Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – Frequently asked questions
What is the CPTPP?
- The CPTPP is a new free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
- The CPTPP incorporates, by reference, the provisions of the Trans-Pacific Partnership (TPP) agreement, with the exception of a number of provisions pertaining mainly to intellectual property and investor-state dispute settlement, whose application will be suspended once the CPTPP comes into force. These provisions will be suspended until all the parties decide otherwise.
- The TPP was originally concluded on October 5, 2015, by 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam) and was signed on February 4, 2016, by all 12 parties. On January 30, 2017, the United States notified TPP signatories of its intention to not ratify the TPP, effectively withdrawing from the TPP. Without the United States, the TPP agreement cannot enter into force as it requires ratification by at least six states that together have a GDP of more than 85% of the GDP of all signatories.
- Following the U.S. decision to not ratify the TPP, Canada has actively participated in discussions for a new agreement among the 11 remaining members of the TPP. On November 10, 2017, in Da Nang, Vietnam, the parties agreed on the core elements of a new CPTPP agreement, and on January 23, 2018, the CPTPP parties resolved all outstanding issues and concluded CPTPP negotiations.
Why is the CPTPP important to Canada?
- Asia-Pacific markets are growing quickly and provide significant opportunities for trade and investment.
- The CPTPP will provide enhanced market access to key Asian markets, including Japan, Malaysia and Vietnam.
- Once the CPTPP enters into force, it will be one of the largest free trade agreements in the world—11 countries representing nearly 500 million people, with a combined GDP of $13.5 trillion, or 13.5% of global GDP.
- The CPTPP will also mean that Canada will have a free trade agreement with all of the G7 countries.
- Canadian imports from and exports to the 10 other CPTPP countries accounted, respectively, for $72.5 billion and $31.5 billion in 2016.
- The expected gains from the CPTPP will benefit a wide range of sectors, including financial services, fish and seafood, forestry, agriculture and agri-food, and metals and minerals.
Why did Canada agree to the CPTPP?
- Canada has always said that we would only agree to a deal that is in Canada’s best interests. To that end, Canada has been working very hard to propose changes in the CPTPP that secure better terms for Canadians.
- Canada went to great lengths to ensure that we reached a progressive agreement that will benefit Canada and Canadians for decades to come. This involved a whole-of-government approach, stakeholder engagement and direct engagement at the highest levels.
- The progressive agreement reached on January 23, 2018, is the right deal.
- Our government stood up for Canadian interests across sectors, meeting our objectives of securing an agreement that will ensure sustainable growth, prosperity and well-paying middle-class jobs today and for generations to come.
- With the CPTPP, Canadian-made products and Canadian companies will gain preferential access to a market of nearly 500 million consumers.
- We have pursued a progressive trade agenda by enshrining enforceable labour and environmental provisions in the CPTPP.
- Canada also successfully preserved its flexibility to adopt and maintain programs and policies that support the creation, distribution and development of Canadian artistic expression or content, including in the digital environment.
How does the CPTPP protect Canadian interests?
- The CPTPP reaffirms the importance of promoting corporate social responsibility, cultural identity and diversity, environmental protection and conservation, gender equality, Indigenous rights, labour rights, inclusive trade, sustainable development and traditional knowledge, as well as the importance of preserving the right of governments to regulate in the public interest.
- By suspending provisions on intellectual property (IP) from the original TPP agreement, we have ensured that innovative Canadian industries are better placed to grow and compete.
- The new CPTPP will create more opportunities for the middle class by including the first-ever chapter on small and medium-sized enterprises (SMEs), making it easier for first-time exporters to grow their company abroad.
How does the CPTPP differ from the TPP?
- The CPTPP incorporates, by reference, the obligations (rules and market access outcomes) contained in the original TPP agreement, except for the list of 22 original TPP provisions the application of which the parties have agreed to suspend upon entry into force of the agreement.
- Canada secured a number of these suspensions, particularly in the area of intellectual property and investor-state dispute settlement, to optimize and rebalance the agreement among the remaining member countries.
- Also notable is that the expected economic benefits of a CPTPP for Canada are greater than they were for the TPP. According to economic modelling, Canada’s GDP gains would total $4.2 billion under the CPTPP, compared with $3.4 billion under the TPP. This is due to the fact that without the U.S. in the agreement, Canadian business will gain a “first mover” advantage in key CPTPP markets such as Japan, and Canada will continue to enjoy privileged access to the U.S. market through NAFTA.
What specific improvements did Canada seek in the CPTPP?
- In the area of intellectual property, Canada sought and achieved important suspensions of provisions that were of greatest concern to Canadians. In particular, under the agreed suspensions in the CPTPP, Canada will not be required to implement TPP obligations for patent term adjustment and copyright term protection, allowing Canada to maintain its existing regime.
- Canada secured important suspensions to limit the scope of investor-state dispute settlement (ISDS) provisions. The suspensions will prevent foreign investors from using ISDS to enforce their contracts with the government, and will also prevent them from suing the Government of Canada for its withdrawal of approval of a foreign investment.Parties have also agreed to suspend provisions that would have expanded the application of investor-state dispute settlement to the financial services chapter.
- With these suspensions in place, Canada has improved the agreement and brought the CPTPP into line with our normal, balanced approach to investment obligations.
- Canada also successfully secured several important side letters with countries on a bilateral basis.
- On culture, these binding and fully enforceable letters ensure that Canada will be exempted from limitations contained in the original TPP that could have restricted our flexibility to adopt cultural policies in the digital environment.
- The CPTPP provides Canada’s auto sector with access to new markets in the Asia-Pacific region through binding commitments on the regional value content requirement for motor vehicles and standards and other regulations.
Does the CPTPP align with Canada’s progressive trade agenda?
- The CPTPP advances Canada’s trade agenda with progressive provisions in areas such as labour, environment, SMEs, and transparency and anti-corruption.
- Canada worked hard to ensure that the CPTPP upholds progressive values and reaffirms the importance of promoting:
- corporate social responsibility;
- cultural identity and diversity;
- environmental protection and conservation;
- gender equality;
- Indigenous rights;
- labour rights;
- inclusive trade;
- sustainable development;
- traditional knowledge; and
- preserving our right to regulate in the public interest.
- The agreement includes labour and environmental provisions that are fully enforceable through the dispute settlement mechanism of the agreement—which will be a first for Canada.
What is the CPTPP outcome on culture?
- Canada’s approach to culture in all of its trade agreements is to maintain Canada’s ability to support its cultural industries through policies and programs, while seizing opportunities in new export markets.
- Canada believes in the fundamental importance of maintaining its flexibility and ability to adopt policies in the best interests of Canada’s cultural industries.
- Canada was successful in ensuring that it will be exempted through side letters from obligations in the original TPP that limit our flexibility to adopt cultural policies.
Does the CPTPP protect labour rights?
- The CPTPP includes comprehensive obligations on labour to protect and promote internationally recognized labour principles and rights, with commitments that:
- ensure national laws and policies provide protection for the fundamental principles and rights at work;
- prevent parties from derogating from domestic labour laws to attract trade or investment;
- ensure laws provide acceptable conditions of work with respect to minimum wages, hours of work, and occupational health and safety;
- provide mechanisms to enforce provisions and monitor compliance; and
- encourage cooperation and voluntary corporate initiatives related to labour issues.
- For the first time in one of Canada’s trade agreements, labour provisions will be subject to the dispute settlement mechanism of the agreement, allowing a party to impose trade sanctions in the event that any of the obligations under the labour chapter are violated.
What is the CPTPP outcome for the auto sector?
- The CPTPP parties have agreed to maintain all of the tariff outcomes contained in the TPP. Tariffs on all exports of Canadian vehicles and parts to CPTPP markets will be eliminated within 12 years of entry into force of the agreement.
- Meanwhile, Canada will eliminate its 6.1% tariff on imported passenger vehicles for all CPTPP countries over 4 years, through five annual cuts.
- The CPTPP will also expand export opportunities for Canadian-made autos by ensuring that non-tariff barriers are reduced in CPTPP markets through provisions contained in chapters on technical barriers to trade, transparency and anti-corruption, and regulatory coherence.
- Canada has obtained additional commitments from several individual countries in the form of enforceable side letters on issues such as rules of origin and standards/regulations that will further support Canadian automotive exports. Such commitments will also ensure that Canadian automotive producers will enjoy a level playing field with major competitors in the future.
- The CPTPP also establishes new channels for parties to cooperate and address non-tariff barriers, including through institutional dialogues and through the agreement’s dispute settlement mechanism.
What is the CPTPP outcome for agriculture?
- The CPTPP will give the Canadian agricultural sector preferential market access to all CPTPP countries, including in Japan, Vietnam and Malaysia—countries where Canada faces high tariffs and no preferential access at this time.
- Upon full implementation, the CPTPP will provide duty free access to CPTPP markets for a wide range of Canadian agricultural products such as meat, grains, pulses, maple syrup, wines and spirits, and processed food.
- In return, Canada will provide permanent CPTPP-wide tariff rate quotas covering dairy, poultry and egg products. This access will be gradually phased in over a five-year period, followed by a smaller growth of the quota volume until year 13. This represents a small portion of Canada’s current annual production. Imports beyond these volumes will be subject to Canada’s usual most-favoured-nation (MFN) tariffs of up to 313.5%.
- This trade agreement will create significant outcomes and opportunities for Canadian agriculture and farmers across the country.
- On supply management, we understand that a strong dairy, poultry and egg industry and a competitive agricultural sector are vital to Canada’s prosperity, creating good jobs, growing the middle class, and bringing high-quality products to the tables of Canadian consumers at affordable prices.
- We understand the importance of the supply managed sector and we are committed to consulting them on the impacts to their industry and the best way forward. We immediately began discussions with our supply managed sectors and we will continue those consultations as we go forward.
- We will continue to strongly support our world-class dairy, poultry and egg farmers and our supply management system.
What is the CPTPP’s outcome on intellectual property (IP)?
- The CPTPP contains a comprehensive chapter on IP, including provisions that cover almost all areas of IP rights protection and enforcement.
- The CPTPP IP provisions will create a new regional standard on IP for the Asia-Pacific region.
- The parties agreed to suspend 11 IP provisions from the original TPP. Canada played an important role in shaping the list of agreed suspensions on IP, and the final outcome addresses key concerns expressed by Canadians regarding the TPP. On the whole, the agreed suspensions will allow the government to continue to develop and put in place policies in line with domestic priorities in those areas.
- In particular, Canada will not be required to implement TPP obligations for patent term adjustment and copyright term protection, allowing Canada to maintain its existing regime. This means that Canada will not have to change its laws to enable patent owners, in some circumstances, to apply for an extension of the term of a patent following unreasonable delays in the processing of patent applications. As well, Canada can continue to provide a copyright term of “life of the author plus 50 years” consistent with multilateral standards, and Canada’s longstanding policy.
- Other suspensions on IP secured by Canada will protect future Canadian policy flexibility.
Does the CPTPP establish protection for the environment?
- The CPTPP includes a stand-alone, enforceable chapter on the environment—Canada’s most comprehensive and ambitious environment chapter in a free trade agreement to date.
- The chapter’s core obligations commit member countries to:
- pursue high levels of environmental protection;
- effectively enforce domestic environmental laws;
- not derogate from these laws to encourage trade or investment; and
- promote transparency and public participation.
How did the government reflect any concerns raised by Indigenous Peoples?
- The Government of Canada has been actively and consistently reaching out to Indigenous groups and partners to seek their views on Canada’s progressive trade agenda, including an agreement with CPTPP countries.
- Our Government carefully considered what we heard during these consultations to ensure that these issues were reflected in the revised CPTPP, particularly on Indigenous rights, culture protection, and the Government’s ability to meet its treaty obligations.
- As a result, the new CPTPP explicitly references Canada’s commitment to Indigenous Peoples by reaffirming the importance of promoting Indigenous rights, sustainable development and traditional knowledge, as well as the importance of preserving the state’s right to regulate in the public interest.
- Canada’s approach to trade policy includes Indigenous provisions and reservations that preserve Canada’s right to adopt or maintain measures conferring rights or privileges to Canada’s Indigenous peoples.
What are the next steps?
- The CPTPP will serve as a cornerstone for Canada’s future trade and investment relations with large and fast-growing economies in the Asia-Pacific region.
- The CPTPP will enter into force for remaining signatories 60 days after they ratify the Agreement.
- Canada looks forward to working with the other CPTPP member countries to implement and grow this Agreement in the future.
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