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23 Nov 2021

Econ Digest

What if Thailand joins CPTPP following China, and the difference between CPTPP and RCEP (under the assumption that Thailand and China become members of both agreements)


        Thailand’s consideration of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is back on the table after China, and subsequently Taiwan region, expressed interest in joining, while the United Kingdom has applied to join early this year. Countries with strong economic and trade relations with China have thus been prompted to reconsider joining the CPTPP.

        KResearch has conducted a comparative analysis of joining the Regional Comprehensive Economic Partnership (RCEP) and CPTPP under the assumption that Thailand and China are members of both agreements. In terms of market access, joining the CPTPP will allow Thailand to enjoy FTA treatment with new markets such as Mexico, Canada, the United Kingdom and Taiwan. In terms of production, both the CPTPP and RCEP are multilateral FTAs, but the RCEP is the most effective way to link production bases and markets in Asia, while the CPTPP is more attractive in integrating multiple regions across the Americas, Europe and Asia, a key selling point not found in any other FTA in the world. In terms of regulations, the RCEP primarily establishes the regulations for opening trade and investment markets, but the CPTPP involves deeper issues than traditional FTA, covering other aspects of liberalization, such as labor standards, environmental standards, free flow of information, and government procurement. Therefore, the CPTPP is undeniably a challenge for each member state in elevating its regulations within the agreed time frame amid the difficulty of avoiding negative consequences.

        If Thailand and China join the CPTPP, Thailand’s manufacturing and export sectors, which are reliant on foreign investment, stand to benefit significantly, both in terms of competition and the potential to seize opportunities to participate in large supply chains, unlike the RCEP in which Thailand’s benefits are mainly limited to Asia. However, there are sensitive issues that the government must evaluate in the CPTPP, particularly intellectual property practices based on international guidelines, such as the stringency of pharmaceutical patent applications and the protection of new plant varieties, which will have far-reaching impact on the general public and farmers. The main challenge for Thai authorities may be to foster a clear understanding among all parties involved, as well as a mitigation plan that will help ease tensions.

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