(Bloomberg) -- After years of often rocky negotiations, the 11 members of a Trans Pacific trade pact officially signed the agreement in Chile on Thursday. Ministers pledged to send the pact to their respective parliaments in the next few weeks, with some saying the accord could be implemented by year-end.
Members have touted the pact, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, as their commitment to free trade after President Donald Trump pulled the U.S. out of the deal last year. Even so, concerns about protectionism are growing after Trump’s pledge to slap new tariffs on steel and aluminum, including on long-standing U.S. allies., potentially triggering tit-for-tat duties.
"This is a very good day for trade,” said Steven Ciobo, Australia’s trade minister. “We are sending a mutual signal that we recognize that trade is good for economic growth, jobs and prosperity.”
For the accord that covers about 13 percent of the global economy to come into force, it needs to be ratified by six signatories -- a lower hurdle than for the original pact nixed by Trump. The agreement signed on Thursday suspends 20 provisions of the original pact, many of which dealt with intellectual property rights.
"Today we can say that free trade is alive," said Chile’s Foreign Minister Heraldo Munoz, who warned “there are protectionist pressures that could end in a trade war that no one really wants.”
Here’s the state of play in each of the national legislatures:
By far the largest economy in the deal, Japan aims to pass it by the June end of the current session of parliament, where Prime Minister Shinzo Abe’s coalition boasts a majority in both houses. Japan’s chief negotiator, Kazuyoshi Umemoto, said in February he hoped the agreement would come into force in the first half of next year.
Prime Minister Justin Trudeau has a majority government, which means that parliament is expected to pass a bill to ratify the deal with relative ease. No national election is due until the autumn of 2019, and even that is unlikely to change the calculus because the main opposition Conservative Party agreed to the original trade deal while in power.
While the government says it wants the CPTPP to come into force "as soon as possible," there are hurdles. After the Chile signing, a government-commissioned analysis on whether the deal is in the national interest will be tabled to parliament. The government lacks a majority in the Senate, where laws need support from rival lawmakers. The main opposition Labor Party has said the pact without the U.S. should be abandoned.
Passing the CPTPP through the current Senate session that finishes at the end of April would be a positive signal, but it’s up to lawmakers to determine the timetable. The next regular session won’t start until September, and that would be with a new group of lawmakers chosen in the July 1 national election.
Trade Minister Mustapa Mohamed said this week that the government won’t be able to change the 18 laws required to put the agreement into force by early 2019.
While the city state has given no timeline for ratification, Trade Minister Lim Hng Kiang said in a speech last week that free and open markets are critical for Singapore’s development. The nation has 21 free trade agreements in place.
President Michelle Bachelet is set to step down just days after the signing ceremony. Her successor, Sebastian Pinera, is a conservative billionaire who favors business-friendly policies and is seen as unlikely to halt the ratification process.
The foreign ministry is analyzing the CPTPP and will determine if it needs to pass through Congress. Legislative approval may be required if the ministry decides the pact has implications for human rights and sovereignty, or requires further laws for its application. Otherwise, the president can ratify it with a signature.
The agreement faces few political hurdles as both of the main parties support it. Still, a parliamentary committee will examine the deal before the government reaches a final decision on ratification, which will require legislation to be passed. The foreign ministry’s website says it’s expected to come into force within 12 to 18 months of the signing.
In the one-party state, the national assembly will vote the pact through if instructed to do so by the leadership. The government hasn’t announced the timing of a vote.
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