A sprawling Pacific trade deal led by Japan is on the verge of kicking in provisionally after Canada became the fifth country to sign off, according to a government official.
Prime Minister Justin Trudeau’s government sent formal notice of its ratification Saturday to New Zealand, which is compiling records for the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the official said, speaking on condition of anonymity ahead of a formal announcement. Canada finalized its legal process over the weekend after lawmakers passed the deal Thursday.
Japan, Mexico, Singapore, New Zealand and Canada have now ratified it, and Australia’s trade minister said last week he’s on the brink of doing so. The deal will be provisionally enacted 60 days after it’s ratified by six countries. Member nations were pushing to do so by Nov. 1, which would allow the pact to kick in Dec. 31 with an initial tariff cut followed by a second round just one day later, the start of the new year.
The deal also includes Chile, Malaysia, Brunei, Peru and Vietnam. Each country will join after it has ratified, but see a delay in tariff reductions when compared to the initial six. The CPTPP was originally called the Trans-Pacific Partnership and once included the U.S. President Donald Trump withdrew the U.S. from the deal after taking office in 2017.
The deal’s enactment would be hailed by supporters as a victory for the global trading system bemoaned by Trump. The CPTPP nations, representing 14 percent of global gross domestic product, are trying to expand the status quo view of free trade amid a tariff fight between Washington and Beijing and a simmering Brexit battle in Europe.
“CPTPP is the most important global trade arrangement in two decades,” said Deborah Elms, executive director of the Singapore-based Asian Trade Center. At a time of increasing protectionism, “it is striking how these governments grasp the importance of pushing ahead with transparent, rules-based trade that benefits large and small firms.”
Ratification by the six nations by Nov. 1 would allow the deal to enter into force by Dec. 31.
That’s important because subsequent annual tariff cuts for 10 of the 11 nations can only occur every Jan. 1 — Japan’s reductions come on April 1 of each year. If the deal kicks in on Dec. 31, the second round of tariff reductions for most countries can come the next day. Otherwise, they’d wait a year.