Background: the Trans-Pacific Partnership (TPP)
Early negotiations for what would become the TPP began with four countries in 2006, which would grow to 12 members by 2013. Canada joined the TPP trade negotiations in 2012. The TPP is an Asia-Pacific regional trade deal that included the United States, Japan, Mexico, Malaysia, Vietnam, Australia, New Zealand Singapore, Chile, Peru, and Brunei. Negotiations concluded in 2015 and the TPP was subsequently signed in 2016 by all 12 State Parties.
The TPP was one of the most significant free trade agreements (FTAs) initiatives around the globe. The TPP represented a Gross Domestic Product (GDP) of US$21 trillion, 40 percent of the global economy, and 25 percent of the global value of trade in 2017. In the same year, the region accounted for over 65 percent of Canada’s agri-food exports.1
From the TPP to the CPTPP
In January 2017, under the leadership of President Donald J. Trump, the U.S. formally withdrew from the TPP. Due to the rules and procedures for implementation of the TPP, the TPP could not enter into force without the U.S. This left the remaining 11 members of the deal to try to find a path forward, which led to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Less than a year after the U.S. withdrawal, the 11 remaining members agreed to a revised trade agreement on Jan. 23 2018 that would forge ahead without the U.S. The pact was rebranded to become the CPTPP.
Negotiations for the CPTPP concluded on January 23, 2018, in Tokyo, Japan, and included much of the original content of the TPP. The CPTPP was signed on March 8, 2018, at a ceremony in Santiago, Chile that was attended by International Trade Minister François-Philippe Champagne and the 10 other trade ministers from the CPTPP countries.
On December 23, 2022, Chile formally notified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Depositary, New Zealand, that it has completed the necessary domestic procedures to ratify and implement the Agreement. Along with Chile, ten other CPTPP countries have ratified the agreement: Canada, Australia, Japan, Mexico, New Zealand, Singapore, Vietnam, Peru, and Malaysia. Brunei Darussalam is still undertaking its domestic procedures to ratify and implement the Agreement.
The agreement secured access to a region that has a combined GDP of $13.5 trillion, and, once implemented, made Canada the only G7 country with free trade access to the Americas, Europe, and Asia-Pacific. Total bilateral trade between Canada and the CPTPP region amounted to $105 billion in 2016, which is equal to 8.1 percent of Canada’s total trade. The CPTPP market continues to present significant potential for growth for Canadian agriculture and agri-food exporters.
In particular, the CPTPP retains the same rules and market access outcomes and most of the provisions of the TPP. This includes the reduction of tariffs that is expected to result in savings of $428 million a year for Canadians.2 Further, 22 provisions have been suspended or changed, largely in areas that were priorities for the U.S. such as investment and intellectual property.
Once the CPTPP entered into force, it became one of the largest FTAs in the world with 11 countries representing almost 500 million people and a combined GDP of $13.5 trillion, or 13.5 percent of global GDP.3 The gains from the CPTPP have benefited many sectors including financial services, fish and seafood, metals and minerals, and agri-food.
The CPTPP was expected to increase exports among the partners by 2.43 percent, increase exports to non-CPTPP parties by .23 percent, and generate economic welfare benefits of C$22 billion by 20354.
CPTPP has brought great economic benefits to Canada. In the first 3 years after CPTPP entered into force, total merchandise trade between Canada and Australia, Japan, New Zealand, Singapore and Vietnam (the 5 ratified CPTPP signatories without other trade agreements with Canada) grew almost 10%—from $47.3 billion in 2018 to $52.1 billion in 2021.
Outcomes for Canadian Agri-Food Exporters
In 2021, agri-food exports to CPTPP countries reached CDN $2.4 billion. The CPTPP provides unprecedented and preferential access to large and fast-growing markets in the Asia-Pacific.
On entry into force some notable gains for Canadian agriculture included:
- Japan eliminated 32 percent of tariff lines,
- Vietnam eliminated 31 percent of tariff lines (67 percent within 15 years),
- and Malaysia eliminated 92 percent of tariff lines.
- Beyond tariffs, the TPP also created a new Asia-Pacific framework for trade with rules to increase cooperation and transparency on non-tariff barriers related to sanitary and phytosanitary measures, biotechnology, and plant health.
The unprecedented access boosted exports of Canadian agri-food products in the region supporting growth, job creation, and stability across rural and urban communities.
CAFTA members projected the following opportunities through CPTPP:
- For canola, better trade security, more value for their products, and increased exports by up to $780 million per year;
- For pork producers, preferential access ahead of non-TPP competitors, ability to compete in the billion-dollar Japanese market where exports could climb by $300 million;
- Canadian beef producers expect to double or triple annual exports to Japan to nearly $300 million;
- Canadian barley producers could export an additional 400,000 to 500,000 tonnes of barley in various valued-added forms worth about $100 million;
- The TPP will create new opportunities, provide a more secure trading environment, level the playing field in countries that have FTAs with members but not Canada and preserve current exports: this for 1.5 million tonnes of premium wheat exported to Japan, $2.3 billion dollars of grains and special crops to Japan, Malaysia, and Singapore, $884 million dollar of soybean exports to TPP markets and $340 million dollars of pulse exports.
- As for Canada’s sugar and sugar-containing products sector, the TPP provides welcome, though small quota increases into the restricted US sugar market.
Japan, Malaysia, and Vietnam are regarded as key CPTPP markets for Canadian agri-food products. In these markets, Canadian exporters faced high tariffs and no preferential access before CPTPP. In 2017, Canada exported approximately $4.9 billion in agri-food products to these three markets, which amounts to 61 percent of total agri-food exports to the CPTPP region.
- Japan was expected to account for 93 percent of agri-food export gains, followed by significant gains in Vietnam, and modest gains in Malaysia.
- Japan has a population of 125 million, is the third-largest economy in the world, the fourth-largest importer of agri-food products in the world, and Canada’s third-largest agri-food export market.
- Japan, as the third-biggest export market, was the big prize for Canadian agri-food exporters in the CPTPP. It is a high-value, stable market, that imports more than $4 billion in agrifood products every year.
- Japan has a food self-sufficiency rate of 38 percent, which makes Japan heavily reliant upon agri-food imports.
- In 2016, 41.6 percent of Canadian agri-food exports were processed foods. The top processed foods include pork, beef, malt, and frozen fries.9
- Canada’s main competition for the Japanese agri-food market includes the United States, China, Thailand, Australia, and the EU.
- In 2021, Japan imported CDN $4.5 billion in Canadian agri-food and agricultural products.
- Vietnam’s population reached about 95 million in 201710. Vietnam was Canada’s 13th-largest agri-food export market in 2017.
- Vietnam has an important emerging middle class—currently accounting for 13 percent of the population and expected to reach 26 percent by 2026.
- Vietnam’s GDP Annual Growth Rate in Vietnam averaged 6.50 percent from 2000 until 2018. According to a forecast by PricewaterhouseCoopers in February, Vietnam may be the fastest-growing economy in the world.
- Although Vietnam has achieved a high level of food self-sufficiency, imports of agri-food products have been increasing.
- Top Canadian agri-food exports to Vietnam include wheat, soybeans, canola meal, and pulses.
- Vietnam is ranked third in the world in pork consumption after the EU and China.
- In 2021, Canadian agri-food exports to Vietnam reached CDN $7.7 billion.
- Malaysia has a population of 31 million and was Canada’s 29th largest agri-food export market in 2017.
- Malaysia’s economy continues to perform strongly, with projected growth of 5.3 percent for 2018. Malaysia’s economy is projected to expand at 5.1 percent in 2019 and is expected to achieve high-income country status at some point between 2020 and 202411.
- Malaysia is heavily reliant upon food imports and faced a food crisis in 2008 after the importation of staple food products in countries was disrupted.
- As a result of the 2008 food crisis, Malaysia has sought to increase its food security through measures of both food self-sufficiency and increase access to new agri-food markets.
- Top Canadian agri-food exports to Malaysia include soybeans, wheat, wheat flour, canola oil, and frozen fries.
- Canadian agri-food exports to the region reached CDN $41.7 million in 2021.
FTAs in the Region
The CPTPP was Canada’s second FTA in the Asia-Pacific region. The Canada-Korea FTA, which entered into force in 2015, was Canada’s first FTA in Asia.
As of 2022, Canada is under free trade negotiations with the Association of South East Asian Nations (ASEAN). Members include Brunei, Philippines, Indonesia, Laos, Myanmar, Malaysia, Singapore, Thailand, and Cambodia. Canada also launched negotiations with Indonesia in 2022 to complete a free trade agreement.
Multiple other FTAs exist in the region, some of which give preferential access to Canada’s competitors in key markets. The preferential access brought by the CPTPP helps Canada remain competitive in the fastest-growing economic region in the world where our competitors are already ahead of us.
- Australia, Mexico, and Chile already have free trade agreements with Japan, and the EU and Japan completed FTA negotiations in December 2017.
- The Japan-EU free trade agreement cut 85 percent of Japanese tariffs on European agri-food exports.
- China, Japan, and South Korea, the three largest economies in Asia, launched negotiations for a trilateral free trade agreement (FTA) in 2013. As of January 2022, a total of 16 rounds of negotiations between the three parties have been held.
- Vietnam and Malaysia, both members of ASEAN, have signed FTAs with some of Canada’s major competitors these include China, South Korea, Australia, New Zealand, India, Chile, and Japan.
- Vietnam and Malaysia are also parties in the Regional Comprehensive Economic Partnership (RCEP), which includes ASEAN, China, Japan, South Korea, India, Australia, and New Zealand.
- Vietnam also has bilateral FTAs with South Korea, Japan, Russia, and the United States.
- The EU and Vietnam signed a Trade Agreement and an Investment Protection Agreement on 30 June 2019.
- Vietnam is currently in FTA negotiations with the EFTA (Norway, Iceland, Liechtenstein, Switzerland).
- Malaysia has bilateral FTAs with Australia, Chile, India, Japan, New Zealand, Pakistan, and Turkey.
- Malaysia has launched FTA negotiations with the EU, EFTA, and the United States.
As one of the most steadfast and vocal supporters of the CPTPP trade agreement, CAFTA applauded the news in January 2018 that Canada concluded negotiations. CAFTA was present in Chile when CPTPP was signed. CAFTA continues to support CPTPP.
See CAFTA’s statement on the signing of CPTPP.
Last updated: December 2022
1 House Standing Committee on International Trade, The Trans-Pacific Partnership Agreement: Benefits and Challenges for Canadians, 2017.
2 Global Affairs Canada, Economic impact of Canada’s participation in the CPTPP, 2018.
3 Global Affairs Canada, Economic impact of Canada’s participation in the CPTPP, 2018.
4 Canada West Foundation, The Art of the Trade Deal: Quantifying the benefits of a TPP Without the United States, 2017.
5 Global Affairs Canada, Economic impact of Canada’s participation in the CPTPP, 2018.
6 Caught in the Cross-Fire: Canadian Agricultural Outcomes under Alternative Asia-Pacific Trade Scenarios; Ciuriak Consulting Inc, 2018.
9 Agriculture and Agri-Food Canada, Outline of Opportunities in Japan, 2018.