Why the EU should join the CPTPP

Why the EU should join the CPTPP

by Dr Yeo Lay Hwee, Vice-Chair, ASEANcham-EU

Joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would be a geostrategic plus for Europe while strengthening the rules-based trading order.

This article was first published in The Straits Times on 14 March 2025

“The addition of the EU to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would – in the hyperbolic lingo of US President Donald Trump – benefit both parties “bigly”, says the writer.

In December 2024, the United Kingdom became the 12th member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). If geography is no barrier to the UK’s membership in the Pacific club, then it is time for the European Union to seriously consider joining the CPTPP too.

The addition of the EU to the CPTPP would make for – in the hyperbolic lingo of US President Donald Trump – a “beautiful” trade agreement, benefiting both parties and more “bigly”.

The CPTPP is a high-quality free trade agreement (FTA) with 12 members – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United Kingdom.

It was conceived as a smaller version of the Trans-Pacific Partnership (TPP) agreement, which was supposed to be the premier trade deal and rule-setter for the global economy. But the US pulled out of the TPP in January 2017, shortly after Mr Trump took office for his first stint in the White House. Resuscitated by Japan, the new agreement now known as the CPTPP proceeded with 11 members in 2018.

Japan’s leadership in salvaging the TPP after the US withdrawal was a clear illustration of how medium powers can take proactive measures to protect their interests in the face of disruptions by the world’s largest economy. In the process, Japan also furthered its economic and diplomatic power in the Asia-Pacific.

Now, Trump 2.0 looks hell-bent to create far more disruptions, targeting both friends and foes. Mr Trump has repeatedly singled out the EU for “ripping off” the US, going as far as to assert that it was formed to “screw” the US.

He has put the EU on notice that tariffs would be imposed soon, prompting a warning from the bloc that it would push back. And retaliate it did. On March 12, in response to US tariffs on aluminium and steel and derivative products that amount to US$28 billion (S$37.3 billion), the EU announced calibrated and proportionate countermeasures worth US$26 billion to be applied in two steps, leaving room for negotiations.

In announcing the measures, European Commission President Ursula von der Leyen reiterated that tariffs are bad for businesses and consumers and bring uncertainty to the economy. This is precisely why instead of going down the road of more “tit-for-tat” responses to Mr Trump’s tariffs, and risking an escalating trade war beneficial to none, the EU should instead double down on the mission it is widely known for – to protect and promote a “rules-based order” – and apply to join the CPTPP instead.

There are good reasons for going down the CPTPP route. For instance, the EU is not without economic heft. It has also prided itself on being a rule-setter when it comes to trade because of its single market that is comparable in size to the US and China. The share of the EU in global gross domestic product (GDP) on purchasing power parity is close to 14.5 per cent.

The EU’s strongest asset is not in defence or security, though it has to raise its game following the Trump administration’s recent threats to walk away from its Nato commitments and the bullying tactics used to force Ukraine into accepting a so-called “peace deal”. Stunned by these policy changes, the EU has finally awoken from its slumber of over-reliance on the US for its security umbrella. Since then, the EU has scrambled to find ways of increasing military aid for Ukraine and generally doing more for Europe’s own defence. Funding increased military spending would require the EU to revitalise its flagging economy, which is still reeling from the twin shocks of Covid-19 and the Russian invasion of Ukraine.

Joining the CPTPP would be a smart geostrategic move by the EU under these circumstances, not only to de-risk from an unpredictable and disruptive Mr Trump, but also to diversify relations away from China, which it has been pursuing since 2022. More importantly, it would provide an opportunity for the EU to work with like-minded partners in the Global North such as Japan and Canada and increase its engagement with the dynamic economies in the Global South to improve the EU’s economic fortunes. Overall, it would be a far more positive response to trade dependencies, economic coercion and rising protectionist impulses around the world.

It would also be a strong signal of the EU’s readiness to strengthen the rules-based trading order.

Furthermore, joining the CPTPP while pushing for an EU-India FTA would add heft to the long-held desire of the EU to assert its strategic autonomy and become a strategic actor in the Indo-Pacific region.

An added “side” advantage of the EU joining the CPTPP is having another channel to strengthen relations between the EU and Britain following Brexit. The UK under Prime Minister Keir Starmer and his Labour Party has stepped up to work more closely with some EU member states to support Ukraine and take on more responsibility for the security of Europe. On the economic front, having both the UK and EU in the CPTPP may facilitate a better win-win solution for both parties as well as a much-needed boost for Europe as it faces immense pressure on both the security and economic fronts.

As the EU already has trade agreements with most CPTPP member countries, it should not in theory be too much of a challenge facilitating the grouping’s accession to the CPTPP. After all, it only took the UK three years from application to becoming a full member.

The question for the EU is whether it would be willing to enter an agreement in which Brussels was not the rule-setter, and whether such mega FTAs would gain popular European support. The inter-regional EU-Mercosur pact that was recently concluded in December 2024 is facing some challenges in its ratification process because of resistance from farmers, particularly from France, in view of likely competitive pressures from the Mercosur members of Argentina, Brazil, Paraguay and Uruguay.

For existing CPTPP members, having the EU in the free trade agreement would double the group’s current market share in global trade. The CPTPP would account for more than 30 per cent of global GDP, providing members with the opportunity to make the CPTPP a benchmark agreement and leading the charge in preventing the further unravelling of the global trade regime.

Negotiating with the EU, one of the poles in world trade still able to drive global trade rules, would also offer an opportunity for existing CPTPP members to shape the regulatory framework for new emerging areas such as in artificial intelligence and medical technology.

Interestingly, for some of the Asian countries in the CPTPP, the EU joining it would make the free trade agreement a conduit for strengthening all three pillars of the global economy – the transatlantic, the transpacific and the Asia-Europe pillars. It will be a remarkable showcase of what middle and smaller powers can do to shore up the global economy in the face of rising headwinds as a result of the US-China rivalry.