Brunei is set to sign the revised version of the Trans Pacific Partnership (TPP) in Santiago, Chile, on March 8, as 11 nations move forward with the $14 trillion free trade deal without the United States, which pulled out of the pact a year ago.
Rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the deal has been resurrected after member states worked to renegotiate the agreement without the world’s biggest economy.
The 11 countries signing on to the new CPTPP pact are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
“Both [Canada and Brunei] have been committed to the TPP process all the way, and it’s important that we come up with a new language that ensures that the original ambitions of the TPP agenda are maintained,” said J. Ian Burchett, director-general for Southeast Asia at Canada’s foreign ministry.
Burchett is on a working visit to the sultanate, along with Canada’s Ambassador to ASEAN Marie-Lousie Hannan.
“It will be a great opportunity to open a new channel for Canada and all of the members of CPTPP, including Brunei,” Hannan said after meeting with Bruneian government officials on Monday.
Burchett added that in addition to existing Canadian investment into Brunei’s aviation and pharmaceuticals sectors, the CPTPP would facilitate FDI into new sectors such as ICT, clean technology and food processing.
This is a key selling point for Brunei — still trying diversify its economy away from oil and gas — which has recorded negative growth for the past three years.
The Peterson Institute for International Economics forecasted that by 2030 Brunei’s GDP will grow by over two per cent under the CPTPP, compared to six per cent growth under the initial TPP agreement.
The original TPP covered 40 per cent of global GDP (US$28 trillion), but without the US, the revised deal now covers about 14 per cent (US$10 trillion).
While the market size is significantly smaller, the CPTPP will still be the third largest free trade pact in the world, behind the North American Free Trade Agreement (NAFTA) valued at US$20 trillion; and the European Union at US$19 trillion.
“It’s unfortunate that the United States has decided to withdraw but the agreement itself is so important… that’s why we decided to proceed with it,” said Burchett. “Maybe at a future date there may be an opportunity for the United States to re-join, but right now we are proceeding with the arrangement as it stands.”
While the bulk of the original TPP agreement remains the same, the contentious investor-state dispute settlement has been scaled back — meaning investors may be forced to waive their right to take governments to court.
Countries like Brunei and Malaysia will also be given more time to apply CPTPP rules to large state-owned enterprises.
A provision in the annex to the CPTPP states that Brunei reserves the right to develop its coal reserves if it determines it is in the national interest.
The CPTPP has also attracted interest from non-members such as South Korea, Indonesia, and even the United Kingdom, which is seeking to expand its trade relations post-Brexit.
While the full text of the agreement has yet to be released — negotiations have been criticised in the past for being conducted in secret — New Zealand Prime Minister Jacinda Ardern urged transparency, saying it is her “strong hope” that the full text would be released this week, ahead of signing in Santiago on March 8.