In 2021, four economies – the UK, China, Taiwan and Ecuador – formally applied to join the 11 countries that make up the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). South Korea has also sent strong signals that it hopes to join the deal. Absent from this list is the United States, which withdrew from the pact in 2017 and, despite widespread acknowledgment in Washington that the move was a strategic mistake, shows no signs of returning in the near term. Other countries in the Indo-Pacific region, however, have suggested they would seek membership, including three Southeast Asian countries: Thailand, the Philippines and Indonesia.
These three countries have expressed varying degrees of interest in joining the CPTPP and have informally explored what it would take to formally join the trade pact. Joining the CPTPP for these countries should be particularly attractive now, as preferential access to several major developed country markets and the need to attract foreign investment would facilitate economic recovery from the COVID-19 pandemic. In particular, China’s recent application to join the CPTPP has revived interest in the potential benefits of membership. Moreover, due to the instability surrounding the future of the United States’ Generalized System of Preferences (GSP), of which Thailand, the Philippines and Indonesia are the main beneficiaries, the need to support their export sectors could accelerate the political dynamic necessary to join them. (Arguably US signals of a desire to return to the deal would be an even more powerful incentive). Nonetheless, sequencing issues, opposing internal stakeholders, and other issues continue to delay the process of formal declaration of intent to join.
Thailand has long expressed a desire to join the CPTPP. Thailand’s trade and finance ministries undertook separate feasibility studies back when the deal was still known as the Trans-Pacific Partnership (TPP) and the United States was included as a party, but the government was unable to counter strong internal opposition from interest groups. are concerned about national access to medicines and wish to protect national agricultural markets. In November 2021, Thailand made headlines when a government official said the country intended to join membership talks; however, the spokesperson noted that certain terms would need to be negotiated internally before formally declaring an intention to join.
Thailand’s Ambassador to the United States, Manasvi Srisodapol, recently told the American Chamber of Commerce that Thailand “sees potential benefits in joining the trade pact. We are in the process of consulting with relevant stakeholders and thoroughly assessing Thailand’s readiness to ensure we can meet the high standards and level of liberalization required to promote inclusive growth and innovation. . Manasvi further stated that “a membership in the CPTPP would build on the Regional Comprehensive Economic Partnership Agreement (RCEP) [of which Thailand is already a member]which entered into force on January 1 this year, to address new and emerging economic issues and foster economic integration and supply chain connectivity.
Like Thailand, the Philippines’ interest in the CPTPP is clear, but the consultation process and legal analysis of the conditions necessary for membership have been long and drawn-out. In early 2021, Commerce Secretary Ramon Lopez asked Philippine trade officials to re-explore opportunities to enter the trade pact. On February 3 of the same year, he sent a letter to the New Zealand Minister for Foreign Affairs and Trade, Damien O’Connor, formally inquiring about the accession process. A year on, the country is continuing stakeholder engagement, including with CPTPP signatories and other interested parties such as the UK
In 2015, the United States Chamber of Commerce, together with AmCham Philippines and USAID, launched a study to assess the readiness of the Philippines to join the then TPP, reconciling the text of the TPP with the existing Philippine trade and investment law. The results were highlighted at a joint event in 2016 in Manila. The Philippines recently commissioned its own study led by the Department of Commerce and Industry and the University of the Philippines to understand the discrepancies between the text of the CPTPP and national legislation.
In a conversation with the United States Chamber of Commerce, Philippine Ambassador to the United States Jose Manuel Romualdez said news of China’s interest in joining has made the CPTPP more attractive to the country. The Philippines has signed RCEP, which includes the 10 ASEAN states, Australia, China, Japan, New Zealand and South Korea, although the agreement has yet to be ratified by the Philippine Congress. The ambassador noted that the original reason for the Philippines’ interest in joining the CPTPP was to gain stable market access from the United States, which was leading the pact at the time.
Later, when the United States withdrew from the agreement, the Philippines began exploratory talks on a possible bilateral US-Philippine free trade agreement, but these talks did not progress due to various concerns of the part of the United States. The United States is the Philippines’ largest merchandise export market, but its trade benefits through the GSP program must be re-authorized every two or three years, and the program is currently suspended. Due to the lack of a stable trade agreement with the United States, according to Romualdez, “our timeline (to join the CPTPP) would accelerate if the United States joined.”
Indonesia is the least likely of the three countries to join the CPTPP, at least in the short term. As President Joko Widodo told a business audience at a 2015 gala dinner at the United States House headquarters in Washington, D.C., his country planned to join the then-deal of the TPP, Indonesia’s ability to meet the standards of the current CPTPP remains far from a reality. Sequencing is also an issue as Indonesia focuses more on ratifying the RCEP agreement. Discussions on ratifying RCEP have progressed, but the deal still requires full approval from the Indonesian House of Representatives, which the government hopes to secure this quarter.
Once the RCEP ratification is complete, we can expect Indonesia to further consider the CPTPP. While the government will certainly be looking at the pact primarily from an economic perspective, the perception that the CPTPP would by design exclude China has raised geopolitical concerns (although these may now have changed, given the interest of China to join the agreement). In 2018, Indonesia also called on ASEAN countries that had not yet joined the TPP to collectively negotiate the terms of the deal, but there is little sense of that collectivism today.
Indonesian Ambassador to the United States Rosan Roeslani, when asked recently about Indonesia’s current position on the CPTPP, left the door open, but seemed to agree that no specific progress was imminent. “In principle, Indonesia welcomes initiatives aimed at boosting inclusive economic growth and prosperity in the region,” the Ambassador said. “We are closely following the development of the initiative and underscore our long-standing commitment to supporting international trade and investment.”
The coming year should offer further clues from all three countries about the potential for CPTPP membership, and while national constituencies will be history, external factors such as other countries’ interest in joining the pact, details of the U.S. Indo-Pacific economic framework and the hoped-for economic recovery from COVID-19 will also play a role.
The United States is politically paralyzed in its ability to pursue any new trade initiative, but competition with China, as well as this year’s congressional elections, could change that dynamic. A new opinion poll by the Singapore-based ISEAS-Yusof Ishak Institute, which shows Southeast Asia overwhelmingly views China as the region’s most influential political, security and economic partner, could also prompt to reconsider the situation.