IEI: Opinion on CPTPP

 "CPTPP only benefits big companies." Do you agree with this statement? Discuss.

     No, I disagree. A Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP is the significant free trade agreement, especially to SMEs. The eleven nations under CPTPP members are Canada, Japan, Mexico, Singapore, Vietnam, Australia, New Zealand, while Malaysia, Chile, Peru, and Brunei Darussalam are yet to ratify. These 11 countries have a total of US$13.9 million, contributing 14% of the world’s GDP. Potential new members include Colombia, Korea, and Thailand. CPTPP gives a lot of benefits especially to SMEs. Here is why.

Firstly, CPTPP would grant full market entry to its member, whereby it decreases or eliminates trade barriers whether it is tariff or not in all areas of commerce in goods and services. The CPTPP aids in increasing the number of nations and sorts of goods that a country's firms, including SMEs, can export more simply to CPTPP countries. With each of these tariff reductions, the firm is able to outperform businesses from non-CPTPP nations, particularly its American rivals, in these markets. Besides, due to lower taxes and levies, imports and exports from CPTPP countries are more affordable and the trade network among them is also increased. Therefore, SMEs and online retailers who sell B2C products have the choice of acquiring raw materials or completed items from any of CPTPP countries at much lower tariff rates, possibly at lower costs or higher quality. Some goods, including clothing, will have low taxes when the CPTPP is put into effect for trading activities between CPTPP countries. Because of decreased taxes and levies, both exports and imports from CPTPP signatories are also more affordable and their trade networks are extended. Cheaper tariffs would result in lower costs, which would increase demand for the products.

Second, CPTPP offers a better sales presentation than Unites States businesses, which is good for SMEs. Due to the removal of tariffs, companies can sell goods at lower prices to other companies in CPTPP countries as well as utilise those commodities as inputs to produce things that they can then sell in any 10 countries through regional cumulation rules, the rules that promotes businesses in CPTPP countries to source for materials and products from other member countries. The materials are valued the same to all the members of CPTPP countries. Doing so allows these final products to enjoy preferential tariffs when exported to other CPTPP countries. For example, for a Japanese clothing company to enjoy these benefits, all it has to do is to follow a few terms involved. First, the company from Japan may imported the materials of fabric from other 10 countries, like Brunei, with preferential tariffs rates. Then, the final product, which is shirt is manufactured using different CPTPP member-sourced materials, like thread from Malaysia. Next step, if a sufficient percentage of the product is made using CPTPP-sourced materials, it will qualify for preferential tariffs when exported to other CPTPP countries. Lastly, if the percentage of the finished product’s material satisfies the CPTPP rules of origin, the shirt can be sold at preferential tariffs in CPTPP countries. The firm might import at affordable prices and a greater selection of inputs to its origin country.  In other words, more supplies of goods and materials are now available to businesses including SMEs, allowing them to continue to be benefited from favourable tariff rates while selling their goods both locally and exporting their goods to those 10 countries.

Third, as SMES tend to have a little experience about the trade facilitation, rules for trade facilitation are made simpler with CPTPP, hence, less mistakes or loss has been made. Since, namely, thread imports already pass into Canada duty-free, the abolition of tariffs is useless to this business. On the other side, the unpredictability of customs rulings on classifying goods and the fact that inputs like threads, variants of fabrics, and materials fluctuate with the seasons have been key drawbacks for the garment industry, as well as many other industries in international trade agreements. Via provisions on self-certification and advance judgements, the CPTPP allays many of these concerns and offers the company—as it does for businesses in all 11 CPTPP markets—more confidence. In accordance with CPTPP regulations, shipments may be made without the need of any specific documents known as a certificate of origin. The business can use something called "advance ruling," which lasts up to three years, to convince customs officers to classify its goods. The corporation can then be confident that the apparel will be categorised as such and not as an item labelled "other" and subject to higher tariffs or other rules of origin at the border or be forced to wait at the crossing while customs officers determine how to classify the item. The chapter restricts the grounds for declining to issue an advance ruling to situations like not receiving the requested information or tests or there being an active legal proceeding. If the SMEs or any companies plan to establish one and only distribution hub in a CPTPP nation in Asia, these trade facilitation requirements will be extremely crucial.

Next, CPTPP will present the business with a greater selection of distribution partner choices that are all governed by the same set of trade regulations. The business could, for instance, ship all of its CPTPP market-bound skincare products to a distributor in Chile, who would handle shipping and logistics concerns such as ensuring cold storage. For a Chile distributor, Japan skincares are more appealing than China skincares since they can be shipped to buyers at a cheaper rate and without extra documentation needed since Japan is a member of CPTPP.

Finally, CPTPP offers intellectual property protection. This advantage is vital especially for small- and medium companies as IP protects their creation against potential infringement and in turning ideas into business assets with a real market value. The companies put a lot of effort into protecting its intellectual property investment in their products, namely ingredients, packaging, as well as the trademark they use. To stop the selling of fake goods in the market, CPTPP provides stronger enforcement and IP investment protection. The company decides to re-examine both its growth strategy and its operational procedures. The CPTPP appears to have significantly increased the attractiveness of markets that were previously unappealing because of high tariffs, expensive freight, inevitable border delays, or the difficulty of retail investments.

To conclude, there are many benefits of CPTPP not only for big companies but also for SMEs, its dedication to assisting them in overcoming knowledge obstacles associated with free trade agreements stands out. If everything goes according to plan, it may be the beginning of more open free trade accords, whose advantages wouldn't be restricted to huge or government-affiliated businesses.