Overview and benefits of the CPTPP
Strategic and economic benefits
- The CPTPP is a major trading bloc comprising 11 countries representing 495 million people and a combined GDP of $13.5 trillion.
- The CPTPP strategically sets the terms of trade in the Asia-Pacific region.
- The CPTPP Agreement, along with CUSMA and free trade agreements with the European Union (CETA) and South Korea, makes Canada the only G7 nation with free trade access to the Americas, Europe and the Asia-Pacific region.
- The Agreement will generate significant economic benefits for Canada, including access to Japan (the world’s third-largest economy) as well as fast-growing markets such as Malaysia and Vietnam.
- These benefits will continue to grow as the CPTPP expands to include new members.
- All Canadian provinces and territories are expected to benefit from the CPTPP.
Goods market access
Goods market access gains are most significant in Japan, as well as in Vietnam and Malaysia, countries with which Canada does not currently have free trade agreements (FTAs) and where tariffs remain high. Canadian exporters will benefit across a number of sectors.
Agriculture
Agriculture—A key export interest for Canada, particularly in the Japanese market. With the entry into force of the CPTPP, more than three quarters of Canada’s agriculture and agri-food products now benefit from immediate duty-free access.
- Pork and beef
- In Japan, tariffs for higher-priced pork cuts will be eliminated within 10 years, while tariffs on lower-priced pork cuts will be reduced within 10 years.
- Tariffs on beef cuts and beef products will be reduced within 15 years, on par with competitors from other countries with FTAs in place with Japan (e.g. Australia).
- Food wheat and barley
- In Japan, Canada will have access to a Canada-specific quota for food wheat and a shared CPTPP-wide quota for food barley.
- Canola oil—Tariffs in Japan and Vietnam will be eliminated within 5 years.
- Immediate duty-free access
- Exports of a number of other Canadian agricultural products will benefit from immediate duty-free access to various CPTPP countries. These products include canola seed, cranberries, blueberries and pet food.
Fish and seafood
Fish and seafood—Under CPTPP, 100% of tariffs will be eliminated for Canadian fish and seafood products. With the entry into force, the vast majority of these products is now entering duty-free, with remaining tariffs to be phased out over periods of up to 15 years.
- Frozen snow crab
- In Japan, tariffs of 4% will be eliminated upon entry into force.
- Lobster (including processed)
- In Japan and New Zealand, tariffs of up to 5% will be eliminated upon entry into force.
- In Malaysia, tariffs of up to 8%, will be eliminated upon entry into force.
- In Vietnam, tariffs of up to 34% will be eliminated within 3 years.
- Fresh, chilled and frozen salmon (including fillets)
- In Vietnam, tariffs of up to 18% will be eliminated upon entry into force.
- In Japan, tariffs of up to 3.5% will be eliminated within 10 years.
- Frozen fish fillets
- In Vietnam, tariffs of 18% will be eliminated upon entry into force.
- In Japan, tariffs of up to 10% will be eliminated within 10 years.
- Oysters
- In Japan, tariffs of up to 10.5% will be eliminated upon entry into force.
Forest products and value-added wood products
Forest products and value-added wood products—Under the CPTPP, tariffs will be eliminated on forestry and value-added wood products, which will create new opportunities in key markets such as Japan, Malaysia and Vietnam.
- Lumber
- In Japan, tariffs of up to 6% will be eliminated in 15 years.
- In Australia and Brunei, tariffs of up to 5% and 20% respectively will be eliminated upon entry into force.
- Oriented strand board
- In Japan, tariffs of up to 6% will be eliminated within 15 years.
- In Malaysia and Brunei, tariffs of up to 20% will be eliminated upon entry into force.
- In Australia and New Zealand, tariffs of up to 5% will be eliminated upon entry into force.
- Plywood and veneer
- In Japan, tariffs of up to 10% will be eliminated within 15 years.
- In Malaysia, tariffs of up to 40% will be eliminated within five years.
- In Australia, tariffs of up to 5% will be eliminated upon entry into force.
- In New Zealand, tariffs of 5% will be eliminated within seven years.
- Carton boxes and packing containers
- In Vietnam, tariffs of up to 24% will be eliminated within three years.
- In Malaysia, tariffs of 25% will be eliminated within two years.
- In Australia, tariffs of 5% will be eliminated upon entry into force.
Industrial goods
Industrial goods—Under CPTPP, 100% of tariffs will be eliminated on industrial goods and consumer products. The majority of Canadian industrial goods exported to CPTPP countries became duty-free immediately with entry into force, with most remaining tariffs on industrial goods to be eliminated over time.
- Industrial machinery
- In Vietnam, tariffs of up to 25% will be eliminated within eight years.
- In Malaysia, tariffs of up to 30% will be eliminated within 10 years.
- In Australia, tariffs of up to 5% will be eliminated within 4 years.
- In New Zealand, tariffs of up to 5% will be eliminated within 7 years.
- Chemicals and plastics
- In Japan, tariffs of up to 6.5% or 25.60 yen/kg, whichever is less, will be eliminated within five years.
- In Vietnam, tariffs of up to 31% will be eliminated within 10 years.
- In Malaysia, tariffs of up to 50% will be eliminated within 10 years.
- In Australia, tariffs of up to 10% will be eliminated within four years.
- In New Zealand, tariffs of up to 10% will be eliminated within seven years.
- Metals and minerals
- In Japan, tariffs of up to 11.7% or 44 yen/kg, whichever is less, will be eliminated within 10 years.
- In Vietnam, tariffs of up to 40% will be eliminated within 10 years, including in-quota tariffs for certain minerals.
- In Malaysia, tariffs of up to 50% will be eliminated within 10 years.
- In Australia, tariffs of up to 5% will be eliminated within four years.
- In New Zealand, tariffs of up to 10% will be eliminated within seven years.
- Cosmetics
- In Japan, tariffs of up to 5.4% will be eliminated upon entry into force.
- In Vietnam, tariffs of up to 30% will be eliminated within four years.
- In Malaysia, tariffs of up to 20% will be eliminated within six years.
- In Brunei, tariffs of up to 30% will be eliminated within seven years.
- In Australia, tariffs of up to 5% will be eliminated upon entry into force.
- In New Zealand, tariffs of up to 5% will be eliminated within seven years.
Provisions on technical barriers to trade (TBT), investment, intellectual property, sanitary and phytosanitary measures, and other areas in the CPTPP Agreement are now in force to secure the goods market access gained through tariff elimination. It will create a predictable trading environment for CPTPP members, giving manufacturers and exporters a leg-up in prospective markets.
The CPTPP Agreement includes annexes to the TBT chapter that address specific challenges faced by exporters of pharmaceuticals, medical devices, information and communications technology, and cosmetics, among others.
Automotive and auto parts
Tariff and non-tariff outcomes for the automotive and auto parts sectors include:
- Phased tariff elimination will apply for all vehicles and vehicle parts into CPTPP markets. Japan is already designated a most-favoured nation (MFN) duty-free.
- Canada’s 6.1% tariff on passenger vehicle imports will be phased out over four years, through five annual back-end loaded cuts to retain greater tariff protection during the first two years—higher protection than in the Canada-Korea FTA and CETA.
- Canada’s tariffs of up to 8.5% on auto parts were eliminated with the entry into force of the Agreement.
- Canada’s bilateral automotive agreement with Japan, including a safeguard mechanism that applies in cases of import surges, binding accelerated dispute settlement procedures, and the establishment of a bilateral committee on motor vehicle trade to discuss issues affecting trade and investment.
- Canada has negotiated a more liberal rule of origin for motor vehicles with Australia and Malaysia to ensure that Canadian manufacturers can benefit from preferential tariff treatment to these markets.
- Commitments on standards and regulations addresses non-tariff measures that prevent Canadian companies from realizing their full export potential.
Services and investment
Canada secured commitments that go beyond those in the General Agreements on Trade in Services and Canada’s current FTAs with certain CPTPP members—using Canada’s traditional negative list approach with standstill and ratchet mechanisms to capture future liberalization.
- Financial services—Once fully implemented, Canadian investors will benefit from enhanced investment protection and access on par with the best treatment provided to any foreign company in CPTPP countries. Commitments by Vietnam and Malaysia go far beyond what either country has offered in an FTA.
- Investment—Canadian investors in the CPTPP members now benefit from a comprehensive set of investment protection provisions, including against expropriation and denial of justice, backed by a robust mechanism for the resolution of investment disputes.
Other sectors
- Biotech annex—The Agreement emphasizes the importance of transparency in each member’s science-based approval processes for biotechnology products, sets out a process in cases of low-level presence occurrences to minimize adverse trade impacts of current regulatory practices, includes year-round submission and review of authorizations of plant products, and provides for the establishment of working groups on biotechnology.
- Temporary entry—Once fully implemented, will provide Canadians with new temporary entry commitments from several CPTPP partners for certain professionals and highly skilled technicians, intra-company transferees, investors, and business visitors, including improved access into priority markets identified by stakeholders, most notably in Australia and Chile.
- Dedicated small and medium-sized enterprises (SME) chapter—For the first time ever in a Canadian trade agreement, this chapter includes provisions to ensure SMEs have access to information specifically tailored for their use, making it significantly easier for Canadian SMEs to explore and navigate the CPTPP markets and better position themselves for success. The CPTPP also includes enforceable provisions on state-owned enterprises to promote fair business practices and an electronic commerce framework for cross-border data flows and server localization requirements.
- Environment—The CPTPP Agreement includes provisions to enhance environmental protection in the CPTPP region and to address global environmental challenges, one of the most ambitious outcomes negotiated by Canada to date. Provisions in this chapter are enforceable through the dispute settlement mechanism of the Agreement—a first for Canada.
- Labour—This chapter requires that the basic workers’ rights included in the International Labour Organization 1998 Declaration on Fundamental Principles and Rights at Work be reflected in law and practice, i.e. the elimination of child labour, forced labour and discrimination, and respect for freedom of association and the right to bargain collectively. Provisions in this chapter are also enforceable through the dispute settlement mechanism of the Agreement—another first for Canada.
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