WELLINGTON/SYDNEY - A trade deal among 11 Pacific nations, once envisioned as a check on China’s clout but abandoned by U.S. President Donald Trump, will kick in on Dec. 30, Economy Minister Toshimitsu Motegi said Wednesday.
Australia became the sixth country to ratify the Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — the number required to trigger the 60-day countdown to its activation — New Zealand said earlier in the day.
“I expect other signatories will come on board after the CPTPP enters into force, as many are working hard to progress their applicable domestic procedures,” New Zealand Trade Minister David Parker, whose nation is the depositary of the pact, said in a statement. “As a result, we could well see other signatories in a position to ratify over the coming weeks and months.”
Japanese government officials hope that the CPTPP will help inject momentum into Tokyo’s push for multilateral free trade ahead of the expected start of bilateral negotiations for a Japan-U.S. trade agreement in January.
When the CPTPP takes effect, Japan’s economy is projected to get an ¥8 trillion ($71 billion) boost, although agricultural and sea produce trade may see a negative impact of up to ¥150 billion, according to the government.
The pact has had a difficult birth and had appeared to be floundering when Trump withdrew U.S. participation.
But frantic behind-the-scenes, Japanese-led diplomacy kept a slimmed-down version of the pact alive among the remaining members — in the hope that Washington will have a change of heart or government and will eventually join.
Even without the participation of the world’s largest economy, the deal has been described as a game changer.
It covers many rapidly growing economies that make up around 14 percent of world trade and was designed as a way of counterbalancing China’s might-is-right approach to commerce in the Asia-Pacific region.
As well binding countries into a tougher legal framework for trade, lowering tariffs and opening markets, the pact will also introduce new labour standards and force some governments to introduce competition in sectors long dominated by insiders and political cronies.
Member nations were pushing to trigger the countdown this week so that the pact could come into provisional force before the end of the year. That would ensure an initial tariff cut followed by a second round on Jan. 1, when most of the nations make their annual tariff reductions. Japan’s reductions come on April 1 each year.
“The timing means there will be the added bonus of a second round of tariff cuts on Jan. 1, 2019 for New Zealand exporters into those markets which apply a calendar tariff year,” Parker said.
He said CPTPP marks the first free trade deal for New Zealand with Japan, the third largest economy in the world, as well as with Mexico and Canada, which are both Group of 20 countries.
Motegi told reporters in Tokyo the activation of the agreement was extremely meaningful for Japanese growth and Asian development.
Australia joined Canada, Mexico, Japan, Singapore and New Zealand in ratifying the deal. Countries yet to ratify are Brunei, Chile, Malaysia, Peru and Vietnam. The other countries will each join after ratifying but will face a delayed schedule of tariff cuts.