ interests as they prevent the efficient flow of goods and services, and can cost millions of dollars in lost opportunities. Resolving trade disputes quickly and effectively is therefore important. The dispute settlement mechanism applies across the CPTPP Agreement, with few specific exceptions. The public in each CPTPP party will be able to follow proceedings as submissions made in disputes, hearings and final reporting presented by panels will be made available to the public. CPTPP parties will make every attempt to resolve disputes through cooperation and consultation and encourage the use of alternative dispute resolution mechanisms when appropriate.
29. Exceptions and general provisions
The exceptions provisions ensure that flexibilities are available to all CPTPP parties that guarantee full rights to regulate in the public interest, including for a party's essential security interest and other public welfare reasons. This Agreement incorporates the general exceptions provided for in Article XX of the General Agreement on Tariffs and Trade 1994 to the goods trade-related provisions, specifying that nothing in the CPTPP shall be construed to prevent the adoption or enforcement by a party of measures necessary to, among other things, protect public morals, protect human, animal or plant life or health, protect intellectual property, enforce measures relating to products of prison labour, for the protection of national treasures of artistic, historic or archaeological value, and relating to conservation of exhaustible resources.
The CPTPP also contains the similar general exceptions provided for in Article XIV of the General Agreement on Trade in Services with respect to the services trade-related provisions. The Agreement includes a self-judging exception, applicable to the entire CPTPP, which makes clear that a party may take any measure it considers necessary for the protection of its essential security interests. It also defines the circumstances and conditions under which a party may impose temporary safeguard measures (such as capital controls) restricting transfers, such as contributions to capital, transfers of profits and dividends, payments of interest or royalties, and payments under a contract related to covered investments, to ensure that governments retain the flexibility to manage volatile capital flows, including in the contexts of balance of payments or other economic crises. In addition, it specifies that no party is obligated to furnish information under the CPTPP if it would be contrary to its law or public interest, or would prejudice the legitimate commercial interests of particular enterprises.
30. Final provisions
The final provisions set out the procedures related to the entry into force, accession and withdrawal from the Agreement.
The CPTPP incorporates the following updates to the original TPP final provisions:
- Entry into force: The Agreement will enter into force 60 days after at least six or at least 50% of the number of signatories (whichever is smaller) notify the depositary in writing of the completion of their applicable legal procedures.
- Accession: Any state or separate customs territory may accede to this Agreement, subject to terms and conditions agreed to by the CPTPP members and said state or separate customs territory after the Agreement is entered into force.
- Withdrawal: Any CPTPP member may withdraw from the Agreement after providing written notice to the depositary as well as other CPTPP members through the designated contact points.
- Authentic texts: Affirms that the English, Spanish and French texts of the Agreement are equally authentic, and that in the event of any divergence between those texts, the English text shall prevail. The CPTPP also recognizes the signatories as well as the date and location of the signing of the CPTPP.
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