A U.S. congressional analysis released a comparison of four trade agreements in force or under negotiation: CPTPP, IPEF, USMCA and RCEP.
To begin with, the U.S. objectives for the Indo-Pacific Economic Framework for Prosperity (IPEF) appear to differ from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and previous U.S. Free Trade Agreements (FTAs), as the Administration does not intend to cover market access issues.
The IPEF includes a limited set of trade issues, which will be negotiated by the U.S. Trade Representation (USTR), including labor, environment and climate change, digital economy, agriculture, transparency, competition policy, and trade facilitation.
The Commerce Secretary will lead negotiations on supply chains, tax, infrastructure and decarbonization.
For now, U.S. officials envision both cooperative and binding commitments, but it is unclear what kind of enforcement mechanism the IPEF may have.
The Treaty between Mexico, the United States and Canada (USMCA) has much in common with CPTPP in breadth and depth, but also has key differences.
Some of the USMCA’s commitments are broader (e.g., on labor, public enterprises and digital trade) and others are less broad (e.g., on government procurement).
Also, the USMCA includes more restrictive rules of origin on automobiles (e.g., 75% Regional Content Value (RVC) and wage requirement).
Notably, the USMCA does not include specific provisions on intellectual property rights for biological products, and limits the application of Investor-State Dispute Settlement (ISDS) issues that were also affected by the suspended provisions in CPTPP.
RCEP includes China, Australia, Japan, New Zealand, South Korea and the ten ASEAN members and came into force in 2022 for most members.
Like CPTPP, RCEP reduces trade barriers and establishes rules among participants, but generally has less comprehensive commitments (e.g., lower levels of tariff liberalization and broad SD exceptions, including the digital trade chapter) and omits issues covered in CPTPP, such as labor, environment, and SOEs.
CPTPP and IPEF
CPTPP is an FTA formed by the 11 remaining members of the proposed Trans-Pacific Partnership (TPP) after the Trump Administration withdrew the U.S. signature from the TPP in 2017.
In general, CPTPP, which retains most of the provisions of the TPP, reduces and eliminates tariff and non-tariff barriers, and establishes enforceable trade rules.
CPTPP is currently in force for nine members, entering into force for Australia, Canada, Japan, Mexico, New Zealand, and Singapore in late 2018; Vietnam in 2019; Peru in 2021; and Malaysia in 2022.
Brunei and Chile have signed but not yet fully ratified the agreement.
The United Kingdom, China, Taiwan and Ecuador applied to join CPTPP in 2021, while others, such as South Korea, are considering applying.