The Quest for Domestic Regulatory Space in the Investment Chapter of the Comprehensive and Progressive Trans-Pacific Partnership

Despite the United States’ withdrawal from the Trans-pacific Partnership (TPP) at the wake of the US presidential election outcome in January 2017, Japan, Canada, and other TPP member countries decided to forge ahead with the conclusion of the trade agreement. In what may be seen as a direct challenge to the new US administration’s embrace of protectionism, the leaders of eleven Asian Pacific states gathered on March, 8th, 2018, to sign a renamed and slightly revised version of the TPP: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP, the scope of which covers 500 million people on either side of the Pacific and connecting economies with a combined GDP of over $10 trillion. Signatories include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. This paper explores the extent to which the CPTPP has revolutionized the approach of international investment law to host states’ right to regulate for the benefit of the public interest of their subjects. The paper also attempts to determine whether the Asian Pacific states seized the opportunity of the US’ departure from the CPTPP to act as global, or at least regional, standard-setters in respect of rule-making in international investment law. Specifically, this paper assesses the extent to which the Asian Pacific states’ approach to preserving the domestic regulatory space under the CPTPP differs from the largely US-influenced approach under the TPP. This paper takes the view that labelling the CPTPP’s investment chapter as a new “Golden Standard”, providing for enhanced regulatory space to the host state, is overstated. Additionally, because the eleven signatory states of the CPTPP settled for superficial revisions and tweaks of the TPP text, they missed an important occasion to build a distinctly “Asian way” of approaching international investment law disciplines. In other words, the Asian-pacific states failed to take on a more active role as “rule-makers,” rather they confined themselves to the passive perspective of “rule-takers” in relation to crafting the investment chapter of this regional trade deal.