April 8, 2022
CPTPP: Overview and Issues for Congress
The Comprehensive and Progressive Agreement for Trans-
initiatives that seek to open markets further in the region.
Pacific Partnership (CPTPP) is a free trade agreement
Previously, the Trump Administration cited a preference for
(FTA) formed by the 11 remaining members of the
bilateral trade talks and concerns over TPP provisions, such
proposed Trans-Pacific Partnership (TPP) after the Trump
as on rules of origin, in its decision to withdraw from TPP.
Administration withdrew the U.S. signature from TPP in
U.S. Trade with CPTPP Members
2017. CPTPP, which retains most of TPP’s provisions,
reduces and eliminates tariff and non-tariff barriers, and
The United States has significant trade and investment with
establishes enforceable trade rules. CPTPP is currently in
the 11 CPTPP members, which, combined, accounted for
effect for eight members, entering into force for Australia,
41% of U.S. goods trade (2021) and 23% of both U.S.
Canada, Japan, Mexico, New Zealand, and Singapore in
services trade and foreign direct investment (FDI) stock
late 2018; Vietnam in 2019; and Peru in 2021. Brunei,
(2020). Including all 15 CPTPP signatories and current
Chile, and Malaysia have signed, but have not yet ratified
applicants, these shares rise to 61%, 39%, and 37%,
CPTPP. The United Kingdom (UK), China, Taiwan, and
respectively, with China accounting for 14% of U.S. goods
Ecuador applied to join in 2021.
trade and the UK accounting for 10% of services trade and
13% of FDI. As noted, CPTPP may disadvantage U.S. firm
Members of Congress may have interest in monitoring and
competition in the region, especially in markets without
shaping the Administration’s views on CPTPP, including
existing U.S. FTAs, such as Japan and Vietnam (Figure 1);
with respect to:
a limited U.S.-Japan agreement, in effect since 2020, has
reduced some bilateral tariffs, including on some top U.S.
U.S. leadership in regional trade rules. U.S. leadership,
exports, such as beef.
including through negotiating objectives mandated by
Congress, was largely reflected in the commitments in
Figure 1. Current and Potential CPTPP Members
CPTPP. TPP was signed under the 2015 Trade
without an Existing U.S. FTA
Promotion Authority (TPA) legislation (P.L. 114-26,
now expired) that set negotiating objectives and
congressional consultation and notification requirements
for U.S trade agreements. The Obama Administration
viewed TPP as a tool to shape or update regional, and
potentially global, trade rules to reflect U.S. priorities,
especially on issues that existing multilateral agreements
at the World Trade Organization (WTO) do not address
substantively. Such issues include digital trade, state-
owned enterprises (SOEs), labor, and the environment.
U.S. commercial competitiveness. CPTPP involves
three of the top four U.S. trade partners and may expand
to other major economies, potentially leading to greater
Source: CRS with trade data from U.S. Census Bureau and tariff
economic integration and trade liberalization among the
data from the WTO and the UK trade ministry.
parties. CPTPP and other regional trade agreements not
Notes: MFN = most-favored nation tariff rates applicable on imports
from WTO members (i.e., tariffs general y faced by U.S. exporters).
involving the United States, such as the Regional
Comprehensive Economic Partnership (RCEP, see
CPTPP Commitments
below), may disadvantage U.S. trade with members, as
CPTPP incorporates by reference the 30 original chapters of
the participants lower their trade barriers to other
the TPP text, including its dispute settlement (DS)
members but not the United States, and possibly set
mechanism. However, it suspends indefinitely 22 specific
rules that may not align with U.S. interests.
TPP commitments (see below), which had been U.S.
China’s potential accession. China’s economic heft and
priorities and which CPTPP parties may reinstate through
contrasting approach to some U.S. priority trade issues
consensus. CPTPP also establishes administrative
procedures (e.g., accession) that replace those in TPP. Side
(e.g., SOE and digital trade disciplines) suggest its
letters to CPTPP clarify how specific commitments apply to
potential membership would have implications for U.S.
certain parties (e.g., a five-year exemption from DS
interests in the region.
regarding data flow commitments and a three-year
The Administration states it is not currently interested in
exemption related to labor obligations apply to Vietnam).
joining CPTPP, but recognizes the region’s economic
Key provisions (with suspensions from TPP noted) include:
importance, and plans to pursue an Indo-Pacific Economic
Goods Tariffs. Immediate elimination of most tariffs
Framework (IPEF, see below). Some Members of
among current members and eventual elimination of tariffs
Congress, industry, and other stakeholders have urged the
on roughly 99% of tariff lines. Tariff commitments for new
Administration to consider participation in CPTPP or other
members are subject to accession negotiations.
https://crsreports.congress.gov
CPTPP: Overview and Issues for Congress
E-Commerce/Digital Trade. Requires free cross-border
matters related to trade and investment. U.S.-proposed
data flows and prohibits requirements to localize computing
bilateral labor plans with Brunei, Malaysia, and Vietnam,
facilities, with certain public policy exceptions. Prohibits
which included additional commitments (e.g., allowing for
duties on digital products and requirements to share source
independent unions in Vietnam), are excluded from CPTPP.
code to gain market entry. Requires members to have
Dispute Settlement (DS). Includes a DS mechanism to
privacy regimes in place nationally. CPTPP did not
enforce commitments, though some exemptions apply.
suspend any digital trade commitments.
Accession. Requires unanimous consent among members to
Environment. Requires countries to enforce and not
begin market access negotiations (the UK is the only
derogate from their environmental laws to attract trade and
applicant to reach this step, to date). If negotiations
investment, implement specified multilateral environmental
proceed, parties are to determine whether an applicant is
agreements they have joined, prohibit certain fishing
qualified to join based on market access (e.g., tariff) offers
subsidies, and combat illegal wildlife trade. A provision
and ability to adhere to CPTPP rules. Such approval for
broadening illegal wildlife trade to include determinations
China may be difficult given global concerns about its trade
based on a trade partner’s laws was suspended.
practices and industrial policies.
Government Procurement. Requires nondiscriminatory
Comparison to Other Trade Initiatives
treatment toward domestic and foreign firms in government
purchasing decisions above certain thresholds. Two
IPEF. U.S. aims for the proposed IPEF appear to vary from
suspended provisions relate to: (1) procuring entities and
CPTPP and past U.S. FTAs, as the Administration does not
efforts to promote compliance with labor laws, and (2) a
seek coverage of market access issues. IPEF involves a
mandate to reopen procurement negotiations in three years.
limited set of trade issues, to be negotiated by USTR,
including labor, the environment and climate change, the
Intellectual Property Rights (IPR). Protects patents,
digital economy, agriculture, transparency, competition
copyrights, trademarks, and includes disciplines on trade
policy, and trade facilitation. The Commerce Secretary is to
secrets to combat cyber-theft, with various phase-in
periods, notably for Vietnam. Protections were narrowed
lead negotiations on supply chains, tax, infrastructure, and
due to suspensions relating to: scope of patentability,
decarbonization issues. U.S. officials envision both
patent term extensions, test data for marketing approvals,
cooperative and binding commitments, but it is unclear
and requirements for criminal penalties for certain IP
what type of enforcement mechanism IPEF may have.
infringements. Also suspended are: biologics commitments,
USMCA. The most recent U.S. FTA, the U.S.-Mexico-
extended term for copyrights, and provisions on legal
Canada Agreement (USMCA), has much in common with
remedies and safe harbor for internet service providers.
CPTPP in its breadth and depth, but also key differences.
Investment. Removes barriers and provides protections for
Some USMCA commitments are more extensive (e.g.,
foreign investors in CPTPP countries, including non-
labor, SOEs, digital trade), and others are less extensive
discriminatory and minimum standards of treatment, though
(e.g., procurement). USMCA also includes more restrictive
each country has exempted some sectors or practices.
ROOs on autos (i.e., 75% RVC and wage requirement).
Includes investor-state dispute settlement (ISDS), though
Notably, USMCA does not include specific IPR provisions
countries may block investors’ claims against tobacco
for biologics, and limits the application of ISDS, issues that
control measures. Due to suspensions, ISDS does not apply
were also affected by suspended provisions in CPTPP.
to certain disputes, such as investment agreements between
investors and a central government authority (e.g., relating
RCEP. RCEP includes China, Australia, Japan, New
to natural resource rights or infrastructure projects).
Zealand, South Korea, and the ten ASEAN members and
Rules of Origin (ROOs). Sets requirements to determine
took effect in 2022. Like CPTPP, RCEP lowers trade
whether goods originate within the territory of CPTPP
barriers and sets rules among the participants, but has
members and are eligible for CPTPP benefits (e.g., autos
generally less extensive commitments (e.g., lower levels of
require 45%-55% regional value content (RVC) depending
tariff liberalization, and broad exceptions from DS,
on calculation method to qualify for tariff elimination).
including the digital trade chapter) and omits several issues
Services. Provides core obligations of non-discrimination
covered in CPTPP such as labor, environment, and SOEs.
(national treatment and most-favored nation treatment),
Issues for Congress
market access, and local presence on a “negative list” basis
Key oversight and legislative issues, which Congress may
(i.e., covering all cross-border services sectors, except those
consider, including through any renewal of TPA, include:
specifically excluded). Includes separate obligations for
financial services, with sector-specific exemptions.
What are costs and benefits of different approaches to
regional economic engagement (CPTPP, IPEF, RCEP)?
State-Owned Enterprises (SOEs). Requires countries to
direct SOEs to make purchase and sale decisions based on
Should other approaches be considered?
commercial considerations, enforce regulations with regard
to SOEs impartially, and ensure subsidies and other
What scope exists for changes to CPTPP if the United
noncommercial assistance to SOEs do not cause harm to
States were to consider joining, and what are the
other member countries, with exceptions, including for
implications of China’s potential membership?
smaller (revenue) SOEs and provision of public services.
Worker Rights. Requires countries to adopt and not
Brock R. Williams, Specialist in International Trade and
derogate from laws consistent with core International Labor
Finance
Organization (ILO) principles and rights on freedom of
Cathleen D. Cimino-Isaacs, Specialist in International
association and collective bargaining, and elimination of
Trade and Finance
forced labor, child labor and employment discrimination in
https://crsreports.congress.gov
CPTPP: Overview and Issues for Congress
IF12078
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https://crsreports.congress.gov | IF12078 · VERSION 1 · NEW