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Australia's recent ratification of the Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP) means the trade pact takes effect from 30 December 2018. Canada, Japan, Mexico, New Zealand and Singapore had already ratified and Brunei, Chile, Malaysia, Peru and Vietnam are working to complete their ratification processes.

While global trade tensions are rising and the US-China trade dispute risks hurting other economies in the Asia-Pacific region, the CPTPP provides a useful counterbalance.

The agreement’s 11 members account for 13 per cent of global output and almost 500m consumers, with the first six nations to ratify representing 90 per cent of the group’s total output and 322m people. The other five countries will benefit when they ratify. That could be within months, though Malaysia and Peru have had changes in government since the agreement was finalised, which may mean delays.

Economic modelling results, such as those from the Peterson Institute for International Economics indicate that every current member of the deal is expected to be a net beneficiary in economic terms.

Ultimately, the pact will remove 95 per cent of the current tariffs on trade among the partners. But, it goes further to provide deep liberalisation in non-tariff barriers such as regulatory and customs requirements, services and investment, and it aims to tackle 21st-century issues such as e-commerce and data protection. It also addresses social concerns such as environment, labour, and inclusive trade for smaller firms.

Although the US and China are notably absent from the accord, its commencement shows that regional integration efforts in the Asia-Pacific zone are still alive. Once fully ratified and implemented, the Peterson Institute estimates the CPTPP could boost trade for members by 6 per cent, adding 1 per cent to real incomes by 2030.

However, the economic benefits will not be equally distributed among the 11 members. Developing countries such as Vietnam, Peru and Malaysia stand to gain most in terms of growth, with exports increasing by more than 8.5 per cent while developed members such as Canada, Australia and New Zealand see their exports rising between 4.0 per cent and 5.8 per cent. Developing countries are also likely to see the greatest proportional real-income gains.

Exports of non-pact members such as China, South Korea, Taiwan, Thailand and the US could decline modestly as members’ trade is re-routed to other members. But, this may provide some non-CPTPP countries with an extra incentive to become members.

The economic gains for the CPTPP would expand overall if other countries join. China, Korea, Taiwan, Thailand and Colombia are reported to be considering membership and Japan’s prime minister has invited the UK to join after Brexit.

The US withdrew its support for the original Trans-Pacific Partnership in January 2017, before it was ratified and, it appears unlikely to re-join in the foreseeable future. Even if the US wanted to, some renegotiation may be required. A number of US-supported provisions of the old deal were suspended and their re-instatement would not be automatic.

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