Updated October 17, 2022
CPTPP: Overview and Issues for Congress
The Comprehensive and Progressive Agreement for Trans-
stakeholders have urged the Administration to consider
Pacific Partnership (CPTPP) is a free trade agreement
participation in CPTPP or other initiatives that seek to open
(FTA) formed by the 11 remaining members of the
markets further in the region. Previously, the Trump
proposed Trans-Pacific Partnership (TPP) after the Trump
Administration cited a preference for bilateral trade talks
Administration withdrew the U.S. signature from TPP in
and concerns over TPP provisions, such as on rules of
2017. CPTPP, which retains most of TPP’s provisions,
origin, in its decision to withdraw from the agreement.
reduces and eliminates tariff and non-tariff barriers, and
U.S. Trade with CPTPP Members
establishes enforceable trade rules. CPTPP is currently in
effect for nine members, entering into force for Australia,
The United States has significant trade and investment with
Canada, Japan, Mexico, New Zealand, and Singapore in
the 11 CPTPP members, which, combined, accounted for
late 2018; Vietnam in 2019; Peru in 2021; and Malaysia in
41% of U.S. goods trade (2021) and 23% of both U.S.
2022. Brunei and Chile have signed, but have not yet fully
services trade and foreign direct investment (FDI) stock
ratified the deal. The United Kingdom (UK), China,
(2020). Including all 15 CPTPP signatories and current
Taiwan, and Ecuador applied to join CPTPP in 2021, while
applicants, these shares rise to 61%, 39%, and 37%,
others such as South Korea are considering applying.
respectively, with China accounting for 14% of U.S. goods
trade and the UK accounting for 10% of services trade and
Members of Congress may have interest in monitoring and
13% of FDI. As noted, CPTPP may disadvantage
shaping the Administration’s views on CPTPP, including
competition of U.S. firms in the region, especially in
with respect to
markets without existing U.S. FTAs, such as Japan and
Vietnam (Figure 1); a limited U.S.-Japan agreement, in
U.S. leadership in regional trade rules. U.S. leadership,
effect since 2020, has reduced some bilateral tariffs,
including through negotiating objectives mandated by
including on some top U.S. exports, such as beef.
Congress, was largely reflected in CPTPP commitments.
TPP was signed under 2015 Trade Promotion Authority
Figure 1. Current and Potential CPTPP Members
(TPA) legislation (P.L. 114-26, now expired) that set
without an Existing U.S. FTA
negotiating objectives and congressional consultation
and notification requirements for U.S trade agreements.
The Obama Administration viewed TPP as a tool to
shape or update regional, and potentially global, trade
rules to reflect U.S. priorities, especially on issues that
existing multilateral agreements at the World Trade
Organization (WTO) do not address substantively. Such
issues include digital trade, state-owned enterprises
(SOEs), labor, and the environment.
U.S. commercial competitiveness. CPTPP involves
three of the top four U.S. trade partners and may expand
to other major economies, potentially leading to greater
economic integration and trade liberalization among the
Source: CRS with trade data from U.S. Census Bureau and tariff
parties. CPTPP and other regional trade agreements not
data from the WTO and the UK trade ministry.
involving the United States, such as the Regional
Notes: MFN = most-favored nation tariff rates applicable on imports
Comprehensive Economic Partnership (RCEP, see
from WTO members (i.e., tariffs general y faced by U.S. exporters).
below), may disadvantage U.S. trade with members, as
CPTPP Commitments
the participants lower their trade barriers to other
CPTPP incorporates by reference the 30 original chapters of
members but not the United States, and possibly set
the TPP text, including its dispute settlement (DS)
rules that may not align with U.S. interests.
mechanism. However, it suspends indefinitely 22 specific
China’s potential accession. China’s economic heft and
TPP commitments (see below), which had been U.S.
contrasting approach to some U.S. priority trade issues
priorities and which CPTPP parties may reinstate through
(e.g., SOE and digital trade disciplines) suggest its
consensus. CPTPP also establishes administrative
potential membership would have implications for U.S.
procedures (e.g., accession) that replace those in TPP. Side
interests in the region.
letters to CPTPP clarify how specific commitments apply to
certain parties (e.g., a five-year exemption from DS
The Biden Administration has stated it is not currently
regarding data flow commitments and a three-year
interested in joining CPTPP, but recognizes the region’s
exemption related to labor obligations apply to Vietnam).
economic importance, and in May 2022, launched the Indo-
Key provisions (with suspensions from TPP noted) include
Pacific Economic Framework for Prosperity (IPEF, see
below). Some Members of Congress, industry, and other
https://crsreports.congress.gov
CPTPP: Overview and Issues for Congress
Goods Tariffs. Immediate elimination of most tariffs
Worker Rights. Requires countries to adopt and not
among current members and eventual elimination of tariffs
derogate from laws consistent with core International Labor
on roughly 99% of tariff lines. Tariff commitments for new
Organization (ILO) principles and rights on freedom of
members are subject to accession negotiations.
association and collective bargaining, and elimination of
E-Commerce/Digital Trade. Requires free cross-border
forced labor, child labor and employment discrimination in
data flows and prohibits requirements to localize computing
matters related to trade and investment. U.S.-proposed
facilities, with certain public policy exceptions. Prohibits
bilateral labor plans with Brunei, Malaysia, and Vietnam,
duties on digital products and requirements to share source
which included additional commitments (e.g., allowing for
code to gain market entry. Requires members to have
independent unions in Vietnam), are excluded from CPTPP.
privacy regimes in place nationally. CPTPP did not
Dispute Settlement (DS). Includes a DS mechanism to
suspend any digital trade commitments.
enforce commitments, though some exemptions apply.
Environment. Requires countries to enforce and not
Accession. Requires unanimous consent among members to
derogate from their environmental laws to attract trade and
begin market access negotiations (to date, the UK is the
investment, implement specified multilateral environmental
only applicant to reach this step). If negotiations proceed,
agreements they have joined, prohibit certain fishing
parties are to determine whether an applicant is qualified to
subsidies, and combat illegal wildlife trade. A provision
join based on market access offers (e.g., tariffs) and ability
broadening illegal wildlife trade to include determinations
to adhere to CPTPP rules. Such approval for China may be
based on a trade partner’s laws was suspended.
difficult given global concerns about its trade practices and
Government Procurement. Requires nondiscriminatory
industrial policies.
treatment toward domestic and foreign firms in government
Comparison to Other Trade Initiatives
purchasing decisions above certain thresholds. Two
IPEF. U.S. aims for the IPEF appear to vary from CPTPP
suspended provisions relate to (1) procuring entities and
and past U.S. FTAs, as the Administration does not seek
efforts to promote compliance with labor laws, and (2) a
coverage of market access issues. IPEF involves a limited
mandate to reopen procurement negotiations in three years.
set of trade issues, to be negotiated by USTR, including
Intellectual Property Rights (IPR). Protects patents,
labor, the environment and climate change, the digital
copyrights, trademarks, and includes disciplines on trade
economy, agriculture, transparency, competition policy, and
secrets to combat cyber-theft, with various phase-in
trade facilitation. The Commerce Secretary is to lead
periods, notably for Vietnam. Protections were narrowed
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,
extended term for copyrights, and provisions on legal
USMCA. The most recent U.S. FTA, the U.S.-Mexico-
remedies and safe harbor for internet service providers.
Canada Agreement (USMCA), has much in common with
Investment. Removes barriers and provides protections for
CPTPP in its breadth and depth, but also key differences.
foreign investors in CPTPP countries, including
Some USMCA commitments are more extensive (e.g.,
nondiscriminatory and minimum standards of treatment,
labor, SOEs, digital trade), and others are less extensive
though each country has exempted some sectors or
(e.g., procurement). USMCA also includes more restrictive
practices. Includes investor-state dispute settlement (ISDS),
ROOs on autos (i.e., 75% RVC and wage requirement).
though countries may block investors’ claims against
Notably, USMCA does not include specific IPR provisions
tobacco control measures. Due to suspensions, ISDS does
for biologics, and limits the application of ISDS, issues that
not apply to certain disputes, such as investment
were also affected by suspended provisions in CPTPP.
agreements between investors and a central government
authority (e.g., relating to natural resource rights or
RCEP. RCEP includes China, Australia, Japan, New
infrastructure projects).
Zealand, South Korea, and the ten ASEAN members and
took effect in 2022 for most members. Like CPTPP, RCEP
Rules of Origin (ROOs). Sets requirements to determine
lowers trade barriers and sets rules among the participants,
whether goods originate within the territory of CPTPP
but has generally less extensive commitments (e.g., lower
members and are eligible for CPTPP benefits (e.g., autos
levels of tariff liberalization, and broad exceptions from
require 45%-55% regional value content (RVC) depending
DS, including the digital trade chapter) and omits issues
on calculation method to qualify for tariff elimination).
covered in CPTPP such as labor, environment, and SOEs.
Services. Provides core obligations of nondiscrimination
(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
What are costs and benefits of different approaches to
financial services, with sector-specific exemptions.
regional economic engagement (CPTPP, IPEF, RCEP)?
State-Owned Enterprises (SOEs). Requires countries to
Should other approaches be considered?
direct SOEs to make purchase and sale decisions based on
What scope exists for changes to CPTPP if the United
commercial considerations, enforce regulations with regard
States were to consider joining, and what are the
to SOEs impartially, and ensure subsidies and other
implications of China’s potential membership?
noncommercial assistance to SOEs do not cause harm to
other member countries, with exceptions, including for
smaller (revenue) SOEs and provision of public services.
Cathleen D. Cimino-Isaacs, Specialist in International
Trade and Finance
https://crsreports.congress.gov
CPTPP: Overview and Issues for Congress
IF12078
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https://crsreports.congress.gov | IF12078 · VERSION 3 · UPDATED