What does the CPTPP trade deal mean for your business?

What is the CPTPP agreement?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership is a multilateral free trade agreement between Canada and 10 other countries in the Indo-Pacific region.

Signed on March 8th 2018, the CPTPP came into effect in December of that year. It is considered a high-standard trade agreement because it goes beyond reducing tariffs. CPTPP also establishes rules about labour, the environment, digital trade and investment. By addressing nearly all sectors and aspects of trade between Canada and member countries, CPTPP reduces trade barriers and makes it easier for Canadian companies to do business in the region.

Which countries are members of the CPTPP?

The CPTPP includes Canada as well as 10 other countries. These include:

• Australia
• Brunei
• Chile
• Japan
• Malaysia
• Mexico
• New Zealand
• Peru
• Singapore
• Vietnam

In July 2023, the CPTPP members signed a protocol allowing the United Kingdom (U.K.) to join the agreement as well. Not yet in force for the U.K., the trade agreement will come into effect for that country once all members complete their respective ratification processes.

What are the benefits of the CPTPP trade agreement for Canada?

Together, CPTPP member countries represent nearly one billion consumers and 15.5% of the world’s GDP. As a result, the trade agreement opens up significant export opportunities for Canadian businesses.

One of the main advantages for Canadian companies is the reduction of tariffs on exports, explains Allison Thorne, a business advisor with BDC Advisory Services. “CPTPP makes nearly all tariff lines–about 99%– duty-free between member countries. This creates significant opportunities for Canadian businesses in the Pacific region.”

For example, over 94% of agricultural and agri-food exports are duty-free under CPTPP. For industrial products, this number rises to 99%, while all forest products, as well as fish and seafood, will enjoy full duty-free access.

Another key benefit of CPTPP is that it lets Canadian companies bid on government contracts on equal footing with domestic suppliers. According to Thorne: “This is a huge benefit because public contracts can be a major source of business for companies in certain sectors.”

CPTPP also offers several other advantages for Canadian businesses:

• Customs and trade facilitation
  In order to reduce processing times at the border and facilitate the movement of goods, CPTPP members are working to keep customs procedures simple, effective, clear and predictable.
• Simplifying compliance
  CPTPP aims to cut unnecessary regulatory barriers and simplify compliance. Among other measures, it includes provisions to make it easier for Canadian companies to do business in the member countries.
• Intellectual property
  The trade agreement sets regional standards for intellectual property rights and enforcement in the region, giving Canadian creators and innovators a clear and predictable framework for doing business in member countries.

How can Canadian businesses know if a tariff will be levied on their export?

To find the applicable tariffs for your products when exporting to CPTPP markets, consult the Canada Tariff Finder. Developed by BDC in partnership with EDC and Canada's Trade Commissioner Service, this tool provides up-to-date custom tariff information for countries with which Canada has a Free Trade Agreement (FTA).

It gives the current tariff rate for the specific good being searched as well as for subsequent years, when available. The Tariff Finder also allows you to compare tariffs between different products or countries to identify your best options.

“It’s a very simple, effective tool, says Thorne. You just enter a description of your product, or your HS code (Harmonized System code), and it will give you the current applicable tariff rate.”

What are the CPTPP rules of origin?

Since products can be shipped from countries different from where they were produced, the CPTPP contains rules of origin to determine the true source of goods. These rules are important because they clarify which products qualify for preferential treatment—such as reduced or zero tariffs—under the agreement.

Under CPTPP rules, certificates of origin are mandatory to claim preferential tariffs or treatment. “However, there is no prescribed format,” says Thorne. At a minimum, a certification of origin must include the following elements:

• Importer, exporter or producer certification of origin: Indicate whether the certifier is the exporter, producer or importer.
• Certifier: Provide the certifier’s name, address, telephone number and e-mail address.
• Exporter: Provide the exporter’s name, address, e-mail address and telephone number.
• Producer: Provide the producer’s name, address, e-mail address and telephone number.
• Importer: Provide the importer’s name, address, e-mail address and telephone number.
• Description and HS tariff classification of the product: Provide a description of the good and the HS tariff classification. If the certification of origin covers a single product shipment, indicate the invoice number.
• Origin criterion: Specify the rule of origin under which the good qualifies.
• Blanket period: Include the period if the certification covers multiple shipments of identical goods for a specified period of up to 12 months.
• Authorised signature and date: The certification must be signed and dated by the certifier and accompanied by a statement specified in the agreement.

How does CPTPP affect work permits and labour mobility?

The trade agreement facilitates work permits and provides temporary entry provisions for business visitors, professionals and investors. It also eliminates a number of barriers such as quotas and labour market tests, facilitating travel for Canadian business travelers.

More specifically, CPTPP aims to facilitate temporary entry for four specific categories of business people:

1. Business visitors: Individuals traveling for business purposes, such as conducting market research or attending meetings and seminars.
2. Intra-corporate transferees: Executives, managers, and other employees moving within their company to a branch or affiliate in another CPTPP country.
3. Investors: Business leaders or company executives who have made a significant capital investment in a member country.
4. Highly skilled professionals and technicians: Specialists such as engineers, actuaries, graphic designers and architectural technologists.

In general, Canada’s commitments regarding entry are based on the principle of reciprocity. In other words, the entry rights Canada receives from other member countries are matched by the access Canada provides to their business people.

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