The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was signed in Santiago, Chile on March 8, 2018. It's a free trade agreement between 11 countries: Japan, Canada, Australia, Chile, New Zealand, Singapore, Brunei, Malaysia, Vietnam, Mexico, and Peru.

The CPTPP covers economies representing more than 13 percent of the global gross domestic product and 500 million people. Colombia, Thailand, the UK, and the Republic of Korea (ROK) are also considering joining the bloc.

The CPTPP will take effect on December 30, accelerating efforts in tariff cuts among member states. Representatives from the 11 countries gathered in Tokyo, Japan on December 20 to establish a working group, which will process further admission applications.

The agreement is a response to the U.S. withdrawal from the Trans-Pacific Partnership in January 2017. Japan took the lead in negotiating with other TPP countries in an attempt to establish a new trade bloc without the United States. 

To Japan's surprise, the negotiations went smoothly. At the end of 2017, 11 countries reached consensus on signing a new free trade agreement, namely, the CPTPP. The deal is a success for Japan, especially on March 8 when the deal was officially signed among members.

In the short-term, the CPTPP makes Japan the largest political and diplomatic winner. After Washington's withdrawal, Tokyo has become a bellwether in promoting the agreement. This is Japan's diplomatic victory.

However, benefits are always accompanied by challenges. Japan's service industry, electronics, information technology, manufacturing, finance, logistics, and intellectual property are one of the strongest among the 11 countries.

Apart from Canada and Australia, no other country in the bloc can compete with Japan in the above fields. In this context, Japan can export its technologies to the other 10 countries in a comprehensive way and gradually take an initiative in these areas.

But in the meantime, Japan is in a relatively disadvantageous status in terms of agriculture, animal husbandry, and fishery. Japan has limited land resources and thus its agricultural costs are higher than that of other countries.

Japan's agricultural products are hard to compete with those of Vietnam. Meanwhile, Australia, Canada, New Zealand are stronger than Japan in animal husbandry. Worse still, Japan's aging problem makes its gap with New Zealand, Mexico, and Malaysia even wider in the fishery. In the fields of light industrialization and household appliances, Vietnam, Mexico and Malaysia have gradually caught up with and may even exceed Japan.

Given the above, with the CPTPP coming into effect, Japan will become the largest political, economic and diplomatic winner in the short-term. But in the long run, Japan may not secure its advantageous status.

Vietnam, Mexico, Malaysia, and other industrial countries will increasingly penetrate into Japan's middle- and low-end industries and markets. Japan will have no choice but stand on the defensive of the high-end industry.

In the long run, Japan will be increasingly dependent on emerging economies in agriculture, animal husbandry, fishery and middle- and low-end industries. But still, with profits gained from high-tech, finance and service industry, Japan will still maintain its prosperity for a long time.